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De Blasio Increases Spending and Savings in $84.86 Billion Executive Budget


de blasio budget

The Mayor presents the budget (photo: Edwin J. Torres/ Mayor's Office)


Nearly $200 million more in spending and $587 million in savings were added to the budget for the 2018 fiscal year in Mayor Bill de Blasio’s latest iteration of the city’s spending plan released on Wednesday.

The mayor presented an $84.86 billion executive budget, which increased proposed spending from the $84.67 billion proposed in the preliminary budget in January. The new spending is targeted at early childhood education, job creation, veterans services, anti-eviction legal services, and other areas. The mayor also unveiled an updated version of the city’s ten-year capital plan, which he added more than $5 billion to from January in order to fund more affordable housing and infrastructure projects.

De Blasio framed the need for the new initiatives in now-familiar language about the city’s affordability crisis and maintaining the city’s core commitments to New Yorkers amid uncertainty over proposed federal funding cuts under the Trump administration.

“This budget continues the work we started four years ago, recognizing that for so many people in this city, it is still a great challenge to make ends meet,” de Blasio said. “We’re trying everywhere we can to relieve those burdens and make it easier on our people to live a good life in this city.” The fundamental goal of his budget proposal, he said, was to make sure the city is both stronger and fairer in the future.

De Blasio and the City Council will now continue budget negotiations, including another round of Council hearings, before a final deal is reached ahead of the July 1 start of the new fiscal year. It is the final budget of what de Blasio hopes is the first of two terms; the Democratic mayor is seeking re-election this fall.

A number of new investments were outlined Wednesday, several of which had been announced in the lead up to the executive budget. These include an expansion of the successful universal pre-kindergarten program to some three-year-olds in the city at an initial cost of $36 million in fiscal year 2018, increasing to $177 million in fiscal year 2021. The proposal is expected to save eligible families $10,000 annually, and provide $2,400 in additional income every year to one in four families, the mayor said. On Tuesday, the mayor had announced that the city would begin installing air conditioning in all city classrooms, which will cost $28.75 million over the next five years.

Under the ambit of promoting affordability, particularly in the housing market, the mayor spoke of various funding allocations in the 2018 operating budget and longer term capital funding commitments (which are largely paid through debt incurred from borrowing and raising funds). These included a $1.9 billion capital investment to provide affordable housing for seniors and low-income New Yorkers, by adding 10,000 affordable units for households making up to $40,000 a year. Of these, 5,000 units will be dedicated to seniors and 500 to veterans.

De Blasio also touted full funding for anti-eviction legal services for low-income New Yorkers, along with legal counsel for tenants in housing court, which will cost $93 million each year.

The executive budget also includes $355 million to repair facades at 150 public housing developments, which will supplement the $1 billion he announced for NYCHA roof repairs in the preliminary budget.

The massive increase in capital investments add up to $6.25 billion more than the preliminary budget’s proposed capital expenditure, bringing the city’s ten-year capital plan spending to $95.85 billion through 2027.

Among the initiatives to promote affordability are investments in job creation, including $12.8 million for the next three years to train 3,000 New Yorkers in construction jobs in the green economy. There’s also $136 million for the Made in New York campus, a hub for the garment, film and television industries that will create 1,500 jobs and will open in 2020 in Brooklyn.

“We know we cannot invest in everything, but we have to invest where our dollars will go the farthest, where we will have the biggest impact for the money that we spend,” de Blasio said.

Other new planned investments are aimed at public safety and improving quality of life in the city. The administration will put $6.9 million towards a citywide initiative to combat domestic violence. The NYPD will receive $700,000 to expand ShotSpotter technology, which uses audio sensors to detect gunfire in real-time, in the Bronx, Manhattan and Staten Island. The mayor touted a $16 million investment in legal services funding for immigrants facing deportation and other related challenges. And $38 million in fiscal year 2018 will be allocated to HealingNYC, the city’s initiative to reduce opioid overdose deaths by 35 percent in five years.

