New York Mayor-elect Bill de Blasio delivers his remarks at...

New York Mayor-elect Bill de Blasio delivers his remarks at the Friends of Crown Heights Educational Center in Brooklyn. (Dec. 19, 2013) Credit: AP

The balanced budget bequeathed to Bill de Blasio by departing Mayor Michael Bloomberg will give the next mayor latitude to pursue his progressive agenda.

But just how much latitude will depend on the strength of New York City's economy, de Blasio's prowess lobbying Albany to boost taxes on the rich and the choices the mayor-elect makes in allocating money, fiscal experts say.

Depending on the forecasting model, the 2015 budget may even show a surplus of $1.9 billion, said Doug Turetsky, chief of staff at the city's Independent Budget Office.

"De Blasio has the ability to stamp a budget with his priorities, but also a lot of fiscal pressures -- from labor contracts to federal cuts to the interests and concerns of other newly elected officials and the constituencies they represent," Turetsky said.

If the surplus materializes, de Blasio must choose how to spend it: Should he fund more government programs? Save it for a rainy day? Award raises to the city's workforce?

"It's a balancing act, fiscally and politically," Turetsky said.

Hanging over de Blasio are expired labor contracts with more than 150 municipal-worker unions that Bloomberg did not account for in his balanced budget.

"The dark cloud is these expired labor contracts," said Maria Doulis of the nonpartisan Citizens Budget Commission.

Although Bloomberg has made much of his announcement last month that he would be handing his successor, for the first time in "documented city history," a balanced budget, de Blasio has gone out of his way to note the "huge asterisk" of the unresolved labor contracts.

De Blasio's transition office declined to answer questions about his budget priorities or to make available his incoming budget director, Dean A. Fuleihan.

Much of de Blasio's flexibility will depend on the strength of the city's economy.

State employment figures, for instance, showed growth of 1.5 percent to 2 percent a year for the last three years -- a rate that is expected to continue into the future, said James Parrott of the labor-friendly Fiscal Policy Institute.

More employment means more tax revenue and more money for the city.

"No one that I know of expects the city's economy to slow down," Parrott said.

Doulis noted that mayoral budgets -- which by law must be balanced -- typically predict economic growth very conservatively, and the economy often does better than those predictions.

Higher taxes are another way de Blasio could fund programs, but state law requires Albany's approval in most categories. De Blasio plans to spend much political capital on passing his campaign pledge: higher taxes on income above $500,000, which would raise about half a billion dollars to expand universal prekindergarten and after-school programs.

De Blasio could also find money by closing corporate tax loopholes, the outgoing comptroller, John Liu, told Newsday.

For instance, insurance companies are exempt from the general corporation tax (their savings: about $300 million to $350 million a year) and private equity funds don't have to pay some other taxes (savings: about $200 million to $250 million), Liu said.

But that would also require Albany's approval -- in a state election year. The governor has been lukewarm to the idea of raising taxes and in fact has said he wants to lower them.

De Blasio could ask the City Council to raise property taxes -- which doesn't require a nod from Albany. But that would break a campaign pledge to hold the line on them.

Budgets are about choices, and "It's up to them" -- de Blasio and the council -- "how to do it," Turetsky said.

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