NEW YORK (AP) -- The nonpartisan New York City Independent Budget Office says the city will have a bigger-than-expected budget surplus.
The group believes that the city will have a surplus of $2.4 billion at the conclusion of this fiscal year, which ends in June.
That is $581 million more than projected by last month by Mayor Michael Bloomberg.
The budget office also predicted Thursday that the city will have a $1.9 billion surplus for the following fiscal year.
But it warns that the city is facing fiscal challenges that "could quickly erode" its economic health.
Chief among them are the new labor contracts that need to be negotiated with every city union.
Mayor-elect Bill de Blasio will follow Bloomberg into office on Jan 1. The city's budget is $72.5 billion.