(photo: Michael Appleton/Mayoral Photography Office)

Mayor Bill de Blasio made his annual trip to Albany on Monday to testify before the state Legislature on Governor Andrew Cuomo’s executive budget proposal, which is $178 billion for the 2021 fiscal year, and urged lawmakers to help prevent what he called nearly $1.4 billion in potential funding “cuts” to the city that could result largely from a proposed overhaul of the state Medicaid program.

Testifying before the joint fiscal committees of the State Senate and Assembly over the course of two-and-a-half hours, the mayor issued dire warnings about how Cuomo’s budget proposal would affect New York City and fielded pressing questions from lawmakers about a range of issues including the city’s special education services and property tax system, the impact of recent criminal justice reforms, and more. Facing two Democrat-controlled chambers, it was a mostly friendly reception for the mayor and there were few areas of disagreement with lawmakers.

Naturally, the issue at the center of the mayor’s testimony was the governor’s proposed Medicaid overhaul. “The cuts in this year's executive budget are of a magnitude we have never seen before,” de Blasio said. “These cuts would be nothing less than devastating for everyday New Yorkers.”

In reality, de Blasio’s $1.4 billion in threatened state “cuts” to the city is a combination of cost-shifts, less-than-expected funding increases, and actual programmatic aid cuts. And within that number is a disagreement between the de Blasio and Cuomo administrations about how to quantify the potential fiscal risk to the city from the governor’s Medicaid proposal, which the governor’s office says is far less than the mayor’s is asserting, even if fully realized. Like all of the executive budget, the details will be the subject of negotiation between the governor and the Legislature ahead of the April 1 deadline for the new state fiscal year.

With the state confronting a $6.1 billion budget gap, mostly from rising Medicaid spending, the governor this year is seeking to implement drastic changes to how the state assumes the cost of Medicaid for municipalities. He reconvened a Medicaid Redesign Team to find $2.5 billion in savings and also proposed that localities that exceed a 2% property tax cap (which doesn’t apply in New York City) and where Medicaid spending grows past 3% annually must pay for the entire cost above that growth rate. For the city, where the Medicaid growth rate was about 7% last year, that would mean a $1.1 billion cost increase over the $5 billion the city already spends annually, according to the de Blasio administration (according to the governor’s office, the full liability for the city is only $221 million).

De Blasio sought to drive home the negative consequences of that move, noting that the proposals this year alone would eclipse the cumulative $1 billion in cuts, cost-shifts and unfunded mandates that the city has absorbed from the state in the last six years. “We need your help more than ever before,” he pleaded to legislators, worried that if the MRT does not find the requisite savings, it could translate to further cost-shifts and outlining for lawmakers what some of the projected impacts could be, from closed health care facilities to reduced public hospital system staff.

Additionally, he said the state budget proposal leaves the city with shortfalls of $136 million in school aid from the city’s expected increase and $100 million over two years through a 5% cut to the Temporary Assistance for Needy Families program (which was already cut by 10% last year). “These cuts year after year are adding up and are going to take away our basic capacity to serve people,” he said.

The governor's office sought to later refute the mayor's testimony point by point. Freeman Klopott, a spokesperson for the Division of Budget, said in an email that over the years, local Medicaid costs taken on by the state and school aid sent to the city totalled about $27.8 billion in additional support, rather than a $1 billion cumulative cut as the mayor claimed. He also noted that the proposed budget increases school aid to the city by $224.4 million and that there is no cut to the TANF program (the state will pay 85% of the program and the city will pay 15%). 

“The mayor used his time on the soapbox to misinform the public about our Medicaid reforms," said Robert Mujica, state budget director, in a statement. He said the MRT "will bring spending in line with targeted growth while ensuring 6 million New Yorkers maintain the same high-quality care they have now. The Mayor’s solution to raise taxes and increase spending without any accountability is a recipe for fiscal instability and inefficiency in a program charged with caring for the most vulnerable among us, and that’s unacceptable. Also, he claimed he hasn’t raised property taxes – and no New Yorker believes that one."

De Blasio however painted a grim portrait of the results of the city having to take on another $1.4 billion in spending – it would not only jeopardize New York City Health+Hospitals, the public hospital system that the administration pulled back from the verge of bankruptcy, but would also necessitate broader cuts to services the city provides. “This would literally set us back years,” he said.

The city would have to consider the closure of 19 neighborhood clinics that serve 140,000 city residents and lay-offs for 1,300 doctors and nurses; they may have to eliminate both the Summer youth Employment Program which enrolls 70,000 young people and the COMPASS after-school program which serves 120,000 students. What de Blasio did not acknowledge is that the city’s own fiscal picture, with flush coffers even as the mayor has drastically increased city spending during his tenure, would likely allow it to make up for even the worst-case scenario, though potentially exhausting a good chunk of the city’s surplus and fairly robust reserves. The mayor has insisted that the city needs to keep those reserves at significant levels to be prepared for an economic recession or unexpected catastrophe, not to help the state balance its books.

De Blasio particularly pushed back against Cuomo’s suggestion that the growing Medicaid costs are because localities lack the incentive to find savings – the governor called it “blank check syndrome” in his budget presentation – as the mayor noted that the state controls the program while localities simply act as “enrollment agents” for Medicaid. “The state of New York sets the rules. The state of New York sets the rates,” de Blasio said, while stressing that the city is ready to work with the state to identify any efficiencies possible.

