Gotham Gazette https://www.gothamgazette.com/component/tags/tag/1984 Fri, 13 Dec 2019 11:19:29 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Max & Murphy Podcast: The MTA's New $52 Billion Plan to Save the Subways & More https://www.gothamgazette.com/state/8813-max-murphy-podcast-the-mta-s-new-55-billion-plan-to-save-the-subways-more https://www.gothamgazette.com/state/8813-max-murphy-podcast-the-mta-s-new-55-billion-plan-to-save-the-subways-more 23 mta 600

(photo: Patrick J. Cashin/Metropolitan Transportation Authority)


September 25, 2019 - Max & Murphy Podcast: The MTA's New $52 Billion Plan to Save the Subways & More

nicole gelinas wbaiThe MTA Board just passed a new five-year, $51.5 billion capital plan largely aimed at upgrading the New York City subways. Nicole Gelinas of the Manhattan Institute joined the show to discuss the new capital plan and share her thoughts on its structure, its positives and negatives, and what comes next.

Listen to the conversation and let us know what you think -- we're on Twitter @TweetBenMax and @JarrettMurphy. You can listen to the show through the embedded audio below or download the episode wherever you get your podcasts, under "Max & Murphy," and listen to Max & Murphy live on Wednesdays at 5 p.m. on WBAI radio, 99.5FM or wbai.org

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by Ben Max, Gotham Gazette
     

Read more by this writer.

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Max & Murphy Podcast: The MTA's New $52 Billion Plan to Save the Subways & More Wed, 25 Sep 2019 04:00:00 +0000
De Blasio's Budget Savings Plan Contains Few Real Efficiencies, Experts Say https://www.gothamgazette.com/city/8526-de-blasio-s-budget-savings-plan-contains-minimal-real-efficiencies-experts-say https://www.gothamgazette.com/city/8526-de-blasio-s-budget-savings-plan-contains-minimal-real-efficiencies-experts-say Mayor de Blasio city budget executive plan

Mayor de Blasio (photo: Michael Appleton/Mayor's Office)


Mayor Bill de Blasio’s much-touted budget savings program is not what he has made it seem.

After rapidly growing the budget over his first five years in office and resisting calls to find significant efficiencies at city agencies, de Blasio this year instituted his first “program to eliminate the gap,” or PEG, to achieve hundreds of millions of dollars in “savings.” But though the mayor boasted at his executive budget presentation of $916 million in identified savings over the current and next fiscal years -- including $629 million in agency PEG savings -- his budget has little by way of true city agency cuts to existing spending.

The mayor’s spendthrift approach has led to a $20 billion increase in the city budget since he took power, while savings and rainy day funds, though solid, have remained below optimal levels, according to budget experts. Exceedingly good economic times have allowed the mayor to spend somewhat lavishly on programs and personnel without having to make many tough decisions about cuts.

The city is also maintaining about $5.72 billion in reserves each year, though the mayor has not added to them this year and the City Council is pushing for an additional $250 million infusion.

The mayor’s latest spending plan, a whopping $92.5 billion executive budget proposal for the 2020 fiscal year, is no exception to his spending growth trend. And as de Blasio touts new savings, fiscal watchdogs are casting doubts and poking holes.

One in particular, Citizens Budget Commission, says city budget officials are misclassifying savings, passing off re-estimated spending and cost shifts as efficiencies at city agencies.

Instituting a targeted PEG for the first time this year, de Blasio required city agencies to make specific spending reductions through various means -- efficiencies, re-estimates of spending and revenue, and service reductions. The mandated PEG, with target amounts for each agency set by the mayor’s budget office, came after years of the administration relying on a Citywide Savings Plan, which had agencies offer voluntary savings, re-estimates, and revenue-raising ideas.

All told, the mayor’s executive budget estimated the $916 million in savings between fiscal years 2019 ($419 millions) and 2020 ($496 million). An analysis by Citizens Budget Commission, a nonprofit fiscal watchdog, of the overall savings plan shows that for 2020 the Mayor’s Office of Management and Budget identified about 62.5% of the savings from what it classified as agency efficiencies.

Melanie Hartzog, the director of the Mayor’s Office of Management and Budget, in testimony before the City Council at a budget hearing last month, stressed the “high levels of efficiency savings” at city agencies that were found through the PEG. That included service reduction for the first time under de Blasio.

“In Fiscal Year 2020, the first full year impacted by the PEG, efficiencies account for two-thirds of the savings. To achieve these savings agencies streamlined and improved practices, yet maintained service levels,” she said.

But CBC’s analysis shows that the estimate of efficiencies in the executive budget savings plan may be overblown. Agency efficiencies in fiscal year 2020 only accounted for about 20.77% of the savings, while re-estimates and funding shifts accounted for the bulk, about 66.4%, according to the analysis, performed by CBC’s Riley Edwards.

City Council Member Daniel Dromm, chair of the finance committee, echoed CBC’s concerns about finding true efficiencies at last month’s budget hearing, saying the Council “is struggling to understand the purpose of the PEG.” He noted, as CBC pointed out, that the PEG and savings plan together did not find sufficient efficiencies or recurring savings at agencies. He noted that PEGs are supposed to force administrations to find “true efficiencies and recurring savings.”

Dromm pointed out that the mayor has typically relied on the voluntary CSP instead of a PEG, during a period of healthy growth and positive economic conditions.

“Since the implementation of that program, the Council has been urging the administration to search for savings more rigorously because the majority of the program consisted of accruals, re-estimates, and increased revenue projections that would have occurred even in the absence of a savings program,” Dromm added. “So, when the administration announced a mandatory PEG this year, the Council was hopeful that the mayor was finally getting serious about reining in inefficient spending. Unfortunately, the result of the PEG is just more of the same.”

CBC experts point out that certain categories of savings that OMB classifies as efficiencies aren’t truly that, including swaps where state or federal funds are used in place of city funds or the hiring freeze that OMB says saved about $116 million across fiscal years 2019 and 2020. According to OMB, the hiring freeze involves permanently taking down 1,600 positions in the executive budget (many are currently filled and will be eliminated when they become vacant without affecting agency performance) after 1,000 vacancies were already eliminated in November. The freeze reduced net planned headcount growth this year for the first time under de Blasio and is meant to create savings every year till 2023.

“Because we’re dealing with positions that are already vacant, we consider that a re-estimate rather than an efficiency,” said CBC’s Edwards, in a phone interview.

CBC director of city studies Ana Champeny said this savings plan has largely been a “continuation” of past years’ plans. “There was a change in their approach in setting the targets for the agencies but they still haven’t delivered substantially more efficiency savings,” she said. According to CBC, these could be achieved through redesigning programs and shrinking or eliminating inefficient ones, as the mayor did by eliminating Extended Time Learning at Renewal and RISE schools; by using technology to improve operations; sharing resources across agencies; finding alternative service providers within or outside the public sector; and strengthening centralized management of cross-agency operations.

Champeny said the city should not stop looking for savings through re-estimates or funding shifts, which are “routine budget management that you would expect every administration to be doing. Our criticism is that there should be more PEG savings, more efficiency savings in addition to this routine budget and fiscal management.”

Ideally, efficiency savings in one year would equal about one percent of the city-funded budget, she said. “That’s about $700 million in one year, not across two years,” she said.

Nicole Gelinas, senior fellow at the Manhattan Institute, a think tank, concurred. “I think the PEG is pretty superficial in the context of this larger budget,” she said, noting that the executive budget increases overall agency spending by about $1.4 billion compared to the mayor’s initial proposal released in January, allowed by higher revenues than earlier projections. Those higher revenues “are giving them some room to increase spending while sticking to this narrative of savings,” she said. “Overall, agency spending is not shrinking by any means. It would be hard to call this an austerity program.”

“It would be good if agency spending pretty much kept pace with inflation, going up 1.5-2% a year,” she said.

Budget watchdogs have also repeatedly urged the administration to find long-term recurring savings rather than temporary ones. Gelinas pointed out that hiring freezes, in particular, “don’t last forever” as a source of savings.

“It’s kind of superficial because the mayor has increased hiring by so much already that it’s kinda time for a pause,” she said. “Hiring freezes are not very good management. This is the same problem at the MTA. If you need a new person to do something, you should hire that person. If there’s something that the government is doing that it shouldn’t be doing anymore, repurpose that person. But just a sort of general hiring freeze oftentimes means positions that should be filled aren’t being filled. So it’s kind of the opposite of efficient.” 

De Blasio has overseen a large increase in the city workforce, from about 297,000 employees when he took office to roughly 332,000 now. Still, he has budgeted for many more positions at various agencies that have gone unfilled each year, with many of those now “frozen” and the act of keeping them empty being counted toward savings.

OMB spokesperson Michael Greenberg said in a statement Tuesday, “Our aggressive approach helped us meet ongoing, fundamental needs, and balance the budget. We will continue to find ways to save money for New Yorkers in future financial plans.”

In a Thursday statement, after this article was published, Greenberg pushed back against the criticism from Gelinas and CBC. "The 2,600 positions we have permanently eliminated since November will lead to hundreds of millions of dollars in savings, much of it recurring annually, and agencies will provide the same level of service with fewer employees. Despite what others might say, this is the actual definition of 'efficiency savings,'" he said. 

Short of creating more efficiencies, the city risks major service reductions should an economic downturn set in. Even without a downturn, the city faces a budget gap of $3.5 billion in 2021 and $3 billion annually in the years after, according to its own documents. While those numbers are manageable and fairly typical, they become much more concerning if there is a recession.

“A recession could easily double or triple these out-year budget gaps that we already need to fill,” Champeny said. “Right now you have the ability to take the time and do a careful analysis of where you can make efficiency changes or improve your processes whereas if you’re cutting during a recession, you’re sometimes looking for quick savings and you’re not as precise and you’re going to have more negative impacts in services reduction.”

Gelinas added, “The city always depends on revenues coming in higher than expected and then because it says it conservatively budgeted, it has these extra revenues. So these budget deficits basically disappear. But that only happens if the city’s economy is doing well. If we do fall into a recession...then suddenly these are real deficits so you’d need a lot more than a billion dollars in savings in two years. So that’s when you really start to see layoffs and service cuts.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Note - This article has been updated with additional details about the administration's partial hiring freeze. 

Note - This article has been updated with additional comment from OMB spokesperson Michael Greenberg. 

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De Blasio's Budget Savings Plan Contains Few Real Efficiencies, Experts Say Tue, 14 May 2019 04:00:00 +0000
What's The [Data] Point? 4.7 MPH, Traffic & Transit with Nicole Gelinas https://www.gothamgazette.com/city/8358-what-s-the-data-point-4-7-mph-traffic-transit-with-nicole-gelinas https://www.gothamgazette.com/city/8358-what-s-the-data-point-4-7-mph-traffic-transit-with-nicole-gelinas whats the data point


What's The [Data] Point? Episode 67 -- 4.7 MPH, Traffic & Transit with Nicole Gelinas [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

wtdp nicole gelinasNicole Gelinas of the Manhattan Institute is an expert on New York City transit, street use, and traffic. She joined the podcast to discuss her recent report on "decongesting" New York City, MTA improvement, and how to get New York moving again.

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!

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by Ben Max, Gotham Gazette
     

Read more by this writer.

