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'External Risks Threaten NYC Budget,’ State Comptroller Says


dinapoli speaking podium

State Comptroller Tom DiNapoli (photo: @NYSComptroller)


As City Council hearings on Mayor Bill de Blasio’s preliminary budget plan began Thursday morning at City Hall, state Comptroller Thomas DiNapoli released a new report on the city’s finances. “External risks threaten NYC budget,” the report blares, raising additional red flags to those already in the air courtesy of de Blasio’s own budget office, city Comptroller Scott Stringer, and others.

DiNapoli’s report, “Review of the Financial Plan of the City of New York,” is part of his job as comptroller -- he is the state's chief fiscal officer. Citing potential cuts to both federal and state funding to New York City, as well as slowing economic growth and tax collection, DiNapoli warns of uncertainty, even as de Blasio has outlined another increase to the city budget -- in late January, de Blasio presented an $84.67 billion spending plan.

Still, DiNapoli noted that the city’s reserves, savings program, and projected budget surplus for the current fiscal year are all helpful as it readies for potential storms ahead.

“While the city faces significant budget risks, it has record reserves to use if needed and Mayor de Blasio plans to expand the citywide savings program to help cut the size of the projected budget gaps,” DiNapoli said. “New York City’s economy is strong, but job growth and tax collections are slowing and risks beyond the city’s control, including possible changes in federal policy, are creating uncertainty.”

The City Council will evaluate de Blasio’s spending plan for the next few weeks, then release a preliminary budget response. Soon after, the mayor must release an updated executive budget plan, which will take into account the Council’s feedback; negotiations with the Council, service providers, and others; any developments on the federal level, where the Trump administration has threatened to strip billions of dollars in funding to cities like New York; and the adoption of a new state budget, which is due by April 1.

De Blasio and the City Council have until July 1 to agree on a spending plan for the next fiscal year. Once de Blasio releases his executive budget, another round of public hearings will commence as negotiations also continue behind closed doors.

DiNapoli’s analysis of the city’s financial picture discusses specific questions related to federal action, like potential repeal of the Affordable Care Act and Wall Street regulations, along with whether President Trump and a Republican Congress will attempt to significantly reduce federal funding to New York City -- in the current fiscal year, the city “anticipates the receipt of $8.8 billion in federal funding,” DiNapoli’s report says, which is about 10 percent of the city’s operating budget. About 1.5 million city residents could lose health insurance if the ACA is repealed, DiNapoli writes, mostly due to a possible loss of Medicaid coverage.

Looming threats from Washington, D.C. -- where de Blasio was himself on Thursday for a meeting of the U.S. Conference of Mayors -- was a major theme of the first City Council budget hearing, where the Council Speaker, Melissa Mark-Viverito; Council Finance Chair, Julissa Ferreras-Copeland; and other Council members asked questions of de Blasio budget director Dean Fuleihan. Ferreras-Copeland and others were disappointed with the lack of planning and detail presented by the de Blasio administration on Thursday.

“At a time when economic growth is slowing, uncertainty from Washington is reaching new heights,” City Comptroller Stringer said in a statement to Gotham Gazette when asked about DiNapoli’s new report. “We have to be prepared for any scenario with this White House, because President Trump is capable of not only shredding American values, but also local budgets.” Stringer released his analysis of de Blasio's preliminary budget on February 15.

In her opening statement at Thursday’s hearing, Mark-Viverito said, “we can anticipate that the President’s proposed budget will likely contain deep spending cuts on important domestic priorities.” She said funding and programs that are threatened “could include cuts to Medicaid, SNAP, and education services...[and] a number of federal initiatives that fund City programs may be targeted for elimination.” She cited job training and youth employment programs, funding for public housing repairs, and “social service block grants.”

As for Governor Andrew Cuomo’s executive budget, released in January, DiNapoli notes that it “would adversely impact the city by an estimated $561 million beginning in FY 2018,” which starts July 1 of this year. “For example, the budget would increase education aid to New York City by $295 million, $244 million less than the amount anticipated by the city for FY 2018.” Cuomo also outlined a variety of funding cuts to the city in a range of areas -- cuts that de Blasio and his allies in Albany, namely the Democrat-led Assembly, will be fighting before a state budget is agreed upon by Cuomo and legislative leaders.

“While the city’s economy remains strong, it is showing signs of slowing down,” DiNApoli’s report says. “Job growth has declined from an average of nearly 125,000 jobs during calendar years 2014 and 2015, to less than 90,000 in 2016. The city assumes job growth will slow further to 55,500 jobs in 2017.” It is in this light that de Blasio recently pledged the city would spur the creation of 100,000 new “good-paying jobs” over the next ten years. For de Blasio, that means at least $50,000 annually. The mayor’s plan was criticized by some as not being bold enough, but de Blasio has pointed to the city’s slowing job growth and the fact that many new jobs have been lower paying.

