Gov. Cuomo (photo: The Governor's Office)
This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here
New York’s economy has seen several rosy years in the decade since the Great Recession, with a run of steady growth, increasing job numbers, rising wages, and reliable tax revenue that has defied historical trends -- and led to growing city and state government budgets. But 2019 may be the peak of that economic swing as economic experts predict a long-expected slowdown to set in before 2020. New York City, the experts say, seems better equipped to weather any adverse effects of slowing growth and the state may struggle, presenting some hard choices for Democrats who will fully control state government come January and have a long list of priorities, some of which have financial costs attached.
Also complicating the fiscal pictures as the state and city levels are projected budget gaps that must be closed, looming negotiations over how to fund the next MTA capital budget plan and its tens of billions of dollars to fix the subways, and the still unclear effects of recent federal tax reforms, among other outstanding questions. The finances of New York City continue to show a rosier picture than those of the state, with the city economy essential to the state’s ability to spend more each year, though the state has grown its budget in much more limited fashion than the city under Mayor Bill de Blasio.
In January, Governor Andrew Cuomo will present his State of the State address and executive budget for the fiscal year that begins April 1. Afterward, de Blasio will respond to the governor’s budget plan -- which will set the stage for negotiations with the state Legislature, de Blasio, and others -- and release his own preliminary budget for the next city fiscal year, which will begin July 1. Once the state budget is finalized, the city will be able to take its details -- funding levels, new mandates, and more -- into account as it creates its own budget. The specifics of the annual struggle over what the state is asking or requiring of the city are to be seen, though Cuomo has already indicated he plans to seek more money for the MTA from de Blasio.
Budgets are statements of values as much as they are financial planning documents and Cuomo and de Blasio, both Democrats, face pressure each year to balance their policy priorities with fiscal restraint, as well as the demands of others, especially members of the respective legislative bodies each must negotiate with. The governor prides himself on having passed eight on-time or nearly on-time budgets with a 2 percent cap on increased spending, though he is known to manipulate the numbers to say he has stuck to that limit even though some years he has not. De Blasio boasts of record amounts of savings, though watchdogs regularly say that he is not socking away enough given the extended economic boom while he is spending too much, especially in recurring costs like through a significant expansion of the city workforce.
The agreed upon state budget was more than $168 billion for the current 2019 fiscal year, with savings that are far too minimal according to every expert. And the mayor’s administration, though praised by fiscal monitors for its responsible financial planning, has overseen ballooning expenditures, passing a nearly $90 billion budget for fiscal 2019 -- it was $72.7 in the final year of the Bloomberg administration.
But New York City revenue is largely based on property taxes, which would remain relatively stable even in the event of an economic slowdown. The state on the other hand is far more vulnerable since personal income tax and sales tax contribute a bulk to state revenue.
Barring any unforeseen circumstances, the current economic expansion, the second-longest in the country’s history, will continue through most of 2019, bolstered by the federal tax cuts passed in 2017 (even if many New Yorkers’ tax burdens increase due to the new cap on state and local deductibles). It should allow both the state and the city to keep spending, though experts warn that both should prepare for what will happen down the line. Both the Cuomo and de Blasio administrations, along with the state Legislature and City Council, respectively, should be putting more money towards rainy day funds, fiscal experts say; particularly the state, especially as necessary infrastructure investments loom large and add to already rising debt obligations.
New York State
The state budget remains far more precariously placed in the case of a downturn, even though one isn’t expected to hit soon. The governor has reiterated in recent months that he will continue to abide by a self-imposed 2 percent limit on increased annual expenditures, which presents little wiggle room to add major spending initiatives, though it remains to be seen if the governor will employ one of his many budget maneuvers to obscure actual spending increases. For instance, the State Fiscal Year 2019 budget, which began April 1, included a provision that funnels Payroll Mobility Tax revenue directly to the MTA instead of going through the state, effectively shifting $1.5 billion out of the budget.
“Part of the problem is they’ve technically abided by it but they’ve only done that by shifting things around and reclassifying things, not necessarily through stringent cost controls,” said David Friedfel, director of state studies at Citizens Budget Commission, a nonprofit watchdog. “The more they play those tricks, the harder they will be to find in the future if that’s how they choose to close the gap.”
The New York State Division of Budget’s mid-year financial update, released in November, predicted that the state will meet its revenue projections by the end of the fiscal year. Even at the state level, budget gaps remain manageable, at about $3.1 billion for fiscal year 2020, a number that is quickly cut if the 2 percent growth is factored in.
