Gotham Gazette Sun, 31 May 2020 10:25:21 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) What's The [DATA] Point? $15 billion, with First Deputy Mayor Dean Fuleihan whats the data point

What's The [Data] Point? Episode 84 -- $15 billion, Deputy Mayor Dean Fuleihan [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

wtdp dean fuleihan2$15 billion is the CBC's estimate of the three-year revenue shortfall for New York City government in a recession. First Deputy Mayor Dean Fuleihan joined CBC President Andrew Rein for a wide-ranging discussion about the City's budget, closing Rikers, access to hydropower, NYC's competitiveness, and more.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

by Ben Max, Gotham Gazette

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What's The [DATA] Point? $15 billion, with First Deputy Mayor Dean Fuleihan Thu, 14 Nov 2019 05:00:00 +0000
First Deputy Mayor on Next Steps for Voter-Approved 'Rainy Day Fund' control board bdb

(photo: Ed Reed/Mayoral Photo Office)

With voter approval of a city charter amendment to pursue the creation of a budgetary “rainy day fund” in New York City, de Blasio administration officials are now looking to change state laws so that the city can actually start one.

“We’re going to have to work together to make this happen,” said First Deputy Mayor Dean Fuleihan at a breakfast event hosted by the Citizens Budget Commission Wednesday morning, just a few hours after polls closed on Tuesday night.

Voters had overwhelmingly approved an amendment to the city charter that would allow the city to set aside revenue in a savings account meant to cushion the impact of a future economic downturn and city revenue dip — the inevitable rainy day. Until the charter amendment passed this week, provisions in both city and state law required the city to balance its budget every year, meaning savings cannot be carried over from one fiscal year to another. Now, only state law requires a balanced city budget.

While the city continues to enjoy a period of economic prosperity since the 2008-2009 fiscal crisis, economists say it must brace for potential dips, whether slowing growth or recession. In the last two national recessions, the city economy contracted significantly and took years to rebound, according to a Citizens Budget Commission report, “To Weather A Storm: Create a Rainy Day Fund.” According to the CBC analysis, the gross city product (GCP) fell 7.6 percent from 2000 to 2002 and took another three years to reach its pre-recession size; from 2007 to 2009 GCP fell 9 percent and did not reach its previous peak until 2013.

In situations like these, the city can quickly exhaust any reserves that may be available, and, in the absence of a rainy day fund, must cut services, raise taxes, and/or fall on short-term borrowing, all of which have consequences that are exacerbated in a recession.

Currently, the city is able to put public funds into “reserves,” which are created through budgetary maneuvers that, among other things, allow the city to prepay for certain resources, debt service, and retiree health benefits costs. But fiscal watchdogs say the reserves would not be sufficient to combat a serious dip in the economy or an emergency crisis, and are a fraction of what a rainy day fund could cover.

The city budget has grown tremendously since the last recession in 2008-2009. Since the beginning of Mayor Bill de Blasio’s tenure in 2014, it has risen nearly $20 billion to $92.8 billion in the current fiscal year. About $6 billion of the total is currently in year-of reserves.

“It’s a historic level of reserves,” which the city has not previously achieved, said Fuleihan, a former director of the Mayor’s Office of Management and Budget and a veteran fiscal policy advisor in the State Assembly. “But it is not a rainy day fund. It’s not a traditional way of doing that, and now we have the opportunity to do that.”

The rainy day fund amendment was one of 19 proposed changes to the city charter, which voters in New York City had an opportunity to approve or reject this fall based on the work of the 2019 Charter Revision Commission, to which the mayor had several appointees along with other citywide and boroughwide officials. The proposals came in the form of five questions covering elections, police oversight, ethics and governance, city budget, and land use. All five questions passed by wide margins.

The laws requiring New York City to balance its budget each year came out of the city’s 1975 fiscal crisis, in which the city’s debt obligations brought it close to bankruptcy. In response, the state enacted the Financial Emergency Act, which required a balanced budget and the use of generally accepted accounting principles as a way to ensure the city’s fiduciary obligations do not exceed its revenue. In 2005, those requirements were incorporated in the city charter.

With the charter amendments that remove those requirements, state laws are the only remaining statutes preventing New York City from adopting a rainy day fund. State Senator Brian Benjamin, a Manhattan Democrat who is considering a run for city comptroller, has introduced a bill that would authorize the city to create a rainy day fund (the fund is described in the bill as a “municipal contingency and tax stabilization reserve fund”). 

For the de Blasio administration, the issue at hand now is not simply a matter of changing the state law. Fuleihan says he hopes to work with the state to devise a partnership that gives the city ultimate control over its budget and rainy day funds. Budget watchdogs are also hoping state lawmakers include statutory restrictions on when the rainy day funds may be spent to ensure that they are used as intended during periods of economic hardship.

“The first step occurred [Tuesday] and now we need to talk about what that looks like,” Fuleihan told the CBC audience Wednesday, “and to make sure that the city is the determining factor in what this rainy day fund looks like.”

“I think we do have to be careful about that,” he added.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

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First Deputy Mayor on Next Steps for Voter-Approved 'Rainy Day Fund' Wed, 06 Nov 2019 05:00:00 +0000
MTA Funding Fight May Dominate This Year’s City-State Budget Struggle 36468561375 7f08a42b5b z

Gov. Cuomo in the subway (photo: The Governor's Office)

Three key points of contention between the city and the state have emerged over transit funding, highlighted during Metropolitan Transit Authority (MTA) Chair Joe Lhota’s testimony at the joint legislative hearing on transportation Thursday in Albany.

The hearing, which included discussion of the MTA plan to restore New York City’s ailing subway system, occurred amid an ongoing feud between New York City Mayor Bill de Blasio and Governor Andrew Cuomo over the funding of crucial repairs for the deteriorating transit system, which is controlled by the state.

In a four-hour session that was at times good-natured and at others tense, members of the Senate and Assembly repeatedly questioned Lhota on three controversial and relevant aspects of Cuomo’s 2018 agenda: cost shifts of capital funding for the city’s subway system from the state to the city as outlined in Cuomo’s budget; a “value capture” plan to allow the state to reap property tax revenue spurred by transportation improvements in the city; and the recently unveiled congestion pricing plan outlined by Cuomo’s “Fix NYC” panel.

These issues were addressed by de Blasio officials in a press conference call with reporters two days earlier. “We are objecting strongly to language that was inserted into the budget that would create a new, capital liability, a new capital commitment liability on the part of the city for New York City Transit, which is breaking a long-standing history of how the MTA is funded,” said First Deputy Mayor Dean Fuleihan during the call. He and the other officials on the call also pushed back against the value capture proposal, calling it an unprecedented intrusion into the city’s tax system.

Mayor de Blasio himself also expressed his opposition during his weekly appearance on WNYC radio’s The Brian Lehrer Show, saying Friday morning.

“To take our property taxes which pay for our police, our schools, you know, our parks, our sanitation, to try and take from our property taxes for something the State wants is absolutely unacceptable…the first thing the State should do is return the $456 million diverted away from the MTA,” de Blasio said, referring to funds that were earmarked specifically for the MTA diverted by the State to other purposes over the last few years. “Put that money back and then we can discuss how to move forward.”

De Blasio will testify himself at a state legislative budget hearing in Albany on Monday, February 5. MTA funding, including the state’s insistence that the city pay about $450 million toward Lhota’s emergency subway stabilization plan, will likely be topics of discussion.

During his testimony Thursday, Lhota said the state’s $836 million Subway Action Plan launched last summer to restabilize the city's subway service is working, citing the MTA’s ability to prevent the predicted “summer of hell” in 2017, though the data does not necessarily support his claim, as explained by Nicole Gelinas of The New York Post.

“That’s not true — or only true if you compare summer and autumn to winter and spring, instead of a season to the previous year’s season. The latter is a far better measure because of similar crowding and weather,” Gelinas writes.

Despite this, Lhota said he attributes the MTA’s success at preempting a disastrous transportation summer to heightened “vigilance” on the part of the agency, something he said must continue year-round.

