Those massive outyear
cuts in federal spending that enabled OMB in planning years 1982 and 1985 to claim great savings in interest expense by artificially inflating baselines, as seen in Figure 6, are juxtaposed against years of little or no deficit reduction efforts, where the baselines for interest look flat or declining.
In August, the mayor, recognizing the large scope of outyear
projected budget projected gaps, directed city agencies to identify approximately $500 million in possible actions to achieve on-going budget savings.
Additionally, the city's budget contains significant levels of nonrecurring resources contributing to substantial outyear
projected budget gaps, heightening the risk of unforeseen events.
When this occurs, a continuation or completion bill for these projects is created in the outyears
While some one shot and transitional measures are utilized in the 1996 budget, the outyear
gaps are significantly lower than in previous years, particularly when tax cuts yet to be legislated are added back as a potential resource.
Budgeted fiscal 2012 results and outyear
projections conservatively indicate total general fund balance declines from $63.
The rating reflects the city's large capital program and projected outyear
budget gaps, as well as significant risks to the current year's budget, offset by the city's broad and slowly recovering economy and its ability to retain budget balance.
Although the current forecast incorporates ongoing cost control in Medicaid and school aid, while prior forecasts assumed sharp spending increases based on then-current law, the forecast gap for fiscal 2014 is quite low and outyear
gaps appear manageable.
projections show further unrestricted general fund balance declines, they remain well above state minimum reserve requirements.
Based on recent years' financial performance, Fitch expects the district to continue to significantly outperform its outyear
projections, but notes that most of the solutions available to the district will be difficult to implement.
WORSENING BUDGET SHORTFALLS: Inability to control costs or over-reliance on reserve drawdowns to address outyear
budget gaps could result in rating pressure.
If enacted, the proposed budget would reduce the outyear
gap forecast to a manageable $715 million in fiscal 2014, rising to $3 billion in fiscal 2015 and $3.