State Comptroller Tom DiNapoli released his own financial update in November, estimating that overall tax revenues would decrease by 1.8 percent by the end of the state’s 2019 fiscal year (end of March). Though personal income tax revenues are expected to fall by 2.5 percent, business and consumption taxes are set to increase by a total of 6.5 percent, the report estimated. Tax revenues are expected to increase by 5.9 in the 2020 fiscal year and then at a lower rate, 2.4 percent in the 2021 fiscal year.
Similar to city representatives, officials in DiNapoli’s office said in a background briefing that they expect a soft landing for the economy, despite the volatility in national and international markets. They have yet to determine the full impacts of the federal tax code overhaul, which capped State and Local Tax (SALT) deductions at $10,000 annually, raising concerns that high earners facing larger tax bills would in some cases fold to out-migration pressures, leaving the state and taking their tax dollars with them. Given New York’s position as a high-tax state, even many upper middle class homeowners in expensive New York City suburbs, and in the city itself, will be facing increased tax burdens, though it is not immediately clear that these factors will lead to a significant increase in the number of higher earners leaving the state. New York has consistently seen out-migration each year and has lost a net of 1 million residents since 2010, according to The Empire Center, a think tank. A report issued by the center in March suggested that the state should undertake several reforms to encourage the economic competitiveness which could help reverse that trend.
The state took measures to decouple state tax provisions from the federal tax code, including decoupling from the SALT limit to prevent higher state taxes, and changes to the child tax credit and the single filer deduction. The state also created two new programs -- the Employer Compensation Expense Program and the State Charitable Gifts Trust Fund -- in an effort to limit state taxpayers’ exposure to federal tax changes, but neither program appears to have caught on in any significant way. Officials in the state comptroller’s office said the impacts of the SALT deduction in particular wouldn’t be evident until during next fiscal year, particularly if it encourages people to move out of state.
Other risks in federal funding to the state seen in recent years -- Republican proposals to repeal the Affordable Care Act and make drastic cuts to Medicaid -- have also mitigated, the officials said, since those proposals have failed to come to fruition. But federal funding does remain uncertain as Congress is in the middle of negotiating the current federal budget with President Donald Trump, who has threatened a government shutdown if Congress does not approve funding for a wall along the southern border that he had promised Mexico would pay for. The ballooning federal deficit incurred from the Trump-led tax cuts have also increased pressure on federal spending, which could trickle down to the aid that New York receives for transportation, health care, and education, among other things.
“The state is in decent financial position but not when you consider the fact that we are nine years or so into an economic expansion,” CBC’s Friedfel said. “The state has been gifted with $12 billion in financial settlements and some additional revenues yet the state’s reserves are not where they should be or could be. They haven’t been added to in about four years. And liabilities are still out there.”
As Friedfel noted, the state’s rainy day funds stand at only about $2 billion, a pittance when looked at in the context of a downturn. In the case of a recession, Friedfel estimated, the state could face up to $50 billion in combined losses over a four-year period. “California is doing a very good job on their reserves. They’re gonna have close to 10 percent of state operating spending in their reserves, which is really what New York should be aiming for,” he said. “Instead of $2 billion, we should be closer to $10 billion.”
As with the city, the state’s debt also continues to rise, particularly with the governor having launched an ambitious infrastructure program that includes modernizing existing facilities and building new ones across the state, including bridges, airports and bus systems. The state’s debt service payments for fiscal year 2019 stood at $5.5 billion and are projected to rise to $6.6 billion in 2020. New York currently ranks second-highest in the country, behind California, in outstanding debt.
Year after year, DiNapoli has waved a red flag over the state’s debt obligations and officials in his office are keeping a close eye on whether those will increase in the upcoming year. There will be particularly pressing needs -- the MTA, NYCHA -- where the state will have to work with the city to fund large capital improvements. The current 2015-2019 MTA capital plan remains underfunded and the Fast Forward Plan, proposed by New York City Transit President Andy Byford to modernize the city’s subway and bus systems, may cost nearly $40 billion, with no plan proposed to pay for it in its entirety. A congestion pricing program for New York City has been embraced by the governor and many in the state Legislature as a funding stream, but even if implemented quickly and without carve-outs it would fall far short of meeting the goal.
“That’s one of the biggest questions,” said Gelinas from the Manhattan Institute, “especially if the economy continues to do well. How much does Governor Cuomo go after the city for MTA funding and in multiple billions of dollars...and does that cut into the city’s other priorities?”
IBO’s Lowenstein also echoed that concern. “The state has a great deal of leverage over the city and its own fiscal concerns and it would be unreasonable to expect these issues get resolved without city participation.”