He also announced technological improvements coming to the MTA, such as a new signaling technology, a fleet of electric buses, and the Freedom Ticket, which allows Long Island Rail Road commuters to seamlessly transfer to the subway system. "I fully expect it to happen this year," Lhota said of the Freedom Ticket.

Cuomo's executive budget allocates $9.7 billion for the departments of transportation and motor vehicles, the Thruway Authority, and the MTA. However, the budget shifts all of the responsibility for capital costs to the City of New York, which would “require a sevenfold increase in City capital contributions,” according to Citizens Budget Commission President Carol Kellermann.

“What we are talking about here is a radical restructuring of where the [Capital] money comes from,” State Senator Gustavo Rivera, of the Bronx, said to Lhota on Thursday. “Is that correct?”

Lhota said this type of fluctuation is typical of past capital plans for transportation.

“When you look at funding over the last 20 or 30 years, sometimes the city has given more than the state, sometimes the state has given more than the city -- it goes back and forth,” said Lhota. “There was a period of time when the federal government gave more than the city and state in various different five-year capital plans.”

Mayor de Blasio is expected to continue to push back on the proposal in the coming weeks, while also relying on state legislators from the five boroughs to take up the cause in budget negotiations with the governor’s administration.

De Blasio has reluctantly agreed to consider the congestion pricing plan released by Cuomo’s advisory panel. The plan, which is similar to one previously proposed by former New York City Mayor Michael Bloomberg and Cuomo has indicated he will tweak as he also negotiates with the Legislature, outlines a three-year, three-phase program aimed at reducing congestion in Manhattan and raising funds for transit improvements, especially the subway system. It also includes calls for the city to increase enforcement of certain traffic measures, like double-parking and placard abuse, that currently contribute to congestion.

Fully phased in, the Fix NYC proposal would charge cars entering the most congested areas of Manhattan $11.52, while trucks would pay $25.34, and those riding in cabs or for-hire vehicles like Uber would see a $2 to $5 surcharge. The congestion fees would vary based on location and time of day, and would likely apply to non-commercial vehicles driving below 60th Street in Manhattan. The plan calls for new transit investments early on and estimates about $1.5 billion in annual revenue when fully implemented.

De Blasio has previously called general congestion pricing, with new tolls on the East River bridges, a "regressive tax" that would disproportionately impact low- and middle-income commuters from outer boroughs, though there have been holes punched in that argument given the low percentage of people who commute into Manhattan from Queens and Brooklyn that are low-income. The mayor appeared less dismissive of the Fix NYC recommendations, calling them an improvement from prior congestion pricing plans.

At Thursday’s hearing, lawmakers were divided on the congestion pricing recommendations, which will be parsed through the legislative process in the coming weeks. Senator Diane Savino, who sponsored the Move New York version of congestion pricing, approves of congestion pricing as a way to make the city’s transportation system more equitable for commuters from the outer boroughs.

However, Savino, a member of the Independent Democratic Conference representing parts of Staten Island and bits of Brooklyn, questioned whether appointees to the Fix NYC board considered the Move New York plan as a “better proposal” to eliminate “winner and losers” while enabling the city to generate transportation revenue without going through Albany. A key element of Move New York not included in the Fix NYC recommendations is lowering tolls on the Verrazano and other currently-tolled bridges, something Cuomo indicated he wants to consider.

Lhota said that panel produced a plan that they believe is a good starting point and that such concerns have yet be addressed during the legislative process. “The basic concept is there. Now, how do we make it fair?” he said.

“Fairness is important,” agreed Savino, adding, “We need to find a more steady stream of revenue for the MTA region, not just the transit system, but the region itself.”

Alex Matthiessen, the founder and director of Move New York, a group that evolved out of former Mayor Bloomberg’s failed attempt to pass a version of congestion pricing, has also thrown his support behind the Fix NYC plan despite its differences with his group’s proposal.

“I thought that we had created the gold standard of congestion pricing plans, especially for the City of New York, tailored for the City of New York, and these guys actually improved upon our plan in a number of ways,” Matthiessen told Gotham Gazette and City Limits during a recent podcast.

Other lawmakers and transportation experts are not yet sold on congestion pricing. Senator Leroy Comrie, a Queens Democrat, expressed skepticism of the plan, saying it does not solve the problem of congestion in Manhattan nor does it generate a reliable source of revenue for the MTA.

“My concern with congestion pricing is it doesn’t relieve the congestion,” Comrie told Lhota during Thursday’s hearing. “Why are we going to do a program where we are just taking more money from people and still the essential business districts will be crowded with the elements -- it won’t fix the truck traffic in the city, it won’t fix the issue of people coming from New Jersey into the City…so there’s a lot of things wrong with the plan.”

Regarding Cuomo’s value capture plan, the mayor’s office maintains that the administration was not consulted ahead of time, and just learned of it from Cuomo’s executive budget. The budget proposal, which targets zones around transportation projects such as the makeover of Penn Station, the 125th Street Metro-North Railroad stop, and expansion of the Second Avenue Subway, would deprive the city of control over its own potential revenue, de Blasio officials say.

“This is the City’s property tax base, it’s our major source of revenue,” said Fuleihan during the January 23 phone conference. "For the MTA to arbitrarily take City tax revenues, determine what those tax revenues are, on established’s outrageous and there is no logical argument for this.”

“The City has significant obligations that we need to keep, that we need to make sure we are able to commit to—safest big city in America, universal pre-K for four-year-olds, expansion of pre-K, we can go on, addressing the opioid crisis,” said Fuleihan.

At the hearing, Lhota fended off criticisms of Cuomo’s plan from New York City lawmakers, including Senator Liz Krueger, a Manhattan Democrat. “I can't emphasize enough why I think that this is a terrible idea, and I was hoping you would agree with me,” Krueger said of the value capture proposal.

When asked by reporters why the city was not consulted in the drafting of the legislation, Lhota said he could not speak for the governor’s office. “You are asking me questions that should be directed at the [executive] chamber,” he said, but noted that Bloomberg used value capture to extend the 7 train to the Upper West Side of Manhattan (something de Blasio officials acknowledged but pointed out was a city decision).

A spokesperson for Cuomo’s office addressed the criticisms saying that other major cities have used this strategy and they expected all affected to be on board with the plan.

“Transit systems in cities across the world use this method, including New York City,” said Cuomo spokesperson Dani Lever. “We'd think anyone who wants to improve the subways would support it, and we will work with the legislature and all our local partners throughout the budget process to pass this law.”

Lhota indicated that the value capture tax could be extended indefinitely after the investment is recouped, arguing that there was a good case for the tax to be continued to maintain the quality of the subway service. “There’s unanimity in the entire MTA board that if we are using taxpayer dollars, we should try to recoup some of that wherever we can,” he said. He also said that the state is constitutionally authorized to utilize the value capture plan in other parts of the city, as needed.

Assembly Ways and Means Chairperson Helene Weinstein, a Democrat representing Brooklyn, noted the absence of communication between Cuomo’s administration and the community representatives of affected areas, questioning why the value capture wasn’t applied to suburban areas that are benefiting from major transportation investment. Of the Hudson Yards development on Manhattan’s West Side, she said, “That was a negotiated, agreed-to proposal, that both the city and MTA board worked out, and that worked on properties that were not really developed. There was clearly much more of a nexus between the extension of the 7 line [and the linked value capture program], than this sort of open-ended situation here.”

by Rachel Silberstein, State government reporter, Gotham Gazette

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MTA Funding Fight May Dominate This Year’s City-State Budget Struggle Fri, 26 Jan 2018 05:00:00 +0000
What’s The [Data] Point? $14.3 Billion, with Robert Mujica and Dean Fuleihan whats the data point

What's The Data Point? Episode 28 -- $14.3 Billion, with Robert Mujica and Dean Fuleihan [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

robert mujica cbc panel jan23

State Budget Director Robert Mujica and New York City First Deputy Mayor Dean Fuleihan spoke at a CBC event on Wednesday, January 24 to discuss the implications of the recently-passed federal tax reform on the state and city. Mujica and Fuleihan discussed how the state and city are responding, with a great deal of budget fallout to come. Ben and Maria were there and provide an intro and brief discussion of the speeches, and this episode then brings you the full remarks from Mujica and Fuleihan, with enlightening audience Q&A after each. You can also catch the video of the entire event, which included two-panel discussions, at the CBC website.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

by Ben Max, Gotham Gazette

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What’s The [Data] Point? $14.3 Billion, with Robert Mujica and Dean Fuleihan Thu, 25 Jan 2018 05:00:00 +0000
Last City Budget Hearing Sets Stage for Final Negotiations ferreras

Council Member Ferreras-Copeland (photo: John McCarten)

The City Council held its final hearing on Mayor Bill de Blasio’s $84.86 billion executive budget proposal on Thursday, with Council members raising issues that have persisted throughout budget season and expressing concerns about the federal budget proposal released this week by the Trump administration.

