(photo: William Alatriste/City Council)

The entire New York City Charter, the city's foundational governing document, is on the operating table, and it is essential that the surgeons act with extreme caution.

On March 7 I testified before the Charter Revision Commission created at the initiative of City Council Speaker Johnson, former Public Advocate James, and Manhattan Borough President Brewer. Charter revision can be a very wonky, technical topic, but the Charter is our city’s constitution and any changes made to it can have a significant, lasting impact. The last comprehensive charter revision was in 1989 and it has served us well.

I urged the members to follow two guiding principles in their deliberations:

First, do no harm. The current structure of city government has for the most part served the city quite well for the last 30 years. With respect to finance and budgeting in particular, as a result of the fiscal crisis in the ‘70s and the enactment of the Financial Emergency Act in state law, New York City has the most transparent, professional, and sound fiscal management and budgeting process of any state or city in the country. Let’s not fix what isn’t broken.

Second, limit charter revision to structural changes that can only be made through the charter. It is meant to define core powers, structures, and processes. Most changes to current rules and procedures can and should be made through City Council law-making.

Every complaint about the way city government functions (and there are surely many valid complaints) cannot and should not be addressed through the charter. It is already cluttered with hundreds of outdated provisions and others that belong in local law. Do not add to that clutter.

Here are the most worrisome proposals that should be rejected by the Commission:

Independent Budgeting. This would enable the Public Advocate, Comptroller, Borough Presidents, and several other offices to self-determine their budgets, in some cases according to a formula that is based on a percentage of another agency’s budget or the entirety of the city budget.

While it is arguable that a few totally independent entities should have set budgets so they can do their work without concern about retaliation by an unhappy Mayor or Council (as is now the case for the Independent Budget Office, and only the IBO) it should not be extended to so many agencies, and especially not to the offices of elected officials. Their independence derives from and is protected by their direct election, not the size of their budgets. Spending priorities are to be determined in the budget negotiation process between the Mayor and the Council and removing budgeting for so many entities from this process would, in effect, take a range of positions and functions of city government as well as a significant amount of resources out of the control of those democratically-elected to oversee them.

Revenue Estimating. A proposal by the City Council would create a process whereby the Mayor would submit an estimate of the amount of revenue expected in the following fiscal year, the Council would accept or reject this estimate and if rejected, a revenue estimate would be set by the IBO. This would be a similar process to the one followed by New York State in which the Comptroller sets the revenue estimate if the Legislature and the Governor cannot agree upon one. The revenue estimate is important because it sets a limit on the amount that can be spent in the annual budget. But this new ‘consensus estimate’ is unnecessary in New York City.

The City Office of Management and Budget is generally cautious in its revenue estimates, as it should be in order to mitigate downside risk. This has not unduly constrained spending; the city budget has grown an average of more than 5% a year over the last 18 years. Moreover, there are several other revenue forecasts published during budget season including that of the IBO, the Office of the State Special Deputy Comptroller, and the City Comptroller. All of these estimates are already compared and contrasted as part of the Mayor’s negotiation of the city budget with the Council.

A more formal procedure for the Council to adopt or reject the OMB revenue estimate would only further politicize the process with each entity compelled to manipulate its forecast to anticipate the reaction of the others. Indeed, you can see how political the revenue estimating process can become by looking at what has just happened in the state process: the Governor announced a very dramatic revenue decline, requiring significant budget discipline; the Assembly and Senate each projected almost $1 billion more in revenue than the Governor, and the Comptroller eventually resolved the conflict with an estimate very close to the Governor’s. There is no reason for New York City to create a similar drawn out form of budget dance.

Pre-Audit Contract Screening. There is widespread dissatisfaction with the city’s procurement process. It is opaque, takes too long, and leaves too much discretion to individual employees. The solution to these problems lies in much better management and oversight, not with adding another layer of review by the Comptroller. It is up to the executive branch to decide the terms and contents of contracts and there should be far more public reporting and disclosure about them, but it is only going to cause even more delay to give the Comptroller the right to review these decisions in advance.

A number of other proposals that would improve transparency and better link spending to performance goals, such as more specific Units of Appropriation in the Budget, use of Budget Function Analysis in more agencies, and better publicly-available tracking of capital projects, would be worthwhile but could be required through local law and do not belong in the City Charter.

Proposals that are appropriate for the charter and that should be adopted by the Commission are:

Better Capital Budgeting. The Charter should be amended to assure that the capital budgeting process is more transparent, comprehensive and effective. In particular, the AIMS report should be expanded to include all city and city-controlled public authority capital assets (i.e., those of the Health and Hospitals Corporation) with at least a five year life and a minimum replacement cost low enough to cover most assets, including computer equipment and moveable assets. This more comprehensive report should be cross-referenced to the Ten Year Capital Strategy and the Capital Commitment Plan so it is possible to assess whether enough is being invested to keep all city infrastructure in a state of good repair.

Rainy Day Fund. There should be a way for the city to set aside funds to be used in the event of an economic downturn or a crisis that reduces revenue so that spending would not have to be drastically cut or taxes increased to maintain a balanced budget. The Financial Emergency Control Act doesn’t allow for such a fund, so while it is appropriate to include one in the Charter, it would also require state law to implement it. Such a fund should, in my view, be in addition to the Retiree Health Benefit Trust, which already exists but is regarded by some as a de facto Rainy Day Fund. Both of these funds should have specific criteria for mandatory deposits and limitations on withdrawals so that money is steadily deposited in good times and can only be withdrawn under set conditions.

Revision of the City Charter should be done with care. It should not be used to settle scores or re-allocate authority in ways that could have unintended adverse consequences despite the best of intentions.

Here is an idea for the Commission: limit your proposed amendments to no more than one page for each of the four topic areas you have delineated. If you can keep it that short you have less chance of doing damage and are more likely to make only adjustments that will enhance the efficiency and effectiveness of our government.