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Plummeting Ridership But No Budget Cuts or Fare Increases for De Blasio's Ferry System


covid 19 climate

Mayor de Blasio aboard the ferry (photo: Benjamin Kanter/Mayoral Photo Office)


The coronavirus pandemic has led to plummeting ridership across the city’s various transit systems, posing an existential threat to the future of mass transit as the state and the city begin to cut costs and service. Among them, the New York City ferry, a signature initiative of Mayor Bill de Blasio, has seen far fewer commuters and a reduced schedule, but unlike a long list of other programs, the city does not plan to decrease its budget or scrap an expansion that is slated to take place this year and next year.

Since Governor Andrew Cuomo signed the “New York PAUSE” order on March 20, mandating that non-essential workers stay at home, the ferry has seen ridership fall by 90%, according to NYC Ferry data. From March 20-April 16, only 39,913 people rode the ferry, compared to 365,233 riders over the same time last year.

From March 23, the system began a reduced schedule, using its smallest boats, and its spring service has been cut by 37%.

Mayor de Blasio recently released his $89.3 billion executive budget, cutting proposed spending by $6 billion and tapping $4 billion in reserves to cover a shortfall in tax revenue caused by the coronavirus recession. The budget included billions in savings, including spending cuts and readjustments for lower-than-expected costs. Among those were cuts to bike lanes, lower spending on the Fair Fares program that provides half-priced MetroCards to low-income commuters. But the ferry system’s budget is not expected to change – it’s funded through the New York City Economic Development Corporation – and the fare is also expected to remain the same, according to EDC spokesperson Chris Singleton.

The rollout of NYC Ferry, as the city-run network is called, has not been without its controversies. When he launched it in May 2017, de Blasio touted it as a new mass transit alternative in a city where neglected subways and buses were struggling to efficiently transport millions of daily commuters.

But the ferry system, now with 21 stops, mostly on either side of the East River, has had a minimal impact, serving a relatively small slice of New Yorkers, and faced ongoing questions about its efficacy and financing. Despite being called a transit project, it was placed under the auspices of NYC EDC, adding to questions of whether it was meant as a vehicle to get people around or to drive up real estate prices and spur economic growth along the city’s waterfronts.

As the fiscal watchdog group Citizens Budget Commission noted in a report last year, the subsidy for each ferry ride was $10.73, ten times that of the New York City Transit system. It has since fallen to $9.34, and is projected to decrease with the two new routes adding about 2.5 million riders per year, according to EDC. The mayor has, however, struggled to justify those subsidies, particularly after data showed that only about 5.6 million people used the ferry in an entire year, when more than that number rode the subway every day (in the pre-coronavirus world). A majority of ferry commuters also tended to be white, upper-income New Yorkers rather than low-income commuters of color.

Ironically, New Yorkers from middle- and low-income communities of color are also less likely to be working from home during the pandemic and many make up the corps of essential workers keeping the city running via its subway and buses, hospitals, grocery stores, and more. Essential workers are also faced with often-overcrowded subways given that the state-run MTA has severely cut service amid plummeting ridership, a sickened workforce, and severe financial strain.

The mayor’s office did not respond to requests for comment for this article about the NYC Ferry system amid the coronavirus public health and fiscal crises. “New Yorkers have been doing their part to stop the spread of COVID-19 by staying home and practicing social distancing. These necessary steps by individuals across the city has led to a decrease in ridership on NYC Ferry,” said EDC’s Singleton. “As a result, NYC Ferry has been operating on a reduced schedule since Monday, March 23. NYC Ferry will continue to serve critical workers who must travel, but we ask that at this time people do not ride for recreation.”

At his daily coronavirus briefing on April 29, when asked by a reporter why NYC Ferry funding remained stable while significant cuts were made to the Staten Island Ferry, Mayor de Blasio said, "One there will be cuts to NYC Ferry and that will certainly be reflected in the next stage of the budget process. Two – obviously, it's never fun to talk about any cuts, but everything that has to be cut will be cut as we deal with more and more challenges."

NYC Ferry’s net operating costs were about $52.9 million in the 2019 fiscal year, up from $30 million in fiscal year 2017, and has since increased further, with added costs to come once new routes are launched.