“The city adopts the Fiscal 2018 budget at a time of great uncertainty about the future of critical programs and services that help many of our most vulnerable populations,” said Council Member Julissa Ferreras-Copeland, chair of the Council’s finance committee, in a prelude to a deal that must be reached between the Council and de Blasio by the July 1 start to the new city fiscal year. Many are expecting a deal much sooner than that deadline, though.

Ferreras-Copeland called the White House’s budget proposal “devastating,” pointing out that it outlines cuts to food stamps, Medicaid, housing programs, and the earned income and child tax credits. She worried that many city agencies hadn’t developed contingencies to cope with those potential cuts.

Although Ferreras-Copeland commended the de Blasio administration for funding key initiatives -- air conditioning in public school classrooms, immigrant support services, planning for borough-based jails in the effort to close the Rikers Island complex -- and reducing excess capital appropriations, she criticized the lack of funding for universal school lunch, senior services, youth jobs, and the Emergency Food Assistance Program. The budget, “as it currently stands, does not appropriately reflect the vision of both the Council and the Mayor,” she said.

Ferreras-Copeland said the administration had failed on a few fronts, particularly in reforming the capital appropriation process and providing transparency. She cited, for instance, the mayor’s announcement of a partial hiring freeze for administrative and managerial positions. “Because the Administration did not issue guidance on this plan until well into the budget hearings, agencies were unable to provide us any detail about how it would affect them,” she said. She also called for increasing city reserves, from the current 10.7 percent of adjusted spending to somewhere between 12 and 18 percent.

Dean Fuleihan, de Blasio’s director of the Office of Management and Budget, defended the proposed budget while promising to continue working with Council members on their priorities. Fuleihan presented a grim assessment of how President Trump’s budget would affect the city, insisting that the administration has “responded to the uncertainties and challenges we face by maintaining historic reserves and expanding our savings program, while continuing to make investments that strengthen New York’s future.”

Reform of the capital projects management system seemed of particular importance at the hearing and Ferreras-Copeland wondered why projects experienced consistent delays and cost overruns. Council Member Brad Lander later released an issue brief at the hearing, prepared in concert with other members, that showed 44 percent of capital projects that cost more than $25 million were severely late and 42 percent of projects were severely over budget. On average, the brief noted, projects were $30 million over-budget and 700 days late.

“This is not the fault of the de Blasio administration but we have a shared responsibility to do more to fix it,” Lander said.

Fuleihan agreed with that sentiment, while insisting the administration was making incremental improvements. “We need to work together...we need to be careful, we need to be thoughtful about this,” he said. The city will pass both a new fiscal year operational spending plan and a revised 10-year capital spending plan. The capital plan is revised every other year.

Fuleihan also promised to provide more detail about lump sum appropriations for a number of city agencies, an issue that Ferreras-Copeland said prevents the Council from full oversight. He also explained the implementation of the administration’s partial hiring freeze, which includes a variety of caveats, as the mayor had indicated it would.

Another issue that has been raised throughout the budget process is increased funding for nonprofit human services providers that are contracted by the city. These providers are increasingly facing financial insolvency and Council members have been advocating for the administration to provide contract increases. Fuleihan noted that it was an “inherited” problem and that the city has done more in the last three years than prior administrations. This year, the mayor’s preliminary budget also included a six percent wage increase over three years, at a cost of $200 million, for employees of these nonprofits. “Do we need to do more? Obviously,” Fuleihan said. “We’re saying we need to do more and we’re committed to doing more.”

Council Member Jimmy Van Bramer, chair of the Committee on Cultural Affairs, Libraries, and International Intergroup Relations, pushed the administration on a $150 million capital need for city libraries and for $40 million in increased allocations for cultural institutions facing the threat of federal funding cuts.

Fuleihan stressed that the city has made significant investments in libraries, including capital allocations and operational funds for six-day service. “There’s always significant needs there, I’m not minimizing that...It’s another area where I think we all need to see some improvements,” he said of library capital projects. Cultural institutions, he said, were “part of the conversation we’re having,” and vowed that the administration will fight back against any proposed cuts.

Both Council Member Ydanis Rodriguez and Council Member Laurie Cumbo reiterated a request for funding “Fair Fares” to give discounted Metrocards to low-income New Yorkers. It is one of the few budget requests that the mayor has absolutely refused to fund, insisting that the state or state-controlled MTA should provide the funding. Fuleihan repeated that rationale at the hearing. “The mayor is more than sympathetic towards this but he feels that the appropriate place to fund it is the MTA,” he said.

Cumbo also asked for the administration’s plan to expand the Summer Youth Employment Program (SYEP), an ongoing point of negotiation between the administration and the Council. Fuleihan, pointing out that the city has increased SYEP slots by almost double in the last three years, said expanding the program was not as simple as funding more slots. “There are two things: how much capacity are we actually able to do over the summer, and if we agree on moving forward, how do we move forward,” he said. “So I think there’s still questions for us to work though.”

Following Fuleihan, Comptroller Scott Stringer also presented the Council with his preliminary analysis of the White House budget proposal and its impact on the city, finding that the city could lose $850 million in social services, housing and education funding. “We have to anticipate the impact of these significant cuts,” he said, “and be prepared with a sound and responsible city budget.”

And although he said that the city’s economic outlook remains strong -- with a projected surplus in fiscal 2017 that will “equal or exceed” the previous year’s $4 billion surplus -- he said revenue and job growth were slowing. “I remain concerned that we are not adequately prepared for a potentially rocky road,” he said.

“We’re not being alarmist, I’m not here today to say we’re in doomsday,” he later added, “but, look, part of why we’ve been successful as a city is, we navigate what comes our way. We’re forward thinking about it...This is our moment to be very strategic and cautious.”

Stringer listed a few of his own priorities for the budget, calling for reductions in the cost of citizenship applications to relieve the financial burden on 670,000 eligible immigrants. He also reiterated the need to fund human services nonprofits, releasing an accompanying analysis of the industry, and finally insisted on procurement reform at the Department of Education.

State Comptroller Thomas DiNapoli also released an analysis of the federal budget proposal on Thursday, calling for increased reserves to weather economic uncertainty and the potential rollback of the Affordable Care Act. “The President's proposed budget would make steep reductions in programs upon which city residents rely and poses a major risk to future city budgets,” DiNapoli said in a statement.

With Thursday’s hearing, the public facing part of the budget process comes to an end, save for the rallies and press conferences that may occur to lobby for additional funding for specific causes. The City Council and the mayor will now move to closed-door negotiations to hammer out the final tweaks to the spending plan. Last year, the final budget deal reduced spending by about $100 million from the proposed executive budget. Council Speaker Melissa Mark-Viverito and Mayor de Blasio ceremoniously shook hands on that budget agreement on June 8, the earliest agreement in 15 years. The next budget is due by July 1, the start of the 2018 fiscal year.

by Samar Khurshid, senior reporter, Gotham Gazette

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Last City Budget Hearing Sets Stage for Final Negotiations Thu, 25 May 2017 04:00:00 +0000
At First Executive Budget Hearing, Council Pushes Unfunded Priorities mmv budget

Speaker Mark-Viverito (all photos: John McCarten/City Council)

The City Council held its first hearing on Mayor Bill de Blasio’s $84.86 billion executive budget for fiscal year 2018 on Thursday, and Council members gave the mayor a mixed review for his updated spending plan. They praised de Blasio for increasing funding for a number of recommendations made by the Council and for taking steps to control the capital budget. But, Council members expressed concern that crucial priorities remained unfunded, or underfunded, even as the latest budget plan increased projected spending by $700 million over the preliminary budget released in February.

