Gotham Gazette Gotham Gazette is an online publication covering New York policy and politics as well as news on public safety, transportation, education, finance and more. http://www.gothamgazette.com/component/tags/tag/carol-kellermann 2017-12-17T12:03:10+00:00 Webmaster webmaster@gothamgazette.com What's The [DATA] Point? 1996, with Chris Jones of the Regional Plan Association 2017-12-14T05:00:00+00:00 2017-12-14T05:00:00+00:00 http://www.gothamgazette.com/?id=7367:what-s-the-data-point-1996-with-chris-jones-of-rpa Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/2017/whats-the-data-point.jpg" alt="whats the data point" width="600" height="600" /></p> <hr /> <p><strong>What's The Data Point? Episode 23</strong><strong> -- 1996, with Chris Jones of the Regional Plan Association [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes] </strong></p> <p><img src="http://www.gothamgazette.com/images/graphics/2017/podcast/chris-jones-wtdp-ep-23.jpg" alt="chris jones wtdp ep 23" width="277" height="143" style="margin-right: 10px; float: left;" /></p> <p>The Regional Plan Association (RPA) just released its latest comprehensive 25-year regional plan -- The Fourth Plan -- to help New York, New Jersey, and Connecticut plan for the present and the future. RPA's Chief Planner, Chris Jones, joined the podcast to discuss the plan, its goals and key components, possible challenges, and immediate steps toward needed progress.</p> <p>Listen to the conversation and let us know what you think: Ben Max of GG (<a href="https://twitter.com/TweetBenMax" target="_blank" rel="noopener noreferrer">@TweetBenMax</a>), Carol Kellerman of CBC (<a href="https://twitter.com/cbcny">@cbcny</a>), and guest Chris Jones of RPA (<a href="https://twitter.com/RegionalPlan" target="_blank" rel="noopener">@RegionalPlan</a>). Listen below or download wherever you get your podcasts!</p> <p><iframe src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/369541940&amp;color=%23ff5500&amp;auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;show_teaser=true" width="100%" height="170" frameborder="no" scrolling="no"></iframe></p> <p>

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by Ben Max, Gotham Gazette
     

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<p><img src="http://www.gothamgazette.com/images/graphics/2017/whats-the-data-point.jpg" alt="whats the data point" width="600" height="600" /></p> <hr /> <p><strong>What's The Data Point? Episode 23</strong><strong> -- 1996, with Chris Jones of the Regional Plan Association [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes] </strong></p> <p><img src="http://www.gothamgazette.com/images/graphics/2017/podcast/chris-jones-wtdp-ep-23.jpg" alt="chris jones wtdp ep 23" width="277" height="143" style="margin-right: 10px; float: left;" /></p> <p>The Regional Plan Association (RPA) just released its latest comprehensive 25-year regional plan -- The Fourth Plan -- to help New York, New Jersey, and Connecticut plan for the present and the future. RPA's Chief Planner, Chris Jones, joined the podcast to discuss the plan, its goals and key components, possible challenges, and immediate steps toward needed progress.</p> <p>Listen to the conversation and let us know what you think: Ben Max of GG (<a href="https://twitter.com/TweetBenMax" target="_blank" rel="noopener noreferrer">@TweetBenMax</a>), Carol Kellerman of CBC (<a href="https://twitter.com/cbcny">@cbcny</a>), and guest Chris Jones of RPA (<a href="https://twitter.com/RegionalPlan" target="_blank" rel="noopener">@RegionalPlan</a>). Listen below or download wherever you get your podcasts!</p> <p><iframe src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/369541940&amp;color=%23ff5500&amp;auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;show_teaser=true" width="100%" height="170" frameborder="no" scrolling="no"></iframe></p> <p>