“Tax collections have also weakened,” DiNapoli’s report says. “Last year, collections grew by 3.2 percent, less than half the average gain during fiscal years 2011 through 2015. Tax collections are projected to slow further to 2.4 percent in FY 2017.”

But, the city does have solid reserves and an ongoing savings program, which de Blasio has vowed will yield even more savings before he presents his executive budget this spring. DiNapoli credits the city with $1 billion in its general reserve, and $250 million to be set aside annually in its Capital Stabilization Reserve, as well as $4 billion in its Retiree Health Benefits Trust.

Asked about DiNapoli’s report, Freddi Goldstein, a budget spokesperson for de Blasio, said, “As Comptroller DiNapoli points out, we have been cautious in our budgeting while we prepare for the unknown. We are maintaining historic levels of reserves, have been saving at each phase of the budget and are being strategic and targeted with our investments.”

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by Ben Max, Gotham Gazette
     

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Federal 'Wait and See' Dominates First City Budget Hearing


Ferreras-Copeland City Council budget hearing

Council Finance Chair Ferreras-Copeland (two photos: William Alatriste/City Council)


The City Council held its first hearing on Thursday to examine Mayor Bill de Blasio’s $84.7 billion preliminary budget for fiscal year 2018, starting the next phase in a months-long process to determine the city’s spending priorities amid broad uncertainty about its fiscal future.

Roughly $7 billion in federal funding to the city is threatened by the proposed policies of the Trump administration and the Republican Congress in Washington D.C., and those threats have cast a pall over the city’s budgeting. The de Blasio administration and the City Council find themselves having to decide agency allocations and long-term spending with one hand tied behind their backs, while also facing a local economic slowdown that has diminished tax revenues and slowed job growth.

“It is clear that Republican budget priorities will harm our seniors, our children, our first responders, and those seeking quality public housing, job opportunities and affordable medical care,” said City Council Speaker Melissa Mark-Viverito, a Democrat, in her opening remarks at Thursday’s hearing. And, as if the federal government were adding salt to the wound, she pointed out that the city is being forced to spend millions in providing security at Trump Tower, with reimbursement uncertain.

Mark-Viverito speculated that the federal budget, in which Trump has promised to prioritize defense spending over discretionary programs, could include cuts to Medicaid, education funding, and to the Supplemental Nutrition Assistance Program (SNAP, or food stamps), among other programs that serve the city’s most vulnerable. Trump’s executive order that calls for cutting federal funding to so-called sanctuary cities could, if enforced, hit New York hard, as could a potential repeal of the Affordable Care Act, which both Trump and Republicans in Congress have promised.

The de Blasio administration has taken stock of the situation -- coupled with some proposed cuts in state funding outlined by Gov. Andrew Cuomo in his own January budget proposal -- and has been “cautious” in its budgeting, said Dean Fuleihan, director of the Office of Management and Budget, in his testimony on Thursday.

Appearing before the Council during his annual budget testimony, Fuleihan sought to assure Council members that the administration is prepared for any blowback from federal cuts and is also actively working to prevent those cuts. “We continue to budget strategically, and we remain focused on critical areas including public safety, education and social services,” he said.

Over the course of three hours, Fuleihan took questions from Council members on the city’s savings, reserves, capital appropriations, and on specific policies and programs. Many inquiries related in some way to the fear of federal policies and what budget cuts might mean for the city. But Fuleihan’s testimony seemed light on details, particularly with regards to the mayor’s homelessness plan announced the day before. He explained to the Council that the administration had few cost estimates for the new approach to homelessness -- which focuses on creating new shelters while shutting down the use of cluster sites and hotels -- because much of the plan is predicated on the “reallocation of existing resources” and will require, as with each budget cycle, adjustments and enhancements.

Dean Fuleihan budget hearing

On numerous occasions, when asked for specifics of city programs, Fuleihan (pictured) gave little clarity but promised to follow up, saying, “I’ll be happy to work with you on that.”

Council Member Julissa Ferreras-Copeland, a key figure in budget negotiations as chair of the Council’s finance committee, was disappointed in what she heard. “The uncertainty of Trump and what that’ll mean for New York City is something that I think is very real and very valid,” she told reporters after Fuleihan’s testimony. “So I would’ve expected more commitments and more clarity on certain things, especially on the homeless proposal, but now we will have to wait and continue to push, and I’m going to hold his feet to the fire.”