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What's The [Data] Point? 4.7 MPH, Traffic & Transit with Nicole Gelinas Thu, 14 Mar 2019 04:00:00 +0000
Agenda 2019: City & State Budgets on Mostly Solid Ground, with Major Questions Looming https://www.gothamgazette.com/state/8147-agenda-2019-city-state-budgets-on-mostly-solid-ground-with-major-questions-looming https://www.gothamgazette.com/state/8147-agenda-2019-city-state-budgets-on-mostly-solid-ground-with-major-questions-looming Cuomo budget presentation

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


This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

New York’s economy has seen several rosy years in the decade since the Great Recession, with a run of steady growth, increasing job numbers, rising wages, and reliable tax revenue that has defied historical trends -- and led to growing city and state government budgets. But 2019 may be the peak of that economic swing as economic experts predict a long-expected slowdown to set in before 2020. New York City, the experts say, seems better equipped to weather any adverse effects of slowing growth and the state may struggle, presenting some hard choices for Democrats who will fully control state government come January and have a long list of priorities, some of which have financial costs attached.

Also complicating the fiscal pictures as the state and city levels are projected budget gaps that must be closed, looming negotiations over how to fund the next MTA capital budget plan and its tens of billions of dollars to fix the subways, and the still unclear effects of recent federal tax reforms, among other outstanding questions. The finances of New York City continue to show a rosier picture than those of the state, with the city economy essential to the state’s ability to spend more each year, though the state has grown its budget in much more limited fashion than the city under Mayor Bill de Blasio.

In January, Governor Andrew Cuomo will present his State of the State address and executive budget for the fiscal year that begins April 1. Afterward, de Blasio will respond to the governor’s budget plan -- which will set the stage for negotiations with the state Legislature, de Blasio, and others -- and release his own preliminary budget for the next city fiscal year, which will begin July 1. Once the state budget is finalized, the city will be able to take its details -- funding levels, new mandates, and more -- into account as it creates its own budget. The specifics of the annual struggle over what the state is asking or requiring of the city are to be seen, though Cuomo has already indicated he plans to seek more money for the MTA from de Blasio.

Budgets are statements of values as much as they are financial planning documents and Cuomo and de Blasio, both Democrats, face pressure each year to balance their policy priorities with fiscal restraint, as well as the demands of others, especially members of the respective legislative bodies each must negotiate with. The governor prides himself on having passed eight on-time or nearly on-time budgets with a 2 percent cap on increased spending, though he is known to manipulate the numbers to say he has stuck to that limit even though some years he has not. De Blasio boasts of record amounts of savings, though watchdogs regularly say that he is not socking away enough given the extended economic boom while he is spending too much, especially in recurring costs like through a significant expansion of the city workforce.

The agreed upon state budget was more than $168 billion for the current 2019 fiscal year, with savings that are far too minimal according to every expert. And the mayor’s administration, though praised by fiscal monitors for its responsible financial planning, has overseen ballooning expenditures, passing a nearly $90 billion budget for fiscal 2019 -- it was $72.7 in the final year of the Bloomberg administration.

But New York City revenue is largely based on property taxes, which would remain relatively stable even in the event of an economic slowdown. The state on the other hand is far more vulnerable since personal income tax and sales tax contribute a bulk to state revenue.

Barring any unforeseen circumstances, the current economic expansion, the second-longest in the country’s history, will continue through most of 2019, bolstered by the federal tax cuts passed in 2017 (even if many New Yorkers’ tax burdens increase due to the new cap on state and local deductibles). It should allow both the state and the city to keep spending, though experts warn that both should prepare for what will happen down the line. Both the Cuomo and de Blasio administrations, along with the state Legislature and City Council, respectively, should be putting more money towards rainy day funds, fiscal experts say; particularly the state, especially as necessary infrastructure investments loom large and add to already rising debt obligations.

New York State
The state budget remains far more precariously placed in the case of a downturn, even though one isn’t expected to hit soon. The governor has reiterated in recent months that he will continue to abide by a self-imposed 2 percent limit on increased annual expenditures, which presents little wiggle room to add major spending initiatives, though it remains to be seen if the governor will employ one of his many budget maneuvers to obscure actual spending increases. For instance, the State Fiscal Year 2019 budget, which began April 1, included a provision that funnels Payroll Mobility Tax revenue directly to the MTA instead of going through the state, effectively shifting $1.5 billion out of the budget.

“Part of the problem is they’ve technically abided by it but they’ve only done that by shifting things around and reclassifying things, not necessarily through stringent cost controls,” said David Friedfel, director of state studies at Citizens Budget Commission, a nonprofit watchdog. “The more they play those tricks, the harder they will be to find in the future if that’s how they choose to close the gap.”

The New York State Division of Budget’s mid-year financial update, released in November, predicted that the state will meet its revenue projections by the end of the fiscal year. Even at the state level, budget gaps remain manageable, at about $3.1 billion for fiscal year 2020, a number that is quickly cut if the 2 percent growth is factored in.

State Comptroller Tom DiNapoli released his own financial update in November, estimating that overall tax revenues would decrease by 1.8 percent by the end of the state’s 2019 fiscal year (end of March). Though personal income tax revenues are expected to fall by 2.5 percent, business and consumption taxes are set to increase by a total of 6.5 percent, the report estimated. Tax revenues are expected to increase by 5.9 in the 2020 fiscal year and then at a lower rate, 2.4 percent in the 2021 fiscal year.

Similar to city representatives, officials in DiNapoli’s office said in a background briefing that they expect a soft landing for the economy, despite the volatility in national and international markets. They have yet to determine the full impacts of the federal tax code overhaul, which capped State and Local Tax (SALT) deductions at $10,000 annually, raising concerns that high earners facing larger tax bills would in some cases fold to out-migration pressures, leaving the state and taking their tax dollars with them. Given New York’s position as a high-tax state, even many upper middle class homeowners in expensive New York City suburbs, and in the city itself, will be facing increased tax burdens, though it is not immediately clear that these factors will lead to a significant increase in the number of higher earners leaving the state. New York has consistently seen out-migration each year and has lost a net of 1 million residents since 2010, according to The Empire Center, a think tank. A report issued by the center in March suggested that the state should undertake several reforms to encourage the economic competitiveness which could help reverse that trend.

The state took measures to decouple state tax provisions from the federal tax code, including decoupling from the SALT limit to prevent higher state taxes, and changes to the child tax credit and the single filer deduction. The state also created two new programs -- the Employer Compensation Expense Program and the State Charitable Gifts Trust Fund -- in an effort to limit state taxpayers’ exposure to federal tax changes, but neither program appears to have caught on in any significant way. Officials in the state comptroller’s office said the impacts of the SALT deduction in particular wouldn’t be evident until during next fiscal year, particularly if it encourages people to move out of state.

Other risks in federal funding to the state seen in recent years -- Republican proposals to repeal the Affordable Care Act and make drastic cuts to Medicaid -- have also mitigated, the officials said, since those proposals have failed to come to fruition. But federal funding does remain uncertain as Congress is in the middle of negotiating the current federal budget with President Donald Trump, who has threatened a government shutdown if Congress does not approve funding for a wall along the southern border that he had promised Mexico would pay for. The ballooning federal deficit incurred from the Trump-led tax cuts have also increased pressure on federal spending, which could trickle down to the aid that New York receives for transportation, health care, and education, among other things.

“The state is in decent financial position but not when you consider the fact that we are nine years or so into an economic expansion,” CBC’s Friedfel said. “The state has been gifted with $12 billion in financial settlements and some additional revenues yet the state’s reserves are not where they should be or could be. They haven’t been added to in about four years. And liabilities are still out there.”

As Friedfel noted, the state’s rainy day funds stand at only about $2 billion, a pittance when looked at in the context of a downturn. In the case of a recession, Friedfel estimated, the state could face up to $50 billion in combined losses over a four-year period. “California is doing a very good job on their reserves. They’re gonna have close to 10 percent of state operating spending in their reserves, which is really what New York should be aiming for,” he said. “Instead of $2 billion, we should be closer to $10 billion.”

As with the city, the state’s debt also continues to rise, particularly with the governor having launched an ambitious infrastructure program that includes modernizing existing facilities and building new ones across the state, including bridges, airports and bus systems. The state’s debt service payments for fiscal year 2019 stood at $5.5 billion and are projected to rise to $6.6 billion in 2020. New York currently ranks second-highest in the country, behind California, in outstanding debt.

Year after year, DiNapoli has waved a red flag over the state’s debt obligations and officials in his office are keeping a close eye on whether those will increase in the upcoming year. There will be particularly pressing needs -- the MTA, NYCHA -- where the state will have to work with the city to fund large capital improvements. The current 2015-2019 MTA capital plan remains underfunded and the Fast Forward Plan, proposed by New York City Transit President Andy Byford to modernize the city’s subway and bus systems, may cost nearly $40 billion, with no plan proposed to pay for it in its entirety. A congestion pricing program for New York City has been embraced by the governor and many in the state Legislature as a funding stream, but even if implemented quickly and without carve-outs it would fall far short of meeting the goal.

“That’s one of the biggest questions,” said Gelinas from the Manhattan Institute, “especially if the economy continues to do well. How much does Governor Cuomo go after the city for MTA funding and in multiple billions of dollars...and does that cut into the city’s other priorities?”

IBO’s Lowenstein also echoed that concern. “The state has a great deal of leverage over the city and its own fiscal concerns and it would be unreasonable to expect these issues get resolved without city participation.”

Last time Cuomo and de Blasio negotiated the MTA capital plan, the governor successfully convinced the mayor to significantly increase city funds for the authority. Cuomo has repeatedly stated publicly in recent months that he will be pushing the city to pay “its fair share” for the MTA. De Blasio has called for an added tax on high-earners to provide dedicated funding for the MTA, a proposal that Cuomo has publicly mocked as fantasy on several occasions.

The state Legislature next year will also include several newly-elected Democrats who expressed support for increased education funding, per the Campaign for Fiscal Equity decision, which could add billions to the state budget. The state Board of Regents recently proposed a $2.1 billion increase in education funding for next year, which would be a significant jump from the current fiscal year’s increase.

New York already spends nearly twice the national average on per-pupil funding, said CBC’s Friedfel, but doesn’t necessarily allocate funding to the districts that need it most. CBC has argued for changing the key formula, known as Foundation Aid, noting that many wealthy districts receive it despite already spending more than the national average and more than the already-high state average by leveraging local tax dollars.

Another open question is what the state will do with about $900 million in unspent or unallocated one-time funds from Extraordinary Monetary Settlements, recovered from the financial industry in the wake of the 2008-09 market crash. Since state fiscal year 2015, the state has received nearly $11.2 billion in those settlements.

Though the governor has repeatedly said he will divert those funds to capital investments, and he mostly has, he has also used them for budget balancing purposes, DiNapoli’s office noted.

“The governor should be putting much more money of any one-time revenue sources aside for the MTA, things like court settlements or just better-than-expected revenues,” Gelinas said, noting the dire need to fund the transit agency. “We haven’t put enough of that money aside for the MTA.” Cuomo has, on the other hand, dedicated financial settlement money to his signature infrastructure projects, like the new Mario M. Cuomo Bridge.

Unlikely to impact the next state budget, but certainly on the negotiating table in the new legislative year, is the push to revolutionize how New York provides health insurance and health care. Several legislators, long-time and newly elected, are pushing for the New York Health Act, which would establish a single-payer health care system in the state and could cost nearly $140 billion in additional state expenditure by 2022, according to a RAND Corporation study. Though the act could reduce total health care spending by 3 percent by 2031, the study found. Cuomo has said he supports a single-payer system, but has insisted that it should be implemented by the federal government rather than the state, and said that he does not see it make fiscal sense for New York.