Unlike other transit systems, NYC Ferry doesn’t rely on fares as a major part of its revenue. In the 2019 fiscal year, only 24% of its revenue came from fares, an increase of 2% from the year before, according to an analysis by Citizens Budget Commission. Each ride on the ferry costs $2.75, the same as a standard bus or subway fare, though it isn’t integrated with those systems. Despite the roughly $10 per ride subsidy to operate the system as it has been, de Blasio has insisted from the start on pegging the fare to that of the subway and bus, and said the city has been working on fare integration with the MTA, though several years in there has been no news on such a partnership.

The expansion of the program at a cost of $100 million in capital funds is also expected to drive those subsidies up. One route connecting to Staten Island is launching this year, and another to Coney Island will launch next year, while other routes will be extended and modified. The two new routes are meant to add 2.5 million riders each year, the EDC projects, and will cost about $25.5 million annually to operate. According to the CBC report, the subsidy on each ride on the Coney Island route is expected to be as high as $24.75.

Sean Campion, senior research associate at CBC, who authored the report, said the coronavirus offers an opportunity for the city to review how it funds and operates NYC Ferry and to find ways to make it financially sustainable. “This should give them some opportunity to review some of the sort of inherent inefficiencies in the program,” he said.

“It may no longer be possible, given everything else going on, to maintain the level of subsidy than with a better structure than it has,” he added.

The ferry is also heavily reliant on leisure ridership, Campion pointed out, and that may not recover quickly. “If people are more reluctant to ride public transit and take discretionary transit trips,” he said, “...if tourism doesn't come back, it could take longer for that to bounce back more so than the commuting patterns. If that happens, that will magnify the need for subsidy.”

In the new coronavirus reality, there’s a flip side to the ferry discussion, however. With the subways crowded, increasing the risk of exposure to the coronavirus, even critics of the ferry system may reluctantly embrace it.

“Given that the subways are not a great way of commuting while adhering to physical distance and guidelines, New Yorkers need all the alternatives they can get,” said Joe Cutrufo, communications director for Transportation Alternatives, an advocacy group.

But Cutrufo remains critical of the already high subsidies, noting that the city hasn’t been as generous when it comes to the Citi Bike program. “Our bike-share system does not have a public subsidy and we've seen bicycle use as one of the very few ways that people can get around while maintaining those physical distancing guidelines,” he said. “So I think we need to take a fresh look at how the city subsidizes its transportation network.”

Advocates like Cutrufo are hoping that when life in the city moves back toward ‘normal’ fear of the coronavirus doesn’t lead to an increase in cars on the road as people avoid public transit, which would further clog the city’s typically crowded streets.

“The way we see it, people are looking to alternatives and we want to make sure that we don't see driving increase,” Cutrufo said. “The ferry can be part of that solution.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Note - this article has been corrected to note that the overall per-ride ferry subsidy is expected to decrease, not increase. 

Note - this article has been updated with comments made by the mayor on April 29. 

Experts Look Ahead to Post-Virus Restart of City Economy Amid Fear of Urban Flight


economy rendering jobs

When will the city economy re-open, and how? (image: Mayor's Office)


Billions of dollars in typical commerce isn’t happening as the novel coronavirus, COVID-19, has brought the local economy to a near-standstill, and with the shutdown hundreds of thousands of jobs and billions in expected tax revenue lost from city coffers. The unparalleled scale of the crisis, with no clear end in sight, has made forecasts unpredictable. What’s not in doubt is that the city will eventually have to revive and rebuild its communities, its industries and job market, and its tax base.

While they respond to the public health crisis, leaders at all levels of government are also starting to plan for the economic revival, a task made especially hard by the many unknowns of the disease and efforts to mitigate it, from mass testing to a vaccine.

On Friday morning, the Center for an Urban Future, a nonprofit think-tank focused on economic opportunity, convened a virtual forum of urban experts and leaders in business, nonprofits, government, and economic development to discuss the strategies the city needs to employ to get New Yorkers and their city back on their feet once the outbreak has passed.

The panel included Shaun Donovan, a former high-level aide to President Barack Obama and Mayor Michael Bloomberg who is also a 2021 mayoral candidate; Winston Fisher, co-chair of the New York City Regional Economic Development Council; Joyce Moy, executive director of CUNY’s Asian American and Asian Research Institute; Seth Pinsky, CEO of 92nd Street Y and former president of the New York City Economic Development Corporation; and Kathy Wylde, President & CEO of the Partnership for New York City, a business group. CUF executive director Jonathan Bowles moderated the discussion.

