Your guide to NYC's public proceedings.
Q&A
Council Member Brannan questions OMB Director on city's financial reserves and bond ratings
0:51:46
·
177 sec
Council Member Justin Brannan engages in a Q&A session with Jacques Jiha, Director of NYC Mayor's Office of Management and Budget, discussing the city's financial reserves, their impact on bond ratings, and potential savings from improved ratings. Jiha explains that current reserves are adequate and that multiple factors influence rating increases.
- The city's financial reserves are projected to remain around $11.5 billion at the end of FY 2025.
- Jiha states that the current level of reserves is adequate for potential economic downturns.
- A typical increase in the city's bond rating could save about 5 to 10 basis points on debt service costs.
Justin Brannan
0:51:46
Talk about reserves.
0:51:49
Standard and Poor's most recent rating of the city's general obligation bonds notes that the city has large financial reserves of almost 11,400,000,000.0 at the end of fiscal year twenty four.
0:52:02
S and P looks at both the city's reserve accounts and surplus budget rolls at the end of the fiscal year when evaluating how they come up with our reserves.
0:52:10
What level of financial reserves as measured by S and P does OMB think we'll have at the end of FY twenty five?
Jacques Jiha
0:52:19
At this point in time, we know we have the total reserve is about 8 and a half billion dollars.
0:52:26
And I think with in the executive budget right now, we have prepayments of about $3,000,000,000 total.
0:52:34
I mean, including the 600,000,000.
0:52:37
So we're talking right now at '11 and a half.
Justin Brannan
0:52:40
So it'll be about the same as the end of FY
Jacques Jiha
0:52:43
twenty '20 We're probably gonna end up probably the same probably the same place.
0:52:47
Okay.
Justin Brannan
0:52:51
Okay.
0:52:54
And besides being a way to protect city services during a downturn, reserves can also help us lower the effective cost of our capital projects.
0:53:03
How much additional deposits into the reserves do you think would be necessary to effectuate a ratings increase?
Jacques Jiha
0:53:12
To be quite honest with you, I think the level of reserve that we have right now is adequate, and I said it over and over because we believe we also need some flexibility in terms of the way we manage our finances.
0:53:30
Reserve by itself is not in itself.
0:53:33
It's one of those factors, but by itself it's not gonna trigger a rating increase.
0:53:41
So from our perspective is you have to look at on top, you know, the way we manage our debt, the way we manage our finances.
0:53:48
You have to look at the economy.
0:53:50
It's a number of factors that play into an increase in our rating.
0:53:59
So therefore, just the leisure by itself from our perspective is not in itself enough to trigger.
0:54:08
But again, as far as we're concerned, we believe the level of reserve that we have right now is appropriate, is adequate for to deal with the potential downturn in the economy.
Justin Brannan
0:54:24
And how much does the typical increase in the city's bond rating save the city in lower debt service costs?
Jacques Jiha
0:54:31
It is about like five to 10 basis points.
0:54:36
So if you're issuing, let's say, $10,000,000,000 worth of debt, you're talking about 5 to $10,000,000.