The hearing kicks off the final weeks of public Council hearings, private negotiations, and lobbying by interest groups and advocates, with the mayor and Council due to agree on an adopted 2018 budget by July 1, the first day of the new fiscal year.

At Thursday’s hearing, City Council Speaker Melissa Mark-Viverito commended the administration for increasing funding for the Administration of Children Services, for including funds for borough-based jails and an adolescent facility -- measures that are key to the closure of the Rikers Island jail complex -- and for reducing excess capital appropriations by $3.2 billion. The speaker noted that it was a “bittersweet day” for her, since this is the last executive budget process she will participate in (she is term-limited out of office at the end of the year).

Mark-Viverito said she is disappointed that the budget did not expand the Summer Youth Employment Program, a six-week paid jobs program for youth 14-24 years old, from the current baselined 65,000 slots to 80,000 slots for fiscal year 2018. She is “dismayed” that the budget did not eliminate all school lunch fees, which would have done away with the stigma associated with free lunches available to low-income students, she said.

The speaker also said that though the budget deals with excess capital appropriations, it does not include a comprehensive plan to reform the capital planning process, which is home to faulty projections and consistently over budget and late building projects. “My colleagues and I remain worried that this budget continues the practice of committing funds that significantly exceed the city’s ability to actually execute projects,” she said.

Mark-Viverito, Council Member Julissa Ferreras-Copeland, who chairs the finance committee and is a key player in budget negotiations, and other Council members also pushed the administration to increase the city’s reserve funds to prepare for the threat of funding cuts under the Trump Administration and the Republican-led Congress.

Ferreras-Copeland similarly expressed approval of several of the administration’s funding commitments, including for air conditioning in school classrooms, repairs at NYCHA buildings, and construction and renovation of animal care centers. She also applauded the mayor’s “3-K” initiative, to expand pre-kindergarten to all 3-year-olds in the city. But, she maintained that the budget “clearly falls short in a number of critical areas,” and fails to fund several Council priorities.

jfc budget“This cannot simply be explained as a matter of budgetary caution,” she said, citing the city’s pattern of budget growth and the $700 million in new funding from de Blasio’s preliminary budget. Ferreras-Copeland (pictured, left) criticized the lack of funding for senior services and the SYEP program, the failure to fund the Emergency Food Assistance Program (EFAP), and the $6.25 billion increase in the ten-year capital budget without accompanying efficiency measures.

She said the mayor’s executive budget does not adequately account for the dangers from Washington D.C. and that spending was growing faster than revenues in a time when the city is facing signs of a predicted economic slowdown. “The executive budget does not go far enough to truly display a commitment to fiscal prudence pledged by the administration,” she said.

[Related: De Blasio Increases Spending and Savings in $84.86 Billion Executive Budget]

Representing the administration, Dean Fuleihan, director of the Office of Management and Budget, offered little in the way of pushback, defending the administration’s budget outlay plans but promising to continue working closely with the Council on their concerns. The executive budget, he said, “funds New Yorkers’ priorities, and it does so responsibly.”

Fuleihan stressed, as he has in the past, that the budget maintains historic levels of reserve funds - with $1 billion annually in the general reserve, $4 billion in the Retiree Health Benefits Trust Fund, and $250 million each year for four years in the Capital Stabilization Reserve.

fuleihan budgetFuleihan (pictured, right) also pointed out that the city has found $2.8 billion in savings since the November modification of the current budget, including $700 million in the executive budget alone. By the final adoption of the budget, Fuleihan promised, the city will find more savings, particularly from a partial hiring freeze at administrative and managerial levels at some city agencies. Noting the risks from federal funding cuts, he said, “Mindful of these risks, we will continue to make strategic investments and approach our budget process with caution.”

Fuleihan’s assurances didn’t seem to set the speaker’s mind at ease. Mark-Viverito expressed worry that the city’s spending growth could eventually be a problem. “While in the short term, what we’re seeing seems to be OK, in the long term there are concerns that this could be unsustainable,” she said. The city budget has increased dramatically under de Blasio and Mark-Viverito -- given the mayor’s executive budget, it would be up $12.2 billion since the last modification under Mayor Bloomberg in November 2013.

Fuleihan, however, sought to allay those fears, pointing out that the city adjusts and reevaluates the budget continually through the year and would be able to respond as needed. “Your point that we constantly need to be cautious and concerned and find additional ways of savings and maintaining our high levels of reserves, we should be working with you to that goal,” he said.

Mark-Viverito also raised the question of whether the city should return to instituting a Program to Eliminate the Gap or PEG, a Bloomberg-era mechanism that set targeted goals for reducing spending at city agencies. De Blasio did away with the PEG, instead opting for a voluntary Citywide Savings Program that he insists is more effective. Fuleihan echoed that point at the hearing, insisting that this administration’s process had been more collaborative. “We have achieved more savings that way,” he said.

The speaker also asked for estimates, that the budget currently doesn’t include, of how the recently announced plan to close Rikers Island jails over ten years would affect the city budget. Fuleihan had few answers, pointing out that the plan -- which there is currently almost no details for -- affects multiple agencies and also relies on the Raise the Age legislation just passed by the state that will be phased in over the next few years and will transfer 16- and 17-year-olds off the island.

Ferreras-Copeland later brought up the SYEP program, stressing that the administration’s commitment to youth jobs seemed lacking. “Essentially this agency is saying “no” to far more young people than we are saying “yes” to,” she said.

Fuleihan insisted that the city has baselined 65,000 slots for the program, showing that the administration is indeed committed to SYEP. He also noted that a joint youth jobs task force created by the Council and the administration to study the issue only recently released its recommendations and that those would be incorporated before the adopted budget. “I had no doubt that this was going to be another priority that we’re going to be working together on adoption now that we have the task force recommendations,” Fuleihan said.

The hearing touched on a number of other budget items, small and large, and many related to individual Council members’ purviews as chairs of Council committees. For instance, Council Member Jimmy Van Bramer, chair of the cultural affairs committee, brought up funding for the arts; transportation committee chair Council Member Ydanis Rodriguez questioned the administration’s refusal to back discounted Metrocards for low-income New Yorkers; and Council Member Ben Kallos, chair of governmental operations, pushed for budgeting to be linked with agency performance. In his typical refrain, Fuleihan repeatedly said OMB would work with the Council members on their individual concerns.

One of the larger issues addressed at the budget hearing was the city’s capital plan -- not the level of funding, but rather the process of allocation. Council members said the city has often allocated excessive funds for projects that are often delayed and that no plans exists to account for cost overruns.

The ten-year capital plan, which funds the city’s infrastructure needs and is paid for by issuing bonds to borrow money, increased to $95.85 billion in the executive budget, a $6.25 billion or 7 percent increase from the February preliminary budget. Fuleihan insisted that the increase was necessary, with much of it going to creating affordable housing and to repair and maintain public housing infrastructure, and that the city’s level of debt was under the longstanding benchmark of 15 percent of tax revenue. “We look at the capital plan as affordable given any standard that the city has used for decades,” he said. “Can we make improvements on the timing? Yes. Will we work together to do that? Absolutely.”

Council Member Brad Lander pushed Fuleihan to go further, insisting that there’s “a need for systemic reform” of capital project management. “Will you form with the Council a task force to look systemically at capital projects management reform?” Lander asked. Fuleihan seemed open to the idea of resolving issues before the adopted budget but did not commit directly to the idea of a task force. “We should discuss what’s the best way to do that,” he said.

Another prominent issue discussed Thursday was funding for the Emergency Food Assistance Program. The entire Council signed on to a letter to the mayor released Thursday, calling on him to include $22 million in baseline funding for the program, up from $8 million currently outlined. “The epidemic of hunger in our city disproportionately affects women, children, seniors, and communities of color and it’s critical that we can guarantee that no New Yorker is turned away from a pantry or soup kitchen,” the letter reads.

Council Member Stephen Levin, chair of the general welfare committee, who has oversight of the program, said the executive budget doesn’t build on last year’s adopted budget, but rather cuts back on funding. Fuleihan refuted that notion but assured Levin that the administration would collaborate with the Council on allocating adequate funding. “We would work with you and we would work with the agency,” Fuleihan responded. “I think that’s fair.”