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by Ben Max, Gotham Gazette
     

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De Blasio's Record on Budgeting and Fiscal Health 2017-11-05T04:00:00+00:00 2017-11-05T04:00:00+00:00 http://www.gothamgazette.com/?id=7300:de-blasio-s-record-on-budgeting-and-fiscal-health Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/2017/reset_1/32386101031_825dc6f43e_z_1.jpg" alt="de Blasio city budget" width="600" height="400" /></p> <p>De Blasio during a budget presentation (photo:&nbsp;Michael Appleton/Mayor's Office)</p> <hr /> <p><strong><em>This article is part of&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">a series on Mayor de Blasio's first term record</a>&nbsp;as he seeks reelection this fall, in partnership with WNYC radio and City Limits.&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">Find all pieces of the series here</a>.</em></strong></p> <p style="text-align: center;">**********</p> <p>Mayor Bill de Blasio inherited a city with a healthy economy and strong tax revenues, allowing him to add billions in new spending for his priorities and increase the size of city government while also saving substantial funds for a rainy day. Though fiscal monitors and budget experts generally agree that the city’s budget has been handled responsibly, they are cautious about the future. This is a mayor who has encountered few budgetary challenges, and numerous loom on the horizon, from slowing economic growth to federal policies that threaten to create a sharp financial crunch. There are also ongoing financial crises at the city’s public housing authority, NYCHA, and public hospital system, New York City Health + Hospitals.</p> <p>As de Blasio seeks a likely reelection on Tuesday, budget watchdogs warn that the incumbent Democrat might face his biggest tests in a second term, to which there are no easy solutions.</p> <p>Under de Blasio, the city’s operating budget grew to $85.2 billion for fiscal year 2018, an increase of $12.5 billion or 17.2 percent from the last budget that was modified under Mayor Michael Bloomberg. Much of the new spending has come from an increase in the municipal workforce. The administration has added more than 31,000 employees in de Blasio’s first term for a total headcount of about 328,267 full-time and full-time equivalent employees, the highest it has ever been. That number is expected to grow to 329,055 by the end of the fiscal year on June 30, 2018. These new employees also come with future obligations in terms of pension and health care costs.</p> <p>The administration has simultaneously put aside what the mayor and others often refer to as “historic” levels of reserves. This includes $1 billion each year in the general reserve, $250 million each year till 2021 in the capital stabilization reserve, and $4 billion in the Retiree Health Benefits Trust fund. Those reserves added up to a $9.8 billion or 11.1 percent budget cushion (reserves as a percentage of adjusted expenditures) at the start of fiscal year 2018, according to City Comptroller Scott Stringer’s <a href="https://comptroller.nyc.gov/newsroom/comptroller-stringer-releases-analysis-of-new-york-citys-fiscal-year-2018-adopted-budget/" target="_blank" rel="noopener noreferrer">report</a> on the adopted budget. Stringer noted that the cushion remained at the same level as fiscal year 2017 since increased savings were matched by expenditures. He recommended an optimal cushion of between 12 and 18 percent, and has emphasized that the administration needs to create more savings through efficiencies at city agencies.</p> <p>De Blasio has eschewed targeted cost-efficiency initiatives at city agencies, which were a signature of previous administrations. He has opted instead for a voluntary Citywide Savings Program which identifies savings at agencies, more often through re-estimates of expenditure rather than efficiencies. He recently announced a partial hiring freeze at city agencies, though some see this as something of a gimmick given how many employees he’s already allowed to be hired.</p> <p>“My broad assessment is that [de Blasio] and budget director Dean Fuleihan have done an excellent job of managing the city budget,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs. “They’ve been fortunate that the revenue situation has been accommodating to an ambitious agenda and they’ve been fiscally responsible to build reserves.”</p> <p>In keeping with his progressive agenda, de Blasio has massively increased funding for social services and related to homelessness, education, public safety, and mental health services, among other major investments.</p> <p>The combined budgets for the Departments of Homeless Services and Social Services increased to $11.5 billion in the fiscal year 2018 budget, up from $10.6 billion in the modified fiscal year 2014 budget that de Blasio inherited from Bloomberg. Department of Education spending increased by $4.4 billion in the same period, owing in large part to the implementation of universal pre-kindergarten and its planned expansion to three-year-olds. NYPD funding increased by $600 million, largely from the hiring of 1,300 more officers, while the Department of Corrections saw a nearly $340 million increase in its budget despite a continued drop in the city’s jail population.</p> <p>“I think we're in a sustainable position,” de Blasio told the <a href="http://www.nydailynews.com/opinion/mayor-de-blasio-visits-daily-news-editorial-board-audio-article-1.3572377" target="_blank" rel="noopener noreferrer">New York Daily News editorial board</a> in an interview last month. “I think it also interacts. I think the investments we're making are strengthening our tax base. Safer city, better schools, stronger tax base. So it works. It's not limitless. You're absolutely right. It's not like you can just add all the time. There's a point -- and we'll have to watch Washington in particular very carefully – there’s a point where we may have to make tough decisions. But to date, I feel they've been responsible, and thank god, and I knock on wood as I say it, the economy continues to cooperate.” &nbsp;</p> <p>Parrott noted that the administration’s strongest achievement, begun early in 2014, was the settling of 99.1 percent of expired municipal labor contracts, which provided thousands of employees with retroactive raises and dispelled significant uncertainty about how the administration would handle a “daunting challenge” in a fiscally prudent manner. “That was an amazing feat,” Parrott said. “He gets four gold stars just for that, even if he hadn’t done anything else.”</p> <p>But, with an increase in the employee workforce and the new union contracts, the city also added significant long-term funding obligations. The last budget under Bloomberg <a href="http://www1.nyc.gov/assets/omb/downloads/pdf/adopt14_fp.pdf" target="_blank" rel="noopener noreferrer">predicted</a> that salaries and wages would be about $26.3 billion in fiscal year 2018, while <a href="http://www1.nyc.gov/assets/omb/downloads/pdf/exec17-fp.pdf" target="_blank" rel="noopener noreferrer">latest estimates</a> show them to be about $1 billion higher. In total, the city will spend about $47 billion in salaries, wages, pensions and benefits for the city’s workforce this year, increasing to $52.5 billion by fiscal year 2021. (The city’s pension contributions are estimated to be about $9.57 billion this year and are expected to grow to about $10 billion by 2021. City employees receive guaranteed pensions, funded by taxpayers, but the administration can do little to reform pension obligations since they are controlled by the state government.)</p> <p>“I think he’s just been very lucky,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “He’s had a good economy. He hasn’t had to make any decisions. He’s just increased spending on everything.”</p> <p>“The mayor has not used the good times to make any reforms in government spending, particularly on health care costs for government workers,” she added. The city will bear $10.1 billion in the cost of health care benefits this year, which will grow to $11.7 billion by 2019, and Gelinas insisted that the mayor should look to reduce that cost in the current round of <a href="http://www.gothamgazette.com/city/7121-with-some-contracts-now-expired-de-blasio-administration-begins-next-labor-negotiations" target="_blank" rel="noopener noreferrer">contract negotiations</a>. “The city should really be thinking about how to bargain that workers pay some of the costs without putting the burden on taxpayers.”