(photo: Edwin J. Torres/ Mayoral Photo Office)
The 2019 Charter Revision Commission, which is looking at ways to improve the city’s central governing document, heard suggestions on Monday from community-based organizations, fiscal watchdogs, and former and current city officials about potential changes to the city’s byzantine budgeting process.
Over the course of more than three hours, experts weighed in on the city’s flawed contract procurement system, the severe lack of transparency in spending on capital projects, the possibility of creating a rainy day fund for the city, and measures to generally improve accountability in city spending. There was general agreement that city procurement needs to be overhauled to make it more efficient and transparent, but broader opposition to changes in the budgeting process and the administration’s ability to set revenues and expenditures.
The city’s budget and budgeting processes are one of four areas of focus for the commission, which will sift through the hours of testimony it has heard, and has yet to hear, before releasing a draft of ballot proposals sometime next month. The proposals will go through another round of public input before the final questions are approved in June. The proposals will then be presented to voters on the November election ballot. The commission has already held hearings on elections reform, exploring issues such as ranked-choice voting, redistricting and campaign finance improvements, and another on police accountability measures. The next hearing is scheduled on Thursday, where the commission will look at issues involving finance and governance including the city’s pension system, a Chief Diversity Officer proposal, and issues around corruption and conflicts of interest.
City Contracting
At Monday’s hearing, there was broad consensus from those within and outside government about how the city’s contracting process works, or rather, doesn’t. Advocates representing human-service nonprofits, which receive most of their funding from the city, bemoaned the now well-known sorry state of the system, with contracts delayed for months, threatening their financial security and their ability to provide uninterrupted services. Unlike private contractors, they cannot cancel the services they provide, advocates said, since they fill the gaps where the city is not meeting the needs of vulnerable New Yorkers. “We’ve entered an era for nonprofits that’s very dangerous,” said Janelle Faris, executive director of Brooklyn Community Services.
Michelle Jackson, deputy executive director of the Human Services Council, which represents more than 100 nonprofits, noted that the city spends $6.5 billion on human services each year, which also allows nonprofits to leverage state and federal funding and philanthropic dollars. “We’re an economic engine,” she said. “The sector nationally is larger than the airline industry yet we do not treat nonprofits the same way we treat airline executives.”
Jackson recommended several measures to improve procurement including established contracting timeframes, interest or other penalties on late payments by the city, and more detailed annual reporting in the Mayor’s Management Report, which tracks performance indicators for city services. Marla Simpson, a former director of the Mayor’s Office of Contract Services (MOCS), however, said financial penalties may not be effective and the best solution may be to name-and-shame agencies for their failures. “Transparency and sunlight is a much more important cure,” she said.
Officials from the comptroller’s office and the Mayor’s Office of Contract Services concurred that city contracting is inefficient though they outlined steps they have already taken to improve it and promised that improvements are slowly coming to fruition. “I agree that New York City’s procurement must be overhauled,” said Daniel Symon, acting director of MOCS, in his opening statement. “Reliance on paper, a patchwork of siloed agency systems and a sometimes necessarily risk-averse culture combine to limit achievable results.”
Lisa Flores, deputy comptroller for contracts, said the procurement system is “notoriously slow, bureaucratic and opaque,” and leads to delays that increase project costs for city vendors, which end up being passed on to taxpayers. She noted, for instance, that in fiscal year 2018, 80 percent of all new and renewal contracts submitted to the comptroller’s office for registration came in after the start date (40 percent of those contracts were late by six months or more) and for human services contracts, the number increased to 89 percent. She called for more transparency and accountability, particularly by setting specific timelines for agencies to submit contracts. Currently, the city charter only requires the comptroller’s office to register contracts within a timeframe.
The commissioners recognized that procurement reform is an age-old issue. “I was on the City Council 20 years ago and we were having the same discussions,” said Commissioner Stephen Fiala, though he expressed doubts about imposing penalties on agencies for late submission of contracts. Other commissioners pressed the expert panel on oversight at agencies and the institutional issues with procurement.