For the next few weeks, the Council will hold individual hearings to examine agency budgets and then issue an official response to the administration. The two sides will then move to closed-door negotiations before coming to a final agreement on an adopted budget for the next fiscal year that begins July 1.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

At First Executive Budget Hearing, Council Pushes Unfunded Priorities Thu, 04 May 2017 04:00:00 +0000
Federal 'Wait and See' Dominates First City Budget Hearing Ferreras-Copeland City Council budget hearing

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

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

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

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

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

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

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

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

Dean Fuleihan budget hearing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next city fiscal year starts July 1.

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

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Federal 'Wait and See' Dominates First City Budget Hearing Thu, 02 Mar 2017 05:00:00 +0000
With Trump Presidency Looming, City Officials Reevaluate Financial Picture ferreas copeland presser nyccouncil

Council Member Ferreras-Copeland (photo: @NYCCouncil)

The potential repercussions of President-elect Donald Trump’s policies on New York City’s budget loomed over a Wednesday City Council hearing. The Council’s Committee on Finance met for oversight on the de Blasio administration’s November Financial Plan Update, which shows a projected increase in spending of $1.3 billion this fiscal year, as well as additional savings being set aside by the city.

On Wednesday at City Hall, Council members led by finance Chair Julissa Ferreras-Copeland had questions for city budget officials, who explained that most of the new spending stems from an increase in federal and state funding. The current fiscal year runs through June.

The budget modification does not account for how Trump’s proposals -- from a promised freeze on funding to so-called sanctuary cities to tax code changes to eliminating the Affordable Care Act -- may affect the roughly $7 billion in federal money that comes to the city annually of late.

While Trump may have a difficult time following through on his promise to withhold all funding from sanctuary cities -- which are those like New York that are welcoming to undocumented immigrants -- he may be able to take a piecemeal approach. Mayor Bill de Blasio has vowed to fight several of Trump’s most extreme campaign promises, like mass deportations.

At the budget hearing this week, City Council Members and Dean Fuleihan, director of the Mayor’s Office of Management and Budget, agreed that in the coming months, the Council and the administration must work together to evaluate the impact of possible federal actions and prepare a response.

“Our fiscal management will be a critical asset as we move into a period of uncertainty at the federal level,” Fuleihan said. “At this time, the consequences of federal action are unknown and potentially widespread.” He noted several times throughout the hearing that city reserves are at “historic levels.” This is true in terms of the raw dollar amount, which is several billion, but with a $83.4 billion budget that has expanded rapidly under de Blasio, the city is somewhat short of a safe “budget cushion,” according to Comptroller Scott Stringer and other watchdogs.

The November budget update anticipates the $1.3 billion increase in spending from the June adopted budget, much of which stems from increases in federal and state funding, including aid for Hurricane Sandy recovery projects. The plan forecasts a $127 million reduction in projected tax revenues, and also includes $1 billion in savings, through changes in municipal government function, like increased use of electronic payments and expanded car sharing among agencies, as well as spending re-estimates at various agencies.

Generally, Council Members were pleased to see that the November Plan includes more savings, which the Council has been pushing for. “The highlight of the November Plan is a Citywide Savings Plan with savings of more than $1 billion in fiscal years 2017 and 2018,” said Council Member Ferreras-Copeland. “This early release of a savings plan signals a cautionary approach and aligns with the Council's push for programmatic, lasting savings that offset spending increases. I'm also pleased to learn that OMB has put together a team to focus on developing real baseline savings across agency boundaries.”

Gotham Gazette previously reported that OMB had launched a new citywide savings unit to coordinate greater agency savings.

Other concerns with the November Plan addressed at the hearing included the added $115.1 million in new needs funding allocated to the Department of Homeless Services for increased shelter costs; the inclusion of $130 million to cover pension fund obligations due to the fund’s underperformance this year; and $14.4 million allocated to the Department of Correction related to the implementation of the 14-point plan to reduce violence in Rikers Island.

Of the $115 million in new shelter costs, $52 million comes from city funding, a 10 percent increase from the amount in the budget at adoption. “What is causing FY17's increasing shelter costs,” Ferreras-Copeland asked, “and how confident are you that these figures reflect what the city will actually be spending on shelter costs in FY17, and we won't be having this conversation again in the spring?”

“It's important to remember that shelter costs have been increasing since the end...of 2009, when there were about 37,000 in shelters,” Fuleihan said (there are currently more than 60,000 in city shelters). “We have, with your help, instituted programs - government assistance and other preventative measures - that we believe have changed what the shelter population would be today,” Fuleihan added.

Noting that the homeless shelter population varies day to day, Fuleihan asserted that what the November Plan provided is OMB’s “understanding of that population and the costs associated with DHS [Department of Homeless Services] services.”

Asked whether homeless shelter costs would continue to increase beyond what is included in the November Plan for FY 2018, Fuleihan said the administration is making changes and “hoping to stabilize this...there are going to be more additional plans coming out, and as we do that, we will continue making assessment” as the city gets closer to the preliminary budget.”

Mayor de Blasio has also recently said the city will be coming forward with new plans to tackle the homelessness crisis.

Council Member Helen Rosenthal took issue with the city’s rising pension obligations due to the underperformance of the city’s pension funds, noting that the November Plan included nearly $100 million more than what was spent to cover the city’s pension obligations in FY 2016, and that OMB projects the number will increase by about $300 million in the following years. Pensions to former city workers are guaranteed, with city funds required to make up gaps in the returns from pension fund investments. The city is currently paying billions of dollars per year toward pension obligations.

“I'm concerned about the fact that the city is having to put in more money to our pension funds, I'll be interested to hear from the comptroller as to why our investments are coming in lower so that city taxpayers have to put in our current dollars for our retiree expenses,” Rosenthal said, calling the situation “alarming.”

Fuleihan noted that OMB is “simply reporting the earnings that the comptroller gave us,” and that they are committed to “fully funding the pension system by 2032.”

The Department of Correction also accounted for a significant amount of the funding for new needs added to the November Plan. As Ferreras-Copeland noted, the de Blasio administration has consistently increased funding “over multiple financial plans for the DOC’s contract with McKinsey Group to accelerate and sustain the department’s anti-violence reform agenda.” Since fiscal year 2016 (July 1, 2015-June 30, 2016), the administration has added $24.2 million for consulting fees, including the $9.9 million for consulting fees included in the November Plan.

Yet, Ferreras-Copeland said, neither the administration nor DOC has shared details of the contract with the Council, or information regarding the exact nature of the McKinsey Group’s role in DOC’s reform agenda.

“Can you provide more details on why administration increased funding for DOC consulting fees at each fiscal year, and when do you expect McKinsey Group to finish its consulting for the department on its reform agenda?” Ferreras-Copeland asked, adding that she is seeking information clarifying what exactly the Council should be expecting to see as a result of the added funding.

Fuleihan said the McKinsey group is expected to finish its consulting in April, which the additional $9.9 million from the November Plan should cover, and promised to get Ferreras-Copeland information regarding the McKinsey Group’s role.

While the population at Rikers Island jails is down significantly under de Blasio, to about 7,500 daily, violence continues to plague the facilities. There are about 10,000 detainees and inmates across all city jails on any given day at this point.

Overall, the November Plan’s inclusion of a savings program and increases to city spending were well-received. Some specifics regarding the budget update remain troubling, like the increasing pension obligations, which are projected to cost the city more in years to come, and homeless shelter costs, yet much of the conversation at the hearing was dominated by concerns over New York City’s uncertain financial future when Donald Trump becomes President.

Funds from the federal government reflect about 10 percent of the resources in the city operating budget this year. Trump’s comments have raised concerns among city officials. “Federal funds make up a significant portion of several agencies and authorities - DOE, HPD, NYPD, and NYCHA,” Ferreras-Copeland said, later adding Health + Hospitals, and asking Fuleihan what could be done to mitigate potential damage to city resources moving forward.