</p> <p>Currently, city employees pay no portion of their health care premiums, a fact that has been a point of contention over time but de Blasio has not shown any interest in changing.</p> <p>“I think it’s easy to be responsible when times are so good,” she added. “The real test will be if we have a recession. No two-term mayor has avoided at least a mild recession.”</p> <p>Most experts agree that some form of slowdown will hit the city’s economy, which is currently in the ninth year of an unprecedented expansion. Gelinas warned that though the city has reserves set aside, “it’s kind of easy to run through those.” In the 2008-2009 recession, she said, about $3 billion in tax revenue “sort of disappeared overnight.” In a similar situation, de Blasio would have to make some difficult choices, and signs of lower revenues are already evident. At the annual meeting of the State Financial Control Board <a href="http://www1.nyc.gov/office-of-the-mayor/news/534-17/transcript-mayor-de-blasio-delivers-remarks-the-annual-state-financial-control-board-meeting" target="_blank" rel="noopener noreferrer">in August</a>, de Blasio said his administration had already projected a $416 million reduction in revenue in the 2018 fiscal year.</p> <p>The biggest uncertainty the city faces is cuts in federal funding and changes in federal policy on health care, taxes and infrastructure, though those have all remained a nebulous since before budget season. Efforts by the Republican-led Congress to repeal the Affordable Care Act have repeatedly failed; and a tax overhaul currently making it’s way through the two houses faces bipartisan opposition over a proposal to change the state and local tax deduction, which is a boon to filers in high-tax states like New York. Should it pass, however, tax revenues in the city will take a major hit.</p> <p>De Blasio made no significant adjustments for federal policies in his 2018 budget, insisting that the city periodically adjusts its budget to account for economic trends. The next budget modification is expected later this month. “We have an obligation and responsibility to provide New Yorkers with quality services now,” said Freddi Goldstein, a mayoral spokesperson on budget issues, in an email. “We cannot and will not let threats of cuts to federal funding that have yet to be realized deter us from strengthening New York’s future.” The city has been cautious in revenue estimates, and tax revenues are expected to grow at 4.5 percent over last year, in keeping with the administration’s plans.</p> <p>Carol Kellermann, president of Citizens Budget Commission, a nonpartisan fiscal watchdog, echoed Gelinas’ assessment of the mayor’s fiscal management. “He hasn’t really been tested in terms of fiscal policy,” she said, “because times have been so good so he hasn’t had to exercise as much restraint as CBC would’ve liked.” CBC gave the mayor’s last budget “<a href="https://cbcny.org/research/mixed-marks-nyc-adopted-fy2018-budget" target="_blank" rel="noopener noreferrer">mixed marks</a>” over the growth in employee headcount and compensation costs.</p> <p>Kellermann emphasized that many of the programmatic expansions made by the de Blasio administration are permanent and escalating in cost, making them harder to pare down in the future. “It’s very hard for public officials to cut back,” she said. “Every program has its constituency and it’s very hard to take those things away, and it’s very hard to layoff public employees.”</p> <p>Both Kellermann and Gelinas also pointed out that the mayor has repeatedly touted the Retiree Health Benefits Trust fund as a reserve, even though it should be solely used to fund retiree health benefits and not in cases of a general shortfall.</p> <p>The mayor has also significantly expanded capital investments to support his agenda. The ten-year capital budget increased by about $6 billion this year to $95.9 billion. The increase includes $1.9 billion in additional funding for affordable housing, $1.1 billion to create new borough-based jail facilities, $300 million to renovate 30 homeless shelters, among other investments. These investments also add to the city’s debt service -- the money spent to satisfy debt from borrowing each year -- which is $6.5 billion for fiscal year 2018, and is expected to grow to about $8.3 billion by fiscal year 2021. “If the interest rates go up, that’s gonna be a big burden down the road,” Kellermann said.</p> <p>Assemblymember Nicole Malliotakis, de Blasio’s Republican challenger in the mayoral race, has repeatedly criticized the mayor’s ballooning budget and his “tax-and-spend” policies. At the first mayoral debate in the general election, on October 10, she attacked the mayor for the 300 new special assistants he has hired at City Hall, and his administration’s overall expenditure. “When we’re spending $15 billion more and we still have roads that are broken, we have subways that don’t run, we a homeless crisis, we have so many issues that are plaguing our city, then that is...the epitome of mismanagement,” she said, insisting that the city needs to streamline agencies.</p> <p>She particularly noted the Department of Design and Construction’s consistent cost overruns for capital projects, which was a source of concern for the City Council as well when this year’s budget was adopted.</p> <p>Two crucial areas where the city already faces a budget crunch, which would be further exacerbated by federal budget cuts, are NYCHA and Health + Hospitals. “These are two so-called independent authorities that all mayors, particularly this mayor, have forthrightly stepped forward to subsidize,” said Kellermann. “They were both meant to be self-sustaining and depend on federal revenue streams.”</p> <p>NYCHA has a $17 billion capital backlog and though the mayor has made large capital investments -- including more than $1 billion to repair roofs at all NYCHA developments -- the agency’s woes are far from solved. The NextGen NYCHA plan has born some fruit, clearing the agency’s operating deficit for the first time in years, but progress would be threatened if the Trump administration follows through with funding cuts to the Department of Housing and Urban Development. &nbsp;&nbsp;</p> <p>NYC Health + Hospitals, the municipal hospital system, handles about 5 million patient visits each year and serves about 500,000 uninsured New Yorkers. But the cash-strapped hospital systems depends heavily on the city bolstering its finances. Even though the city has increased funding to the system from $1.3 billion in 2013 to $1.8 billion this year, Health + Hospitals projects an expected budget deficit of $1.6 billion in fiscal year 2019, growing to $1.8 billion by fiscal year 2020.</p> <p>“[De Blasio’s] been hoping and saying that they will reinvent themselves into a new model, but it’s just not happening,” Kellermann said, referencing the city’s plan to overhaul the hospital system. “It’s the same thing with NYCHA. The [NextGen NYCHA] plan has the prospect of bearing fruit. But will it fill the $17 billion need? No...Both are open questions for which there are no answers at this point.”</p> <p>Parrott, who recently co-authored <a href="https://www.nysna.org/sites/default/files/attach/419/2017/09/RestructuringH+H_Final.pdf" target="_blank" rel="noopener noreferrer">a report</a> on Health + Hospitals for the New York State Nurses Association, said the city’s approach to restructuring the system has been flawed since it only focuses on finances without taking into account the larger eco-system of healthcare. The city and state must work together, he recommended, to create an integrated system that involves private hospitals doing their fair share for a more equitable health care system overall.</p> <p>“The testing of the ability to manage these things will come sooner or later,” said Kellermann. “He gets an incomplete,” she added about de Blasio’s budget record, “That’s the grade I would give.”</p> <p style="text-align: center;">**********</p> <p><strong><em>This article is part of&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">a series on Mayor de Blasio's first term record</a>&nbsp;as he seeks reelection this fall, in partnership with WNYC radio and City Limits.&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">Find all pieces of the series here</a>.</em></strong></p> <p>