Flores suggested more outward transparency for the process and establishing metrics to track whether agencies are working in a timely manner. Symon, though, was wary of creating timelines for agencies that could potentially allow them to delay their work or lead to clashes with vendors. “What I don’t want to do is start with an arbitrary time-frame when we don’t know how fast it can be,” he said. Both agreed that the contracting process needs to be more structured and predictable, with vendors being able to track the progress of their contracts in real time. A time-frame, Flores said, would be an important first step. Advocates agreed.
City Budgeting
There was similarly consensus on the subsequent panels where experts testified on the city’s expense, revenue, and capital budget procedures. But rather than agreeing on ways to improve the budget, they mostly were on the same page in warning the commissioners to be careful about interfering in what is already a strong fiscal management system.
“Changing our fiscal discipline practices will cause unintended and perhaps adverse consequences,” said Chuck Brisky, deputy director for expense and capital coordination for the Mayor’s Office of Management and Budget. He opposed any shift in responsibility for the city’s revenue forecast, which is set by the mayor. Brisky said the mayor is accountable to New Yorkers for providing services and so must be responsible for setting the revenue projections that funds those services.
“If the budget isn’t balanced by even one-tenth of one percent at our current revenue and spending level, the city could lose control of its finances to the Financial Control Board under the Emergency Financial Act,” he said. The state, he noted, doesn’t have the same stringent budget and accounting standards as the city. Brisky also opposed any changes to the mayor’s power to impound revenues, which allows for short-term fixes during times of crisis such as natural disasters, financial recessions or terror attacks.
Preston Niblack, deputy comptroller for budget, echoed that sentiment, as did Mark Page, a former director of OMB, and Anthony Shorris, previously the first deputy mayor under Mayor Bill de Blasio. Both Page and Shorris repeatedly cautioned the commission to tread lightly around imposing new mandates on the administration’s budgeting powers.
Niblack did raise several measures that could make the budget more transparent. It’s “very hard to understand exactly what you’re getting for your money,” he said, noting that the budget process is not linked to the delivery of services. The MMR, he said, is ineffective and does not report measures attached to spending.
When Commissioner James Caras posed a question about the mayor’s ability to impound revenue, Niblack did agree that there could be limits on it to prevent misuse for political reasons. “Right now it’s open ended and should probably be restricted,” he said.
The city’s capital spending process has been particularly fraught, leading to hundreds of millions in cost overruns and delayed projects. At the hearing, Jon Kaufman, chief operating officer at the Department of City Planning, outlined several reforms DCP has implemented and said that his department works with agencies to appropriately plan their future capital needs. But, he said, “I don’t think additional charter mandates are going to lead to materially increased collaboration.”
Independent fiscal watchdogs also bolstered the administration’s argument. Carol Kellermann, former president of the Citizens Budget Commission (CBC), gave the commission two pieces of advice: “First, do no harm...Second, don’t use the charter to do things that can be done by local law.”
This question, what can and should be done by local law as opposed to amending the city charter, has been a theme raised throughout charter revision processes, including the one formed last year by Mayor Bill de Blasio, which saw three charter amendments passed by voters, all of which, some argued, could have simply been passed as local law.
Kellermann and her successor at CBC, Andrew Rein, did recommend that the charter consider a proposal to create a rainy day fund for the city. Though Kellerman noted that it would require authorization from the state as well, she said the charter commission could create the criteria for it and present it to voters for their approval, strengthening the city’s case in front of the state. She also pushed for greater transparency in the capital budget, including by expanding the annual statement of needs that agencies provide to all city-controlled public authority assets.
On a proposal to create independent budgeting for certain offices -- such as the public advocate, comptroller, and the Civilian Complaint Review Board -- Kellerman warned that it would be “dangerous” and could disrupt the city’s budget process by giving other elected officials besides the mayor creeping authority over the budget.