Last time Cuomo and de Blasio negotiated the MTA capital plan, the governor successfully convinced the mayor to significantly increase city funds for the authority. Cuomo has repeatedly stated publicly in recent months that he will be pushing the city to pay “its fair share” for the MTA. De Blasio has called for an added tax on high-earners to provide dedicated funding for the MTA, a proposal that Cuomo has publicly mocked as fantasy on several occasions.
The state Legislature next year will also include several newly-elected Democrats who expressed support for increased education funding, per the Campaign for Fiscal Equity decision, which could add billions to the state budget. The state Board of Regents recently proposed a $2.1 billion increase in education funding for next year, which would be a significant jump from the current fiscal year’s increase.
New York already spends nearly twice the national average on per-pupil funding, said CBC’s Friedfel, but doesn’t necessarily allocate funding to the districts that need it most. CBC has argued for changing the key formula, known as Foundation Aid, noting that many wealthy districts receive it despite already spending more than the national average and more than the already-high state average by leveraging local tax dollars.
Another open question is what the state will do with about $900 million in unspent or unallocated one-time funds from Extraordinary Monetary Settlements, recovered from the financial industry in the wake of the 2008-09 market crash. Since state fiscal year 2015, the state has received nearly $11.2 billion in those settlements.
Though the governor has repeatedly said he will divert those funds to capital investments, and he mostly has, he has also used them for budget balancing purposes, DiNapoli’s office noted.
“The governor should be putting much more money of any one-time revenue sources aside for the MTA, things like court settlements or just better-than-expected revenues,” Gelinas said, noting the dire need to fund the transit agency. “We haven’t put enough of that money aside for the MTA.” Cuomo has, on the other hand, dedicated financial settlement money to his signature infrastructure projects, like the new Mario M. Cuomo Bridge.
Unlikely to impact the next state budget, but certainly on the negotiating table in the new legislative year, is the push to revolutionize how New York provides health insurance and health care. Several legislators, long-time and newly elected, are pushing for the New York Health Act, which would establish a single-payer health care system in the state and could cost nearly $140 billion in additional state expenditure by 2022, according to a RAND Corporation study. Though the act could reduce total health care spending by 3 percent by 2031, the study found. Cuomo has said he supports a single-payer system, but has insisted that it should be implemented by the federal government rather than the state, and said that he does not see it make fiscal sense for New York.
New York already has one of the largest Medicaid programs in the country, comprising a huge chunk of the state budget (education and Medicaid are the two biggest spending programs). But enrollment has been relatively flat over the last three years. If that trend continues, Friedfel said, the state could find more savings in the budget.
Friedfel also noted at least one development on the horizon that could have a significant impact on state tax revenue. “The million pound gorilla in the room is what’s gonna happen with the state’s millionaire’s tax,” Friedfel said. The tax is due to expire on December 31, 2019, and though prominent elected officials have called for extending, and even expanding, the program, CBC’s position is that it should be allowed to sunset to help with the state’s economic competitiveness and to keep high-earners from leaving because of the SALT deduction cap.
While Cuomo has overseen its repeated extension and he has dismissed calls to expand it, during the recent election cycle he was mum about what he wants to do with the current millionaire’s tax.
New York City
The city released its latest budget modification in November, revising spending up by $1.4 billion, for a total of $90.56 billion for the 2019 fiscal year, which ends June 30. That marks a high point for city spending, and an $18 billion increase from before de Blasio came to power in 2014. The city’s Office of Management and Budget projects a manageable $3.17 billion budget gap -- the difference between expected revenues and projected expenditures -- for the 2020 fiscal year starting July 1. OMB expects that gap to rise to $3.36 billion for fiscal year 2022, the end of the current four-year financial plan period, by when expenditures are projected to reach a whopping $99.6 billion.
As City Comptroller Scott Stringer noted in his latest financial report released on Friday, OMB tends to issue more conservative estimates of revenues in upcoming years, allowing the administration more leeway to adjust spending. Stringer’s report estimates the budget gap to be lower, about $2.6 billion in FY2019 and $2.8 billion in FY2022.
“We’ve come out of a run of a number of years of good economic conditions and good fiscal conditions here in the city...but we’re not seeing anything in the numbers that suggests it’s going to end anytime soon,” said Ronnie Lowenstein, director of the Independent Budget Office, a nonpartisan city-funded agency.
In a background briefing, an official at Comptroller Stringer’s office acknowledged that there’s significant uncertainty, with even the Federal Reserve appearing divided about where the economy is heading. There are mixed signals in the market -- unemployment is markedly low which should lead to higher inflation, but hasn’t.
But the comptroller’s office is cautiously optimistic and no economist currently projects a recession -- though one is never out of the question -- but rather a return to a slower rate of growth by the time 2020 rolls around.