Quality of life initiatives include a $100 million investment in the Manhattan Waterfront Greenway, to construct an esplanade along the East River, and $1.8 million for 14 sidewalk-cleaning trucks under the CleaNYC program. The city will even expand curbside e-waste collection services to the Bronx, Brooklyn and Queens over the next three years, after an initial pilot on Staten Island and expansion soon throughout that borough and part of Brooklyn.

The mayor noted risks in the budget from the federal government, as well as both positive and negative impacts from the recently passed state budget.

For instance, $53 million in proposed cuts by Governor Andrew Cuomo to senior centers and health services did not ultimately go through. The state budget also allocated $200 million for NYCHA and another $200 million in water infrastructure funding for the city. However, the state did shift $68 million in costs to the city for foster care and special education services, and did not give the city the authority to use design-build in infrastructure projects, which de Blasio said could have potentially saved the city $450 million. He promised to continue to fight for design-build authority.

But the mayor was confident in the city’s ability to manage challenges as they arose, particularly as it concerned the federal budget, cuts in public housing grants and proposed cuts in anti-terror funds for the NYPD. When asked how he could justify the increased spending in the budget, de Blasio emphasized that the unprecedented uncertainty emanating from the White House would not give the city pause, particularly since proposals that would have been damaging to the city have so far failed -- including the Trump administration’s executive order on immigration from certain Muslim-majority countries, another order cutting federal funds for sanctuary cities, and the attempted repeal of the Affordable Care Act.

“We came to a strategic assumption that we think is the right one, that if you have no idea where something is going and no one else does, it’s dangerous to start making decisions based on that reality,” he said. “And It’s counterproductive because it will stop us from making investments that we may need to make that we believe in.”

“We’re just not gonna be paralyzed by uncertainty, we have to keep investing,” he added, stressing that the city has multiple opportunities in the year to modify its budget and ample rainy day funds to meet funding deficits in real time. “We can slow down spending, we can speed up spending..we have a lot of latitude,” he said. “So if we see a danger, we can start acting on that danger very quickly.”

The city has indeed set aside considerable funds in reserves and identified a good deal of savings. Reserves are at the highest in the city’s history, a fact that de Blasio has touted in part to justify increased spending. The city’s general reserve holds $1 billion each year, the Retiree Health Benefits Trust fund holds another $4 billion, and the Capital Stabilization Fund, created under de Blasio, is set to hold $250 million each year for the next four years.

Between the November update to the current fiscal year 2017 budget and Wednesday’s proposed executive budget for 2018, the city found $2.8 billion in savings. That includes $700 million in savings identified this year, with $587 million coming from agency savings, surpassing the mayor’s promise in January that agencies would identify another $500 million in efficiencies in time for the latest spending plan.

Separately, the city projects $1.3 billion in sustained healthcare savings each year through the labor union contracts signed by the administration, mostly in 2014 and 2015. The mayor also announced a partial hiring freeze of certain managerial and administrative staff, and said that by the time the adopted budget passes, the Office of Management and Budget will be able to put a number to how much that will save the city. The government workforce has increased by tens of thousands of employees under de Blasio, but he is now promising to not fill some middle- and upper-level agency positions that are vacant or become vacant.

The City Council, in its response to the preliminary budget released early in April, called on the mayor to increase savings without cuts to essential services, while also pushing certain targeted investments. On Wednesday, City Council Speaker Melissa Mark-Viverito and Council Member Julissa Ferreras-Copeland, chair of the finance committee, commended the administration for incorporating some of their prior recommendations and funding additional support for NYCHA, legal services for immigrants and air conditioning for classrooms.

Yet, Mark-Viverito and Ferreras-Copeland, on behalf of the Council, remained concerned that the budget didn’t go far enough in certain areas, and said in a joint statement that the administration needs to “take additional steps to strengthen vital City services.” They noted in particular that the mayor did not increase reserves, “which is an important measure under the current national political uncertainty,” they said and that senior services remained unfunded as did slots for the Summer Youth Employment Program.