“Right now, it’s very difficult to make an assessment as to what is going to happen,” Fuleihan said, though that picture should become clearer in the coming months. “We should, working together, coordinate our response to any action that may be taken in Washington,” he told the Council, and identify what federal aid may be at risk.

by Meg O'Connor, Gotham Gazette

Read more by this writer.

With Trump Presidency Looming, City Officials Reevaluate Financial Picture Thu, 15 Dec 2016 05:00:00 +0000
Several Council Asks Remain as City Budget Negotiations Hit Home Stretch de blasio council budget briefing

The Mayor and Council discuss the budget (all photos: William Alatriste)

City budget season entered its home stretch last week when the City Council conducted its final hearing on Mayor Bill de Blasio’s $82.2 billion executive budget for fiscal year 2017. With a deal between the Council and the mayor due by the July 1 start of the new fiscal year, the parties will largely negotiate behind closed doors, with funding levels for a number of major priorities on the table. There are also lingering questions about savings and how much the de Blasio administration is asking its agencies to trim as spending grows.

On the Council side, negotiations will be led by Speaker Melissa Mark-Viverito and Council Member Julissa Ferreras-Copeland, chair of the finance committee. This past Tuesday, Ferreras-Copeland reiterated concerns she had expressed at the first executive budget hearing that de Blasio’s latest spending plan, his executive budget, largely ignored the Council’s priorities while adding massive appropriations for the administration’s proposals.

“I can say today, after presiding over nearly 65 hours of Executive Budget hearings, that the testimony we heard from the agencies only reinforced this notion,” she said in her opening statement at the final executive budget hearing. “Over the past two weeks, we questioned each commissioner about the items from the Council’s budget response that were not included and were repeatedly told that they were just not a priority.”

Ferreras-Copeland called out agencies for assuming that the Council would fill budget gaps with its discretionary funding - particularly for the Department for the Aging and the Department of Youth and Community Development - and also pointed out that they had given few details about how $2 billion in new funding would be implemented. Throughout the budget process, she said, “the Council’s ability to fulfill its Charter-mandated review and oversight role was hindered by the administration’s delay in providing vital information, despite public assurances that documents and data would be provided promptly.”

Specifically citing the administration’s ambitious plan to overhaul the municipal hospitals system, New York City Health + Hospitals, as problematic, Ferreras-Copeland (pictured) said that the plan was provided to the Council less than a day before the first executive budget hearing.

julissa ferreras-copeland budget hearingThe issue of savings, which has underscored the entire budget process, was raised again last week. The mayor’s executive budget shows $5.4 billion in savings through the Citywide Savings Program through Fiscal 2020. For 2017, however, Ferreras-Copeland stressed that the city’s reserves are largely flat, and Council Member Helen Rosenthal pointed out later that the CSP depends heavily on debt refinancing, spending re-estimates and accruals (delays in spending from earlier years) rather than programmatic efficiencies.

An analysis by Citizens Budget Commission, the nonpartisan nonprofit budget watchdog, showed that $189 million of the nearly $1 billion in savings proposed just for fiscal 2017 comes from agency efficiencies. “The increased size of the CSP is a step in the right direction,” says the report, “but too little of the savings are from agencies thinking strategically and creatively about how to provide value to taxpayers and do more with less.”

Since coming into office, de Blasio has on one hand been praised for what he is socking away and the general health of the city economy and his fiscal prudence, but on the other hand he’s been criticized for not demanding more in savings from his commissioners and not having the recommended budget “cushion” in savings. Under de Blasio, savings have grown, but as the city economy has boomed, union contracts have been settled, and the mayor has implemented many new programs, spending has grown rapidly and the cushion does not meet the percentage of city spending that watchdogs like city Comptroller Scott Stringer say is wise.

At a press conference on Wednesday, Speaker Mark-Viverito said Council members would start discussions on the negotiations by Thursday. “We’re starting to have the formal process internally to delineate the priorities and engage with the administration,” she said in response to a question from Gotham Gazette. She pointed out that many of the Council’s top priorities had already been identified over the course of budget hearings.

Council members have publicly called on the mayor to increase funding for a variety of initiatives and programs including summer jobs for youth, emergency food assistance, cultural institutions, human services nonprofits, seniors, and the offices of the five district attorneys.

Summer Youth Employment
Council members and community advocates have been pushing for increased baseline funding for the Summer Youth Employment Program (SYEP), which provides six weeks of paid work to youth 14 to 24 years old. Last year, the program served 54,000 young people and supporters want to increase that to 60,000 this year, reaching their eventual goal of 100,000 by the 2019 fiscal year. Currently, the city is allocating $36.5 million for SYEP which, along with $15.6 million from the state, would fund about 35,000 jobs.

dean fuleihanAt last week’s final executive budget hearing, Dean Fuleihan, director of the Office of Management and Budget, stressed that the administration has made huge commitments to DYCD, increasing the agency budget by nearly $250 million over the years, but the SYEP was not a priority. “I understand that the Council wants this to be a priority and that’s going to be a part of our conversation,” Fuleihan (pictured) said.

Emergency Food Assistance
The executive budget includes $8.2 million for the Emergency Food Assistance Program (EFAP), but 48 Council members signed a letter calling on the mayor to increase this to $22 million and baseline it in the budget. “Millions of New Yorkers rely on meals from food banks and soup kitchens, and the need is greater than ever before,” said Council Member Stephen Levin, chair of the general welfare committee, in a statement last week. “No family should have to choose between paying for necessary expenses and being able to eat,” he added.

Fuleihan pointed out that this increased need was due to significant cuts in federal funding for emergency food programs and that the administration was open to discussing the funding with the Council.

Cultural Programs
A number of Council members are pushing to increase the budget for the Department of Cultural Affairs. Council Member Jimmy Van Bramer, chair of the cultural affairs committee, pointed out at last week’s hearing that the City Council’s cultural initiatives have increased over the last two years but the administration is not sharing that commitment. He and many of his colleagues want the city to increase funding for nonprofit cultural institutions by $40 million - it has remained flat for the last three budgets - and to baseline $43 million for six-day service at city libraries. Currently the city has baselined about half of that library funding. Again, Fuleihan promised to work with the Council on the issue.

Department for the Aging
Council Member Margaret Chin said that the previous administration “was all about cuts” to funding for seniors and the Council expects this administration to be “quicker and faster” in funding services for a growing senior population.

In his testimony, Fuleihan emphasized that the administration has committed to senior services and increased Department for the Aging’s budget by $30 million since Mayor de Blasio took office, reversing a trend of at least ten years of reductions in DFTA’s budget. He insisted to Chin that the administration has increased DFTA case manager salaries and that it would eliminate waiting lists for homecare, one of Chin’s priorities.

District Attorney Offices
The executive budget did not include any additional funding that the five District Attorney offices had requested after the preliminary budget was released. The Council, which listed public safety as one of its top priorities in its budget response, called on the mayor to heed these requests, which total about $21 million. Citing the Council’s own commitment to criminal justice reform, including the funding of 1,300 new officers for the NYPD last year, Council Member Vanessa Gibson, chair of the public safety committee, said, “What I fail to understand is, in the executive, is why we have a big whopping zero for the district attorneys.”

Fuleihan said the dialogue with the district attorneys was ongoing, particularly the two new DAs in the Bronx and Staten Island. “We do believe that’s part of the adopted budget,” he said at last Tuesday’s hearing.

Human Services Nonprofits
On Thursday morning, Council members rallied with nonprofit groups at City Hall to push the mayor for $25 million to cover administrative costs at contracted nonprofits that provide social services. These nonprofits, according to a report by the Human Services Council, are facing a budget crisis owing to government underfunding. In a letter, 47 Council members asked the mayor “to offer some critical budget relief” to nonprofits and help them invest in equipment, technology, and staff development.

In a statement on Thursday, mayoral spokesperson Karen Hinton said, “We look forward to working with the Council throughout the budget process.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Several Council Asks Remain as City Budget Negotiations Hit Home Stretch Mon, 30 May 2016 04:00:00 +0000
Several Significant Questions About The Governor's Budget Cuomo built to lead sots

Gov. Cuomo at his State of the State (via The Governor's Office)

Gov. Andrew Cuomo's 2016-2017 budget proposal has legislators and budget experts scratching their heads as to how major capital projects will be paid for, how the state plans to make good on a promise to fund the MTA, and how certain measures might affect funding for New York City. Many are wondering if the governor will keep his pledge that his plan to shift millions in costs for CUNY and Medicaid "won't cost New York City a penny."