Estimates vary but the coronavirus fallout could end up costing the city between $7.4 billion, according to Mayor Bill de Blasio’s new executive budget, and $9.7 billion, per a new Independent Budget Office report, if not more, though the role the federal government might play in bailing out the city remains as open question and source of lobbying by de Blasio and others.

As of April 11, more than 520,000 New York City residents had filed unemployment insurance claims with the state Department of Labor, accounting for 43% of the total claims filed this year. The Independent Budget Office also projects that the city will lose another 475,000 jobs from now through March 2021.

Considering those dire numbers, there were no easy or singular solutions proposed in the forum, though the panellists drew ideas from the city’s past recoveries after the Great Recession, the September 11, 2001 terror attacks, and the fiscal crisis of the 1970s. But the coronavirus pandemic is unlike those events and the response from the city, they all agreed, must be just as unprecedented.

“It's important to think this is not a restart of the economy we had in 2019. I think it's a rethinking, and a reinvention of our economy in ways that it's just not going to be bringing back the same,” said Wylde, noting that the pandemic has not only caused problems but revealed many that existed in the way the government functions. “One of the things we found out in this crisis is that the technology that supports our local and state government is not smart, that it has failed on a number of fronts. That's not a people problem. It's not a leadership problem. That's a technology investment problem,” she said.

The panellists agreed that local recovery will be near impossible without direct federal aid. But they insisted that the state and city governments need to lead the way, paying little heed to the flawed decisions coming out of the Trump administration that contributed to the scope of the crisis.

“It's absolutely critical that we not pit the economic crisis against the health crisis, but rather think of them as moving together,” said Donovan, warning against easing social distancing restrictions too soon as President Donald Trump and Republican elected officials have suggested.

Pinsky said the city needs to restore confidence that New York remains a good place to do business, and he agreed with Fisher in suggesting that one key way to do that is to ease regulations. “I don't think anyone would look at the system that we have today and say that the way we spend the money that we collect in taxes is efficient, or the way that we regulate businesses and protect people is efficient,” Pinsky said.

Fisher said the city should work to improve access to credit for small and medium-size businesses and “help businesses cut through bureaucracy and red tape.”

A lot of the damage to small businesses, particularly minority and immigrant-owned businesses, may be irreparable, said Moy. She said family-owned small businesses have been wiped out, and are unlikely to be able to recover what wealth they may have built up over generations. “The next thing that's really going to be needed is to restart capital because these businesses, in many ways, have expended whatever funds they have,” she said.

A major roadblock to recovery, as Bowles noted, is that most New Yorkers who have lost their jobs are unlikely to have enough disposable income to survive mounting bills during the crisis, let alone to put back into the economy once the outbreak subsides.

Donovan said the city and state need to focus on two areas – ensuring that direct assistance reaches all those who need it, particularly the most vulnerable, such as low-income communities, communities of color, and particularly undocumented immigrants, and then tackling the larger structural impacts. In New York City, with its large renter population, he said housing and rental assistance is crucial. “We should never let a crisis go to waste,” he said, also suggesting that as the city begins to house more homeless people in hotel rooms, it should take the opportunity to think about long-term solutions such as new permanent affordable housing and supportive housing.

He also suggested that nonprofits and the city government take advantage of dropping real estate prices to purchase land and buildings and lock them into permanent affordability. Donovan was secretary of Housing and Urban Development under Obama and led the budget offices for both Obama and Bloomberg.

The panellists all worried that the outbreak could cause mass urban flight as New Yorkers hurt by the crisis follow others who have exited to other locales with lower costs of living. “I do think that that is an existential problem for New York City right now,” said Fisher, noting how that could shrink the tax base that the city will require to recover revenue.

“This issue...is what we need to be most focused on. Because what oil is to Saudi Arabia, our workforce is to New York. It is our most valuable natural resource. And it is the fuel that has driven our economic expansion,” Fisher said.

One solution he suggested was to improve the city’s zoning laws that he said have held back the type of affordable housing development that is direly needed. “Don't waste the crisis. Figure out how you can build to the needs of the community in greater scale, and at the same time recognize that we're possibly having urban flight,” he said.

Wylde also drew a contrast with past trends of outmigration, stressing that one of the issues the city needs to work on is improving its crowded and inefficient transportation system. “I think we've got a different set of issues today where people aren’t fleeing the city because it's full of crime, that they're not fleeing it because the schools are horrible,” she said. “They're going to stay home or leave if we don't get the infrastructure right.”