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by Samar Khurshid, City government reporter, Gotham Gazette
     

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<p><img src="http://www.gothamgazette.com/images/graphics/2017/reset_1/32386101031_825dc6f43e_z_1.jpg" alt="de Blasio city budget" width="600" height="400" /></p> <p>De Blasio during a budget presentation (photo:&nbsp;Michael Appleton/Mayor's Office)</p> <hr /> <p><strong><em>This article is part of&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">a series on Mayor de Blasio's first term record</a>&nbsp;as he seeks reelection this fall, in partnership with WNYC radio and City Limits.&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">Find all pieces of the series here</a>.</em></strong></p> <p style="text-align: center;">**********</p> <p>Mayor Bill de Blasio inherited a city with a healthy economy and strong tax revenues, allowing him to add billions in new spending for his priorities and increase the size of city government while also saving substantial funds for a rainy day. Though fiscal monitors and budget experts generally agree that the city’s budget has been handled responsibly, they are cautious about the future. This is a mayor who has encountered few budgetary challenges, and numerous loom on the horizon, from slowing economic growth to federal policies that threaten to create a sharp financial crunch. There are also ongoing financial crises at the city’s public housing authority, NYCHA, and public hospital system, New York City Health + Hospitals.</p> <p>As de Blasio seeks a likely reelection on Tuesday, budget watchdogs warn that the incumbent Democrat might face his biggest tests in a second term, to which there are no easy solutions.</p> <p>Under de Blasio, the city’s operating budget grew to $85.2 billion for fiscal year 2018, an increase of $12.5 billion or 17.2 percent from the last budget that was modified under Mayor Michael Bloomberg. Much of the new spending has come from an increase in the municipal workforce. The administration has added more than 31,000 employees in de Blasio’s first term for a total headcount of about 328,267 full-time and full-time equivalent employees, the highest it has ever been. That number is expected to grow to 329,055 by the end of the fiscal year on June 30, 2018. These new employees also come with future obligations in terms of pension and health care costs.</p> <p>The administration has simultaneously put aside what the mayor and others often refer to as “historic” levels of reserves. This includes $1 billion each year in the general reserve, $250 million each year till 2021 in the capital stabilization reserve, and $4 billion in the Retiree Health Benefits Trust fund. Those reserves added up to a $9.8 billion or 11.1 percent budget cushion (reserves as a percentage of adjusted expenditures) at the start of fiscal year 2018, according to City Comptroller Scott Stringer’s <a href="https://comptroller.nyc.gov/newsroom/comptroller-stringer-releases-analysis-of-new-york-citys-fiscal-year-2018-adopted-budget/" target="_blank" rel="noopener noreferrer">report</a> on the adopted budget. Stringer noted that the cushion remained at the same level as fiscal year 2017 since increased savings were matched by expenditures. He recommended an optimal cushion of between 12 and 18 percent, and has emphasized that the administration needs to create more savings through efficiencies at city agencies.</p> <p>De Blasio has eschewed targeted cost-efficiency initiatives at city agencies, which were a signature of previous administrations. He has opted instead for a voluntary Citywide Savings Program which identifies savings at agencies, more often through re-estimates of expenditure rather than efficiencies. He recently announced a partial hiring freeze at city agencies, though some see this as something of a gimmick given how many employees he’s already allowed to be hired.</p> <p>“My broad assessment is that [de Blasio] and budget director Dean Fuleihan have done an excellent job of managing the city budget,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs. “They’ve been fortunate that the revenue situation has been accommodating to an ambitious agenda and they’ve been fiscally responsible to build reserves.”</p> <p>In keeping with his progressive agenda, de Blasio has massively increased funding for social services and related to homelessness, education, public safety, and mental health services, among other major investments.</p> <p>The combined budgets for the Departments of Homeless Services and Social Services increased to $11.5 billion in the fiscal year 2018 budget, up from $10.6 billion in the modified fiscal year 2014 budget that de Blasio inherited from Bloomberg. Department of Education spending increased by $4.4 billion in the same period, owing in large part to the implementation of universal pre-kindergarten and its planned expansion to three-year-olds. NYPD funding increased by $600 million, largely from the hiring of 1,300 more officers, while the Department of Corrections saw a nearly $340 million increase in its budget despite a continued drop in the city’s jail population.</p> <p>“I think we're in a sustainable position,” de Blasio told the <a href="http://www.nydailynews.com/opinion/mayor-de-blasio-visits-daily-news-editorial-board-audio-article-1.3572377" target="_blank" rel="noopener noreferrer">New York Daily News editorial board</a> in an interview last month. “I think it also interacts. I think the investments we're making are strengthening our tax base. Safer city, better schools, stronger tax base. So it works. It's not limitless. You're absolutely right. It's not like you can just add all the time. There's a point -- and we'll have to watch Washington in particular very carefully – there’s a point where we may have to make tough decisions. But to date, I feel they've been responsible, and thank god, and I knock on wood as I say it, the economy continues to cooperate.” &nbsp;</p> <p>Parrott noted that the administration’s strongest achievement, begun early in 2014, was the settling of 99.1 percent of expired municipal labor contracts, which provided thousands of employees with retroactive raises and dispelled significant uncertainty about how the administration would handle a “daunting challenge” in a fiscally prudent manner. “That was an amazing feat,” Parrott said. “He gets four gold stars just for that, even if he hadn’t done anything else.”</p> <p>But, with an increase in the employee workforce and the new union contracts, the city also added significant long-term funding obligations. The last budget under Bloomberg <a href="http://www1.nyc.gov/assets/omb/downloads/pdf/adopt14_fp.pdf" target="_blank" rel="noopener noreferrer">predicted</a> that salaries and wages would be about $26.3 billion in fiscal year 2018, while <a href="http://www1.nyc.gov/assets/omb/downloads/pdf/exec17-fp.pdf" target="_blank" rel="noopener noreferrer">latest estimates</a> show them to be about $1 billion higher. In total, the city will spend about $47 billion in salaries, wages, pensions and benefits for the city’s workforce this year, increasing to $52.5 billion by fiscal year 2021. (The city’s pension contributions are estimated to be about $9.57 billion this year and are expected to grow to about $10 billion by 2021. City employees receive guaranteed pensions, funded by taxpayers, but the administration can do little to reform pension obligations since they are controlled by the state government.)</p> <p>“I think he’s just been very lucky,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “He’s had a good economy. He hasn’t had to make any decisions. He’s just increased spending on everything.”</p> <p>“The mayor has not used the good times to make any reforms in government spending, particularly on health care costs for government workers,” she added. The city will bear $10.1 billion in the cost of health care benefits this year, which will grow to $11.7 billion by 2019, and Gelinas insisted that the mayor should look to reduce that cost in the current round of <a href="http://www.gothamgazette.com/city/7121-with-some-contracts-now-expired-de-blasio-administration-begins-next-labor-negotiations" target="_blank" rel="noopener noreferrer">contract negotiations</a>. “The city should really be thinking about how to bargain that workers pay some of the costs without putting the burden on taxpayers.”</p> <p>Currently, city employees pay no portion of their health care premiums, a fact that has been a point of contention over time but de Blasio has not shown any interest in changing.</p> <p>“I think it’s easy to be responsible when times are so good,” she added. “The real test will be if we have a recession. No two-term mayor has avoided at least a mild recession.”</p> <p>Most experts agree that some form of slowdown will hit the city’s economy, which is currently in the ninth year of an unprecedented expansion. Gelinas warned that though the city has reserves set aside, “it’s kind of easy to run through those.” In the 2008-2009 recession, she said, about $3 billion in tax revenue “sort of disappeared overnight.” In a similar situation, de Blasio would have to make some difficult choices, and signs of lower revenues are already evident. At the annual meeting of the State Financial Control Board <a href="http://www1.nyc.gov/office-of-the-mayor/news/534-17/transcript-mayor-de-blasio-delivers-remarks-the-annual-state-financial-control-board-meeting" target="_blank" rel="noopener noreferrer">in August</a>, de Blasio said his administration had already projected a $416 million reduction in revenue in the 2018 fiscal year.</p> <p>The biggest uncertainty the city faces is cuts in federal funding and changes in federal policy on health care, taxes and infrastructure, though those have all remained a nebulous since before budget season. Efforts by the Republican-led Congress to repeal the Affordable Care Act have repeatedly failed; and a tax overhaul currently making it’s way through the two houses faces bipartisan opposition over a proposal to change the state and local tax deduction, which is a boon to filers in high-tax states like New York. Should it pass, however, tax revenues in the city will take a major hit.</p> <p>De Blasio made no significant adjustments for federal policies in his 2018 budget, insisting that the city periodically adjusts its budget to account for economic trends. The next budget modification is expected later this month. “We have an obligation and responsibility to provide New Yorkers with quality services now,” said Freddi Goldstein, a mayoral spokesperson on budget issues, in an email. “We cannot and will not let threats of cuts to federal funding that have yet to be realized deter us from strengthening New York’s future.” The city has been cautious in revenue estimates, and tax revenues are expected to grow at 4.5 percent over last year, in keeping with the administration’s plans.</p> <p>Carol Kellermann, president of Citizens Budget Commission, a nonpartisan fiscal watchdog, echoed Gelinas’ assessment of the mayor’s fiscal management. “He hasn’t really been tested in terms of fiscal policy,” she said, “because times have been so good so he hasn’t had to exercise as much restraint as CBC would’ve liked.” CBC gave the mayor’s last budget “<a href="https://cbcny.org/research/mixed-marks-nyc-adopted-fy2018-budget" target="_blank" rel="noopener noreferrer">mixed marks</a>” over the growth in employee headcount and compensation costs.</p> <p>Kellermann emphasized that many of the programmatic expansions made by the de Blasio administration are permanent and escalating in cost, making them harder to pare down in the future. “It’s very hard for public officials to cut back,” she said. “Every program has its constituency and it’s very hard to take those things away, and it’s very hard to layoff public employees.”</p> <p>Both Kellermann and Gelinas also pointed out that the mayor has repeatedly touted the Retiree Health Benefits Trust fund as a reserve, even though it should be solely used to fund retiree health benefits and not in cases of a general shortfall.</p> <p>The mayor has also significantly expanded capital investments to support his agenda. The ten-year capital budget increased by about $6 billion this year to $95.9 billion. The increase includes $1.9 billion in additional funding for affordable housing, $1.1 billion to create new borough-based jail facilities, $300 million to renovate 30 homeless shelters, among other investments. These investments also add to the city’s debt service -- the money spent to satisfy debt from borrowing each year -- which is $6.5 billion for fiscal year 2018, and is expected to grow to about $8.3 billion by fiscal year 2021. “If the interest rates go up, that’s gonna be a big burden down the road,” Kellermann said.</p> <p>Assemblymember Nicole Malliotakis, de Blasio’s Republican challenger in the mayoral race, has repeatedly criticized the mayor’s ballooning budget and his “tax-and-spend” policies. At the first mayoral debate in the general election, on October 10, she attacked the mayor for the 300 new special assistants he has hired at City Hall, and his administration’s overall expenditure. “When we’re spending $15 billion more and we still have roads that are broken, we have subways that don’t run, we a homeless crisis, we have so many issues that are plaguing our city, then that is...the epitome of mismanagement,” she said, insisting that the city needs to streamline agencies.</p> <p>She particularly noted the Department of Design and Construction’s consistent cost overruns for capital projects, which was a source of concern for the City Council as well when this year’s budget was adopted.</p> <p>Two crucial areas where the city already faces a budget crunch, which would be further exacerbated by federal budget cuts, are NYCHA and Health + Hospitals. “These are two so-called independent authorities that all mayors, particularly this mayor, have forthrightly stepped forward to subsidize,” said Kellermann. “They were both meant to be self-sustaining and depend on federal revenue streams.”</p> <p>NYCHA has a $17 billion capital backlog and though the mayor has made large capital investments -- including more than $1 billion to repair roofs at all NYCHA developments -- the agency’s woes are far from solved. The NextGen NYCHA plan has born some fruit, clearing the agency’s operating deficit for the first time in years, but progress would be threatened if the Trump administration follows through with funding cuts to the Department of Housing and Urban Development. &nbsp;&nbsp;</p> <p>NYC Health + Hospitals, the municipal hospital system, handles about 5 million patient visits each year and serves about 500,000 uninsured New Yorkers. But the cash-strapped hospital systems depends heavily on the city bolstering its finances. Even though the city has increased funding to the system from $1.3 billion in 2013 to $1.8 billion this year, Health + Hospitals projects an expected budget deficit of $1.6 billion in fiscal year 2019, growing to $1.8 billion by fiscal year 2020.</p> <p>“[De Blasio’s] been hoping and saying that they will reinvent themselves into a new model, but it’s just not happening,” Kellermann said, referencing the city’s plan to overhaul the hospital system. “It’s the same thing with NYCHA. The [NextGen NYCHA] plan has the prospect of bearing fruit. But will it fill the $17 billion need? No...Both are open questions for which there are no answers at this point.”</p> <p>Parrott, who recently co-authored <a href="https://www.nysna.org/sites/default/files/attach/419/2017/09/RestructuringH+H_Final.pdf" target="_blank" rel="noopener noreferrer">a report</a> on Health + Hospitals for the New York State Nurses Association, said the city’s approach to restructuring the system has been flawed since it only focuses on finances without taking into account the larger eco-system of healthcare. The city and state must work together, he recommended, to create an integrated system that involves private hospitals doing their fair share for a more equitable health care system overall.</p> <p>“The testing of the ability to manage these things will come sooner or later,” said Kellermann. “He gets an incomplete,” she added about de Blasio’s budget record, “That’s the grade I would give.”</p> <p style="text-align: center;">**********</p> <p><strong><em>This article is part of&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">a series on Mayor de Blasio's first term record</a>&nbsp;as he seeks reelection this fall, in partnership with WNYC radio and City Limits.&nbsp;<a href="http://www.gothamgazette.com/city/7221-dissecting-mayor-de-blasio-s-record-as-he-seeks-reelection">Find all pieces of the series here</a>.</em></strong></p> <p>

