Controller: mayor's revenue estimates reasonable but exposed to FEMA, hospitality and telecommuting risks

Ben Rosenfield and Carol Lou of the Controller's Office presented the annual revenue letter and five-year forecast, telling the Budget & Appropriations Committee that the revenue assumptions in the mayor's proposed budget are reasonable but subject to elevated risk.

The controller highlighted three main risks: (1) FEMA reimbursements (the budget assumes roughly $430 million; the office has submitted claims but as of the hearing FEMA had obligated $36 million and paid $15 million), (2) the pace of hospitality recovery and return of conventions and international travel, and (3) the long-term effect of telecommuting on downtown office demand and related business, hotel and transfer taxes. Rosenfield said the budget depends on approximately $625 million in one-time federal stimulus dollars and warned of a possible structural shortfall of roughly $300 million beyond the two-year horizon.

The controller also outlined reserves and proposed new reserves included in the mayor's plan: the fiscal cliff reserve (about $294 million) and a $100 million reserve to hedge against potential federal or state disallowances of FEMA claims. Rosenfield described the FEMA review and audit timeline as lengthy and noted that disallowances sometimes surface years after claims are paid, justifying the proposed disallowance reserve.

Committee members asked for more detail on the five-year plan, the assumptions behind the FEMA number and how potential disallowances would be handled. Rosenfield and Carol Lou offered to provide supplemental tables and scenario analyses.

What happens next: the controller will continue to provide quarterly updates as actual collections and FEMA outcomes become clearer.