1. New York City Independent Budget Office IBO’s Outlook for New York City Theresa J. Devine Senior Economist

2. New York City Independent Budget Office IBO’s Outlook for New York City Fiscal Outlook for New York City Economic Outlook for New York City (as of late February) New Data

3. New York City Independent Budget Office Fiscal Outlook for New York City Greatly improved over 2005 fiscal year Recovery of local economy Real estate market Surpluses in 2005 and 2006 Gaps appear in 2007-2009 Expiration of temporary sales and personal income tax increases Continued growth of costs of Medicaid, debt service, and pensions

4. New York City Independent Budget Office Fiscal Outlook for New York City (continued) Additional Risks: Labor agreements with police, fire, teachers, sanitation and correction officers unions – no contract now State and federal grants Pension savings Policy changes in Washington Economy – federal deficit, interest rates, trade deficit, etc.

5. New York City Independent Budget Office IBO Revenue Projections (millions of dollars) 20052006200720082009Change Tax Revenues Property 11541124031332314405153427.4% Personal Income 596657525839627765572.4% General Sales 435841514301449846991.9% General Corporation 175618111862191220073.4% Unincorporated Business 9799981045109611514.1% Real Property Transfer 869578526669761-3.3% Mortgage Recording 949610499603664-8.5% Hotel Occupancy 2552752943163367.1% Commercial Rent 4404504654855043.5% Total Taxes 29042289002992332045337533.8% % of Total Revenue 55.7%58.2%59.6%61.3%62.3%

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9. New York City Independent Budget Office IBO Economic Forecast 200420052006200720082009 National Economy Real GDP Growth 4.43.43.23.53.63.1 Non-farm Employment Growth 1.01.71.41.11.4 Inflation Rate (CPI-U) 2.72.2 2.42.1 Personal Income Growth 5.14.24.44.7 4.6 Unemployment Rate 5.5 5.45.24.94.8 10-Year Treasury Bond Rate 4.35.05.7 5.55.7 Federal Funds Rate 1.33.04.34.94.5

10. New York City Independent Budget Office IBO Economic Forecast 200420052006200720082009 NYC Economy Non-farm New Jobs (thousands) 20.732.439.929.239.139.9 Employment Growth 0.60.91.10.81.1 Inflation Rate (CPI-U-NY) 3.51.91.72.22.02.1 Personal Income ($ billions) 327.7347.2365.0384.6405.2426.3 Personal Income Growth 6.0 5.15.35.45.2 Manhattan Office Rents ($/sq.ft) 48.5049.6850.9252.1153.4154.72

11. New York City Independent Budget Office NYC Employment Forecast February-05 20052005 to 2009Per year Total32,400148,700 37,000 Private34,700148,200 37,000 Construction-200-700 -200 Manufacturing-2,700-4,000 -1,000 Trade, Trans & Util700-3,300 -800 Information40011,300 2,800 Financial Activities1,9008,700 2,200 Securities1,5005,700 1,400 Prof & Bus Services10,20046,500 11,600 Ed &Health Services13,70059,500 14,900 Leis & Hospitality4,90015,600 3,900 Government-2,300-200 -50

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15. New York City Independent Budget Office New Payroll Employment Data 2004 BenchmarkGain/Loss Adjustment2004-2003 Total-7,50010,000 Private-10,20013,400 Construction3,800-1,600 Manufacturing1,800-6,600 Trade, Trans & Util1,6004,500 Information-8,900-2,200 Financial Activities2,1001,000 Securities4,6003,200 Prof & Bus Services-9,000800 Employment Services-11,000-1,600 Ed &Health Services-1,6008,400 Leis & Hospitality1,6008,200 Other Services-1,500800 Government2,700-3,500

16. New York City Independent Budget Office New Payroll Employment Data Dec04 - Dec03 as of Febas of MarchChange Total33,800 18,700-15,100 Private38,600 22,000-16,600 Construction-1,400200 1,600 Manufacturing-6,300 -7,500-1,200 Trade, Trans & Util2,700 8,8006,100 Information6,500 800-5,700 Financial Activities-800 1,8002,600 Securities2,200 3,000800 Prof & Bus Services14,500 -2,600-17,100 Employment Services6,100 -2,100-8,200 Ed &Health Services8,400 7,900-500 Leis & Hospitality9,400 10,200800 Other Services5,600 2,400-3,200 Government-4,800 -3,3001,500

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24. New York City Independent Budget Office Conclusion IBO’s recent forecast was more optimistic than our past forecasts Will new data make IBO even more optimistic??? Watch for our May Report on the Mayor’s Executive Budget