“[We’re] expecting a great deal more softness in economic growth,” said IBO’s Lowenstein. “Not a recession but a much softer U.S. economy. And as far as the local economy’s concerned, we’ve already begun to see the weakening.” She pointed to the drop in job growth over the last few months and also noted that though the job market has diversified with more jobs created outside the financial industry than before the last recession, most of the new jobs have been in lower-paying industries.
But she said that slower growth won’t create out-of-control deficits. “We’re looking at gaps that are readily manageable, of the size that we’ve managed in the past,” she said.
The official from the comptroller’s office agreed that the city has the capacity to manage outyear budget gaps, particularly with a strong budget surplus each year that has allowed the city to maintain a healthy, if not optimal, level of reserves. The de Blasio administration put away added rainy day funds in the current fiscal year, responding to demands from the City Council. The result included a total of $1.25 billion in the general reserve, $4.35 billion in the Retiree Health Benefits Trust Fund, and $250 million in the capital stabilization reserve.
The city’s budget cushion has been increasing over the years and stood at about 11.2 percent at the start of the current fiscal year, though the comptroller has urged the administration to maintain levels between 12 and 18 percent, the lower range of which would have required more than $6.3 billion to hit the upper end.
There are of course various risks that the city must manage. One big vulnerability, according to the official from the comptroller’s office, is the size of the city’s workforce, which has added more than 30,000 workers under de Blasio.
“If you look at the November budget update...the biggest issue is the increased expected spending on labor,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a think tank. She noted that the report increased the labor reserve for fiscal year 2020 by $704 million, for 2021 by nearly $1 billion and for 2022 by about $1.4 billion.
“It just shows that these labor agreements that the mayor is making with the unions are costing a little bit more money than expected,” she said. “So the basic story is if the economy keeps doing well, we can probably squeak by with balancing next year’s budget...but if the economy does fall into a recession, with the higher labor costs making these deficits a little bit bigger over the next few years, they would pose a bigger problem for the city.”
Gelinas said the city must take aggressive cost-cutting measures in labor agreements, particularly health care spending, to help avert layoffs and service cuts in the case of a recession. “Longterm, health care savings have to be much more aggressive,” she said. “The healthcare fringe benefit budget for the upcoming fiscal year will be almost $11.5 billion and it’s continuing to rise. It’s going to $12.5 billion by the end of the financial plan.”
“No mayor has ever gotten through two terms without a recession,” she added on the eve of de Blasio’s sixth year in office.
The city’s debt obligations have also been rising, owing to a massive capital program, which pays for building and maintaining the city’s infrastructure such as roads, parks, schools, and libraries.
“Debt service is one of the two big sources of growth in city spending,” said IBO’s Lowenstein, referring to the annual debt payments that are included in the city’s expense budget. “It’s debt service and healthcare, and they’re both big and they’re both growing very fast.” Debt service -- which is accounted for in the city’s annual operating budget -- is budgeted at a total of $6.8 billion for fiscal year 2019, according to the November update, and is expected to rise to $8.3 billion by fiscal year 2022.
Unlike most other municipalities, New York City’s capital program is funded entirely through borrowing, incurring massive debt that must necessarily be paid off every year, which could pose problems in the long run. “It’s less that we can’t continue to pay the debt service on the commitments that we’ve made but rather that they’re crowding out other things that the city might want to do,” Lowenstein said. “And our ability to expand those capital commitments is not unlimited. Especially in an era when interest rates are rising.”
Rising debt service also gives the mayor and City Council “less leeway to budget for other things ranging from teachers to cops to road repair,” she said.
Stringer has repeatedly raised the issue of rising debt, though it’s not yet out of control. The rule of thumb for his office is that debt service should not exceed 15 percent of tax revenues, a level it is well below currently. And the City Council has also attempted to make changes to the mismanaged capital funding process, creating a new subcommittee this year dedicated to examining the capital budget, finding ways to make it more efficient and reducing cost overruns. Upcoming City Council budget hearings may indicate whether that subcommittee and its focus are having any real impact.
But there are big items that may add significantly to the city’s capital investments and therefore create an additional debt burden. Those include funding for the beleaguered New York City Housing Authority (NYCHA) and the state-run Metropolitan Transportation Authority (MTA). In both cases, the city may have no choice but to commit billions more dollars, particularly pending the outcome of negotiations with federal officials over NYCHA and with state officials over the MTA, for which the city typically kicks in significant capital funds.
“The city may not have choices so the speed with which this occurs may be out of our hands,” Lowenstein said.