New York already has one of the largest Medicaid programs in the country, comprising a huge chunk of the state budget (education and Medicaid are the two biggest spending programs). But enrollment has been relatively flat over the last three years. If that trend continues, Friedfel said, the state could find more savings in the budget.

Friedfel also noted at least one development on the horizon that could have a significant impact on state tax revenue. “The million pound gorilla in the room is what’s gonna happen with the state’s millionaire’s tax,” Friedfel said. The tax is due to expire on December 31, 2019, and though prominent elected officials have called for extending, and even expanding, the program, CBC’s position is that it should be allowed to sunset to help with the state’s economic competitiveness and to keep high-earners from leaving because of the SALT deduction cap.

While Cuomo has overseen its repeated extension and he has dismissed calls to expand it, during the recent election cycle he was mum about what he wants to do with the current millionaire’s tax.

New York City
The city released its latest budget modification in November, revising spending up by $1.4 billion, for a total of $90.56 billion for the 2019 fiscal year, which ends June 30. That marks a high point for city spending, and an $18 billion increase from before de Blasio came to power in 2014. The city’s Office of Management and Budget projects a manageable $3.17 billion budget gap -- the difference between expected revenues and projected expenditures -- for the 2020 fiscal year starting July 1. OMB expects that gap to rise to $3.36 billion for fiscal year 2022, the end of the current four-year financial plan period, by when expenditures are projected to reach a whopping $99.6 billion.

As City Comptroller Scott Stringer noted in his latest financial report released on Friday, OMB tends to issue more conservative estimates of revenues in upcoming years, allowing the administration more leeway to adjust spending. Stringer’s report estimates the budget gap to be lower, about $2.6 billion in FY2019 and $2.8 billion in FY2022.  

“We’ve come out of a run of a number of years of good economic conditions and good fiscal conditions here in the city...but we’re not seeing anything in the numbers that suggests it’s going to end anytime soon,” said Ronnie Lowenstein, director of the Independent Budget Office, a nonpartisan city-funded agency.

In a background briefing, an official at Comptroller Stringer’s office acknowledged that there’s significant uncertainty, with even the Federal Reserve appearing divided about where the economy is heading. There are mixed signals in the market -- unemployment is markedly low which should lead to higher inflation, but hasn’t.

But the comptroller’s office is cautiously optimistic and no economist currently projects a recession -- though one is never out of the question -- but rather a return to a slower rate of growth by the time 2020 rolls around.

“[We’re] expecting a great deal more softness in economic growth,” said IBO’s Lowenstein. “Not a recession but a much softer U.S. economy. And as far as the local economy’s concerned, we’ve already begun to see the weakening.” She pointed to the drop in job growth over the last few months and also noted that though the job market has diversified with more jobs created outside the financial industry than before the last recession, most of the new jobs have been in lower-paying industries.

But she said that slower growth won’t create out-of-control deficits. “We’re looking at gaps that are readily manageable, of the size that we’ve managed in the past,” she said.

The official from the comptroller’s office agreed that the city has the capacity to manage outyear budget gaps, particularly with a strong budget surplus each year that has allowed the city to maintain a healthy, if not optimal, level of reserves. The de Blasio administration put away added rainy day funds in the current fiscal year, responding to demands from the City Council. The result included a total of $1.25 billion in the general reserve, $4.35 billion in the Retiree Health Benefits Trust Fund, and $250 million in the capital stabilization reserve.

The city’s budget cushion has been increasing over the years and stood at about 11.2 percent at the start of the current fiscal year, though the comptroller has urged the administration to maintain levels between 12 and 18 percent, the lower range of which would have required more than $6.3 billion to hit the upper end.

agenda19v2 aThere are of course various risks that the city must manage. One big vulnerability, according to the official from the comptroller’s office, is the size of the city’s workforce, which has added more than 30,000 workers under de Blasio.

“If you look at the November budget update...the biggest issue is the increased expected spending on labor,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a think tank. She noted that the report increased the labor reserve for fiscal year 2020 by $704 million, for 2021 by nearly $1 billion and for 2022 by about $1.4 billion.

“It just shows that these labor agreements that the mayor is making with the unions are costing a little bit more money than expected,” she said. “So the basic story is if the economy keeps doing well, we can probably squeak by with balancing next year’s budget...but if the economy does fall into a recession, with the higher labor costs making these deficits a little bit bigger over the next few years, they would pose a bigger problem for the city.”

Gelinas said the city must take aggressive cost-cutting measures in labor agreements, particularly health care spending, to help avert layoffs and service cuts in the case of a recession. “Longterm, health care savings have to be much more aggressive,” she said. “The healthcare fringe benefit budget for the upcoming fiscal year will be almost $11.5 billion and it’s continuing to rise. It’s going to $12.5 billion by the end of the financial plan.”

“No mayor has ever gotten through two terms without a recession,” she added on the eve of de Blasio’s sixth year in office.

The city’s debt obligations have also been rising, owing to a massive capital program, which pays for building and maintaining the city’s infrastructure such as roads, parks, schools, and libraries.

“Debt service is one of the two big sources of growth in city spending,” said IBO’s Lowenstein, referring to the annual debt payments that are included in the city’s expense budget. “It’s debt service and healthcare, and they’re both big and they’re both growing very fast.” Debt service -- which is accounted for in the city’s annual operating budget -- is budgeted at a total of $6.8 billion for fiscal year 2019, according to the November update, and is expected to rise to $8.3 billion by fiscal year 2022.

Unlike most other municipalities, New York City’s capital program is funded entirely through borrowing, incurring massive debt that must necessarily be paid off every year, which could pose problems in the long run. “It’s less that we can’t continue to pay the debt service on the commitments that we’ve made but rather that they’re crowding out other things that the city might want to do,” Lowenstein said. “And our ability to expand those capital commitments is not unlimited. Especially in an era when interest rates are rising.”

Rising debt service also gives the mayor and City Council “less leeway to budget for other things ranging from teachers to cops to road repair,” she said.

Stringer has repeatedly raised the issue of rising debt, though it’s not yet out of control. The rule of thumb for his office is that debt service should not exceed 15 percent of tax revenues, a level it is well below currently. And the City Council has also attempted to make changes to the mismanaged capital funding process, creating a new subcommittee this year dedicated to examining the capital budget, finding ways to make it more efficient and reducing cost overruns. Upcoming City Council budget hearings may indicate whether that subcommittee and its focus are having any real impact.

But there are big items that may add significantly to the city’s capital investments and therefore create an additional debt burden. Those include funding for the beleaguered New York City Housing Authority (NYCHA) and the state-run Metropolitan Transportation Authority (MTA). In both cases, the city may have no choice but to commit billions more dollars, particularly pending the outcome of negotiations with federal officials over NYCHA and with state officials over the MTA, for which the city typically kicks in significant capital funds.

“The city may not have choices so the speed with which this occurs may be out of our hands,” Lowenstein said.

This is part of AGENDA 2019, a joint Gotham Gazette-City Limits project
Find the rest of the series here

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Note - This article has been updated to ntoe that the Capital Stabilization Reserve is $250 million, not $250 billion. 

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Agenda 2019: City & State Budgets on Mostly Solid Ground, with Major Questions Looming Sun, 16 Dec 2018 05:00:00 +0000
8 Steps to Fix New York Transit and Get New Yorkers Moving Again https://www.gothamgazette.com/city/8008-8-steps-to-fix-new-york-transit-and-get-new-yorkers-moving-again https://www.gothamgazette.com/city/8008-8-steps-to-fix-new-york-transit-and-get-new-yorkers-moving-again Cuomo subway repairs

Gov. Cuomo underground (photo: The Governor's Office)


With the transit system in New York City in constant crisis over a sustained period of time, from delayed trains underground to ever-dropping bus speeds on the streets, the question of how exactly to fix mass transit has been on the minds of elected and appointed officials, advocates and analysts, and, of course, frustrated commuters. In the aftermath of the short-term Subway Action Plan, the effectiveness of which was somewhat difficult to quantify and apparently underwhelming, officials are trying to focus on how to provide more long-term physical and fiscal stability for the beleaguered Metropolitan Transportation Authority (MTA).

While the ambitious plan to upgrade train signals, bus routes, and MTA spending practices that MTA New York City Transit president Andy Byford has called Fast Forward seems to be a universally agreed-on blueprint to improve city transit, how the plan gets funded and implemented is somewhat more muddled thanks to political disagreements between state and city leaders.

Governor Andrew Cuomo has embraced congestion pricing, a plan that would fund the MTA through tolls on vehicles entering Manhattan south of 60th Street, what the Fix NYC panel has determined should be the border of Manhattan’s central business district. Cuomo called the scheme -- which is aimed at both funding the MTA and reducing Manhattan roadway congestion -- an “idea whose time has come” last year, but the only part of the proposal that was agreed upon by state leaders this year was new fees on taxis and app-basd for-hire vehicles ($0.75 added to for-hire-vehicle carpool rides, $2.50 on taxi trips and $2.75 on FHV trips that go into Manhattan south of 96th Street), leaving the more difficult matter of adding a toll cordon in Manhattan to be dealt with later -- perhaps in the 2019 state budget, as Cuomo has indicated.

Cuomo is also demanding the New York City “pay its fair share” for any subway upgrades, an ask that observers have called dubious and one that seems wrapped up in his running feud with Mayor Bill de Blasio.

For his part, de Blasio has resisted embracing congestion pricing, calling it “regressive” even in the face of data showing car owners are wealthier than regular city transit riders, and has instead pushed a millionaires tax as a way of providing the MTA a new revenue stream. The mayor’s resistance to congestion pricing has drawn criticism from subway advocates, who have put together an advocacy coalition made up of anti-poverty and transit groups to push for the toll, and the millionaires tax is an idea Cuomo and even Democratic state Senators have dismissed as not having much support in Albany. In recent months de Blasio has appeared warmer to congestion pricing, perhaps seeing the writing on the wall as it gains support and appears to be a top Cuomo priority for the new year, pending his own reelection.

There’s also a coalition of elected officials who feel like the answer is to institute congestion pricing and the millionaires tax, in addition to reinstituting the commuter tax and getting the federal government to end the carried interest loophole. With the expected price for Fast Forward coming to close to $40 billion, these officials argue that neither congestion pricing nor a millionaires tax would provide the needed revenue for the MTA even when combined with contributions by the city and state.

Along with the policy-makers themselves, New York’s other top transit minds, who often influence policy outcomes, continue to assess ways to improve the subway and bus systems. Asked by Gotham Gazette how city, state, and MTA leaders can make real improvements, experts outlined roughly eight key steps, ranging from instituting the much-discussed congestion pricing and Fast Forward plans to more ambitious proposals that would encourage the city and state to look at mass transit as an all-encompassing ecosystem instead of separate pieces that happen to operate under a single public authority.

1. Fast Forward
The transit experts who spokes to Gotham Gazette pegged moving ahead with Fast Forward as an important next step in the life of the MTA. “The Regional Plan Association has long advocated for modernizing the signaling system in the subways, improving bus service, and making all stations ADA accessible, these are fundamental parts of Fast Forward,” said Kate Slevin, the senior vice president of programs and advocacy at RPA.

Not only does the Fast Forward plan include the physical improvements that Slevin noted, but it signals to riders and employees at the agency that there could be a new way of doing things going forward. “The MTA finally has a big picture vision, which is important for aligning the priorities of the many projects and fixes that have to be done,” Liam Blank, the advocacy manager at the Tri-State Transportation Campaign told Gotham Gazette. “They've lacked that for a number of years, and as a result we've gotten hodgepodge improvements that don't really show benefits to a majority of commuters.”