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by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

</p>
Budget Watchdogs Question De Blasio’s 'Mansion Tax' 2017-03-23T04:00:00+00:00 2017-03-23T04:00:00+00:00 http://www.gothamgazette.com/?id=6830:budget-watchdogs-question-de-blasio-s-mansion-tax Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/2017/32767734794_a0c5bd435f_z.jpg" alt="de blasio mansion tax" width="600" height="400" /></p> <p dir="ltr">De Blasio pitches his mansion tax (photo: Michael Appleton/Mayor's Office)</p> <hr /> <p dir="ltr">Budget watchdogs have expressed concern that Mayor Bill de Blasio’s “mansion tax” proposal, which would impose levies on real estate transactions above $2 million, may be misguided or even unnecessary.</p> <p dir="ltr">De Blasio made a last-minute trip to Albany on Wednesday to rally with Democratic lawmakers and progressive advocates in favor of a number of proposals currently being considered in state budget negotiations. The mayor’s chief concern, however, was the mansion tax, a proposal he has floated for years and revived this budget season as a tool to subsidize affordable housing for seniors.</p> <p dir="ltr">The proposal would impose a 2.5 percent tax on buyers who purchase property in the city at more than $2 million, raising an estimated $336 million next year, according to the mayor. That funding would then be used for a new Elder Rent Assistance program to provide $1,300 in monthly assistance to 25,000 seniors, the mayor said at his State of the City speech in February. In order to implement the tax, the city needs state approval, which is unlikely given opposition to new taxes from the Republican majority in the state Senate as well as Governor Andrew Cuomo, a Democrat who is fiscally moderate and habitually opposed to de Blasio proposals.</p> <p dir="ltr">The Wednesday rally at the state Capitol was one stop in something of a barnstorm by de Blasio, who has been pushing the mansion tax plan among seniors, including at two senior center stops on Thursday. The mayor has cited the necessity of the tax revenue to provide the additional rent subsidies to older New Yorkers who fit certain age and income guidelines.</p> <p dir="ltr" style="text-align: center;">[Related: <a href="http://www.gothamgazette.com/city/6826-in-albany-de-blasio-and-democrats-to-push-mansion-tax">In Albany, De Blasio and Democrats Push ‘Mansion Tax’</a>]</p> <p dir="ltr">But fiscal experts question whether the city really needs a new tax to raise that revenue and, if so, whether a transactional tax is the best way to do it.</p> <p dir="ltr">“This could be a good idea in the context of general property tax reform and other tax reform,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a conservative think tank. “But it's not a good idea as a revenue raiser."</p> <p dir="ltr">Gelinas noted that the city already charges a mortgage tax, which she called “a tax on people who can't pay cash for an apartment.” “If we wanted to have a more progressive tax on just the purchase of more expensive properties, the money should go to reducing or eliminating mortgage taxes or other property taxes," she added.</p> <p dir="ltr">That’s not what the mayor is proposing. Instead, Gelinas pointed out, de Blasio is attempting to raise revenue for a new program through a new tax, something mayors don’t usually do unless they face a sharp revenue crunch. “The city is not exactly starved for revenue right now,” she said.</p> <p dir="ltr">Although the city is feeling the early effects of an economic slowdown, revenues and reserves are still robust after years of sustained growth. Available monies could be used to prioritize affordable senior housing, Gelinas said. Yet, as he once did with his universal pre-kindergarten program, de Blasio is insisting that the way to fund his senior assistance program is through a new tax.</p> <p dir="ltr">The mansion tax also faces opposition at home from allies of de Blasio. Manhattan Borough President Gale Brewer told Gotham Gazette that she opposes the $2 million threshold for the tax since it would have an outsize impact in Manhattan, where property prices are far greater than the other boroughs. She would prefer a $5 million threshold. “Manhattan should not be the cash cow for the rest of the boroughs,” she said last month.</p> <p dir="ltr">A <a href="http://ibo.nyc.ny.us/cgi-park2/2017/02/how-many-homes-apartments-in-new-york-city-sold-in-recent-years-for-more-than-2-million/" target="_blank" rel="noopener noreferrer">report</a> by the nonpartisan Independent Budget Office, prompted by Brewer, looked at property sales from the last three years and found that between 2014 and 2016, 8 percent of homes sold citywide were priced at $2 million or more. Of those, 86 percent were in Manhattan.</p> <p dir="ltr" style="text-align: center;">[Related: <a href="http://www.gothamgazette.com/city/6773-de-blasio-faces-local-questions-about-mansion-tax-plan" target="_blank" rel="noopener noreferrer">De Blasio Faces Local Questions About ‘Mansion Tax’ Plan</a>]</p> <p dir="ltr">In response, the de Blasio administration points out that it is a “marginal tax for incremental sales price over $2 million,” meaning that only the price above the $2 million would be taxed at the 2.5 percent. Those purchasing homes closer to the $2 million threshold would be paying very little in added tax.</p> <p dir="ltr">There are also <a href="https://www.wsj.com/articles/de-blasios-mansion-tax-would-hit-humble-homesteads-1485816608" target="_blank" rel="noopener noreferrer">concerns</a> among the real estate industry about the proposal’s effect on sales, at a time when Brooklyn brownstones can cross the $2 million threshold. The de Blasio administration dismisses that concern due to the incremental nature of the tax.</p> <p dir="ltr">Carol Kellerman, president of the nonpartisan Citizens Budget Commission, believes the mayor hasn’t made a clear case for the mansion tax. “If the goal is to impose higher taxes on people perceived to be wealthy, there are ways to do it through the income tax structure,” she said in a phone interview. “The mayor’s not proposing this as a form of budget relief or as necessary for budget needs.”</p> <p dir="ltr">Kellerman also emphasized the “volatile” nature of a transactional tax, which would depend on the ups and downs of the real estate industry and also have a “distortive impact” on the market and change behavior. “If there’s a need to raise that amount of revenue, a transfer tax of this nature is not a reliable source of revenue,” she said.</p> <p dir="ltr">She also pointed out that the mayor has already allocated billions in the city’s capital plan for affordable housing, so the need for a separate tax for senior housing doesn’t necessarily pass muster.</p> <p dir="ltr">Given opposition from state Senate Republicans, the mansion tax may be dead on arrival in Albany. De Blasio has argued, including in Albany Wednesday, that he’s heard that before about proposals, such as the $15 minimum wage. Gelinas was blunt about mansion tax prospects. "I don't think it's going to go anywhere," she said.</p> <p dir="ltr">A spokesperson for the de Blasio administration refuted both Gelinas and Kellerman’s concerns, stressing that property tax reform is a larger undertaking and that the mansion tax is necessary when considering how the proposed federal budget will impact affordable housing and seniors in particular.</p> <p dir="ltr">The spokesperson also pointed out New York’s existing state mansion tax, which is 1 percent for properties above $1 million, and cited jurisdictions around the world that have used similar taxes to fund policy goals from rising housing markets.</p> <p dir="ltr">A spokesperson for another budget watchdog, city Comptroller Scott Stringer, declined to comment on the mansion tax proposal. The comptroller has not released any fiscal analysis of the proposal.</p> <p>At the Wednesday rally in Albany, de Blasio reiterated the need for the mansion tax. “Here’s the bottom line, right now, there are seniors struggling to get by in New York City and all over New York State,” he said. “There are seniors struggling to get by because so many of them are on fixed incomes. So many of them don’t have a way to get more income but the cost of housing keeps going up...We owe it to them to get it right, and asking the wealthy to pay their fair share so our seniors can have decent life is a thing we call common sense.”</p> <p>