The mayor proposed three solutions. He called on the MRT to work with localities to find savings (the mayor said the city had identified as much as $260 million in basic efficiencies, building on $180 million that the city has already saved the Medicaid program over three years). Notably, the governor did not include any city representatives on the MRT. De Blasio also said the state should revise the “artificial restraint” of the Medicaid Global Cap that sets limits on how much spending on the program can increase; and he pushed for increasing taxes on the wealthy to raise revenue rather than risk cutting health care services or Medicaid enrollment.

Legislators all seemed to agree with the mayor that the governor’s Medicaid proposal would either bankrupt localities or severely curtail services and lead to New Yorkers losing their healthcare.

The mayor did have some praise for the governor’s budget proposal, welcoming legislation on legalizing e-bikes and e-scooters, and recreational adult-use of marijuana, though he called for a dual licensing structure that would give the city some control over the system and for a greater degree of “economic justice,” which has been the source of some challenges in negotiations among Cuomo and the Legislature.

The hearing was, of course, also an opportunity for the mayor to ask the Legislature to fund various initiatives and to pursue non-budgetary policy goals. Hat in hand, he quickly ran through a list of requests.

He asked for more funding to fight homelessness and called for the passage of the Home Stability Support bill that would increase the value of rental vouchers for low-income residents and would keep about 25,000 people in their homes, he said. He pushed for more transparency in the MTA’s $51.5 billion 2020-2024 capital plan, which calls for a $3 billion contribution from the city that de Blasio has yet to agree to. He pointed out that $2.5 billion already sent to the MTA from the city under the previous capital plan had yet to be spent and that the agency has completed only 30% – 380 out of nearly 1,300 – of the projects approved in 2015.

As he continues to try to restore and rehabilitate the crumbling housing stock of the New York City Housing Authority, he asked the state to pitch in another $2 billion.

The mayor also raised several proposals that he unveiled in his State of the City speech last week. He called for authorization to levy a storefront vacancy tax and pushed the Legislature to start considering the preliminary recommendations of a city commission on property tax reform (the mayor praised those recommendations and said that after more public dialogue a final set will be available soon). He also pushed for the passage of new renter-friendly legislation including universal renter protection for the 2.5 million New Yorkers who live in non-regulated apartments and measures to regulate security deposits.

De Blasio also repeatedly aired his concerns about reforming the state’s bail reform law that went into effect this year. The mayor has said the law should give judges more discretion to assess the potential dangerousness of a defendant before deciding whether to set bail. He ascribed a recent uptick in crime last month in part to the effects of the bail reforms, though such a direct relationship isn’t matched by evidence. While that concern was shared by some legislators, Senator Robert Jackson, a Manhattan Democrat, implored the mayor to be more patient, noting that it has been less than a month-and-a-half since the reforms became effective. “Give it a chance to work. That’s what I’m asking,” Jackson said. De Blasio said that the good effects of the law would remain under his proposal for change, though critics say adding judicial discretion would lead to many more defendants, mostly people of color, being locked up pre-trial.

The mayor did have to defend his administration on certain fronts. Senators Jackson and Simcha Felder, a Brooklyn Democrat, pushed him to explain the city’s apparent failure to provide sufficient services for students with special needs.

Senator Diane Savino, a Staten Island Democrat, tried to dissuade him from pursuing a vacancy tax that she said would be burdensome on small businesses that are already struggling with the city’s regulatory framework. “Instead of looking for a culprit, perhaps we should have a more holistic approach,” she said.

The mayor emphasized though that his approach is not meant to be punitive. He reiterated the many proposals in his State of the City aimed at helping small businesses, including committing a $500 million investment in local businesses from the city pension fund, continuing to reduce fines, and providing low-interest loans and free legal assistance.

Assemblymember Robert Carroll, a Brooklyn Democrat, urged de Blasio to significantly expand screenings and programming for dyslexic youth, saying that such efforts would have a major impact on student reading and overall progress. De Blasio said he would look more closely at the issue.

Some of the lawmakers were dubious of the recent property tax commission’s preliminary recommendations, which are meant to reduce various inequities in the current system.

Assemblymember Nicole Malliotakis, a Staten Island Republican, urged the mayor to impose a 2% property tax cap, which is in place everywhere outside the city, while the commission completes its work. Senator James Gaughran also asked the mayor to consider keeping within the cap as a means to control Medicaid spending similar to other localities. As he has done each year, de Blasio said that such a cap is not in the city’s plans or interests.

“The recommendations sound great but I don’t know how workable they are,” said Senator John Liu, a Queens Democrat. Assemblymember Tremaine Wright, a Brooklyn Democrat, expressed similar reservations, specifically citing concerns about the bills that many homeowners of color in neighborhoods that have rapidly gentrified may have to pay under a new system.

Emphasizing that the commission’s proposals are only preliminary, de Blasio said he would take their feedback into consideration as the process moves ahead, adding, “We’re trying to come up with something that will address the reality of the whole city.”

Note - This article has been updated with comment from State Division of Budget director Robert Mujica.