It’s the signal system upgrade at the heart of the plan, though, that Byford has suggested can be done on 11 line segments in 10 years, that could make the biggest difference according to Nicole Gelinas, a senior fellow at the Manhattan Institute with a focus on transit. “The single-biggest thing we need to do is get more people onto the trains more reliably, and you can't really do that with the signal system the way it is,” she said. “Even if [the signal upgrades] aren’t on the exact schedule the Fast Forward plan laid out, it's a high-priority, I think it's important,” Gelinas said, noting that the communications-based train control-equipped L train has on-time performances over 90 percent compared to averages of 60 percent performance across the rest of the system, which Gelinas, Byford, and everyone else paying attention wants upgraded to CBTC as quickly as possible.

2. Congestion Pricing
Of course, implementing Fast Forward will require a large infusion of money for the MTA in order to get this work done. For revenue, and other reasons, transit experts peg congestion pricing as a necessary step to improve city mobility and livability. “There should be costs to bringing a large metal vehicle into the city,” Gelinas said, noting the effect that car traffic has on pedestrians walking around cars in crosswalks and cyclists having to dodge cars in bike lanes.

Not only would congestion pricing compel drivers to pay what Blank called “their fare share” for using public infrastructure, it would also free up street space in Manhattan which helps improve bus speeds there. “Fewer cars on the road means that the buses can start to move at speeds comparable to other cities. Right now they're stuck in the same traffic as the rest of the cars, so we have a transit system that's ineffective down below and on the surface,” Blank said.

And the need for it, according to Slevin of RPA, is almost impossible to overstate. “I can't stress enough how the key is congestion pricing to help us fix the subway, fix the buses, and provide the revenue for Fast Forward. And we have to get it done in 2019, we have to,” she said.

3. Control Costs
Whether or not a new revenue source for the MTA comes to fruition, the authority must look at how it actually spends the money it has at its disposal, according to transit watchers. The good news, on that front, is that members of the MTA board have spoken up about cost-controls recently, including a well-received report by Scott Rechler that laid out how the MTA could cut costs by reforming the agency’s bidding and project management processes.

“I think the board has laid out some common sense changes to how the MTA does business that will make things more cost effective and done in a more timely manner,” Slevin said, about proposals like simplifying contracts and making it easier to change projects on the fly. “But the leadership of the MTA and the whole agency has to be on board with implementing those changes and explain to the public how they're going about that.”

Like with many governmental agencies and authorities, personnel costs loom large. A coming jump in employee healthcare costs to $2.6 billion in 2022, according to Gelinas, means the authority should take a look at those and other costs as a preparation to make a bigger ask. “I would like to see a full audit of every single cost. Not even start with cutting health benefits, but are there better ways to deliver this healthcare, look at the labor rules, really justify spending every dollar before you do congestion pricing and say, ‘Oh by the way we need more money too.’"

There’s also an upcoming opportunity for the MTA and the Transportation Workers Union to find savings in staffing rules when they negotiate a contract in 2019, according to Jamison Dague, the director of infrastructure studies at the Citizens Budget Commission.

“What you'd like to see is some coordination between management and labor to improve productivity,” Dague said. “Whether looking at some of the work rules and the staffing as far as how flexibly you can deploy certain workers for different types of tasks, or even when it comes to hiring, can you can be less specific in the types of job requirements.”

Public-facing introspection could help make the case for more funding. “Byford could use a set of talking points on how the MTA is changing inside,” said Jon Orcutt, director of communications and advocacy at TransitCenter. “The line station managers are achieving X, we brought this project to a close under budget, we have our procurement process under review and will be instituting reforms by X month and so forth.”

Part of the spending fix can be as simple as the MTA taking a more active role in buying work materials. “Contractors and subcontractors buy the materials like cement and steel,” Gelinas said. “You'd think it would make sense for the MTA to buy those because it's a much bigger purchaser on the world market, and then give them to the contractors. Materials procurement is very opaque and there's a lot of room for corruption and middle men and padding and all kinds of things there,” she said, but the process still flies under the radar and delays projects that are as simple as repairing some stairs.

4. Use Current Projects as Proof Points
It’s also important for the MTA to prove they can actually improve the lives of New Yorkers, in order to build political support for the authority’s larger plans. The upcoming completion of the 7 train’s much-delayed CBTC signaling system is another opportunity for the MTA to show off what service improvements actually look like, while also explaining how other lines will be upgraded more efficiently, per Fast Forward.

“[Andy Byford] needs to deliver on that, and he needs a huge communications push to show why it's gotten better,” Orcutt said. “It would be great for everyone in Queens and also the whole city to see, ‘We re-signaled a line and it's great. And if you want more of that on your subway you have to fund Fast Forward. Delivering something tangible is really key for them.”

“The more the MTA can do to build its credibility in the near term will help with some of these longer term funding discussions,” said Slevin of RPA. “The L train shutdown is an opportunity to show you can get a big project done faster and cheaper by ripping off the Band-Aid and having a shorter period of time when there's more pain for riders,” she said, an especially salient point as Fast Forward fixes will most likely come with massive service disruptions.

5. Remember the Buses
There is one area where New York City government can exert more control on its own, advocates say, which is the bus system. “The city has [bus lane enforcement] cameras,” Orcutt said. “They can move them around, they can broadcast the fact that the cameras are out there more vigorously,” he said, and can also ask the NYPD to actually enforce the rules against driving and parking in bus lanes, a subject that Orcutt said the mayor “has been completely obtuse about.”

And as budget season starts in 2019, Blank of Tri-State Transportation said the city and MTA should lobby state lawmakers for even more bus lane cameras, an improvement that advocates called for in a recent “Fast Bus, Fair City” report. Blank also said the city should follow another one of the report’s recommendations and add 100 miles of bus lanes in the next five years, on top of the city’s existing 120 miles of lanes.

Gelinas of the Manhattan Institute suggested a more radical redesign of the city’s streets if human-based enforcement didn’t speed the buses up. “The city can do more with the physical infrastructure itself, something like building out a curb so the traffic can't easily get into a bus lane. They do that in Paris, with reverse bus thoroughfares, so buses come in the opposite direction of traffic. So you'd have to be very stupid to go into that lane and be hit by a bus. When human enforcement of things like speeds and double parking doesn't work, use the physical environment to nudge people in the right direction,” she said.

6. Don’t Silo; See an Ecosystem
Taking care of the bus system is part of an overall attitude shift that needs to happen, one that sees transit as one interconnected system instead of competing ways of getting around. “I think that for far too long transit has been seen in silos, and as a result it's created a disjointed transportation network that we have today, mainly in terms of how it functions,” Blank said. “Things don't have proper transfers, the investments are clearly unequal between the systems and especially between different neighborhoods. So we need to start seeing these things as complementary and operating like an ecosystem.”

Taking care of the buses, in an example Slevin laid out, would make it that much easier to work on the subways during Fast Forward. “You have to make the bus system faster so you have a reliable alternative when you're fixing the subway,” Slevin said. “So if you have a bus system that functions better you can have longer term windows to work on the subway.” Slevin also gave an endorsement to Scott Stringer’s new proposal to provide a single-ride ticket for use among the subway, bus, and LIRR and Metro-North stations located in the city.

A vision of interconnected transit can even extend to pieces of it outside of the MTA’s purview, according to Associate Director of NYU Rudin Center for Transportation Sarah Kaufman. “I imagine an app like Citymapper, which already integrates multiple modes seamlessly into its direction platform, also providing a payment option through pre-loaded funds. Perhaps 10 Citi Bike rides would lead to a free ride, or 20 subway trips earns the user a discount. During gridlock alert days, prices could surge on Ubers while remaining low on transit in order to modify New Yorkers' behavior,” she said.

While New York isn’t set to completely phase out the MetroCard in favor of a contactless fare payment until 2023, the city can look to places like Chicago where transit users can connect to the subway, buses, and bike share system with a single app..

7. Expansion’s Also a Must
While the MTA has to make sure the trains and buses they actually have now are running effectively, there’s still a need to grow the transit system according to some experts.

“I don't think we can afford to wait another 20 years to add three stops to the Second Avenue subway. We have to be doing [Crossrail-type] of things here too if we want people to have a good quality of life. I don't think it's too ambitious,” Gelinas said in response to the question of whether the MTA should have to choose between bringing the subway system up to good repair or expanding it.

Slevin at the RPA made the case that the MTA should study expansion now, since it typically takes so long to get a huge new project off the ground. “It takes many years to build new transit lines so the MTA could start studying the Triboro now, and then be ready to build once resources become available,” she said, making the case for the Brooklyn/Queens/Bronx line that the RPA has endorsed and which would largely run on existing  little-used, above-ground railroad tracks, thus requiring significantly less construction than another new subway line, while also providing much needed access between boroughs that doesn’t rely on trips into Manhattan.

“Part of the reason we are in the transit mess we are in now is because we failed to invest in the system, modernize it, and build new lines to meet growing demand. We can’t make that mistake again,” said Slevin, also arguing for expansions like the Utica Avenue line in Brooklyn, building the Q into the Bronx, and a Jewel Avenue line in central Queens, all subway extensions into dense, transit-starved neighborhoods.

Gelinas echoed Slevin’s argument that a current lack of real planning could doom the city down the road. “We should be able to do two things at once, and if we can't, we're really harming the future of the city.

8. Communication is Key
As any perusal of Twitter will show you during a morning commute meltdown, transit riders are almost as annoyed by a lack of information about delays and trains getting rerouted as they are by travel disruptions themselves. Beyond confusing and irritating commuters, a lack of communication saps enthusiasm for proposals that would improve the system. “People understand when there's a real problem, but what they hate is not getting straight talk about it,” said Orcutt of TransitCenter. “If people don't feel like the MTA is levelling with them, it's much harder to get them to rally around more funding,” he explained.

“Multiple studies have shown that passengers mostly trust the transit agency when they are provided real-time information -- even when it's bad news,” Kaufman told Gotham Gazette. “The information gives the perception of control over the system, whereas only sharing the word ‘delay’ does not.” Kaufman recommended the agency lean on specifics when telling riders why their train is delayed, especially since clearly communicating something like a signal failure could encourage riders to lean on elected officials to focus more on the issue of signal replacement.

“[Communication] should just be a management thing. You don't need new anything for that, you just run it well and have somebody in charge,” Orcutt said. It’s a step the agency has made some movement on, hiring Sarah Meyer as the agency’s chief customer officer, but the effort at clear, timely, and focused communication is obviously still dogging the MTA with the occasional management failure and inaccurate countdown clock and website information.

While improving the way the MTA shares real-time problems plaguing the subway system won’t actually fix those problems the way other solutions can, it will at least help with the perception of screaming, or tweeting, into a bureaucratic void when something goes wrong.

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by Dave Colon, Gotham Gazette
     

Read more by this writer.

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8 Steps to Fix New York Transit and Get New Yorkers Moving Again Mon, 22 Oct 2018 04:00:00 +0000
Max & Murphy Podcast: A New Era at the MTA? https://www.gothamgazette.com/state/7751-max-murphy-podcast-a-new-era-at-the-mta https://www.gothamgazette.com/state/7751-max-murphy-podcast-a-new-era-at-the-mta mxm logo

Ben Max, left, of Gotham Gazette, and Jarrett Murphy, right, of City Limits


June 20, 2018 - Max & Murphy Podcast: A New Era at the MTA? with Nicole Gelinas, senior fellow at the Manhattan Instituteand and columnist at the New York Post.