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by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/graphics/2017/32767734794_a0c5bd435f_z.jpg" alt="de blasio mansion tax" width="600" height="400" /></p> <p dir="ltr">De Blasio pitches his mansion tax (photo: Michael Appleton/Mayor's Office)</p> <hr /> <p dir="ltr">Budget watchdogs have expressed concern that Mayor Bill de Blasio’s “mansion tax” proposal, which would impose levies on real estate transactions above $2 million, may be misguided or even unnecessary.</p> <p dir="ltr">De Blasio made a last-minute trip to Albany on Wednesday to rally with Democratic lawmakers and progressive advocates in favor of a number of proposals currently being considered in state budget negotiations. The mayor’s chief concern, however, was the mansion tax, a proposal he has floated for years and revived this budget season as a tool to subsidize affordable housing for seniors.</p> <p dir="ltr">The proposal would impose a 2.5 percent tax on buyers who purchase property in the city at more than $2 million, raising an estimated $336 million next year, according to the mayor. That funding would then be used for a new Elder Rent Assistance program to provide $1,300 in monthly assistance to 25,000 seniors, the mayor said at his State of the City speech in February. In order to implement the tax, the city needs state approval, which is unlikely given opposition to new taxes from the Republican majority in the state Senate as well as Governor Andrew Cuomo, a Democrat who is fiscally moderate and habitually opposed to de Blasio proposals.</p> <p dir="ltr">The Wednesday rally at the state Capitol was one stop in something of a barnstorm by de Blasio, who has been pushing the mansion tax plan among seniors, including at two senior center stops on Thursday. The mayor has cited the necessity of the tax revenue to provide the additional rent subsidies to older New Yorkers who fit certain age and income guidelines.</p> <p dir="ltr" style="text-align: center;">[Related: <a href="http://www.gothamgazette.com/city/6826-in-albany-de-blasio-and-democrats-to-push-mansion-tax">In Albany, De Blasio and Democrats Push ‘Mansion Tax’</a>]</p> <p dir="ltr">But fiscal experts question whether the city really needs a new tax to raise that revenue and, if so, whether a transactional tax is the best way to do it.</p> <p dir="ltr">“This could be a good idea in the context of general property tax reform and other tax reform,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a conservative think tank. “But it's not a good idea as a revenue raiser."</p> <p dir="ltr">Gelinas noted that the city already charges a mortgage tax, which she called “a tax on people who can't pay cash for an apartment.” “If we wanted to have a more progressive tax on just the purchase of more expensive properties, the money should go to reducing or eliminating mortgage taxes or other property taxes," she added.</p> <p dir="ltr">That’s not what the mayor is proposing. Instead, Gelinas pointed out, de Blasio is attempting to raise revenue for a new program through a new tax, something mayors don’t usually do unless they face a sharp revenue crunch. “The city is not exactly starved for revenue right now,” she said.</p> <p dir="ltr">Although the city is feeling the early effects of an economic slowdown, revenues and reserves are still robust after years of sustained growth. Available monies could be used to prioritize affordable senior housing, Gelinas said. Yet, as he once did with his universal pre-kindergarten program, de Blasio is insisting that the way to fund his senior assistance program is through a new tax.</p> <p dir="ltr">The mansion tax also faces opposition at home from allies of de Blasio. Manhattan Borough President Gale Brewer told Gotham Gazette that she opposes the $2 million threshold for the tax since it would have an outsize impact in Manhattan, where property prices are far greater than the other boroughs. She would prefer a $5 million threshold. “Manhattan should not be the cash cow for the rest of the boroughs,” she said last month.</p> <p dir="ltr">A <a href="http://ibo.nyc.ny.us/cgi-park2/2017/02/how-many-homes-apartments-in-new-york-city-sold-in-recent-years-for-more-than-2-million/" target="_blank" rel="noopener noreferrer">report</a> by the nonpartisan Independent Budget Office, prompted by Brewer, looked at property sales from the last three years and found that between 2014 and 2016, 8 percent of homes sold citywide were priced at $2 million or more. Of those, 86 percent were in Manhattan.</p> <p dir="ltr" style="text-align: center;">[Related: <a href="http://www.gothamgazette.com/city/6773-de-blasio-faces-local-questions-about-mansion-tax-plan" target="_blank" rel="noopener noreferrer">De Blasio Faces Local Questions About ‘Mansion Tax’ Plan</a>]</p> <p dir="ltr">In response, the de Blasio administration points out that it is a “marginal tax for incremental sales price over $2 million,” meaning that only the price above the $2 million would be taxed at the 2.5 percent. Those purchasing homes closer to the $2 million threshold would be paying very little in added tax.</p> <p dir="ltr">There are also <a href="https://www.wsj.com/articles/de-blasios-mansion-tax-would-hit-humble-homesteads-1485816608" target="_blank" rel="noopener noreferrer">concerns</a> among the real estate industry about the proposal’s effect on sales, at a time when Brooklyn brownstones can cross the $2 million threshold. The de Blasio administration dismisses that concern due to the incremental nature of the tax.</p> <p dir="ltr">Carol Kellerman, president of the nonpartisan Citizens Budget Commission, believes the mayor hasn’t made a clear case for the mansion tax. “If the goal is to impose higher taxes on people perceived to be wealthy, there are ways to do it through the income tax structure,” she said in a phone interview. “The mayor’s not proposing this as a form of budget relief or as necessary for budget needs.”</p> <p dir="ltr">Kellerman also emphasized the “volatile” nature of a transactional tax, which would depend on the ups and downs of the real estate industry and also have a “distortive impact” on the market and change behavior. “If there’s a need to raise that amount of revenue, a transfer tax of this nature is not a reliable source of revenue,” she said.</p> <p dir="ltr">She also pointed out that the mayor has already allocated billions in the city’s capital plan for affordable housing, so the need for a separate tax for senior housing doesn’t necessarily pass muster.</p> <p dir="ltr">Given opposition from state Senate Republicans, the mansion tax may be dead on arrival in Albany. De Blasio has argued, including in Albany Wednesday, that he’s heard that before about proposals, such as the $15 minimum wage. Gelinas was blunt about mansion tax prospects. "I don't think it's going to go anywhere," she said.</p> <p dir="ltr">A spokesperson for the de Blasio administration refuted both Gelinas and Kellerman’s concerns, stressing that property tax reform is a larger undertaking and that the mansion tax is necessary when considering how the proposed federal budget will impact affordable housing and seniors in particular.</p> <p dir="ltr">The spokesperson also pointed out New York’s existing state mansion tax, which is 1 percent for properties above $1 million, and cited jurisdictions around the world that have used similar taxes to fund policy goals from rising housing markets.</p> <p dir="ltr">A spokesperson for another budget watchdog, city Comptroller Scott Stringer, declined to comment on the mansion tax proposal. The comptroller has not released any fiscal analysis of the proposal.</p> <p>At the Wednesday rally in Albany, de Blasio reiterated the need for the mansion tax. “Here’s the bottom line, right now, there are seniors struggling to get by in New York City and all over New York State,” he said. “There are seniors struggling to get by because so many of them are on fixed incomes. So many of them don’t have a way to get more income but the cost of housing keeps going up...We owe it to them to get it right, and asking the wealthy to pay their fair share so our seniors can have decent life is a thing we call common sense.”</p> <p>