In her own opening, Ferreras-Copeland pressed the administration to create more savings through agency efficiencies, rather than through spending re-estimates, funding shifts and one-time reductions. She had apprehensions about the administration’s ability to handle the crisis looming on the horizon, particularly after hearing Fuleihan’s testimony. “We get the most details in this process from the commissioners,” she told reporters. “But what we will probably hear from commissioners is, ‘I don’t know. Ask OMB.’ That’s the process that unfortunately we will have to face and push back, and push back hard on.”

Fuleihan didn’t agree with Ferreras-Copeland’s assessment, telling reporters outside the Council chambers that he was “surprised” by the reaction. “In terms of preparing for the future, when the mayor made the presentation in the preliminary budget, he was very clear that this was a cautious budget,” he said. “It is a cautious budget. It was cautious on our revenue forecast and our view of the economy. It was cautious on how we presented and how we looked forward on debt service. It was cautious in maintaining historic levels of reserves that the city has never achieved by any measure.”

Fuleihan argued that the city has adequate savings and rainy day funds. The city found $1 billion in savings in the November adjustment to the fiscal year 2017 budget, identified about $1.1 billion in the fiscal year 2018 preliminary budget, and the mayor has promised his administration will find another $500 million by the time the executive budget is released early this spring. Another $1.3 billion will come from healthcare savings in fiscal year 2018, the administration has guaranteed.

There is also $5.2 billion in reserve funds, including $1 billion in the general reserve, $250 million annually for each of four years in the Capital Stabilization Reserve, and $4 billion in the Retiree Health Benefits Fund. “Those dont sound like we don’t know the numbers,” Fuleihan said, “they sound very much like we know the numbers.”

After Thursday’s initial hearing on the overall spending plan in front of the Council finance committee and whichever Council members chose to attend, the Council will now hold weeks of hearings one or two committees at a time, calling before it the relevant city agencies -- the Council health committee will hear from the Department of Health, for example. Friday will see the higher education committee’s preliminary budget hearing.

Besides projected expenditure in the next fiscal year, Thursday’s hearing also focused on the city’s $89.6 billion preliminary ten-year capital strategy. This is the city’s plan for infrastructure spending that is separate from its annual operating budget. A new ten-year capital plan is due every other year.

Council Member Ferreras-Copeland expressed concern that capital appropriations made in excess for the current fiscal year diminish the Council’s oversight authority. “Because of the excess appropriations, the administration can add capital projects during the Fiscal Year without Council input or approval,” she said, promising to make this a central issue in budget discussions.

Other Council members touched on a broad range of budget items, specifically issues that related to committees which they chair or are members of.

Council Member Helen Rosenthal, chair of the contracts committee, raised concerns that the city must to do more to fund nonprofit human services providers contracted by the city. Fuleihan, in response, pointed to wage raises provided by the city in the past few years, as well as the 6.12 percent salary increase over three years proposed in the new preliminary budget for fiscal year 2018.

Council Member Jimmy Van Bramer, who chairs the cultural affairs committee, asked if the administration had taken into account the tax revenue impact of the city’s projected decrease in tourism attributed to Trump administration policies. A recent report by the city foresees a drop of 300,000 tourists this year, meaning $600 million in lost business. “We had assumed that there would be some slowing, if not in the actual numbers then in the amount of spending that may be occurring,” Fuleihan said, promising a fuller analysis in coming weeks. “So we will be very cautious in our revenue estimates.”

As chair of the health committee, Council Member Corey Johnson naturally inquired about how the city’s struggling municipal hospital system, New York City Health + Hospitals, could remain fiscally sound without support from the state, particularly with the Affordable Care Act under attack at the national level. “We’re very comfortable that the current fiscal year, Health and Hospitals is within their budget,” Fuleihan said, noting that the system had actually seen revenue improvements. Like the city’s housing authority, NYCHA, the public hospital system has seen an overhaul of its financial planning under de Blasio, but is still in dire straits, and may be in worse shape based on decisions out of Washington, D.C.

Although Fuleihan promised close collaboration with all the Council members on their budget asks, he didn’t provide in-depth responses. Later, after his testimony, he dismissed the idea that he had little to offer to individual Council members. “There are a series of budget hearings with experts, with commissioners who actually know their areas much better than I do,” he said. “I want to be careful...Any of the general budget questions I answered, and I answered very specifically...and I’m fine answering those. But if somebody’s asking me specific details about an individual project, I want to be careful that I’m giving the accurate information. So that’s all that was.”

Fuleihan’s testimony was followed by that of representatives from the Department of Finance, Comptroller Scott Stringer, and the city’s Independent Budget Office, as each gave their analysis of the city’s fiscal situation and next year’s budget needs.

State Comptroller Thomas DiNapoli also released his report on the city’s fiscal health on Thursday, noting the “external threats” that pose a risk to the city’s budget, including potential federal and state funding cuts.