“The Fiscal 2018 Executive Budget is a good starting point and we look forward to working with the Mayor in the coming weeks to negotiate a budget that protects our vulnerable communities and uplifts families across the City,” they said.

Although the city’s financial management and ample savings and reserves have been generally praised by fiscal monitors and ratings agencies, the mayor has received criticism for ramping up spending so drastically and growing the size of the municipal government. Under de Blasio, the city’s budget has added $12.2 billion in spending (assuming the adopted budget will reflect the excutive budget's $84.86 billion), a 17 percent increase from the final budget under former Mayor Michael Bloomberg, which stood at $72.7 billion when it was modified in November 2013.

The Citizens Budget Commission, a nonprofit fiscal watchdog, reiterated this criticism on Wednesday, pointing out that spending increases were not matched by increased reserves and that budget gaps were growing down the line. The group also criticized the dramatic increase in the capital budget. “In an atmosphere of political and economic uncertainty,” the CBC said in a statement, “the New York City Executive Budget for Fiscal Year 2018 should have exhibited more spending restraint.”

[Related: With No 'Trump-Specific Adjustment,' De Blasio Unveils $84.7 Billion Budget]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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Comptroller Examines Uneven Economic Growth in Gentrifying Neighborhoods


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Comptroller Stringer (photo: Samar Khurshid/Gotham Gazette)


The 15 neighborhoods that experienced the highest rates of gentrification in the city between 2000 and 2015 showed a monumental increase in new businesses and job growth but with an inequitable distribution of the accompanying benefits, according to a new analysis released Tuesday by Comptroller Scott Stringer.

Stringer’s first-of-its-kind report, titled “The New Geography of Jobs: A Blueprint for Strengthening NYC Neighborhoods,” looked at economic activity in 15 gentrifying neighborhoods and examined trends in employment and entrepreneurial activity by industry, age, racial and ethnic groups. The neighborhoods were those identified by the NYU Furman Center in an analysis of 55 “sub-borough areas” in 2015. Of these, 22 were classified as lower income and 33 as higher income. The gentrifying neighborhoods were those that were lower income in 1990 and had experienced rent increases beyond the median neighborhood.

“We need to create an economy based on fairness,” Stringer said, speaking at the Chinese-American Planning Council on the Lower East Side. Stringer cited CPC’s work in the Lower East Side Employment Network, a successful workforce development approach that he said should be the model for other neighborhoods. “We want to be able to lift up all groups of people and everyone in our communities. I believe this is about the need to support the idea of local wealth creation and we can only do that with innovative, collaborative and community-centric solutions,” the comptroller added.

As economic activity increases in previously under-developed and lower-income neighborhoods, Stringer believes, the resulting opportunity, profits, and benefits should be experienced more evenly by all groups of residents.

The number of businesses in the city grew from 203,698 to 237,198 in the 15-year period, the report found, with increased activity in the boroughs outside Manhattan. In Downtown and Midtown Manhattan, which have traditionally seen large concentrations of the city’s economic activity, the share of total businesses fell from 39 percent to 31 percent. But in the 15 gentrifying neighborhoods -- which include East and Central Harlem, Bedford-Stuyvesant, Crown Heights, Prospect Heights, Bushwick, Sunset Park, Brownsville and Ocean Hill -- there was a 45 percent increase in the number of businesses from 29,132 in 2000 to 42,261 in 2015.

Although lower income communities saw greater growth than higher income districts across myriad industries, that growth was unevenly distributed. The report notes that while people of color own 34 percent of the city’s businesses, an uptick from years past, their share in the city’s overall economy, 16 percent of revenue and 21 percent of employment, remains relatively low. Black New Yorkers remain massively underrepresented, accounting for 22 percent of the city’s population but only owning 3 percent of businesses.

