New York City Tax Revenues Do an About Face

NEW YORK CITY—A strong New York City economy and federal tax reform helped fuel a dramatic increase in tax revenues in Fiscal Year 2018, according to the city’s Comprehensive Annual Financial Report for FY 2018 released by New York City Comptroller Scott M. Stringer.

The report notes that the city added 76,600 jobs during FY 2018, an increase of 7,000 jobs as compared to FY 2017 when the city added 69,600 new positions. The strong jobs market helped lower the city’s unemployment rate to its lowest on record at 4.3%.

New York City’s economy, measured as real gross city product, grew 3.1%, outperforming US GDP growth for the sixth consecutive year. Last year, the city’s real gross city product grew by 2.1%.

New York City tax revenues grew 8.1% in FY 2018, a turnaround from FY 2017 when the city posted the lowest tax revenue growth since FY10. FY 2018 growth was propelled by a 19.1% rise in personal income tax revenues, due in part by a one-time boost from federal tax reform, the report states. City property tax revenues grew by 7% in FY 2018.

For the 38th year in a row, New York City ended the fiscal year with a budget balanced according to generally accepted accounting principles.

The city had an operating surplus of $4.6 billion in FY 2018, an increase of approximately $400 million from the previous fiscal year. After certain prepayments and transfers for Fiscal Year 2019, the General Fund surplus for FY 2018 was $5 million, which was the same as FY 2017.

In addition to the city’s financials for FY 2018, the CAFR also includes the basic financial statements of the city’s five pension systems and closely-related entities such as NYC Health + Hospitals, the NYC Water and Sewer System and the NYC Economic Development Corp.

Some of the other pertinent data from the report included:

• The Comptroller’s Bureau of Asset Management, the investment advisor to the city’s five Retirement Systems, as of June 30, 2018 had $195.8 billion in assets under management for the five New York City retirement systems.

• The pension trust funds earned $13.5 billion in investment income, net of investment expenses, in FY18, for a return of 8.7%.

• The city and the New York City Transitional Finance Authority (TFA) issued a total of $7.42 billion of long-term bonds to finance the city’s capital needs.

• The New York City Municipal Water Finance Authority issued a total of $1.5 billion of bonds to finance the capital needs of the city’s water and sewer systems.

• Refundings of bonds of the city and the TFA generated $613.38 million in budgetary savings and refundings of Water Authority bonds generated $389.34 million of savings over the lifetime of those bonds.

• As of June 30, 2018, the city’s outstanding General Obligation debt, the TFA’s Future Tax Secured debt, and the Water Authority’s debt together totaled $103.84 billion.