NEWYORK: Comptroller Mark Levine issued a proposal for the City of New York to create a framework for its major “rainy day fund,” including a targeted balance, regular replenishment, and stronger guardrails for drawing it down.
The suggested parameters, outlined in a new report, come amid a budget season that has seen a proposed drawdown of the key Revenue Stabilization Fund – also known as the Rainy Day Fund – by as much as half to balance the City’s finances.
The use of reserves during an otherwise strong revenue year for New York City has contributed to several major credit rating agencies changing their economic outlook for New York City from “stable” to “negative.”
“New York City can’t take a make-it-up-as-we-go approach to preparing for tough times,” said Comptroller Mark Levine.
“We need a well-structured rainy-day fund with clear savings goals, consistent rules for deposits and withdrawals, and strong safeguards against political interference. I look forward to working with the Mayor and City Council to put this in place.”
“Comptroller Levine is right — New York City needs to strengthen its Rainy Day Fund so it can protect New Yorkers from potentially devastating service cuts during a recession,” said Andrew Rein, President of the Citizens Budget Commission.
“We have long supported the critical elements the Comptroller identifies are needed for a well-designed Fund. We welcome the opportunity to work with him, the Mayor, and the City Council to bolster and codify the budgetary safety net New Yorkers need.”
The Revenue Stabilization Fund (RSF) was first created through a 2019 Charter Amendment and enabled by the State Legislature the following year. Since 2020, however, the RSF has never had a target balance nor mandated deposits — unlike other major U.S. cities.
Its coffers have largely been filled through pre-existing General Fund surpluses, as well as one-time deposits. While other reserves exist, the RSF was the City’s first dedicated mechanism to set aside money in case an economic downturn occurs.
But few safeguards exist to ensure this vital tool is as sharp as possible to weather economic headwinds.
Comptroller Levine recommended targeted balance, set deposit and withdrawal rules, and adopt formal policies.
The Comptroller’s Office recommended a published, clear policy that incorporates the targeted balance, deposit rules, and withdrawal triggers. That would require the Mayor’s Office of Management and Budget to include a section on the RSF in each financial plan, with details on the gap between the current and targeted balances, the deposit formula, and whether the triggers for a withdrawal have been met, among other metrics.