***
by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

</p>
De Blasio Faces Local Questions About ‘Mansion Tax’ Plan 2017-02-23T05:00:00+00:00 2017-02-23T05:00:00+00:00 http://www.gothamgazette.com/?id=6773:de-blasio-faces-local-questions-about-mansion-tax-plan Ben Max <p><img src="http://www.gothamgazette.com/images/32805723182_2f0ce1af02_z.jpg" alt="de Blasio speech dining room gracie" width="600" height="401" /></p> <p>Mayor de Blasio (photo:&nbsp;Edwin J. Torres/ Mayor's Office)</p> <hr /> <p>A report released by the city Independent Budget Office has raised questions about the potential effects of the so-called “mansion tax,” a proposed part of Mayor Bill de Blasio’s affordable housing strategy that would levy a 2.5 percent surcharge on the sale price over a threshold of $2 million for residential properties.</p> <p>De Blasio put forward a version of the mansion tax proposal, which requires approval by the State Legislature and Governor Andrew Cuomo, in mid-2015. It failed to gain traction then. The mayor presented the current updated form at an Albany legislative state budget hearing in late January and reiterated it at his State of the City address February 13.</p> <p>The mayor has said that he hopes the revenues from the tax, estimated by his Office of Management and Budget at $336 million in fiscal year 2018, will be used to subsidize rents for seniors.</p> <p><a href="http://ibo.nyc.ny.us/cgi-park2/2017/02/how-many-homes-apartments-in-new-york-city-sold-in-recent-years-for-more-than-2-million/" target="_blank">The IBO report</a> shows that about 8 percent of citywide home sales between 2014 and 2016 carried price tags of $2 million or more; and of those sales, 86 percent were for properties in Manhattan.</p> <p>Manhattan Borough President Gale Brewer had requested that IBO examine the impact the tax would have on her constituency. Often in agreement with de Blasio, a fellow Democrat, Brewer told Gotham Gazette that she is opposed to the mayor’s mansion tax proposal.</p> <p>“Manhattan should not be the cash cow for the rest of the boroughs,” Brewer said during a phone interview, adding that she would be “much more comfortable with [a threshold of] $5 million and not $2 million.”</p> <p>At the State of the City speech, the mayor told his constituents to “ask [state legislators] if you think someone selling a home for more than $2 million can afford a little bit for senior citizens.” The tax would be paid by the buyer, according to de Blasio’s plan.</p> <p>Brewer also raised concerns that mansion tax revenues would not be guaranteed to go to rent subsidies. “Any tax that has been enacted then has to be allocated. It could go to seniors, or it could go to homeless services, or it could go to anything,” she said.</p> <p>Asked if she would publicly oppose and testify against the tax if given the opportunity, Brewer said she would. She said she had not been in touch with the mayor or his staff about the mansion tax specifically, but had heard from constituents concerned about the measure’s effects.</p> <p>In emailed comments expanding on the report, IBO Chief of Staff Doug Turetsky said there were arguments for and against the tax. A possible issue is the specter of a price cliff: “suddenly you will probably have a lot of sales priced just under the threshold for the mansion tax.”</p> <p>However, he touted the proposal’s potential to level the playing field, as both co-ops and high-end residential sales paid in cash or with foreign financing are not subject to the city’s existing mortgage recording tax. “As a result, purchasers of a comparatively moderate priced home will likely pay both the city’s mortgage recording tax and real property transfer tax, while many buyers of the city’s most expensive residential properties will only pay the transfer tax,” he said.</p> <p>Along with skepticism from Brewer, de Blasio is facing a long road to mansion tax passage in Albany, where both Cuomo, a fellow Democrat, and the state Senate Republican majority are philosophically opposed to new taxes. Senate Majority Leader John Flanagan has said his conference is interested in cutting taxes, and he is facing a Cuomo proposal to extend the state’s “millionaire’s tax.”</p> <p>De Blasio has said that recent progressive victories indicate nothing is impossible to see through Albany if there is enough support. The mayor also argues the city needs the mansion tax revenue to bolster his affordable housing plan, especially for seniors, though the city has been rapidly adding to its budget under the mayor without additional taxes, given revenues have been strong amid a booming city economy.</p> <p>“I don’t think the mayor has thus far made the case why the tax is needed for any particular agenda he wants to pursue,” said Carol Kellerman, president of the Citizens Budget Commission, adding that “it would seem to us that the mayor and the [City] Council are able to fund anything they need $330 million for” out of the already expanded, $84.7 billion budget the mayor has proposed for fiscal year 2018.</p> <p>Melissa Grace, a spokesperson for the mayor’s office, dismissed the idea of a price cliff, arguing that, since the tax would only apply for the price over $2 million, “that’s not going to affect any buyer or seller’s behavior.” She also pointed out that the average home purchase affected by the tax would be $4.5 million, an argument the mayor also raised at an unrelated press conference this week when Gotham Gazette asked about his tax plan.</p> <p>In response to Brewer’s concern of the money being used for other purposes, Grace said that according to the city’s proposal, the funds would go specifically to the recently announced Elder Rent Assistance program and could not be used for anything else.</p> <p>Asked at a Tuesday press conference about previous statements that the mansion tax was justifiable given tax cuts for the wealthy the mayor is anticipating from Washington, D.C., the mayor said that President Donald Trump “has been salivating for the opportunity to reduce corporate taxes and taxes on the wealthy...So I think it’s a really, really good betting assumption there will be tax cuts for the wealthy and the corporations.”</p> <p>The mayor added that, even if a federal tax cut does not materialize, “I still think the mansion tax makes sense...Someone who’s buying a $4.5 million home can afford to spend a little bit more.”</p> <p>