Stringer reiterated what he said two weeks ago when he first presented his analysis of de Blasio’s preliminary budget, calling on the mayor to add another $1.7 billion to reserves to increase the city’s budget cushion from the current 10 percent to the optimal range between 12 and 18 percent. De Blasio has repeatedly said he is very comfortable with the city’s savings and does plan to keep adding, but he has dismissed Stringer’s calls for a fluffier budget cushion several years running.

The IBO had a somewhat different view of the economy, at least relative to city projections, predicting $262 million more in tax revenues than the administration’s forecast but also projecting $308 million in additional expenditure needs for homeless services and education. The IBO’s report, released Thursday morning, also stated that budget reserves may not be sufficient for long. “Although these reserve funds would enable the city to weather a small budgetary storm they would not buttress against a much longer budgetary event,” it reads. “Nor could the existing reserve funds replace the loss of all current federal funding.”

The next city fiscal year starts July 1.

[Read: Several Specific Funding Debates as City Budget Season Begins]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

NYPD Temporarily Suspends Issuance of Press Passes


nypd press conf

The media at an NYPD press conference (photo: @NYPDNews)


Members of the news media wanting to get a new NYPD press badge will have to make do without until further notice.

The department’s Office of the Deputy Commissioner, Public Information (DCPI), which handles the issuance of the credentials, has not been accepting applications for new cards for weeks, and has not definitively said when it will begin taking appointments again. The passes are designed to allow reporters to cross police lines and enter certain police-protected events and buildings. These regularly include events at which the Mayor is appearing, as well as City Hall, where the City Council regularly holds hearings.

For journalists covering breaking news and government in the city, the cards facilitate their jobs to the point that not having one can be a serious impediment. New reporters and those returning to the trade or switching beats who do not currently hold credentials could find themselves unable to access news events.

Reached by phone at the DCPI office, Detective Michael DeBonis, who handles applications for department-issued press passes, said that the delay was due to renovations at DCPI’s offices in One Police Plaza, and that he expected to start issuing new credentials “around mid-March.”

Asked why credentialing operations had halted during the renovations, Det. DeBonis said that they couldn’t “start handing out cards in the street.”

Following a 2009 legal victory by three bloggers who had filed suit against the NYPD after they were denied credentials, all cards issued have expiration dates for the next 15th of January, making them generally valid for one year at most. Cards that were set to expire January 15, 2017 have been extended “until further notice,” according to the NYPD’s press relations website. "The 2017 press card application process has ended. Please re-visit our website for the announcement of the 2019 press card application process," that site says, with no mention of 2018.

Two years ago, cards expiring in January 2015 were similarly extended, until April 30 of that year. According to Officer Sophia Mason of DCPI, this was due to equipment renovations.

Press cards have been issued by the NYPD in some form or another since at least the early 1900s, according to New York Press Photographers, a book by Marc Hermann. The badge-shaped paper cards introduced then were used until 2003, when they were replaced with the modern large rectangular plastic cards.

These modern credentials display a unique “card number,” the journalist’s name, publication, and photograph, an expiration date, and the word “PRESS” four times in large black print. They say “PRESS IDENTIFICATION” above “City of New York” at the very top.

Applications require a journalist to provide published or broadcast proof that in the 24 months preceding the application they covered “in person” breaking news where police or other city agencies established barriers or crowd control, or city-sponsored events open to the press.

The discretionary nature of the process -- which seems to require that journalists cover the sorts of events they’d need press credentials for so they can obtain press credentials -- has led to a considerable amount of controversy.

Officers have confiscated credentials when coming into conflict with journalists in the field, although usually cards are returned. DCPI has also struggled to keep up with changing technologies, and been slow to accept the credentialing of reporters for online or unconventional outlets.

Reporters for Gothamist tried for eight years to get the credentials, finally receiving them in 2012 after three rejections. The NYPD does not make available statistics on application or rejection numbers.

The 2008 lawsuit by the three bloggers, who were rejected with no explanation in 2007, argued that system was “inconsistent and constitutionally flawed.”

This week, a federal judge denied a motion to dismiss a lawsuit arguing NYPD procedures to revoke credentials are unconstitutional. The suit was filed by freelance journalist J.B. Nicholas after officers took his card while he tried to photograph a partial building collapse in 2015.

Nick Paolucci, a spokesperson for the city’s Law Department, said in an emailed statement that they had reviewed the ruling and would “continue to defend the case.”

A spokesperson for the mayor did not respond to written questions asking if the mayor’s office had been informed of the application suspension or issued any guidelines, and its assessment of Mr. Nicholas’ lawsuit.

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by Felipe De La Hoz, Gotham Gazette
     

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