Nicole Gelinas

Are we in a new era at the MTA? With Joe Lhota one year on the job as chair and a new transit chief, Andy Byford, in place and out with a plan to modernize the signals, where do things stand? Has the Subway Action Plan had any effect? What needs to be done to really improve the subways and buses, and get New York City moving again? Nicole Gelinas is an expert on the MTA and other transit and infrastructure matters, and she joined the podcast just after checking out the June MTA board meeting to answer these questions and others.

Listen to the full conversation and let us know what you think -- we're on Twitter @TweetBenMax, @JarrettMurphy, and @NicoleGelinas. You can listen to the episode through the embedded audio below or download the episode wherever you get your podcasts.

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by Ben Max, Gotham Gazette
     

Read more by this writer.

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Max & Murphy Podcast: A New Era at the MTA? Wed, 20 Jun 2018 04:00:00 +0000
De Blasio's Record on Budgeting and Fiscal Health https://www.gothamgazette.com/city/7300-de-blasio-s-record-on-budgeting-and-fiscal-health https://www.gothamgazette.com/city/7300-de-blasio-s-record-on-budgeting-and-fiscal-health de Blasio city budget

De Blasio during a budget presentation (photo: Michael Appleton/Mayor's Office)


This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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Mayor Bill de Blasio inherited a city with a healthy economy and strong tax revenues, allowing him to add billions in new spending for his priorities and increase the size of city government while also saving substantial funds for a rainy day. Though fiscal monitors and budget experts generally agree that the city’s budget has been handled responsibly, they are cautious about the future. This is a mayor who has encountered few budgetary challenges, and numerous loom on the horizon, from slowing economic growth to federal policies that threaten to create a sharp financial crunch. There are also ongoing financial crises at the city’s public housing authority, NYCHA, and public hospital system, New York City Health + Hospitals.

As de Blasio seeks a likely reelection on Tuesday, budget watchdogs warn that the incumbent Democrat might face his biggest tests in a second term, to which there are no easy solutions.

Under de Blasio, the city’s operating budget grew to $85.2 billion for fiscal year 2018, an increase of $12.5 billion or 17.2 percent from the last budget that was modified under Mayor Michael Bloomberg. Much of the new spending has come from an increase in the municipal workforce. The administration has added more than 31,000 employees in de Blasio’s first term for a total headcount of about 328,267 full-time and full-time equivalent employees, the highest it has ever been. That number is expected to grow to 329,055 by the end of the fiscal year on June 30, 2018. These new employees also come with future obligations in terms of pension and health care costs.

The administration has simultaneously put aside what the mayor and others often refer to as “historic” levels of reserves. This includes $1 billion each year in the general reserve, $250 million each year till 2021 in the capital stabilization reserve, and $4 billion in the Retiree Health Benefits Trust fund. Those reserves added up to a $9.8 billion or 11.1 percent budget cushion (reserves as a percentage of adjusted expenditures) at the start of fiscal year 2018, according to City Comptroller Scott Stringer’s report on the adopted budget. Stringer noted that the cushion remained at the same level as fiscal year 2017 since increased savings were matched by expenditures. He recommended an optimal cushion of between 12 and 18 percent, and has emphasized that the administration needs to create more savings through efficiencies at city agencies.

De Blasio has eschewed targeted cost-efficiency initiatives at city agencies, which were a signature of previous administrations. He has opted instead for a voluntary Citywide Savings Program which identifies savings at agencies, more often through re-estimates of expenditure rather than efficiencies. He recently announced a partial hiring freeze at city agencies, though some see this as something of a gimmick given how many employees he’s already allowed to be hired.

“My broad assessment is that [de Blasio] and budget director Dean Fuleihan have done an excellent job of managing the city budget,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs. “They’ve been fortunate that the revenue situation has been accommodating to an ambitious agenda and they’ve been fiscally responsible to build reserves.”

In keeping with his progressive agenda, de Blasio has massively increased funding for social services and related to homelessness, education, public safety, and mental health services, among other major investments.

The combined budgets for the Departments of Homeless Services and Social Services increased to $11.5 billion in the fiscal year 2018 budget, up from $10.6 billion in the modified fiscal year 2014 budget that de Blasio inherited from Bloomberg. Department of Education spending increased by $4.4 billion in the same period, owing in large part to the implementation of universal pre-kindergarten and its planned expansion to three-year-olds. NYPD funding increased by $600 million, largely from the hiring of 1,300 more officers, while the Department of Corrections saw a nearly $340 million increase in its budget despite a continued drop in the city’s jail population.

“I think we're in a sustainable position,” de Blasio told the New York Daily News editorial board in an interview last month. “I think it also interacts. I think the investments we're making are strengthening our tax base. Safer city, better schools, stronger tax base. So it works. It's not limitless. You're absolutely right. It's not like you can just add all the time. There's a point -- and we'll have to watch Washington in particular very carefully – there’s a point where we may have to make tough decisions. But to date, I feel they've been responsible, and thank god, and I knock on wood as I say it, the economy continues to cooperate.”  

Parrott noted that the administration’s strongest achievement, begun early in 2014, was the settling of 99.1 percent of expired municipal labor contracts, which provided thousands of employees with retroactive raises and dispelled significant uncertainty about how the administration would handle a “daunting challenge” in a fiscally prudent manner. “That was an amazing feat,” Parrott said. “He gets four gold stars just for that, even if he hadn’t done anything else.”

But, with an increase in the employee workforce and the new union contracts, the city also added significant long-term funding obligations. The last budget under Bloomberg predicted that salaries and wages would be about $26.3 billion in fiscal year 2018, while latest estimates show them to be about $1 billion higher. In total, the city will spend about $47 billion in salaries, wages, pensions and benefits for the city’s workforce this year, increasing to $52.5 billion by fiscal year 2021. (The city’s pension contributions are estimated to be about $9.57 billion this year and are expected to grow to about $10 billion by 2021. City employees receive guaranteed pensions, funded by taxpayers, but the administration can do little to reform pension obligations since they are controlled by the state government.)

“I think he’s just been very lucky,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “He’s had a good economy. He hasn’t had to make any decisions. He’s just increased spending on everything.”

“The mayor has not used the good times to make any reforms in government spending, particularly on health care costs for government workers,” she added. The city will bear $10.1 billion in the cost of health care benefits this year, which will grow to $11.7 billion by 2019, and Gelinas insisted that the mayor should look to reduce that cost in the current round of contract negotiations. “The city should really be thinking about how to bargain that workers pay some of the costs without putting the burden on taxpayers.”

Currently, city employees pay no portion of their health care premiums, a fact that has been a point of contention over time but de Blasio has not shown any interest in changing.

“I think it’s easy to be responsible when times are so good,” she added. “The real test will be if we have a recession. No two-term mayor has avoided at least a mild recession.”

Most experts agree that some form of slowdown will hit the city’s economy, which is currently in the ninth year of an unprecedented expansion. Gelinas warned that though the city has reserves set aside, “it’s kind of easy to run through those.” In the 2008-2009 recession, she said, about $3 billion in tax revenue “sort of disappeared overnight.” In a similar situation, de Blasio would have to make some difficult choices, and signs of lower revenues are already evident. At the annual meeting of the State Financial Control Board in August, de Blasio said his administration had already projected a $416 million reduction in revenue in the 2018 fiscal year.

The biggest uncertainty the city faces is cuts in federal funding and changes in federal policy on health care, taxes and infrastructure, though those have all remained a nebulous since before budget season. Efforts by the Republican-led Congress to repeal the Affordable Care Act have repeatedly failed; and a tax overhaul currently making it’s way through the two houses faces bipartisan opposition over a proposal to change the state and local tax deduction, which is a boon to filers in high-tax states like New York. Should it pass, however, tax revenues in the city will take a major hit.

De Blasio made no significant adjustments for federal policies in his 2018 budget, insisting that the city periodically adjusts its budget to account for economic trends. The next budget modification is expected later this month. “We have an obligation and responsibility to provide New Yorkers with quality services now,” said Freddi Goldstein, a mayoral spokesperson on budget issues, in an email. “We cannot and will not let threats of cuts to federal funding that have yet to be realized deter us from strengthening New York’s future.” The city has been cautious in revenue estimates, and tax revenues are expected to grow at 4.5 percent over last year, in keeping with the administration’s plans.

Carol Kellermann, president of Citizens Budget Commission, a nonpartisan fiscal watchdog, echoed Gelinas’ assessment of the mayor’s fiscal management. “He hasn’t really been tested in terms of fiscal policy,” she said, “because times have been so good so he hasn’t had to exercise as much restraint as CBC would’ve liked.” CBC gave the mayor’s last budget “mixed marks” over the growth in employee headcount and compensation costs.

Kellermann emphasized that many of the programmatic expansions made by the de Blasio administration are permanent and escalating in cost, making them harder to pare down in the future. “It’s very hard for public officials to cut back,” she said. “Every program has its constituency and it’s very hard to take those things away, and it’s very hard to layoff public employees.”

Both Kellermann and Gelinas also pointed out that the mayor has repeatedly touted the Retiree Health Benefits Trust fund as a reserve, even though it should be solely used to fund retiree health benefits and not in cases of a general shortfall.

The mayor has also significantly expanded capital investments to support his agenda. The ten-year capital budget increased by about $6 billion this year to $95.9 billion. The increase includes $1.9 billion in additional funding for affordable housing, $1.1 billion to create new borough-based jail facilities, $300 million to renovate 30 homeless shelters, among other investments. These investments also add to the city’s debt service -- the money spent to satisfy debt from borrowing each year -- which is $6.5 billion for fiscal year 2018, and is expected to grow to about $8.3 billion by fiscal year 2021. “If the interest rates go up, that’s gonna be a big burden down the road,” Kellermann said.

Assemblymember Nicole Malliotakis, de Blasio’s Republican challenger in the mayoral race, has repeatedly criticized the mayor’s ballooning budget and his “tax-and-spend” policies. At the first mayoral debate in the general election, on October 10, she attacked the mayor for the 300 new special assistants he has hired at City Hall, and his administration’s overall expenditure. “When we’re spending $15 billion more and we still have roads that are broken, we have subways that don’t run, we a homeless crisis, we have so many issues that are plaguing our city, then that is...the epitome of mismanagement,” she said, insisting that the city needs to streamline agencies.

She particularly noted the Department of Design and Construction’s consistent cost overruns for capital projects, which was a source of concern for the City Council as well when this year’s budget was adopted.

Two crucial areas where the city already faces a budget crunch, which would be further exacerbated by federal budget cuts, are NYCHA and Health + Hospitals. “These are two so-called independent authorities that all mayors, particularly this mayor, have forthrightly stepped forward to subsidize,” said Kellermann. “They were both meant to be self-sustaining and depend on federal revenue streams.”

NYCHA has a $17 billion capital backlog and though the mayor has made large capital investments -- including more than $1 billion to repair roofs at all NYCHA developments -- the agency’s woes are far from solved. The NextGen NYCHA plan has born some fruit, clearing the agency’s operating deficit for the first time in years, but progress would be threatened if the Trump administration follows through with funding cuts to the Department of Housing and Urban Development.   

NYC Health + Hospitals, the municipal hospital system, handles about 5 million patient visits each year and serves about 500,000 uninsured New Yorkers. But the cash-strapped hospital systems depends heavily on the city bolstering its finances. Even though the city has increased funding to the system from $1.3 billion in 2013 to $1.8 billion this year, Health + Hospitals projects an expected budget deficit of $1.6 billion in fiscal year 2019, growing to $1.8 billion by fiscal year 2020.