This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
Note - This article has been updated to ntoe that the Capital Stabilization Reserve is $250 million, not $250 billion.
Cuomo & Vital Brooklyn (photo: Mike Groll/Governor's Office)
In March of 2017, Governor Andrew Cuomo unveiled what he described as a groundbreaking initiative to “bring health and wellness to one of the most disadvantaged parts of the state.” That place was Central Brooklyn, where roubling health indicators of all types plague residents, from diabetes rates to poverty levels to inadequate access to quality health care.
Cuomo said the plan, named Vital Brooklyn, came with $1.4 billion in state funds to pay for a long list of items across the borough, from playground renovations to job training to resiliency projects — all with the aim of fighting “entrenched pockets of poverty” in a comprehensive way, he said at the time.
“What is the area in this state that has the greatest social need? If you look at unemployment rates, food stamps, physical inactivity, number of murders, one of the greatest areas of need in the entire state is Central Brooklyn. And it’s not even close,” Cuomo said.
Since then, the governor has made nearly a dozen announcements related to Vital Brooklyn, six of them taking place from June to September in the lead-up to this year’s gubernatorial primary in which candidates for statewide offices heavily courted Central Brooklyn voters. At those events, Cuomo emphasized state funding for an oyster reef restoration project ($400,000), 22 community gardens ($3.1 million), fresh food programs ($1.8 million) and a new 407-acre state park to be named after iconic Brooklyn Congressional Rep. Shirley Chisholm — an announcement made eight days before the primary.
In total, the governor’s office says there are 8,800 projects funded under the Vital Brooklyn umbrella, funded by the $1.4 billion (a dollar amount unchanged since spring of 2017, according to the state budget office). However, it’s important to note that those touted by the governor — such as those gardens, farmers markets and state park — make up a small slice of the total funding. The much larger pieces of the pie fall into just two (albeit very big) categories: housing and health care.
In fact, nine out of every 10 dollars spent through Vital Brooklyn fall into the housing and health care columns: $578 million for subsidized housing in rapidly gentrifying areas (for example, a 2,400-unit project just announced in East New York) and $700 million, allocated in 2015, for a new health care system that aims to restructure and revive three of Brooklyn's struggling hospitals.
While some aspects of Vital Brooklyn are quickly taking shape, others will take months or years to materialize. Some officials, including several who have excitedly joined Cuomo at celebratory announcements, are lauding the investments, but critics of the project worry it’s not enough — and take issue with how Vital Brooklyn was rolled out, and how the money is divvied up.
Brooklyn Borough President Eric Adams said in a recent interview that his office wasn’t asked to give input on the project (the state instead took comments from advisory boards convened through the area’s elected state Assembly members) and he feels the funding is too small in scope and dollar amount, even if the governor’s frequent appearances make it appear otherwise.
“We have to have a re-examination of the state allocations and are we doing what’s right by Brooklyn,” he said, particularly in relation to the Bronx, which Adams feels has gotten significantly more financial help from the state; Bronx Borough President Ruben Diaz, Jr. is a close ally of the governor.
Earlier this year, he put it more bluntly earlier in an interview on the Max & Murphy podcast.
“You can’t keep brushing off and rolling out the same billion-dollar project,” he said in May.
When asked to respond to that claim — and whether or not the Vital Brooklyn announcements were made in relation to this year’s primary — Cuomo spokesperson Tyrone Stevens’ comment was brief: “Bogus.”
“This is simple: Our significant new investment in Brooklyn is based on a multi-pronged strategy to uplift communities that have been ignored for too long,” Stevens said in an email. “We’re proud of this effort, and we will not be shy about talking to local residents about the important work we’re doing to make their neighborhoods a better place to live.”
Big Spending: Health Care
Of Vital Brooklyn’s $1.4 billion, fully half is dedicated to a new health care system for Brooklyn. That funding comes from a $700 million capital grant made through the Health Care Facilities Transformation Program included in the 2015-2016 state budget, allocated two years before it was announced as part of Vital Brooklyn.
The funding will go to One Brooklyn Health System (OBHS), a newly formed operator that will combine the management of three previously separate Central Brooklyn hospitals — Kingsbrook Jewish Medical Center in East Flatbush, Interfaith Medical Center in Bedford-Stuyvesant, and Brookdale University Hospital Medical Center serving Brownsville and East New York — into one not-for-profit corporation.
LaRay Brown, previously the president and CEO of Interfaith, is heading up the new venture. She says she’s been pushing for years for the “incredibly impactful” amount of state funding that will support dozens of major projects throughout the new health care system.
Inside the buildings, the $700 million will pay for “boring things, but essential things,” Brown said, like replacing elevators, repairing HVAC systems and updating an outdated fire alarm system.
