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Q&A
Balancing current needs with future financial planning in NYC budget
0:28:45
·
155 sec
Council Member Gale A. Brewer discusses the challenge of balancing immediate needs with future financial planning in New York City's budget. Sarah Parker from the Independent Budget Office explains options for managing budget surpluses and the purpose of the rainy day fund.
- Two options for surplus: prepayment of next year's expenses or contribution to the rainy day fund.
- Prepayment shifts money from the current year to the next, while the rainy day fund saves for future emergencies.
- The discussion highlights the difficulty in deciding when to use the rainy day fund and how to balance immediate needs with long-term financial stability.
Gale A. Brewer
0:28:45
Second question is regarding the either rainy day or other kinds of payment for the future.
0:28:52
That is hard to understand for the public because, you know, you want to use what you have now because you don't have health care, you don't have, etcetera, food.
0:29:01
So how do you balance that, those two?
0:29:03
Because I do, as having been on this finance committee for the last hundred years, I understand the need to do the, wait for the future and and bank it.
0:29:13
But but how I mean, do you have some sense of how that could work?
0:29:16
I know, Andrew Rain in today's daily news.
0:29:20
Thank you, Andrew.
0:29:20
Very good, op ed.
0:29:23
Also said, you know, put your money aside.
0:29:25
But it's hard for people to understand when they are starving.
Sarah Parker
0:29:29
How do you balance that?
0:29:30
Great question.
0:29:32
We presented in our testimony two options of what to do with any surplus that we do have out of the current fiscal year 2025.
0:29:41
The first is a prepayment.
0:29:43
And so, again, to unpack this because it is hard to understand, when the city runs a surplus, it uses that extra money to prepay down expenses that we know we're going to incur next year.
0:29:56
This is usually debt service, so the cost of money that we've What that does, that allows the city to maintain a balanced budget.
0:30:05
The city is legally required to have a balanced budget in its current fiscal year and as it plans its next year.
0:30:15
Prepayment is is a shift from of dollars from this year to next year.
0:30:20
The rainy day fund is a shift of dollars from this year to whenever you choose to use it.
0:30:27
And I think one of the questions is the rainy day fund was newly created under the de Blasio administration.
0:30:37
And we've put money in it, but we haven't tapped it yet.
0:30:40
And I think that's a question for everybody is what does it look like?
0:30:45
What does this emergency that we set this money aside look like?
0:30:48
And I think that's really the question we're asking ourselves today.
Gale A. Brewer
0:30:52
So that would be one of the issues that you would if you were in charge to decide what should be done with that money to take care of current challenges.
Sarah Parker
0:31:01
It's a it's really a question of thinking about is this a is this a question of money this next year or money this year, next year, and the following year and the following year?
0:31:12
Like, it's it's really a time horizon question.
Gale A. Brewer
0:31:14
I never worry about the future, but everybody else does.
0:31:17
And so do the bonding agencies.
0:31:18
I understand that.
0:31:19
Alright.