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by Felipe De La Hoz, Gotham Gazette
     

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/32805723182_2f0ce1af02_z.jpg" alt="de Blasio speech dining room gracie" width="600" height="401" /></p> <p>Mayor de Blasio (photo:&nbsp;Edwin J. Torres/ Mayor's Office)</p> <hr /> <p>A report released by the city Independent Budget Office has raised questions about the potential effects of the so-called “mansion tax,” a proposed part of Mayor Bill de Blasio’s affordable housing strategy that would levy a 2.5 percent surcharge on the sale price over a threshold of $2 million for residential properties.</p> <p>De Blasio put forward a version of the mansion tax proposal, which requires approval by the State Legislature and Governor Andrew Cuomo, in mid-2015. It failed to gain traction then. The mayor presented the current updated form at an Albany legislative state budget hearing in late January and reiterated it at his State of the City address February 13.</p> <p>The mayor has said that he hopes the revenues from the tax, estimated by his Office of Management and Budget at $336 million in fiscal year 2018, will be used to subsidize rents for seniors.</p> <p><a href="http://ibo.nyc.ny.us/cgi-park2/2017/02/how-many-homes-apartments-in-new-york-city-sold-in-recent-years-for-more-than-2-million/" target="_blank">The IBO report</a> shows that about 8 percent of citywide home sales between 2014 and 2016 carried price tags of $2 million or more; and of those sales, 86 percent were for properties in Manhattan.</p> <p>Manhattan Borough President Gale Brewer had requested that IBO examine the impact the tax would have on her constituency. Often in agreement with de Blasio, a fellow Democrat, Brewer told Gotham Gazette that she is opposed to the mayor’s mansion tax proposal.</p> <p>“Manhattan should not be the cash cow for the rest of the boroughs,” Brewer said during a phone interview, adding that she would be “much more comfortable with [a threshold of] $5 million and not $2 million.”</p> <p>At the State of the City speech, the mayor told his constituents to “ask [state legislators] if you think someone selling a home for more than $2 million can afford a little bit for senior citizens.” The tax would be paid by the buyer, according to de Blasio’s plan.</p> <p>Brewer also raised concerns that mansion tax revenues would not be guaranteed to go to rent subsidies. “Any tax that has been enacted then has to be allocated. It could go to seniors, or it could go to homeless services, or it could go to anything,” she said.</p> <p>Asked if she would publicly oppose and testify against the tax if given the opportunity, Brewer said she would. She said she had not been in touch with the mayor or his staff about the mansion tax specifically, but had heard from constituents concerned about the measure’s effects.</p> <p>In emailed comments expanding on the report, IBO Chief of Staff Doug Turetsky said there were arguments for and against the tax. A possible issue is the specter of a price cliff: “suddenly you will probably have a lot of sales priced just under the threshold for the mansion tax.”</p> <p>However, he touted the proposal’s potential to level the playing field, as both co-ops and high-end residential sales paid in cash or with foreign financing are not subject to the city’s existing mortgage recording tax. “As a result, purchasers of a comparatively moderate priced home will likely pay both the city’s mortgage recording tax and real property transfer tax, while many buyers of the city’s most expensive residential properties will only pay the transfer tax,” he said.</p> <p>Along with skepticism from Brewer, de Blasio is facing a long road to mansion tax passage in Albany, where both Cuomo, a fellow Democrat, and the state Senate Republican majority are philosophically opposed to new taxes. Senate Majority Leader John Flanagan has said his conference is interested in cutting taxes, and he is facing a Cuomo proposal to extend the state’s “millionaire’s tax.”</p> <p>De Blasio has said that recent progressive victories indicate nothing is impossible to see through Albany if there is enough support. The mayor also argues the city needs the mansion tax revenue to bolster his affordable housing plan, especially for seniors, though the city has been rapidly adding to its budget under the mayor without additional taxes, given revenues have been strong amid a booming city economy.</p> <p>“I don’t think the mayor has thus far made the case why the tax is needed for any particular agenda he wants to pursue,” said Carol Kellerman, president of the Citizens Budget Commission, adding that “it would seem to us that the mayor and the [City] Council are able to fund anything they need $330 million for” out of the already expanded, $84.7 billion budget the mayor has proposed for fiscal year 2018.</p> <p>Melissa Grace, a spokesperson for the mayor’s office, dismissed the idea of a price cliff, arguing that, since the tax would only apply for the price over $2 million, “that’s not going to affect any buyer or seller’s behavior.” She also pointed out that the average home purchase affected by the tax would be $4.5 million, an argument the mayor also raised at an unrelated press conference this week when Gotham Gazette asked about his tax plan.</p> <p>In response to Brewer’s concern of the money being used for other purposes, Grace said that according to the city’s proposal, the funds would go specifically to the recently announced Elder Rent Assistance program and could not be used for anything else.</p> <p>Asked at a Tuesday press conference about previous statements that the mansion tax was justifiable given tax cuts for the wealthy the mayor is anticipating from Washington, D.C., the mayor said that President Donald Trump “has been salivating for the opportunity to reduce corporate taxes and taxes on the wealthy...So I think it’s a really, really good betting assumption there will be tax cuts for the wealthy and the corporations.”</p> <p>The mayor added that, even if a federal tax cut does not materialize, “I still think the mansion tax makes sense...Someone who’s buying a $4.5 million home can afford to spend a little bit more.”</p> <p>

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by Felipe De La Hoz, Gotham Gazette
     

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