“I say they’re boring, but they’re critical to providing safe and comfortable patient care,” she said.
The medical centers will get major upgrades to their patient facilities, too. According to Request for Proposal documents from OBHS, Brookdale will build out a new 33-bed intensive care unit, renovate a 40-year-old operating room suite and upgrade all of the facility’s inpatient psychiatric units among others improvements. At Interfaith, the medical center’s emergency room will be upgraded and expanded, inpatient medical units will be renovated and new equipment such as MRI and x-ray machines will be installed. Major medical equipment will be replaced at Kingsbrook, as well, the documents show.
Overall, the idea for the restructuring and redesign is to merge services among the three hospitals in order to form a more streamlined organization — and hopefully, in the end, become more financially stable.
That’s according to state officials from the Public Health and Health Planning Council who approved the creation of OBHS in December of 2016. A report to the council at the time concluded that, operating separately, the hospitals require hundreds of millions of dollars in operating subsidies from the state every year “and are otherwise not financially sustainable.” (According to budget data from a PHHPC report, operating funds given to the three hospitals from the state totaled $169 million in 2015-16, then rose to $245 million in 2016-17 and $250 million in 2017-18.)
“They've come together … in an effort to try to restructure and become more efficient and reduce its dependence on specialty subsidies,” state health department official Charles Abel told the council before it approved the OBHS application.
To achieve those efficiencies, OBHS will reorganize how certain operations run within the three hospitals. For example, Brown said, Kingsbrook will no longer have inpatient medical-surgical beds and, though it will still have an emergency room, patients in need of ongoing acute or complex care will be transferred elsewhere, likely to Brookdale, which Brown said will become the system’s “center of excellence.”
“As the inpatient acute care role diminishes at Kingsbrook, that role increases at Brookdale,” said Brown (pictured).
But Brown is careful to note the restructuring effort should not be considered a consolidation. Current assessments by OBHS show no material difference between the number of current beds and projected beds in the system, according to OBHS’ Dona Green. In the end, Brown says the quality and quantity of services will expand.
“Because these hospitals are coming together and because of the state’s commitment to invest in these hospitals, the Central Brooklyn community served by these hospitals will get more services, and not less,” Brown said.
That sentiment was echoed by Assemblymember Latrice Walker of District 55 in Brownsville, who has been waiting for years to see this funding come through for the hospital system, particularly at Brookdale, where many of her constituents go for care — and where her own brother died of gunshot wounds when he was 19, she said.
“I’m confident the services will be reinvigorated and enumerated. I don’t think we’re going to lose anything here,” she said. “Quite the contrary — we’re actually gaining.”
By the totality of the health facilities in the works under Vital Brooklyn, that appears to be the case. A chunk of the initiative’s healthcare funding — $210 million in all — is allocated to create 32 new ambulatory care facilities, or community health centers, under the OBHS umbrella. The goal there is to create more medical offices, outpatient surgical facilities and urgent care options with a more long-term goal of reducing unnecessary trips to emergency rooms.
“We need to start moving toward people having primary care physicians so that the emergency room isn’t their doctor office,” Walker said.
Cuomo put it this way when announcing some of the 32 ambulatory care locations in July of this year: “It's not just about a hospital where you go when you're very sick.”
“Prevent the illness in the first place,” he continued. “Have more community-based healthcare systems that are focused on wellness, and health, as opposed to waiting for a person to get sick, and then be in acute need.”
These new ambulatory centers are meant to handle a diverse slate of same-day health services, including diagnostic work, rehabilitation, or even major procedures such as hip replacements, according to Bill Hammond, the Director of Health Policy at the Empire Center think tank.
Ambulatory centers have a lot of benefits, he said. For the patient, it’s generally a more comfortable experience to avoid spending a night at a hospital, and there’s less risk of infection. For hospitals, increasing outpatient services makes a lot of financial sense.
“It’s less expensive,” he said. “Hospitals come with a lot of overhead.”
That idea is in line with a healthcare trend more generally to move patients out of traditional inpatient hospitals and toward ambulatory centers for all kinds of services, from preventative doctor visits all the way up to certain surgeries. The move from “reliance on hospital-based services” to more outpatient services “is a major policy shift,” said Brown of OBHS. And it takes place within the context of years of financial struggle, and at times closure, for many hospitals, particularly those serving low-income communities, as costs have continued to rise.