These questions linger almost two months after the plan was first released, rankling Mayor Bill de Blasio, City Council members, and city-based state legislators, and alarming budget watchdogs.

Only one month remains until the April 1 start of the new fiscal year and budget negotiations have been muted. State of Politics reports that there was an initial budget conversation on Wednesday morning among Cuomo and legislative leaders. The way Cuomo has positioned things, there are questions about whether the State Assembly and Speaker Carl Heastie, de Blasio's most important ally, will be willing and able to take on the political cost of going to battle for the city - on CUNY, Medicaid, and other issues like affordable housing bonds and homelessness-prevention vouchers. The Legislature recently finished holding budget hearings and the Assembly and Senate one-house budgets are expected imminently.

Potential state cuts loomed large over the initial New York City Council preliminary budget hearing on Tuesday, at which de Blasio's budget director reiterated several times that possible state cuts could be crippling to the city, but that the city plans to hold the governor to his word and that Assembly Democrats will be essential in the process.

Cuomo's move to have New York City assume additional MTA, CUNY, and Medicaid cuts are among his most controversial, along with the governor's plan to take more control of affordable housing being built in the city. While many await more detail from the governor as the clock ticks, there is also mystery around major infrastructure projects for the metropolitan region that the governor is overseeing as well as a proposal from the governor to create a new entity to take more control of such projects.

As the governor pushes other policies that city Democrats back, like a minimum wage increase and paid family leave, he appears to be exacting whatever costs from the city he can in order to both undermine de Blasio and help the state pay its obligations.

Cuomo has a variety of government ethics reform proposals in his budget, but he has not been promoting them publicly, leaving many to wonder their fate. Meanwhile, in recent days new light has been shone on billions of dollars in the governor's budget with no determined purpose, to be used by Cuomo and legislative leaders as they see fit at a later date.

The City's Burden
A recent evaluation of New York City finances by State Comptroller Thomas DiNapoli warned that Governor Cuomo's budget provides major economic threat to the city. "The largest and most immediate budget risk is the proposed state Executive Budget, which includes three proposals that would increase the city's costs by $985 million in FY 2017 and by about $1.2 billion in each subsequent year (a total of $4.8 billion during the financial plan period)," reads the comptroller's report.

It continues: "The two proposals with the greatest budgetary impact ($785 million in FY 2017 alone) would require New York City to pay a larger share of the local cost of Medicaid and of the costs of the senior colleges of the City University of New York. After the release of the Executive Budget, the Governor stated that efficiencies would be identified to mitigate the budgetary impact of these proposals, but such savings have not yet been identified."

The Citizens Budget Commission, a nonprofit, nonpartisan watchdog based in New York City, quickly cried foul over the proposals in Cuomo's budget that would move costs for CUNY and Medicaid to the city (both are joint city-state programs that the state has traditionally supported to a far greater degree than the city).

CBC estimates the shift would cost the city $800 million. De Blasio pledged he would do "whatever it takes" to stop the plan, saying it could impact major plans to expand pre-kindergarten and other initiatives. As focus on the budget measure intensified Cuomo characterized the plan as a mutual agreement between the city and state to find efficiencies in the programs. De Blasio had only met briefly with Cuomo before the State of the State address and said he had learned about the shift that could cost the city nearly a billion dollars when most New Yorkers did.

Cuomo, in a NY1 interview, claimed "At the end of the day, what you will see is it won't cost New York City a penny, but we will make joint streamlining policy efficiency changes."

Some observers expected Cuomo to adjust the plan in his 30-day budget amendments, but nothing about it changed - apparently leaving it up to the city's allies in the Legislature to negotiate it.

Assembly Speaker Carl Heastie, the city's most powerful advocate in Albany, has expressed major concern over the plans, but it appears that he would have to own the cost of a change as part of budget negotiations, possibly preempting other major initiatives his conference wants.

E.J. McMahon, president of the Empire Center, a budget-focused think tank, said he believes that undoing Cuomo's plan would cost Heastie "$500 million" during negotiations which would limit what else Assembly Democrats could bargain for given that Cuomo appears committed to a 2 percent overall cap on spending growth.

The governor's budget makes for 1.7 percent spending growth so there isn't much room for new initiatives and losing the savings created by the cost shift would further tighten the equation. "1.7 to 2 [percent] is $300 million," said McMahon, "So $500 million is a pretty significant number in budget negotiations."

Dave Friedfel of the CBC agrees. "To add $500 million back on to the budget would blow through the governor's spending cap. It will have a major impact on negotiations," Friedfel said.

The Fiscal Policy Institute, also a think tank, argued in its budget testimony that the state should scrap the 2 percent spending cap. "There is no reason to hold annual spending growth below two percent if it means that we are under-investing in education and poverty reduction," reads the FPI testimony. "This unforced austerity has already caused the state to underinvest in several critical areas, and the continuation of the cap guarantees further harmful cuts to local governments, education and human service programs."

Meanwhile, Heastie has pressed for a millionaire's tax that would allow the state to spend more on education. The Cuomo administration has derided the plan and Heastie has fired back. Mayor de Blasio has continued to express support for raising taxes on the highest earners, but he has not made a focused push on the issue since his efforts failed in 2014.

Asked about whether there have been joint efforts between the Cuomo and de Blasio administrations to find efficiencies as the governor discussed, Morris Peters, spokesperson for the division of budget, said in a statement: "We have been having conversations with our partners in government and we will continue to do so."

During City Council budget testimony on Tuesday, de Blasio's budget director Dean Fuleihan said that talks had yet to occur between the city and state but that he expects them to take place soon.

"I've also said I'm going to take him at his word, but I'll hold him to it," de Blasio told a gathering of the state Legislature's Black, Puerto Rican, Hispanic, and Asian Caucus last month, referring to Gov. Cuomo and the CUNY and Medicaid cuts. "When the budget is passed on April 1 I fully expect there won't be any negative impact on New York City," de Blasio continued. "He said it won't cost us a single cent. That's what we expect, and I think a lot of people are going to make sure that happens."

Construction & Housing Takeovers
Another, little-discussed measure contained in Gov. Cuomo's budget would see the creation of "The New York State Design and Construction Corp." that would be given oversight of public construction projects worth over $50 million. The DCC would be a subsidiary of the state's Dormitory Authority and would be headed by three commissioners, all appointed by the governor.

"The DCC's primary purpose will be to provide additional project management expertise and oversight on significant public works projects undertaken by state agencies, departments, public authorities and public benefit corporations throughout the state," reads the governor's State of the State policy book.

The proposal has raised concerns for legislators and budget watchdogs who believe Cuomo is trying to have more influence over independent authorities like the MTA. The MTA board is made up of members appointed by the city and other localities serviced by the agency. The Governor also appoints members and names the chair. Representatives of Citizens Budget Commission (CBC) are concerned the body would create more bureaucracy and confusion. For example, the DCC could void contracts signed by the MTA. CBC has written legislators urging them to oppose the plan.

John Kaehny, of watchdog group Reinvent Albany, said he was taken aback by the plan. "The Dormitory Authority is the premier slush fund for pork barrel spending. To house a project management agency within it is alarming. We agree with budget watchdog groups who view this as a power grab and another attempt to reduce transparency and accountability."

"What is his motivation for proposing this unprecedented design and construction corporation?" asked McMahon, of The Empire Center. "It will allow [Cuomo] to reach in and take control of any project he wants. The governor is the kind of guy who will say 'Stop that, give it to me, I can do it better!' The governor likes to draw power to the center, to the top, to him."

Cuomo is also looking to increase the state's say over New York City development of affordable housing. Per the governor's plans, The Public Authorities Control Board would be allowed to veto individual housing projects proposed by the city that utilize tax-exempt bonds, given to the state by the federal government, which the state then allocates to municipalities.

Cuomo administration officials say the plan would add a new level of transparency to a system that allocates billions of dollars to construction each year. City officials and affordable housing developers say that there is no need for another level of bureaucracy.

