IBO Predicts NYC to Bring in $900M More in Tax Revenue Than Adams’ Projections
By Abigail Nehring February 16, 2024 8:37 pm
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The New York City Independent Budget Office (IBO) has a much sunnier fiscal outlook for the year ahead than Mayor Eric Adams.
IBO predicts the city will see $73.8 billion in tax revenue this fiscal year, which puts an extra $900 million into city coffers compared to the estimates released by the Mayor’s Office of Management and Budget (OMB) last month.
The bump in revenue, combined with IBO’s lower estimate for city spending this year, amounts to a $2.8 billion surplus in the current year budget, with the bulk of those excess funds coming from the extra tax revenue the city didn’t plan for. That surplus could prevent the Adams administration from making further cuts to city agencies in future budgets.
The estimates diverge most dramatically on corporate taxes, which IBO estimates will bring in $6.5 billion in tax revenue this year versus OMB’s $6.25 billion, according to the IBO’s economic analysis published Thursday.
A spokesperson for the mayor did not respond to a request for comment.
Both the IBO and OMB increased their forecasts after collections showed the city would collect more than $2 billion in tax revenue last year than previously expected.
While the Adams administration predicts business tax revenue to increase by 4 percent this fiscal year, the IBO has a rosier 8 percent growth outlook. That implies healthy earnings for local businesses and could help the national economy have a soft landing, according to the IBO.
The IBO builds its macroeconomic outlook with inputs from Moody’s Analytics, according to a spokesperson for the office.
The mayor’s financial plan also cites Moody’s as a data source in at least one place, but it’s unclear if it leans on other sources for its figures.
Regardless of the data sources and how precise they are, the IBO warned that the predictions can sometimes be off.
“Forecasting is predicting the future and it’s not precise,” said Cole Rakow, a senior economist for the IBO. “We’re always working with a range.”
And that has rung true in the past. The Adams administration and IBO have released differing tax revenue projections before and both have wound up being wrong.
Last year, OMB predicted the city to rake in $69 billion in tax revenue while the IBO had higher hopes with $70.6 billion. In the end, the city saw $73.3 billion in tax revenue for the year.
Abigail Nehring can be reached at anehring@commercialobserver.com.