To combat that, the Vital Brooklyn plan puts a priority on the financial viability of health care projects funded under the plan. Included in guidelines for evaluating applicants to Vital Brooklyn, the state’s website says it will consider “the extent to which the proposed projects further the development of primary care and other outpatient services; the extent to which the proposed projects contribute to the long-term sustainability of the applicant or preservation of essential health services; and the extent to which the proposed projects involve partnerships with community-based health care providers,” among other criteria.
With the funding for the new 32 health facilities, the state hopes to roughly double the number of ambulatory care visits in Central Brooklyn, increasing capacity for 742,000 more visits every year, according to the governor’s office.
Exactly where all that new health care capacity will be built is unknown; all 32 locations have not yet been finalized. But Cuomo announced plans in July for renovations and the expansion of several existing health care centers, including the Bishop Walker Health Care Center in Prospect Heights, the Pierre Toussaint Health Center in Crown Heights and the Brownsville Multi-Service Center. In addition to those locations, several health care providers including the Bed-Stuy Family Health Center, Community Health Network, and ODA Primary Health Care Network have been chosen by the state to build new health centers in Brooklyn, providing both primary and specialty care.
Some of the 32 new ambulatory health centers will be built within new developments underwritten by the second largest piece of the Vital Brooklyn funding: affordable housing.
Housing on State and Hospital Sites
In all, the state will spend $578 million — or more than 40 percent of the total Vital Brooklyn package — on subsidized housing, with a goal to build 4,000 new units over several years.
The governor has repeatedly linked overall health goals of Vital Brooklyn to housing, particularly in rapidly gentrifying areas such as East New York where speculative buying and building, combined with a 2016 rezoning, has put pressure on poor residents.
“It starts in the home, having the right housing, having the right environment, having the right support. And that's where we're going to start. We need afford affordable housing because out people are being displaced. Gentrification is everywhere,” the governor said at a Vital Brooklyn event earlier this year.
How all those units will be constructed is still up in the air, but details on some of the development sites are beginning to emerge. Late last month, the state announced four winning bids to develop housing on land owned by the three OBHS hospitals or on state-controlled land, including one complex in East New York that’s set to deliver the bulk of the subsidized housing funded under Vital Brooklyn.
On Nov. 29, the state chose Westchester-based L+M Development Partners, Harlem-based construction group Apex Building, and two social services organizations — RiseBoro Community Partnership and Services for the Underserved — to bring a massive, 2,400-unit development to the site of the former Brooklyn Developmental Center, a home for developmentally delayed adults that closed in 2015. The three other chosen projects — two to be built on land owned by Interfaith hospital and another on land owned by Brookdale Hospital — will bring another 328 subsidized units to the borough.
At the same time the state announced those projects, it rolled out another set of request for proposals (RFPs) on eight state-controlled sites around the borough, including several hospital parking lots set to be replaced by new buildings. Proposals for five of the sites are due by February 28, 2019 and the three others are due by April 30, according to the RFP documents.
A majority of the affordable housing will be funded by $568 million allocated through the state’s Homes and Community Renewal agency, with a goal of creating 3,000 units. In addition, the governor said in August $15 million in federal tax credits have been allocated by the state for future housing developments on land controlled by the New York City Housing Authority (NYCHA). In his announcement on that initiative, the governor said he hopes to support the creation of 1,000 units of housing. However, no specific sites for those developments have been announced and will be “reviewed on a rolling basis by HCR as NYCHA makes properties available through its disposition process,” according to a press release.
The need for housing is the number one priority for Brooklyn residents, Borough President Adams said, and he gave credit to Vital Brooklyn for addressing the issue. He also acknowledged the plans would bring much-needed resources — including park space and options for healthy food — to the area. But he thinks it doesn’t go far enough.
“We’re dealing with historical inequities. People who were denied food access before — OK, let’s give them more farmer’s market,” he said. “Those things are great. But if we’re going to invest, let’s be visionaries in our investment.”
He would have liked to see more funding allocated to grandparent housing, which is set aside for grandparents who are the primary caregivers to young children, and even more resources given to the hospital network, he said.
More criticism of the governor’s Vital Brooklyn plan came from the East New York district where the large Brooklyn Developmental Center site is set to be rebuilt under the initiative. The complex will have 100 percent subsidized apartments set aside for a combination of formerly homeless New Yorkers, households earning less than 50 percent of the area median income (AMI) — a federal guideline for determining the cost of affordable housing — and the rest for households earning less than 80 percent of the AMI. Currently for a family of three, 80 percent of AMI equals $62,150 a year.
That may sound like a win in a low-income area like East New York. But with the median household income of East New York at $34,512 per year (according to data from the city’s Housing Preservation and Development agency), the development doesn’t satisfy one of the neighborhood’s longtime leaders.