Moy said the city needs to invest in workforce training so that once the outbreak is over, the people without jobs and lower levels of education who will struggle the most are able to pull themselves up. “What I'm worried about is this new economy that we create is going to further create this gap between the well-off and the not-so-well-off,” she said.

More than just saving small businesses, Pinsky said the city should encourage the creation of new ones, especially in low-income neighborhoods, to spur economic activity. Moy had several recommendations for how the city could achieve that goal: create an inventory of retail spaces with existing infrastructure, provide grants for start-up costs, encourage and aide worker coops.

In order to give people more flexibility to work, Donovan said the city should create an infrastructure for flexible benefits, similar to the Affordable Care Act. That’s an issue that elected officials in New York have often talked about with regards to freelance and gig workers who lack the same protections as salaried workers. But the coronavirus has shown that even salaried workers face the perils of losing their benefits when their healthcare is tied to their jobs and entire industries are shut down while others are seeing mass layoff and furloughs.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Tapping Reserves for $4 Billion and Cutting Proposed Spending by $6 Billion, De Blasio Presents $89.3 Billion Executive Budget


mayor budget fiscal

Mayor de Blasio at a prior budget briefing (photo: Benjamin Kanter/Mayoral Photo Office)


With the sobering reality presented by the coronavirus pandemic that has shut down major sectors of New York City’s economy, Mayor Bill de Blasio on Thursday released a significantly pared down $89.3 billion executive budget proposal for the 2021 fiscal year, a staggering $6 billion drop from his preliminary budget plan put forth in January. To do so, the mayor identified dozens of cuts and spending reassessments across city agencies, from modifying school programs to keeping the city’s public pools closed for the upcoming season.

Given steep revenue shortfalls in the current year projected to extend into next, the mayor said his budgeting relies on using about $4 billion of the roughly $6 billion the city has in reserves, though he repeatedly stressed that the federal government should pass a rescue package that fills the city’s growing hole.

The coronavirus has been nothing short of devastating, with the city reporting 10,899 deaths caused by the outbreak as of Wednesday. Entire industries have come to a near-standstill as people shelter at home. Unemployment has hit record highs, and there is no end in sight. 

Suffice it to say, it has quickly become the most challenging budget de Blasio has had to create since he took office in 2014. A new city budget, with agreement from the mayor and City Council, is due by the July 1 start to the new fiscal year.

“There are four things that we will focus on, four things that I care about profoundly as we fight this battle, four things that we will prioritize in the way we spend our resources,” de Blasio said in his budget presentation, live-streamed from City Hall. “First of all, keeping New Yorkers healthy...Second, keeping you safe. Third, making sure there's food on your table. Fourth, keeping a roof over your head. These are the basics. These are just fundamental basics.”

For nearly a decade, the city had benefited from constant economic growth that allowed the mayor and Council to increase spending by nearly $20 billion while growing the size of city government to unprecedented levels. Despite cost-shifts from the state and growing concerns about an economic slowdown, the city budget was on track to grow again this year. But the coronavirus has changed everything. 

“Things that might have been a priority two months ago, three months ago, can't be a priority right now,” the mayor said. “Things that we would love to focus on in peacetime, we don't get to focus on in wartime and this, in effect, is wartime.”

De Blasio said the city expects revenue to fall by $7.4 billion across the current fiscal year, ending June 30, and through the next because of decreased collections of sales and hotel taxes, personal income tax, and business taxes. According to an Independent Budget Office estimate released Wednesday, that shortfall could be even worse, which the mayor acknowledged when asked by a reporter during the virtual question-and-answer session after the mayor’s initial presentation. “It could grow by a little. It could grow by a lot. It could grow by billions even,” de Blasio said. “But right now this is based on the facts as we know it.”

[Read: New Reports Paint Bleak Picture of New York City Economy, Budget]

Some of the city’s pain comes from the recently-approved state budget, which, according to the mayor, forced $800 million in costs onto the city including $360 million in education aid, $123 million for the Temporary Assistance for Needy Families program, and $63 million for the MTA's Access-a-Ride program. The state budget also allows the state to intercept sales tax proceeds from the city to fund distressed hospitals, which would cost $250 million.

The state toll may also not be final since Governor Andrew Cuomo has the ability to adjust spending periodically if the state’s revenues fall short of the projections used to craft its budget, and cuts could come in the form of reduced aid to localities. The federal government’s role remains the wild card, with both de Blasio and Cuomo repeatedly calling on President Donald Trump and Congress to pass another rescue package that directly addressed state and local government need.