The report also found that 17.2 percent of young adults, between 18 and 24 years old, were out of school and out of work (OSOW) in 2015, with racial and ethnic disparities in those numbers. Among OSOW youth in gentrifying neighborhoods, black and Hispanic youth represented 21 percent each, while white youth made up 12 percent.

Stringer makes a number of recommendations in the report, aimed at connecting economic growth in a neighborhood to its residents. These include creating local network coordinators at workforce development providers to connect businesses with local job seekers; creating uniform assessments to evaluate and prepare job-seekers for the labor market; and assisting entrepreneurs and startups in scaling up their operations and setting up brick-and-mortar establishments; among other proposals.

“My message today is this: skylines change, creation is a good thing,” Stringer said. “But we have to do a better job of harnessing this economic power in a way that serves everyone. We need to focus not on prices and not just on rent, but we also need to work on wealth creation, on linking long-term residents with new emerging jobs.”

The comptroller noted, in response to a reporter, that housing affordability is still a crucial component of gentrification but emphasized the need to recognize changing demographics and economic challenges in those same neighborhoods. “What we need is a much more forceful workforce development plan because our data shows that there’s real possibility,” Stringer said, “but right now, for many communities, for many people, there’s a real disconnect between some of the benefits of changing neighborhoods, and it’s not filtering down to long-term residents.”

Stringer said this more robust city response to workforce development issues should be part of proposed rezonings that are being studied across the city. The de Blasio administration and local communities are in the process of developing plans to add development, population density, housing -- including affordable units, and neighborhood-specific changes like additional school seats and new parks, for example, to a variety of areas throughout the city. One plan, for East New York, was passed a year ago and is in the process of implementation. Others have moved slowly or stalled, though several, including for East Harlem, may be moving ahead more quickly soon.

Stakeholders in the East New York rezoning, including local Council Member Rafael Espinal, pushed strongly for workforce development initiatives to be included in the final plan, particularly the establishment of a city-run Workforce1 career center that opened in December. Similar efforts are also underway in other neighborhoods facing proposed rezonings, with community advocates insisting that jobs created by development should go to local residents.

Asked by Gotham Gazette about Mayor Bill de Blasio’s recently announced plan to create 100,000 “good paying jobs” in the next ten years, Stringer had some cutting advice. “Anytime you want to say, ‘I can create 100,000 jobs,’ sure that’s OK, that’s a good thing,” he said, “but now we have to look at our emerging economies in the boroughs and what kinds of jobs are being created and are we matching good jobs with the citizens in those communities. And if we’re not, and we’re clearly not with communities of color in some of these neighborhoods, well what will you do about it? Can’t just say we’re gonna create jobs for people who can’t access those jobs? That’s not right.”

[Related: Part of Rezoning Plan, City Opens New Career Center in East New York]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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De Blasio Skeptical of Cuomo’s New Budget Powers


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De Blasio & Cuomo (photo: Michael Appleton/Mayor's Office)


As part of the budget deal announced earlier this month, Governor Andrew Cuomo highlighted the inclusion of new power his administration now has to adjust the state spending plan mid-year given significant federal cuts to New York. While Cuomo said it is an important provision in the state budget given uncertainty and threats from Washington D.C., Mayor Bill de Blasio expressed skepticism.

When he announced a deal with the state Legislature on April 7, Cuomo outlined the major aspects of the new $153 billion budget, almost one-third of which comes from federal grants to New York. “This budget also has the first ever Federal Funding Response Plan,” Cuomo said at a press conference at the state Capitol, explaining that if there are major federal funding cuts, his Division of Budget “will come up with a plan that corrects the state budget for that shortfall.” The plan would then be presented to the state Assembly, which would have 90 days to either pass its own plan or the Cuomo plan would automatically go into effect.