“[De Blasio’s] been hoping and saying that they will reinvent themselves into a new model, but it’s just not happening,” Kellermann said, referencing the city’s plan to overhaul the hospital system. “It’s the same thing with NYCHA. The [NextGen NYCHA] plan has the prospect of bearing fruit. But will it fill the $17 billion need? No...Both are open questions for which there are no answers at this point.”

Parrott, who recently co-authored a report on Health + Hospitals for the New York State Nurses Association, said the city’s approach to restructuring the system has been flawed since it only focuses on finances without taking into account the larger eco-system of healthcare. The city and state must work together, he recommended, to create an integrated system that involves private hospitals doing their fair share for a more equitable health care system overall.

“The testing of the ability to manage these things will come sooner or later,” said Kellermann. “He gets an incomplete,” she added about de Blasio’s budget record, “That’s the grade I would give.”

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This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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De Blasio's Record on Budgeting and Fiscal Health Sun, 05 Nov 2017 04:00:00 +0000
With Some Contracts Now Expired, De Blasio Administration Begins Next Labor Negotiations https://www.gothamgazette.com/city/7121-with-some-contracts-now-expired-de-blasio-administration-begins-next-labor-negotiations https://www.gothamgazette.com/city/7121-with-some-contracts-now-expired-de-blasio-administration-begins-next-labor-negotiations 23589013804 3bdd4cedec z

Mayor de Blasio at DC 37's union headquarters (photo: Michael Appleton/Mayor's Office)


As numerous labor contracts for thousands of city employees begin to expire, the de Blasio administration is already in the midst of new talks with municipal unions. The process revisits a key element of Mayor Bill de Blasio’s early tenure -- when the city faced an unprecedented situation wherein all the city’s labor contracts were expired -- and of the incumbent mayor’s first-term record: de Blasio regularly boasts of bringing to terms the outstanding workforce uncertainty he inherited.

With negotiations underway with several unions, fiscal watchdogs say the de Blasio administration needs to implement cost cutting and efficiency measures while ensuring contracts are resolved without inordinate delay.

Upon taking office, de Blasio and his team, led by labor relations chief Bob Linn and budget director Dean Fuleihan, moved to quickly settle the city’s labor union contracts, all of which had been expired for years under former Mayor Michael Bloomberg. Of the city’s 355,286 employees, 337,666 are represented by unions and the city settled contracts with all but 1,350 or 0.4 percent of them. But, even as the administration touts that success, both sides are already back at the table as 30 of the settled contracts have expired, between 2016 and 2017, and 27 more are set to expire in the next few months. Bob Linn and his team are in regular negotiations, according to mayoral spokesperson Freddi Goldstein, and he was not made available for an interview based on that busy schedule.

Fiscal watchdogs generally praise the administration’s efforts in settling the expired contracts, particularly the inclusion of healthcare savings for the first time and reasonable wage increases, but recommend improvements that will ensure long-term fiscal stability. Some wanted to see municipal employees required to contribute to their health care, but that did not happen, while others said the administration should not have pushed the cost of retroactive raises as far into future budget obligations.

Among those unions whose contracts have expired are the Patrolmen’s Benevolent Association, which represents around 22,200 rank-and-file NYPD officers, and the Uniformed Firefighters Association, which represents more than 8,000 firefighters. De Blasio and the PBA just celebrated coming to terms on a largely retroactive contract in January.

In September, the contract for District Council 37, the union that represents the second-largest group of civilian employees in the city, is due to expire. With more than 84,000 city employees on its rolls, accounting for about 25 percent of unionized city employees, DC 37 is second to only the United Federation of Teachers (UFT), the union whose deal was perhaps most-anticipated and, when reached in 2014, set the “pattern” for the other unions in terms of annual raises.

Unions, including the likes of DC37, UFT, PBA,1199SEIU, 32BJ SEIU and the Hotel Trades Council, also employ significant political clout in the city. DC 37 and its affiliated political action committee, for instance, have made campaign contributions to candidates for mayor (they donated the maximum $4,950 to de Blasio), public advocate, comptroller and City Council. DC 37 endorsed de Blasio for reelection in January. The endorsement came just two days after the mayor released his preliminary budget for fiscal year 2018 that proposed creating 100 new school crossing guard supervisor positions, which were created for DC 37 workers. The mayor later denied that the endorsement was part of the deal, and the positions were eventually included in the adopted budget that passed in June. De Blasio has also been endorsed for reelection by a number of other prominent city unions. The PBA, which has been a thorny opponent of Mayor de Blasio and the progressive-dominated City Council, has decided to focus on swaying City Council races in this year’s election cycle. It’s unclear if the union will get involved in the mayoral race. De Blasio is seen as an overwhelming favorite in both the primary and the general, in no small part because of his support from labor unions, which help drive voter turnout in what are expected to be very low participation elections.

Union labor issues pose significant challenges to the city’s fiscal health, particularly if -- or when -- the city experiences an economic downturn, experts say.

“One of the measures of prudence is what the costs were supposed to be when Mayor de Blasio took office compared to what they actually are,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a conservative think tank. The last budget under Mayor Bloomberg predicted that salaries and wages for city employees in fiscal year 2018 would account for $26.4 billion in the city’s budget, Gelinas pointed out, but have actually reached nearly $27.3 billion. “That clearly adds strain to the budget,” she said.

Part of the increase stems from pay raises that didn’t match accompanying savings. “The mayor signed these agreements without really asking for givebacks in return,” Gelinas said.

Maria Doulis, vice president of the Citizens Budget Commission, a nonpartisan fiscal watchdog, echoed Gelinas’ point. Doulis said the last round of negotiations lacked a needed focus on efficiency in work rules, for instance negotiating staggered shifts for NYCHA workers or the causes of overtime in uniformed departments. “Those are important but weren’t done last time because the pressure was to get [agreements] done quickly and responsibly.”

But Doulis also said that the city had shown significant progress by working collaboratively with the unions on including health care savings in the negotiations. The de Blasio administration bargained with the Municipal Labor Committee, which collectively represents the city’s labor unions, to implement what it pegged as $3.4 billion in health care savings -- from $400 million in fiscal year 2015 to $1.3 billion in fiscal year 2018. There are a variety of measures in those savings plans, including a focus on preventive care so that union members avoid costly emergency room visits. Savings in excess of that projection are meant to provide bonuses to the city workforce. Doulis said the administration should build on that success.

The urgency with which the administration moved in 2014 to put labor agreements in place owed to long-expired contracts. But that also meant the city missed an opportunity to agree upon significant savings, Doulis said. “The savings that can come from productivity enhancements can only be recognized prospectively, not retroactively,” she said. “So it’s important to get contracts done in a timely way. Letting contracts go too long introduces fiscal risk to the city. And employees need to be able to plan their lives too.”

Gelinas reiterated that urgency is costly in labor negotiations. “Expired contracts, de Blasio really used that as an excuse,” she said. “It’s not good to have them expired for years on end but it’s not good to do a bad deal just to say that you did a deal.”

Gelinas said the city has fared well so far because of a strong and stable economy, and that a downturn after such an extended period of expansion would put the city in fiscal jeopardy as well as give the mayor less flexibility to cut costs. “Health care costs are increasing less fast than a few years ago,” she acknowledged, “but they’re still going up. The only reason the city can afford it is the economy is doing so well.”

She insisted that any further salary and wage increases should be paid for with cuts in the costs of benefits, namely health care. Although pensions are another part of the equation, and the city’s pension obligations have ballooned over the years, the city has a limited role in that respect since pensions are decided by the state Legislature.

In a view shared by other fiscal watchdogs, Gelinas suggested that workers share some of the costs, which currently fall almost entirely on taxpayers because of guaranteed benefits for city employees. She noted that health care benefits currently cost the city $10.1 billion and will grow to $11.7 billion in two years. “Keeping that from growing would be good savings,” she said. “Avoid the increase and share costs half and half with workers.”

And the onus is on the mayor to devise creative solutions, she said. “Bill de Blasio certainly hasn’t wanted to cut labor costs in his first term,” she said.

De Blasio, for his part, has recognized health care savings as an avenue where the city can go further. “I think the last agreement was very affirming to me that there's, again, much more where that came from,” he said at the annual State Financial Control Board meeting on August 2, referring to health care costs for public employees. “There's a willingness from our labor partners to think creatively. They understand this is about the longer term fiscal health of the city, they understand that if they want government to be effective, we have to keep finding healthcare savings, and I think there's a surprisingly strong atmosphere of partnership compared to, sort of, what the assumptions were previously. I think everyone has become sober together about the fact that we have to do a lot more on that front, and it is available to us.”

Asked about the current round of negotiations, de Blasio spokesperson Freddi Goldstein said the process was ongoing. “When this Administration came into office, no city worker was under contract,” Goldstein emailed. “Today, over 99 percent of the unions have reached a fair deal. As contracts begin to expire over the next year, we're confident we'll once again be able to reach deals that are both fair to workers and fair to taxpayers.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

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With Some Contracts Now Expired, De Blasio Administration Begins Next Labor Negotiations Thu, 10 Aug 2017 04:00:00 +0000
De Blasio’s 'Piecemeal' Transportation Agenda https://www.gothamgazette.com/city/6855-de-blasio-s-piecemeal-transportation-agenda https://www.gothamgazette.com/city/6855-de-blasio-s-piecemeal-transportation-agenda de blasio subway

Mayor de Blasio on the subway (photo: Michael Appleton/Mayor’s Office)


Announcing the next steps of his citywide ferry service initiative at a recent press conference, Mayor Bill de Blasio said he is pleased with what his administration has done to improve transit options for New Yorkers, but admitted that he hasn’t put forth a coherent, comprehensive transportation agenda.

Though transit experts have praised some of de Blasio’s moves to expand the city’s transportation network, many have also criticized what they call a piecemeal approach.

Asked about that assessment by Gotham Gazette, as well as restrictions he faces in enacting a transportation agenda given that the city is reliant on the MTA, a state authority, de Blasio said that a lot is moving in the right direction. Pointing to a few examples, he claimed “pretty impressive growth in a city that already has a lot of mass transit.” But, de Blasio acknowledged, “What I don’t think we’ve done is sort of put it together in a single statement for people to see how all the pieces connect, and I think that is a commendable idea.”

De Blasio appeared to think for the first time about having and presenting an overall transportation agenda, perhaps indicative of the fact that he has not approached transportation like he has education or affordable housing.

Like virtually all policy areas, transportation is complex, expensive, and challenging in New York City. For many driving New Yorkers, the top concerns are traffic congestion and smoothly paved roads. For others, the focus, and often the ire, are the city’s subway and bus networks, which are largely controlled by the MTA, which includes several board members appointed by the mayor, and is funded through city and state monies. The majority of the power at the MTA resides with the state, which also allocates a larger portion of the MTA budget.

An age-old problem for New York City mayors, though, is that New Yorkers don’t always realize that the MTA is a state authority, and therefore blame the mayor for travel woes. Mayor de Blasio has taken to a common refrain when the MTA comes up during interviews or press conferences: “The MTA subways, buses are run by the State of New York. That is their process to work through. We contribute money to the MTA, but the ultimate decisions are made by the State of New York,” de Blasio said during an interview Tuesday morning on Hot 97 radio.

The city can propose its own funding for subway extensions, as Mayor Michael Bloomberg did with the 7 train to the far west side of Manhattan, and influence Select Bus Service routes, which are essentially express buses. The city, through its mayor and MTA board members and state legislators, also has influence over many other MTA decisions.