Last June, the city adopted a $92.8 billion budget and in January of this year the mayor had proposed increasing spending to $95.3 billion for next fiscal year. Instead, he has been forced to significantly reduce spending and institute a PEG (Program to Eliminate the Gap) to find savings and efficiencies at city agencies. 

Across the 2020 and 2021 fiscal years, the administration found $2.1 billion in PEG savings and another $600 million in savings on citywide spending, for a total of $2.7 billion. Of the total, however, only $820 million constituted recurring savings that can be replicated each year. 

The administration also had to fall back on its rainy day reserves, which had been built up to nearly $6 billion under de Blasio, well short of what budget watchdogs have called for given the immense increases in city spending.

“We got much more than a rainy day, we got a pandemic. We got something unimaginable,” the mayor said. The executive budget would leave the reserves at about $2.18 billion in fiscal year 2021, after the city drew $900 million from the general reserve, $250 million from the capital stabilization fund, and $2.6 billion from the Retiree Health Benefits Trust fund (which would have $2.08 billion left).

The direct costs of battling coronavirus have been immense. The mayor said the city has already spent $700 million fighting the outbreak, and expects to spend $3.5 billion in total by the end of 2020. Included in that is $170 million on providing food to hungry New Yorkers, $100 million to bolster staffing at the municipal hospital system, $200 million to purchase Personal Protective Equipment for medical and other emergency personnel, and $50 million for grants and loans to small businesses. 

De Blasio repeatedly emphasized that the only way the city would be able to restart its economy and ensure that basic services continue to be met is if the federal government provides adequate emergency relief directly to the city in the latest round of stimulus being negotiated in Washington. “If we can’t provide the basics for our people. then you can kiss your recovery goodbye,” he said bluntly. 

Without federal funds, the city may have to eventually consider layoffs, de Blasio said, though he insisted that it was the “last resort.”

“We must have that stimulus money, or else we're gonna have to make horrible choices going forward,” he said. Under his tenure, the city has added more than 33,000 full-time and full-time equivalent employees to the municipal workforce, a trend that budget watchdogs have long said is unsustainable even during times of positive economic growth.

“When you look at the impact here, anybody with a heart would recognize the federal government has to come to the rescue,” he added. He noted that the federal government was quick to bail out major banks and the auto industry during the Great Recession, and that the $2.2 trillion stimulus package approved in the current crisis has provided only $1.4 billion in direct aid to New York City while giving $58 billion to the airline industry alone. 

“How about bailing out the nation's largest city? How about bailing out the epicenter of this crisis where people have been suffering?,” de Blasio said. “That is what our federal government should do, for every reason, morally, practically, as any question of fairness, as any question of how we move forward. And we're still waiting.”

If push comes to shove, the mayor has said the city may have to ask the state Legislature to authorize city borrowing to pay costs. Currently, state law requires the city’s budget to be balanced each year so it can only spend what revenues it has at its disposal. “We have not yet activated or worked to activate new borrowing capacity,” de Blasio said on Thursday. “It's certainly a conversation we will have going forward, the possibility of doing some kind of long-term borrowing that is fiscally smart.”

The reductions and savings that the administration made cut across education, social services, law enforcement, transportation, infrastructure, housing, parks, sanitation, administrative costs, and other areas. A sampling includes:

– $100 million reduction in fair student funding in FY21
–$100 million saved because of school closures in the current fiscal year
–$124 million from suspending the Summer Youth Employment Program over FY20-21
–$65.5 million in reduced spending in FY20 on the Fair Fares program, because of the drop in subway ridership caused by the coronavirus
–$128 million cash infusion from the Water Authority in FY20
–$55 million in reduced spending on snow removal operations in FY20
–$106 million in savings from a hiring freeze and vacancy reductions

The City Council was forced to suspend hearings on the preliminary budget because of the outbreak but is expected to resume them, albeit remotely, for the executive budget. The Council and administration must then come to an agreement before the July 1 start of the next fiscal year. 

In a joint statement, Council Speaker Corey Johnson, Council Finance Committee Chair Daniel Dromm and Capital Budget Subcommittee Chair Vanessa Gibson acknowledged that they will have “tough decisions” to make. “Our guiding principal will be to ensure that the most vulnerable New Yorkers are protected and that we keep providing critical social services,” they said. “We will use our upcoming budget process, which will be done remotely for the first time in Council history, to determine the best ways to deal with the extreme economic challenges we are facing as a City.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.



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