It turns out what may seem like a math problem a 5th grader could solve, isn’t as simple as dividing by five. The city’s estimated $1.045 billion dollar budget shortfall over five years isn’t evenly spread over each year.
It turns out what may seem like a math problem a 5th grader could solve, isn’t as simple as dividing by five. The city’s estimated $1.045 billion dollar budget shortfall over five years isn’t evenly spread over each year. WHYY’s Elizabeth Fiedler has more.
Instead of a cool $209 million or so each year, the budget gap for next year is $171 million and then the numbers get even bigger.
City Budget Director Steve Agostini: “We’re looking at a $303 million shortfall for FY 11, $194 million shortfall for FY 12, a $203 shortfall for FY 13, and then $174 million for FY 14.”
Agostini says the dollar figure jumps in 2011 from $171 to over $300 million because of a spike in pension payments. In general he says the change in numbers is a lot like what happens in a household budget: the numbers shift as money goes out – expenses, most notably pensions – and as money comes in – drops in revenue.
Agostini says the current financial situation is unprecedented and dynamic which makes it difficult to predict.
Agostini: “People in the last 30 days are starting to conclude that the recovery’s now going to push into 2010 as opposed to beginning in the latter half of 2009 and that pushes our revenue growth out into future years. And it then shifts the size of the deficit annually.”
If the economy’s so unpredictable, why doesn’t the city just take it one year at a time? Answer: the city’s required by state law to create a five-year budget plan. Agostini says it is a best practice in budgeting and it ensures the city’s not making one time fixes.
And one more thing, the city’s really always in the first year of its five – year plan, never the second, third, fourth, or fifth – because every year budget folks like Steve Agostini sit down and create a new five-year budget plan.
Click on the play button below or right click on this link and choose “Save Link As” to download.
You can hear Elizabeth Fiedler’s entire interview with Budget Director Agostini by clicking on the play button below or download the interview by right clicking on this link and choosing “Save Link As.”
Where did the budget gap come from? Check out the city’s presentation on what makes up the greater parts of the shortfall.