“The City Charter calls for a lot more clarity on programmatic spending and performance in the city’s operating budget than we actually see in practice,” said George Sweeting, deputy director of the Independent Budget Office, a nonpartisan city agency. He noted that the budget includes units of appropriation that are overly broad and that obscure spending, and that the charter should be strengthened to require units to be linked to individual programs. Kellermann also said as much, though she laid some blame at the City Council’s feet. “The Council really needs to insist more on doing this...but the definition in the charter is already clear that they need to be more specific than they are,” she said.
Sweeting recommended that the charter commission start looking at ways to improve the Retiree Health Benefits Trust, which the city uses as a form of reserves, as a means of testing the appropriate way to create a dedicated rainy day fund. That could include specific “rules for when deposits have to be made and when withdrawals could be made.”
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
The first public advocate debate (photo: Holly Pickett for The New York Times (pool))
Small-dollar donors were behind 63 percent of the first wave of campaign contributions to candidates who ran in the February special election for public advocate, up from 26.3 percent in 2013 when there was an open race for the seat, according to an analysis by New York City Council Member Ben Kallos. The Manhattan Council member sponsored the law to implement in the public advocate special election the new campaign finance rules overwhelmingly approved by voters in a ballot referendum last year.
The public advocate special election, in which City Council Member Jumaane Williams emerged victorious, was the first citywide race under the new rules that lowered contribution limits for special elections for citywide offices from $2,550 to $1,000 (special election limits are half of the regular election limits, which changed from $5,100 to $2,000), increased the ratio of public matching funds given to candidates from 6-to-1 for the first $175 of a qualifying contribution to 8-to-1 for the first $250, and increased the limit for public funds payments from 55 percent of the spending limit for a race to 75 percent. Soon after the referendum was approved -- by just over 80 percent of voters -- the City Council and Mayor Bill de Blasio expedited legislation in order to apply the rules to elections before 2021, after which they were set to be mandatory. For the special election and those through 2021, the next citywide election year, candidates must choose the old or new system.
Of the 17 candidates on the public advocate ballot, all but one opted into the voluntary public matching funds program, which is administered by the New York City Campaign Finance Board. Only four decided to stick with the outgoing matching program while the rest chose lower contribution limits that came with higher public matching funds. In total, the 11 candidates who eventually qualified for public funds received $7,178,120 via the CFB.
According CFB’s own analysis released the day after the election, the most common contribution amount was $10, down from $100 in previous public advocate elections. “The matching funds give candidates the incentives to raise money the right way, by going to the New York City voters they want to represent in government, not to big-money donors or special interests,” said Amy Loprest, CFB executive director, in a statement on February 27. “If we want a government that is closer and more responsive to the people, it has to start with how candidates fund their campaigns.”
Kallos, the City Council’s resident good government wonk, has pushed improvements to the city’s campaign finance law for years and felt vindicated by seeing the campaign finance numbers behind the election. The ballot question, proposed by a charter revision commission created by Mayor Bill de Blasio, was largely similar to a bill Kallos had sponsored in the previous legislative session of the Council.
“One of the reasons I was so eager for this to apply in the public advocate’s race is I was worried about the time between the vote in November [2018] and 2021 and I wanted to prove to people that this could work,” he said. There will be another public advocate election this fall to decide who will hold the seat vacated by Attorney General letitia James for the final two years of her public advocate term. Kallos’ bill also lowered the thresholds for candidates to qualify for official debates sponsored by the CFB and for public funds payments.
His analysis, which covers the candidates’ pre-election campaign finance disclosures till February 11 (the most recent filing deadline - final numbers are due March 25), found that contributions of $1,000 and more accounted for 26 percent of the $2.2 million raised to that point in the election, compared with 60 percent throughout 2013. In total, all the candidates raised $2.6 million for the special election, which was “nonpartisan” and did not have party primaries. In 2013, candidates raised $4.9 million running for public advocate in the primary and general.
Kallos has long been critical of big money in elections, particularly donations from the real estate industry which have been a large force at the city and state level. “This is the first time a citywide elected official has been elected without real estate money,” said Kallos, who himself rejects real estate donations.