While it is important that any mayoral administration work with the MTA -- additionally challenging these days given the ongoing feud between de Blasio and Governor Andrew Cuomo -- the mayor and his Department of Transportation must find other ways to leave a meaningful impact on city transit, especially in terms of expanding options as the city population, tourism to the city, and subway ridership all swell.

On Tuesday morning, de Blasio said that the city must move on transit projects no matter what is happening at the MTA. “[I]t takes a long time for the MTA to do anything that’s big and new,” the mayor said. “We’re able to do these things a lot quicker,” he said, referring to his administration’s efforts on ferries, bike-sharing, and a streetcar project coming to the Brooklyn-Queens waterfront. “We’re starting them up now, and we’re doing a lot of the Select Bus Service in parts of the outer boroughs that were underserved, so those are, you know, faster buses that are very appealing to people because they can cut their commute a lot.”

Additionally, for de Blasio the issue of “transit equity” is part of the discussion in ways it was not for his predecessors, given that the mayor was elected on an equity platform. Where his transportation initiatives reach and what they cost riders are of utmost importance as de Blasio attempts to increase economic mobility and shrink opportunity gaps.

Three-plus years in, the de Blasio administration has basically established that three-pronged approach to expanding mass transportation options in the city: ferries, Citi Bike, and the Brooklyn-Queens Connector (or BQX) streetcar. Most of this agenda has not come online yet, though. Each reaches or is projected to reach some key, underserved communities and offers attractive alternatives or supplements to the subway and bus map. But, as de Blasio himself appeared to acknowledge, the pieces have not necessarily made for a comprehensive city approach.

These proposals are “piecemeal at best,” said Ben Kabak, who writes the popular Second Avenue Sagas blog, which has focused on the Second Avenue Subway extension but deals with city transit more broadly. “It's hard to say that his administration even actually has a comprehensive plan for transit.”

The new ferry service, which will launch this summer, will build out over multiple years; the streetcar is in the planning stages and a few years off; and the ongoing expansion of Citi Bike continues. These marquee measures each fit into the de Blasio equity frame in different ways, though they each also have limitations in that regard.

“We’re creating alternatives for people,” de Blasio told Hot 97. “We’re going to have citywide ferry service starting this year, and including some communities that have really been left out of the equation like Soundview in the Bronx and the Rockaways…We’re [also] talking about a light rail system from Astoria, Queens down to Sunset Park, Brooklyn.”

The mayor is faced with major funding and program decisions: how much to contribute to the MTA; how the BQX will be paid for; where to install ferry landings and when; whether to invest public dollars to speed Citi Bike’s move into new neighborhoods; and whether to fund the “fair fares” proposal that would provide subsidized Metrocards to poor New Yorkers.

De Blasio is also facing questions about costs related to the ferry system and BQX: fares for each will be pegged to the price of a subway ride, according to the mayor, but there will not necessarily be fare integration, which would allow a free transfer from, say, the BQX to a subway near the route.

On “fair fares,” de Blasio has thus far argued the city cannot afford its estimated $212 million annual price tag and said it should be the state’s responsibility anyway. For some, this has detracted from de Blasio’s equity mantel, and a broad coalition of groups and individuals are calling on him to reconsider. Meanwhile, the MTA chair has said it is a city responsibility, calling it a “social program,” not under the MTA’s purview.

In its April 3 response to de Blasio’s fiscal year 2018 preliminary budget, the City Council offered the mayor a $50 million compromise for a pilot fair fares program. Nancy Rankin, vice president of policy, research and advocacy for the Community Service Society and City Council Member Ydanis Rodriguez, chair of the transportation committee, discussed the specifics of that proposal outside a City Hall subway station on Wednesday. They explained a three-year ramp-up proposal to fully fund fair fares: first for the 380,000 New Yorkers living in “deep poverty” (families of three making less than $10,00 per year, or families of four making less than $12,000) and eventually for all 800,000 living in poverty.

“Look, it’s a world of choices,” de Blasio said at a March press conference centered around his Vision Zero street safety program, when asked why he was subsidizing the ferry service but wouldn’t back the fair fares plan.

“Your choices matter” happens to be a slogan de Blasio has used, alongside the NYPD, when promoting Vision Zero. De Blasio has encouraged New Yorkers, especially drivers, to be more careful, and has put largely successful efforts in motion to reduce pedestrian, cyclist, and motorist fatalities. While it is not exactly about transit options or equity, per se, Vision Zero has a transportation focus and implicit in its safety goals is the use of bikes and expansion of bike lanes.

De Blasio’s transportation choices have received mixed reviews -- some wonder if the BQX will actually get built, while some question if it should, for example -- and the mayor has promised an imminent plan to battle congestion on city streets, especially in Manhattan.

Paul Steely-White, executive director of advocacy group Transportation Alternatives, told Gotham Gazette in an interview last year that he believes “the city should get more intentional and more systematic in terms of how it's addressing these different options, and how they are going to be greater than the sum of their parts.”

Though he did admit he has not shown that overall vision, the mayor thinks that things are going well. “What the city is doing on its own and what the MTA is doing, I think they’re complementary,” de Blasio told Gotham Gazette at a March press conference. “You look at the routes and how they function, I’m very comfortable with the fact that everything is supporting everything else.”

“I think there is a vision in that we’re grabbing every opportunity to fill gaps and reach places that don’t have enough service and it’s moving very steadily by any measure,” the mayor said. “You look at just over the last few years, the growth of Select Bus Service, the ferry system coming online after 100 years, the light rail...I feel good.” The mayor did not acknowledge that much of what he was citing is not yet functional.

While de Blasio might characterize his approach as “filling gaps” left by the subway system, others see it as disjointed. “It’s not a comprehensive plan,” Nicole Gelinas of the Manhattan Institute told Gotham Gazette in a 2016 interview. “It makes for part of a plan, but it shouldn’t be a whole plan.”

Asked what would constitute a comprehensive plan, Gelinas offered the following: “a goal of something like, you can get anywhere in the five boroughs within 45 minutes…and saying, what do we need to do to make that happen.”

Others prefer to point a finger at Gov. Cuomo, arguing that de Blasio is handicapped by the MTA governing structure, the same structure that has Cuomo eyeing a $65 million cut in MTA operations funding, a move being met with significant opposition as state budget talks wind down.

“The mayor does not control the MTA, he does not control the subways, and that's really a problem...so what the mayor's doing with the BQX, with Select Bus Service, the ferries, and Citi Bike, is really focusing on what he can control...that I think is a very smart direction to go in, because we can't count on the state, we can't count on the governor,” said Steely-White.

Kabak, of Second Avenue Sagas, said last year that he believes for de Blasio, “some of it is perspective...I think he just doesn't have a good grasp of what transit means to so many people in New York.”

BQX
The Brooklyn-Queens Connector (BQX) is a 16-mile streetcar system that, if approved, will stretch from Astoria to Sunset Park. De Blasio announced his vision for the project as a centerpiece of his 2016 State of the City address, explaining that it would be an essential piece of his fight for more equity.

“The BQX has the potential to change the lives of hundreds of thousands of New Yorkers,” he said at the time.

While the espoused intention behind the BQX is to connect residents of Brooklyn and Queens, especially those in several public housing projects, to job-laden areas along the East River or other transportation into Manhattan, the proposal has been met with considerable skepticism from those who argue that it will only raise real estate prices and advance gentrification.

In an interview with Gotham Gazette last year, DOT Commissioner Polly Trottenberg dismissed such claims. “Equity was a huge part of it…I’m not sure we would have been able to convince the mayor if it was only luxury housing, or some of the hipsters moving in. I think what really turned a corner is that there are 44,000 people that live in public housing [along the proposed route]...So I see everything that comes out of the administration through the glasses of, ‘is this good for lower income people?’”

Critics wary of too much government-developer collusion have pointed to the involvement of developers such as Jed Walentas, CEO of Two Trees Management, who sits on the executive committee of Friends of the BQX, a non-profit set up to rally public support for the project. While this partnership might make sense considering increased property values are essential to the financing plan for the BQX, which the city says will largely pay for itself, it nevertheless does not sit well with some.

“This seems to be very driven by Two Trees, who own a lot of property in DUMBO, and are looking at ways to make that area more accessible,” said Kabak. “So it's a transportation proposal that's put forward by a private entity that stands to gain and may not really solve the problem that the city has regarding mobility.”

Some experts, however, are more optimistic. “If anything,” Steely-White of Transportation Alternatives said, “we're recommending that the mayor go even further in this direction, looking at more innovating financing mechanisms for city-led transit expansions…if you look at the innovative, value-capture approach they're taking to the BQX, you know, there's no reason that or other similar approaches could not be used to do more.”

Steely-White was referring to a New York City Economic Development Corporation estimate that the $2.5 billion for the BQX will be recaptured by the city as it takes a percentage of increased property values and development each year.

“It very well might pay for itself,” said Gelinas, when asked about the BQX, “but that doesn't make it our top transit priority…improving capacity along a very crowded [subway] line may not pay for itself directly, but it affects more people.”

De Blasio has not voiced any intentions to pursue subway expansion, though he did celebrate the opening of phase one of the Second Avenue Subway extension. He has not pushed to advance the Utica Avenue extension in Brooklyn that many want to see made a priority by the city and state.

Transit equity advocates have one major concern about the BQX: whether it will allow for free transfers between the streetcar and MTA-operated buses and subways it is projected to connect with. Such a one-swipe ride would take negotiation between the city and the MTA, and some kind of financial plan.

If construction adheres to schedule, work on the BQX will begin in 2019-2020, with the first streetcar expected to be running by 2024, long after de Blasio is out of office, even if he serves two terms.

Ferry Service
In addition to the BQX, the de Blasio administration has also been moving forward on bolstering the city’s ferry service. The only public ferry route currently operating is the Staten Island Ferry, which the administration moved to run every 30 minutes 24-hours per day, as opposed to the hourly schedule it previously offered during off-peak hours.

In an effort to address overcrowding on the subway and provide waterfront commuters with increased transportation access, the city has teamed up with Hornblower, a San Francisco-based boat provider, to build a fleet of city-owned ferries that will eventually provide regular service to all five boroughs.

“If you talk to people in the Rockaways, if you talk to people in South Brooklyn, if you talk to people in Soundview in the Bronx, they will tell you that they didn’t feel like this City’s transportation system was built for them,” de Blasio told reporters at a recent press conference.

The project will receive an initial $55 million capital investment, with an additional $30 million expected to be infused each year over six years. The citywide service is expected to serve 4.5 million passengers annually with stops in Astoria, Far Rockaway, and along the Brooklyn coastline that are projected to be operational by the summer of 2017. Additional stops are scheduled to be added to Manhattan’s Lower East Side and the Bronx in 2018, with further expansion likely to include Staten Island and other stops.

When asked about additional stops, especially to include spots further south on Staten Island, de Blasio was receptive, but non-committal. “I am very open to making additions after we see how the initial runs go…if they continue to be productive, we’ll be open to expansion,” the mayor said.   

However, as with the BQX, there is significant concern among experts that the ferries constitute an ill-advised investment. Arguing that de Blasio is wasting his time with the ferries, Gelinas told Gotham Gazette that “we’re still dealing with the margins…the ferries won’t do in a year what the subway system does in a day.”

Kabak agreed, describing the ferry proposal as “very limited in its scope, in that it really only has an impact on people who live very close to the waterfront.”