The Control Board is made up of the governor and both legislative leaders. Mayor de Blasio has panned the proposal, as have a number of contractors and housing advocates who worry the plan will create overlap and uncertainty around badly-needed projects that increase affordable housing stock. The Real Estate Board of New York has also raised concerns that more state say would create uncertainty and possibly confuse lending institutions.

"We think adding these additional layers will only slow down the process at a point where thousands and thousands of people are waiting for housing that will allow them and their families to be able to make ends meet," de Blasio told legislators during budget testimony earlier this year.

Adding to the drama around the city's affordable housing plans, De Blasio administration officials, housing advocates and developers are also growing nervous that Cuomo may continue to divert some of the flow of federal housing bonds that the city relies on to create affordable housing. After doing so with millions of dollars in bonds that the city thought it could count on in 2015, Cuomo is considering using the bonds for the state's newly expanded role in creating affordable housing. During his State of the State, Cuomo outlined general plans to invest billions in affordable housing, but he has yet to flesh those plans out. His policy book promised details "in the coming weeks."

MTA Financing
Last year, Cuomo and his MTA Chair Thomas Prendergast began a campaign to push the city to contribute more to the MTA capital plan. Eventually a deal was struck where the city agreed to contribute $2.5 billion and the governor pledging an additional $7.3 billion, bringing the state's total pledged contribution to $8.3 billion, all part of the $26 billion overall five-year plan. For months Cuomo was asked how the state would pay its share and he retorted that the question would be answered in his budget.

His budget plan simply raised more questions. Cuomo's plan appropriates $1 billion for the MTA capital plan and pledges to provide more of the promised $8.3 billion when the MTA spends through other capital funding. The city has in turn put off its commitment to extra funding since the city-state agreement was contingent upon parallel fund allocation.

Budget experts believe the Cuomo administration will allow the MTA to issue bonds to raise the $7.3 billion once it spends the funds it has on hand. "[The governor] already committed to $8.3 million for the MTA and we all wondered where that would come from," said McMahon. "The answer is that the MTA commitment he signed was not worth the paper it was written on. Once the MTA is done spending money it raises itself, the state will direct them to issue their own bonds."

Jamison Dague of CBC said that while the MTA has a backlog of projects that need to be addressed, he would like to see the state spell out specific funding for the agency. "What they've done here is tell the MTA, 'You have resources to draw down before we come in with the pledge.' The MTA has a lot of capital funding sources they are still trying to spend."

However, Dague said knowing where the state funding is coming from is prudent for both the MTA and state's long-term planning. "You always want to identify revenue for big capital work before you get going with big contracts," Dague said.

Legislators expressed outrage over the plan during a budget hearing last week. "I have no idea how we can actually do a capital program and actually approve a capital program with language that 'it'll be there when you need it.' Corporate America would laugh at this. Any country would be surprised with this type of approach in funding," said Senator Marty Golden, a Republican from Brooklyn, according to Politico New York.

The Cuomo administration has vigorously defended its position. "The Governor put unambiguous and iron-clad language in the budget to make good on his commitment to provide $8.3 billion towards the MTA's capital plan," Morris Peters of the Division of The Budget told Gotham Gazette in a statement. Peters pointed to budget legislation that he said would cement the state's commitment to funding the MTA "in law."

Infrastructure Spending
This year's State of the State address was centered around the idea that Cuomo is rebuilding New York. "Built to Lead" was the theme and the governor announced a myriad of projects including revamping Penn Station, retooling the Javits Center, reconstructing LaGuardia Airport, and a major contribution to the rail tunnel underneath the Hudson River. The combined cost of the projects is estimated at over $100 billion.

Budget watchdogs say Cuomo's plans are bold but not backed up with detailed funding mechanisms. The governor's budget points to federal funding, cash from public authorities, and investment from public/private partnerships to fund a number of the projects. It leaves the state assuming $29 billion of project costs. Watchdogs say the budget only appropriates two-thirds of that cash. "I think the situation was created by the governor's desire to portray himself as having a grand plan. So we all wondered: 'With what money?'" said McMahon.

Cuomo has also already allocated billions of dollars worth of the state's bank settlement funds to other projects such as upstate revitalization. The state is also relatively close to bumping up against a borrowing cap that was signed into law under Gov. George Pataki, so it is unlikely the state could fund all of the projects if it wanted to.

"I think the governor's ambition is admirable," said Dague of CBC. "But one of the concerns is he has promised to take on so many projects while leaving the funding details to be filled in. Another concern the legislature has is that the projects aren't being put through rigorous analysis. There isn't a discussion of how the state makes use of its limited capital projects funds--why this and not that. And there also is the question in some cases of: 'Why are these projects in the governor's budget and not the MTA's?'"

Peters, of Cuomo's administration, said that the budget clearly lays out how Cuomo's grand plans will be paid for. The list of major infrastructure projects are funded by a combination of resources, including from the state and federal governments, public authorities, and private investment, as clearly laid out in our budget materials."

Cash Stash
Another major concern for budget watchdogs is the $2.4 billion in funds stashed in 80 different pots in this year's executive budget not labeled for any specific use, as identified by good government group Citizens Union in a new report.

It is actually common for the governor and both houses of the Legislature to create slush funds in the budget each year. The practice came under increased scrutiny last year after the arrest of (now former) Assembly Speaker Sheldon Silver, who used cash from one of those pots of money in a scheme to earn referral fees through his law firm. Silver has been convicted on federal corruption trials and faces sentencing soon.

This year, according to the Citizens Union "spending in the shadows" report, the governor has $2.2 billion worth of this discretionary money, the Senate $815 million, and $686 million for the Assembly. Last year, Cuomo inserted language into the budget that would have required legislators to reveal their connections to any organization that received funding from these pots of cash, but he has not reinserted the language this year. Cuomo has outlined a series of ethics reforms that he says he intends to negotiate with legislative leaders

"With former Speaker Silver convicted in part because of his access to and illegal use of a healthcare-related lump sum pot, we need no greater reason to reform this form of budgeting," said Dick Dadey, executive director of Citizens Union, in a statement. "We need a whole new set of rules and level of transparency to ensure that taxpayer dollars are not used to personally enrich elected officials or used in unseemly pay to play schemes."

Policy Questions
Cuomo has again packed his budget with his major legislative priorities, a practice that has earned the governor criticism - some say that the budget should only include operational and capital spending, not new policy. This year, Cuomo is including an increase of the minimum wage toward $15 per hour, paid family leave, and raising the age of adult criminal responsibility from 16 to 18, among other policies.

The governor has the support of Assembly and Senate Democrats on the outlines of all of these issues while Senate and Assembly Republicans have voiced varying levels of dissent. The Governor recently told reporters the minimum wage issue might be removed from the budget debate.

Assembly Democrats, who control that chamber, are pushing for The DREAM Act, which Cuomo has included in his budget but has not rallied for publicly this year. Senate Republicans, who control that chamber, have been vigorously opposed to the plan, which would allow undocumented residents access to education aid.

Also on the Assembly to-do list is the millionaire's tax they argue will allow an increase in education spending, among other things. The Cuomo administration and the Senate have both rejected the idea.

Cuomo has remained nearly silent on the package of ethics reforms he pitched in January. Although he's taken to touring the state in an RV to tout his wage plan at a series of rallies, he has discussed ethics reform when prompted by reporters. His plans would strictly limit legislators outside income and close the LLC loophole that allows corporate donors to avoid campaign finance limits.

The governor was asked about the lack of discussion around ethics reform during one of his RV stops last week. He replied that discussions were happening "in phases."

"There's not a lot of continuity between $15 minimum wage and ethics," he said. "It's kind of a hard transition: 'I want to talk to you about a $15 minimum wage, oh, and now I wanna talk to you about limiting income for legislators.' It's not the most fluid transition. Maybe you could do it. It's tough for me."

by David King, Albany editor, Gotham Gazette

Read more by this writer.

Note: this article has been changed to reflect the report of the initial budget meeting between Cuomo and legislative leaders.

Several Significant Questions About The Governor's Budget Wed, 02 Mar 2016 22:16:00 +0000