Several candidates in the special election similarly refused real estate cash, which is of a piece with broader calls for candidates to rely on small donors. Public Advocate-elect Williams was among those who signed a pledge floated by New York Communities for Change, a housing justice advocacy organization, to refuse corporate and real estate money.
“New York City has changed forever: we will no longer be held hostage by big-money real estate developers and landlords who aim to profit through policies that incentivize the displacement and gouging of low-income tenants,” said Jonathan Westin, NYCC executive director, in a statement calling on other candidates to follow Williams’ lead.
Several candidates running for citywide office in 2021, or exploring a candidacy, have already said that they will rely on the new campaign finance system, including Comptroller Scott Stringer and City Council Speaker Corey Johnson.
Real estate donations are increasingly becoming a litmus test for progressive Democrats, some of whom were elected to the state Legislature last year and are also pushing to implement a public financing program for state elections similar to the city’s model. For advocates and labor leaders, the public advocate election was proof positive that small-dollar financing is effective and should be replicated by the state. “Jumaane Williams's victory, and the public participation in the process, is a glimpse of what we could accomplish if we pass campaign finance reform at the state level,” said Stanley Fritz, campaigns manager for Citizen Action. Hector Figueroa, president of 32BJ SEIU, said, “The major shift towards small donor financing in city wide elections shows that working people in our state want a more democratic system.
Kallos notes that candidates can spend fewer hours dialling for dollars from wealthy donors if they rely on small contributions from the tens of thousands of residents of their districts, or from millions in the case of citywide races. “My hypothesis was that if we increase the public match...that that would halve big money and it actually did that,” he said. “It wasn’t a modest success. It literally cut it almost in half.”
The expanded matching funds program has been widely praised for elevating the voices of everyday New Yorkers. “Normally, a special election for public advocate would probably be very much of an insider’s race. It would be funded by insiders and people who follow politics closely,” said Alex Camarda, senior policy advisor at Reinvent Albany, a good government advocacy group. “And I think that what putting this legislation into effect now did was incentivized candidates to reach out to ordinary New Yorkers to campaign.” Camarda also expects this momentum to carry forward and that candidates will feel “real pressure” to participate.
Many of the candidates who ran for public advocate were also first-time contenders, including Nomiki Konst and Dawn Smalls, who were among the ten candidates on stage at the first official debate in the race, and among the seven candidates at the second official debate.
There have been arguments levelled against the public funds system, of course, and it’s hard to predict exactly how it will work for a full-fledged citywide race rather than a truncated special election. Some candidates have said the regulators of the program are sometimes overly harsh and fine them for small, technical violations. Others criticize the cost to taxpayers -- the entire special election is estimated to cost the city around $20 million in administrative and public campaign financing while the annual budget of the public advocate was only about $3.6 million last year. Former City Council Speaker Melissa Mark-Viverito, who stuck with the old campaign finance rules and came in third in the special election, argued that the new system was being pushed through to prevent her from winning, apparently in part because she was transferring a significant sum of funds from her prior campaign account, an advantage more easily mitigated with the new system.
But there is otherwise broad agreement that the city’s program is a model to be emulated, as other jurisdictions have done across the country, and it is progressively being improved. “I’m still not done yet,” Kallos said.
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
Note - This article has been updated to clarify that total candidate fundraising was $2.6 million for the special election. It has also been updated to clarify the contribution limits for special elections.
Library rally before the Council hearing (photo: @NYCLibraries)
The presidents of the city’s three public library systems on Monday requested from the City Council an additional $35 million in operating support and $15 million in capital funding, allowing the libraries to maintain and expand collections, hire more workers, fund more programming, make necessary building repairs and expansions, and respond to emergencies.
Mayor Bill de Blasio’s preliminary budget proposes a $388.8 million subsidy for the public library systems, which are separated into the New York Public Library (serving the Bronx, Manhattan, and Staten Island), the Brooklyn Public Library, and the Queens Library, as well as four Research Centers. City Council documents note that the combined system contains 216 branches across the five boroughs, and has over 65 million items, including books, DVDs, and periodicals, in circulation.