Assemblymember Charles Barron says his district needs even more low-cost units because only a fraction of its residents are in the 80-percent income range. And, overall, he thinks Vital Brooklyn doesn’t go far enough in a state with a $168 billion budget, and billions more in capital spending.
“You see $600, $700 million and think it’s wonderful and a lot of money,” he said. “That is peanuts.”
In particular, he wants to see more support for the healthcare system.
“It’s simply not enough money for three hospitals,” he said.
In response, Cuomo spokesperson Stevens said in a statement that the Vital Brooklyn investment is “delivering substantial resources and coordinated services to support neighborhoods that have long been neglected.”
“We believe this massive commitment is something to celebrate, not politicize with cheap attacks that are untethered to reality,” he said.
Looking for Results
The governor has often said, for him, Vital Brooklyn is a project that brings his own career full circle, from when he was working on housing in East New York as a young man, to now. In speaking about it, he says he has wanted to help turn Brooklyn around for years.
“I never lost the inspiration, and the hope, and the optimism, of what you can do when you do it right,” he said in a speech on the project in April, nearly half-way through his eighth year in office. “For me, this is something special. This is something that is long overdue. It's an investment in people who desperately have needed help, and have been ignored for too long.”
But it may take quite a while to see all of the Vital Brooklyn projects come to life. Some of the smaller pieces of the puzzle, like a pilot program for youth-run food markets and construction on new playgrounds, are beginning this year and next, the governor has said. For the larger, more complicated parts, however, it could take years; for example, some of the first units of housing are estimated to come online in 2021 and others — like the East New York project — is not slated for completion until 2026, the governor’s office said.
The health center restructuring, too, will takes years to finish. When it’s finally complete, it remains to be seen whether the largest part of Vital Brooklyn — the $700 million in health care capital funding — will make a substantive difference to financially shore up the three Central Brooklyn hospitals.
Hammond of the Empire Center said if the plan is a good one that reconfigures the facilities’ operations significantly, it “could put them in a different position to succeed,” though he was hesitant to say whether he believes the restructuring will prove successful long-term.
But the health funding is not peanuts, as Barron said, nor is it a groundbreaking amount, as one may think from the governor’s announcements. The reality is somewhere in the middle.
“The state routinely spends billions and billions of dollars on health care all over the state,” both in discretionary grants and capital allocations, Hammond said. “On any given day, you could go to a different community and announce a very large-sounding dollar amount…and it would be absolutely routine.”
However, on a per-resident basis, Brooklyn is getting more than the average — while falling far below the state’s most generous allocations. Hammond found the state spent $190 per resident in capital health care spending in the last five years in New York State. In Kings County, the per-resident breakdown equaled $264 per resident, which is “significantly more than the state average,” he said. But that figure is dwarfed by another capital grant also given in 2015 to a hospital system in Oneida County, where spending totaled $1,297 per resident.
For all those funding plans, however, the dollars have not yet started to flow, according to Brown of OBHS. Before that happens, several bureaucratic steps must take place, including complying with transparency regulations approved by the state comptroller’s office. She hopes that will be complete in the new year.
“Everyone is endeavouring to get [approval]…by early 2019,” she said, while emphasizing it’s hard to make an exact estimate, as she and her team are figuring out the complexities of the project as they go along.
“We’re all entering a new journey here,” she said.
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by Rachel Holliday Smith for Gotham Gazette
@rachelholliday
@GothamGazette
All photos via the Governor's Office on flickr.
Ben Max, left, of Gotham Gazette, and Jarrett Murphy, right, of City Limits
December 12, 2018 - Max & Murphy Podcast: Will Single-Payer Health Care Come to New York?
One of the most hotly-debated issues in state government is whether New York should or will move ahead with the New York Health Act, which would institute single-payer health care. State Senator Gustavo Rivera, a Bronx Democrat, is the Senate sponsor of the bill and will soon be part of the Democratic majority in the Senate, as well as the health committee chair. He joined the show to discuss the broader priorities of the Senate Democrats and the prospects for the New York Health Act when his party has full control of state government come January.
Then, Bill Hammond, director of health policy at the Empire Center, joined the show to dissect the New York Health Act and a variety of ways in which he thinks it is problematic legislation, as well as the political terrain ahead for it.
Listen to the conversation and let us know what you think -- we're on Twitter @TweetBenMax and @JarrettMurphy. You can listen to the show through the embedded audio below or download the episode wherever you get your podcasts, under "Max & Murphy," and listen to Max & Murphy live on Wednesdays at 5 p.m. on WBAI radio, 99.5FM or wbai.org
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by Ben Max, Gotham Gazette
@tweetBenMax @GothamGazette