Mayor Bloomberg’s depature from office could herald a massive drop in infrastructure spending, according to new analysis from New York Building Congress.
After small declines in 2013 and 2014, spending is projected to fall $1.3 billion over the two year period from 2015-16. The $7.2 billion of projected spending in 2016 is a reduction of almost $2 billion from this year and $3.3 billion down from the 2010 peak.
City-funded capital commitments are also at levels last seen in 2004. Commitments represent new registered contracts, an indicator of future construction and spending.
While commitment forecasts change considerably from year to year, the Building Congress analyzed the five-year outlook from each of the Administration’s proposed budgets going back to 2002 and found that the city’s five-year Commitment Plan — at $37.6 billion — is at its lowest point since 2004.
And, the City-funded portion of the five-year capital commitment plan is $29.5 million, also the lowest since 2004.
Years four and five of the five-year Commitment Plan are the lowest of any Executive Budget of the Bloomberg Administration; more than $1 billion lower than any previous Budget. Adjusted for inflation, the City’s Commitment Plan is $7 billion less than it was in 2002; inflation-adjusted City-funded commitments for years four and five are only 52% of what was forecast in 2002.
In its last Infrastructure Update, the Building Congress noted a variety of individual agencies facing deep cuts, including the City’s Departments of Transportation, Education and Environmental Protection.
A key factor limiting future City investment is growing debt service costs. As it assumes more debt than it is retiring, the City predicts debt will take up a greater share of overall expenditures. Annual debt service is forecast to grow from $5.7 billion this year to $7.5 billion in 2016, when debt service will make up about 13% of City expenditures, a high water mark for the Bloomberg Administration.
However, the New York City Comptroller notes that rating agencies perceive “that a City’s annual debt service burden is high if it exceeds 15 percent of general fund expenditures.”
Building Congress President Richard T. Anderson said, “During his tenure, Mayor Bloomberg has made an historic commitment to capital investment. These investments have helped ensure a higher quality of life and private investment in New York. The City’s civic leadership must be united in reminding the Mayor, and the candidates who seek to succeed him, that we must continue to invest toprotect the gains made in schools, housing, parks and transportation.”
The Building Congress is mounting a “Keep Building New York” infrastructure campaign to remind elected officials and the public of the importance of maintaining strong levels of investment in core infrastructure. The organization is urging government leaders to look closely at future capital needs and make sure there is adequate support to pay for them.
The Building Congress has also urged City officials to look at creating revenue streams from sources other than general revenue funds to pay for new infrastructure so that these projects do not compete with other core services for funding.
Anderson said, “Building the City’s vital infrastructure requires planning and investment well before the first shovel is put in the ground. For the City to be able to reverse the trends this budget shows for the later years, additional funding must be available and agencies must be permitted to begin planning and design for the next wave of infrastructure projects.”
