Q&A
Council Member Brannan discusses budget risks with IBO representatives
2:04:52
·
3 min
Council Member Justin Brannan engages in a Q&A session with representatives from the Independent Budget Office (IBO) regarding potential risks to next year's budget and the necessity of Program to Eliminate the Gap (PEG) cuts. The IBO representatives highlight several areas of concern including economic factors, affordability issues, and challenges facing the nonprofit sector.
- Key risks identified include the city's economic outlook, real estate market sensitivity to mortgage rates, changes in personal income tax collection, and affordability challenges for city residents.
- The IBO representatives emphasized that the proposed PEG cuts were a policy choice rather than a fiscal necessity.
- Concerns were raised about the impact of late payments on nonprofit providers, particularly those involved in housing asylum seekers and providing human services.
Justin Brannan
2:04:52
Just a couple of questions generally.
2:04:55
What what do you feel are the biggest risks to, occurring in next year's budget?
Sarah Parker
2:05:04
I'm gonna start with the city's economy overall.
2:05:08
Our economic forecast is predicated on the the notion of a soft landing, where the inflation approaches the Federal Reserve's target level without triggering a recession.
2:05:22
This is something we have been building our forecast around for several plan cycles now.
2:05:29
There has been stubborn inflation, and so this is still a risk and a question to how exactly the Federal Reserve is navigating this, and also what it means for interest rates.
2:05:42
So that's one thing that I will just say for revenue forecasts, things like the the real estate market, the buying and selling is very sensitive to mortgage, fixed mortgage rates.
2:05:55
Another area is the personal income tax, and how it relates to the pass through entity tax program, p tet, is something that is is a fairly new program created by New York State to work around the cap on state and local tax deductions that the federal government enacted.
2:06:14
And that's being a fairly new program makes it slightly a little slightly murkier to predict how personal income taxes are coming in.
2:06:22
This past April, we saw really strong refunds on personal income tax and also lower withholdings, for, or lower quarterly estimated payments.
2:06:33
So on the revenue side and the sort of economy side, those are 2 risks I'd like to highlight.
2:06:40
I think,
Louisa Chafee
2:06:41
I'm gonna echo something the controller said.
2:06:43
And so I think in some ways the largest challenge to the city is the affordability to stay in the city, and that we see, pressure on the employment market, and that is partially the need for people being in the workforce, and that is the ability to remain in New York City to be part of the workforce.
2:07:01
So that is not, currently in our, or not explicitly studied in these reports, but overarching, you know, the for the welfare of the city, for the stability of the city, the need to have, many different, people's ability to stay here and arrive here.
Sarita Subramanian
2:07:24
And I would just also add, one other area, of risk is, the nonprofit sector.
2:07:31
And, you know, and and I think the the it's been pretty well documented, how late the city has been in terms of payment, for providers.
2:07:41
And from what we're hearing, that's also impacting, for example, ability to, to house asylum seekers, especially with the city's, called for a shift towards more nonprofit, providers providing those services.
2:07:57
The the pressure on non the nonprofit community, particularly in other areas of the budget that they're also providing these human services, is a real, issue.
2:08:09
And as we noted in testimony, the, the system that manages, both the RFP processing and the payments to nonprofit providers, is also being cut.
2:08:21
And so that could also have a compounding impact, on this, provider community.
Justin Brannan
2:08:28
Does Zybio think that any of these pegs were necessary?
Louisa Chafee
2:08:33
They are a policy choice.
2:08:35
They are not necessary for the stability of the city's fiscal health.
Justin Brannan
2:08:41
Okay.
2:08:43
I really appreciate your all that you guys do all year round.
2:08:46
I appreciate your testimony today.
2:08:48
Thanks for helping us out.
2:08:49
Thanks for, putting out independent analysis.