Under the budget proposal, the NYPL would receive $142.9 million, the BPL would receive $106.7 million, the QBPL would receive $110.2 million, and the research libraries would receive $29 million. This would be a decrease for the NYPL and an increase for the other systems from this year’s adopted budget. The city’s fiscal year begins July 1; in February, de Blasio released his preliminary spending plan, coming in at $92.2 billion, that is now the focus of City Council hearings and will be the subject of negotiations before a new budget is agreed upon in June.
The de Blasio administration has significantly increased funding for libraries. De Blasio’s first budget as mayor, the Fiscal Year 2015 budget, included $311.4 million for the systems, which itself was a large increase after several years of post-recession austerity in library funding under Mayor Michael Bloomberg.
The presidents of the three library systems testified in front of the Council’s Cultural Affairs Committee, chaired by Queens Council Member Jimmy Van Bramer, and to a packed audience of library workers wearing orange “Invest in Libraries” shirts. The presidents are Tony Marx of NYPL, Linda Johnson of BPL, and Dennis Walcott of QBPL.
Van Bramer, who before the hearing addressed a rally of library workers outside City Hall, was broadly sympathetic to the argument for more funding.
“Just about anything good that happens in this city couldn't happen without libraries and without library workers, and we've gotten to a good place on public libraries in this city, but we can do even better,” Van Bramer said at the beginning of the hearing. “And I want to frame the discussion there and make sure that we're all working towards that goal.”
The city’s public libraries provide far more services than just book lending and study space. The public libraries provide literacy programs, instruction in coding, and outreach to incarcerated individuals. They are, for many people, the only access point to the internet. The libraries are currently gearing up to play a critical role in ensuring an accurate count in the upcoming U.S. Census. And, according to Marx, 20 percent of IDNYCs are obtained at library branches.
“We cannot do all of this if we don't get increased funding simply because our costs have been increased,” Marx said at the hearing. “We want to do everything in partnership with you, and we're proud of what we have done. But it is simply unsustainable without additional support.”
Collective bargaining increases led to small proposed increases in the budgets for the BPL and QBPL, but the presidents signalled that this was not enough to cover rising labor and health care costs that would be met by the additional $35 million investment.
The additional funding would, according to the presidents, allow the libraries to maintain current funding for their host of programs, instead of directing money towards fulfilling labor obligations.
“[Allocating $35 million] will ensure our growing programs remain strong and have new and expanded spaces, are staffed with library workers, program rich, and filled with materials our patrons deserve,” said Johnson. She went on to note that the administration had instead asked the libraries to identify $8 million in savings as part of the mayor’s “Program to Eliminate the Gap.”
While funding for libraries has substantially increased, there are some obvious areas where new funding could greatly improve the situation. One hundred percent of the city’s libraries are now open six days per week, but the percentage open seven days per week is in the single digits. While everyone in the room expressed support for having 100 percent of locations open seven days per week, the presidents dismissed this possibility as impossible in the short term, and that additional funding would be needed just to maintain six day weeks.
On the capital front, de Blasio’s preliminary ten-year capital plan unveiled in February allocates $778.3 million to the city’s libraries, which will go towards renovations, expansions, or relocations for certain existing branches. Those present noted that branches often have to close in the summer due to broken air conditioning and in the winter due to broken boilers.
The presidents asked for the additional $15 million capital allocation this year, $5 million for each system, in order to fund critical maintenance at branches, such as air conditioning or boiler failures.
The spectators, library workers and allies, expressed satisfaction with the work of the library presidents and with Van Bramer via silent, jazz hands applause. Nonetheless, as their shirts indicated, they also were calling for greater investment in the systems.
“The libraries have to advocate for funding because they have to make their points known why they need the funding in the first place,” said Kleon Battersby, a technology resource specialist at BPL. “New York is ever increasing as far as population, and they have to know that the funding is being used for the right reasons. So as long as they keep advocating for the libraries, I personally think the hearing went very well, and I hope that they give them the funding that they need.”
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by Ben Brachfeld, Gotham Gazette
@GothamGazette