The threshold for allowing this mid-year adjustment is $850 million in federal funding cuts to New York. Cuomo said that the federal response plan “gives me confidence that the ship of state, the financial ship of state...the financial integrity of the state will be OK.” He said that he did not want to have to rely on calling the Legislature back to Albany for a mid-year adjustment. State lawmakers, whose jobs are considered part-time, are only in session in Albany from January through mid-June. The federal government has a more fluid budget “season,” operating on a “continuing resolution,” and major funding cuts could come at virtually any time.

When Gotham Gazette asked de Blasio about the new budget mechanism that gives Cuomo additional power and any concerns for New York City he may have, particularly about federal cuts trickling down to the city, the mayor said he wasn’t completely familiar with the provision, but from what he did know, he wasn’t sure why it was needed.

"I’m not familiar enough – I don’t fully understand it – I don’t know if I’m alone in that fact,” de Blasio said during a question-and-answer session after an unrelated announcement on April 19. “You know, from our point of view, we would do that through a budget process...we have a normal process for budget modifications. We go to the City Council – they vote on it. I don’t understand, even though I know the Legislature has more of a fixed session than the Council does, that’s true, but I don’t fully follow the logic.”

De Blasio went on to say, “I would think the normal thing to do would be, you know, set a course if those federal actions really fundamentally change things to come back to the Legislature and talk it through if it was major things. So, I’m speaking as someone who doesn’t fully understand what the vision is, but I think if it’s a major magnitude, you’d want to work with the Legislature to work it out."

The governor’s office did not return a request for response to de Blasio’s comments.

During his explanation of the budget deal, however, Cuomo had already responded to de Blasio’s critique. Relying on the Legislature to return to Albany and agree on budget modifications in the face of federal cuts “was too risky a proposition for me, frankly,” Cuomo said.

“‘Well you could have always called the Legislature back into special session,’” the governor said, preemptively. “Yeah, but legislatures are not always quick to convene, they’re not always quick to agree and they’re never quick to cut funds, right? Legislatures prefer giving out funds, not calling up and saying, ‘I need you to return the money I gave you.’”

“This is what gives me the greatest security in this budget,” Cuomo said of the new mechanism, “and it’s a device that we just came up with recently and if we didn’t have a device like this, I believe it would have been better to leave the budget open throughout the year so we’re sure we could adjust.”

The mayor and governor have been engaged in a well-publicized feud for most of de Blasio’s term, conflict that has boiled over around budget issues at times. In the recently passed state budget, the city saw something of a mixed bag, though de Blasio appeared mostly pleased with the outcomes.

For the good he saw in the new state budget, the mayor mostly praised Assembly Speaker Carl Heastie, a Bronx Democrat who de Blasio has said is the city’s strongest ally in budget negotiations among Cuomo, who is a second-term Democrat; Heastie; and Senate Majority Leader John Flanagan, a Long Island Republican.

In January, de Blasio outlined his own $83 billion preliminary budget for next city fiscal year, which begins July 1. De Blasio will now take into account both the new state budget and the latest from Washington, D.C., among other factors, when crafting his executive budget plan, which he’ll unveil in May. That will set the stage for continued negotiations with the City Council before the two sides reach a deal by the end of June.

The de Blasio administration did not yet have a number for total state grants coming to the city from the state, but de Blasio’s preliminary budget had projected about $14.5 billion. It’s unclear what state money to New York City could be at risk if federal cuts to the state occur and the Cuomo administration crafts a budget amendment. The city is also at risk of losing some of the roughly $7 billion in direct federal aid it may receive -- the Trump administration and Republican Congress’ priorities mostly do not match de Blasio’s, and there have already been both threats to withhold funding and proposed cuts to the city.

As de Blasio intimated when discussing Cuomo’s new budget powers, the city has a regularly scheduled “budget modification” each November, at which time the mayoral administration and City Council adjust the current year’s spending plan and reestimate for the following year. The state has no such mechanism as part of its annual budget process.

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by Ben Max, Gotham Gazette
     

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