Asked about these concerns, Trottenberg argued that the waterfront was actually targeted specifically because “we have a good number of low-income areas along the waterfront,” adding that “the catchment area for the Brooklyn Navy Yard has lots of jobs, meaning the city suddenly takes in Red Hook, suddenly takes in some of the neighborhoods in Brooklyn with lower income.”

De Blasio echoed this notion at a recent press conference about the service and the jobs it is both creating and helping New Yorkers get to: “We’re here at the Navy Yard because we really want to focus on the impact and the connection to jobs with citywide ferry service…We really wanted all of the jobs associated with citywide ferry service to be here, if that was possible to do, that was our goal. And we found with the Brooklyn Navy Yard an extraordinary partner.”

Citi Bike
The Mayor’s Office reported that Citi Bike saw a 40% increase in ridership in 2016, with 4 million more trips taken than in 2015. As the program has expanded further into Manhattan, Brooklyn, and Queens, ridership has increased each year, with almost 14 million trips in 2016.

There are growing calls, though, for Citi Bike to expand into more neighborhoods, especially low-income neighborhoods, even if it means a public subsidy, which Mayor de Blasio has said he has no intention to pursue.

Still, Citi Bike has already been touted by transit equity advocates as a positive development. “The biking and walking improvements that have been made are absolutely benefiting lower-income New Yorkers who are more reliant on transit and therefore more reliant on walking,” said Steely-White.  

Commissioner Trottenberg agreed, saying she supports more investment in walking and biking options and that she “would love to see a bridge across the East River for bicycles and pedestrians.”

Given its success, both advocates and elected officials are now calling for Citi Bike to expand to less-accessible outerborough communities and the upper reaches of Manhattan. In November, the City Council put forth a proposal to expand the program to every neighborhood across the five boroughs by 2020. Trottenberg testified at a recent hearing that a citywide program would require as many as 80,000 bikes. The current fleet is up to 10,000 and is on pace to grow by 2,000 every year, meaning a hefty funding increase would be needed to expand citywide by 2020.

“When Citi Bike was created, it was created mostly thinking about the financial center,” Council Member Rodriguez, the transportation committee chair, told Gotham Gazette at a January press conference. “Now there’s a lot of transportation deserts that we have in the South Bronx, that we have in Brooklyn, that we have in Queens, that [Citi Bike] can be benefitting to,” he said.

While it is unclear where the capital for such an expansion would come from, a City Council majority, led by Rodriguez, has called on de Blasio to incorporate the necessary funds into the 2018 budget. Rejecting this possibility, de Blasio told Gotham Gazette in January, “we have no plans for public financing of Citi Bike.”

In its April response to the mayor’s preliminary budget proposal for fiscal year 2018, the Council stood fast on its position, officially proposing that de Blasio add $12 million of baseline funding to the DOT’s allotment for Citi Bike expansion.

Whether it is Citi Bike reach or other options, the de Blasio administration believes his transportation efforts are addressing equity. “The Mayor…has made strides in creating a more equitable transportation system by offering multiple solutions that are tailored to the needs of specific communities,” wrote Raul Contreras, a deputy press secretary for de Blasio, in an email to Gotham Gazette. “[T]he development of brand new transportation options, such as Citibike, ferries and the BQX, impacts the lives of all New Yorkers, no matter what their socioeconomic status may be,” Contreras argued.

Vision Zero
Connected to transportation is de Blasio’s street safety program, Vision Zero, which ambitiously aims to eliminate traffic fatalities by 2024. The de Blasio administration, along with the City Council, took aggressive measures to begin implementation of Vision Zero in 2014 and quickly saw impressive results in reducing pedestrian, bicyclist, and motorist deaths.

There were 223 total traffic deaths in New York City in 2016; down from 233 in 2015; and 258 in 2014, which was the mayor’s first year in office. Though there was strong initial progress, the rate of decline must advance quickly to meet the goals set forth -- advocates and local officials are calling for additional street redesigns, changes to traffic signals, more protected bike lanes, and other adjustments.

De Blasio has succeeded in lowering the city’s default speed limit to 25 mph, installing more speed cameras around schools, instituting the “Dusk and Darkness” initiative, and redesigning Queens Boulevard, aka “the Boulevard of Death,” among other advancements under Vision Zero.

Last year, Steely-White said he saw a lack of full investment from de Blasio. “We're really looking for a much greater contribution in the city budget to the DOT, to undertake specifically those street safety fixes,” Steely-White said, “signal timing, street design, that don't really entail massive digging up of the street and all of that very involved capital work…so really now the ball is in the mayor's court. Will he fully fund Vision Zero or not?”

At the Vision Zero press conference this January, de Blasio did announce an additional $370 million in funding for a variety of street redesigns. Admitting that “there’s a lot more to do,” de Blasio stressed that “a lot of the impact of Vision Zero has not been felt fully yet because it keeps building each year.”

“We are celebrating the good news today that with $370 million in additional capital funding over the next five years, more intersections will see the fully constructed upgrades that they need to keep the number of deaths and injuries on our streets falling,” Council Member Rodriguez said in a January statement.

Reality
Many want the city to have more control of the subway and bus systems. “If you look at what New York contributes as a whole in terms of all the taxes that fund the MTA, it's really largely New York City resources that are funding the system, and yet we still have very little control,” Steely-White said, before suggesting to start “thinking more holistically about our transportation system and maybe even starting to make a case for the city taking over some functions that the MTA currently performs.”

On the city-state dynamic, de Blasio indicated some progress. “In terms of Select Bus Service, which again in ridership terms is hugely important, that is a partnership between the city and the MTA that is functioning very well and is based on systematically determining where there are gaps we need to fill,” the mayor said.

Commissioner Trottenberg, who sits on the MTA board, discussed the imperfect system. “Look, it's a challenge in New York...the transportation system here is broken up among several agencies -- you have city DOT, you have the MTA, you have the Port Authority, you have state DOT -- but I think all of us who run those agencies recognize that it's part of our responsibility to work together to create a seamless transportation system,” Trottenberg said. “If you're the customer, if you're a New Yorker trying to travel around the city, you don't care what agency it is, you just want to get where you're going.”

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by Luke Foley, Gotham Gazette

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De Blasio’s 'Piecemeal' Transportation Agenda Wed, 05 Apr 2017 04:00:00 +0000
Budget Watchdogs Question De Blasio’s 'Mansion Tax' https://www.gothamgazette.com/city/6830-budget-watchdogs-question-de-blasio-s-mansion-tax https://www.gothamgazette.com/city/6830-budget-watchdogs-question-de-blasio-s-mansion-tax de blasio mansion tax

De Blasio pitches his mansion tax (photo: Michael Appleton/Mayor's Office)


Budget watchdogs have expressed concern that Mayor Bill de Blasio’s “mansion tax” proposal, which would impose levies on real estate transactions above $2 million, may be misguided or even unnecessary.

De Blasio made a last-minute trip to Albany on Wednesday to rally with Democratic lawmakers and progressive advocates in favor of a number of proposals currently being considered in state budget negotiations. The mayor’s chief concern, however, was the mansion tax, a proposal he has floated for years and revived this budget season as a tool to subsidize affordable housing for seniors.

The proposal would impose a 2.5 percent tax on buyers who purchase property in the city at more than $2 million, raising an estimated $336 million next year, according to the mayor. That funding would then be used for a new Elder Rent Assistance program to provide $1,300 in monthly assistance to 25,000 seniors, the mayor said at his State of the City speech in February. In order to implement the tax, the city needs state approval, which is unlikely given opposition to new taxes from the Republican majority in the state Senate as well as Governor Andrew Cuomo, a Democrat who is fiscally moderate and habitually opposed to de Blasio proposals.

The Wednesday rally at the state Capitol was one stop in something of a barnstorm by de Blasio, who has been pushing the mansion tax plan among seniors, including at two senior center stops on Thursday. The mayor has cited the necessity of the tax revenue to provide the additional rent subsidies to older New Yorkers who fit certain age and income guidelines.

[Related: In Albany, De Blasio and Democrats Push ‘Mansion Tax’]

But fiscal experts question whether the city really needs a new tax to raise that revenue and, if so, whether a transactional tax is the best way to do it.

“This could be a good idea in the context of general property tax reform and other tax reform,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a conservative think tank. “But it's not a good idea as a revenue raiser."

Gelinas noted that the city already charges a mortgage tax, which she called “a tax on people who can't pay cash for an apartment.” “If we wanted to have a more progressive tax on just the purchase of more expensive properties, the money should go to reducing or eliminating mortgage taxes or other property taxes," she added.

That’s not what the mayor is proposing. Instead, Gelinas pointed out, de Blasio is attempting to raise revenue for a new program through a new tax, something mayors don’t usually do unless they face a sharp revenue crunch. “The city is not exactly starved for revenue right now,” she said.

Although the city is feeling the early effects of an economic slowdown, revenues and reserves are still robust after years of sustained growth. Available monies could be used to prioritize affordable senior housing, Gelinas said. Yet, as he once did with his universal pre-kindergarten program, de Blasio is insisting that the way to fund his senior assistance program is through a new tax.

The mansion tax also faces opposition at home from allies of de Blasio. Manhattan Borough President Gale Brewer told Gotham Gazette that she opposes the $2 million threshold for the tax since it would have an outsize impact in Manhattan, where property prices are far greater than the other boroughs. She would prefer a $5 million threshold. “Manhattan should not be the cash cow for the rest of the boroughs,” she said last month.

A report by the nonpartisan Independent Budget Office, prompted by Brewer, looked at property sales from the last three years and found that between 2014 and 2016, 8 percent of homes sold citywide were priced at $2 million or more. Of those, 86 percent were in Manhattan.

[Related: De Blasio Faces Local Questions About ‘Mansion Tax’ Plan]

In response, the de Blasio administration points out that it is a “marginal tax for incremental sales price over $2 million,” meaning that only the price above the $2 million would be taxed at the 2.5 percent. Those purchasing homes closer to the $2 million threshold would be paying very little in added tax.

There are also concerns among the real estate industry about the proposal’s effect on sales, at a time when Brooklyn brownstones can cross the $2 million threshold. The de Blasio administration dismisses that concern due to the incremental nature of the tax.

Carol Kellerman, president of the nonpartisan Citizens Budget Commission, believes the mayor hasn’t made a clear case for the mansion tax. “If the goal is to impose higher taxes on people perceived to be wealthy, there are ways to do it through the income tax structure,” she said in a phone interview. “The mayor’s not proposing this as a form of budget relief or as necessary for budget needs.”

Kellerman also emphasized the “volatile” nature of a transactional tax, which would depend on the ups and downs of the real estate industry and also have a “distortive impact” on the market and change behavior. “If there’s a need to raise that amount of revenue, a transfer tax of this nature is not a reliable source of revenue,” she said.

She also pointed out that the mayor has already allocated billions in the city’s capital plan for affordable housing, so the need for a separate tax for senior housing doesn’t necessarily pass muster.

Given opposition from state Senate Republicans, the mansion tax may be dead on arrival in Albany. De Blasio has argued, including in Albany Wednesday, that he’s heard that before about proposals, such as the $15 minimum wage. Gelinas was blunt about mansion tax prospects. "I don't think it's going to go anywhere," she said.

A spokesperson for the de Blasio administration refuted both Gelinas and Kellerman’s concerns, stressing that property tax reform is a larger undertaking and that the mansion tax is necessary when considering how the proposed federal budget will impact affordable housing and seniors in particular.

The spokesperson also pointed out New York’s existing state mansion tax, which is 1 percent for properties above $1 million, and cited jurisdictions around the world that have used similar taxes to fund policy goals from rising housing markets.

A spokesperson for another budget watchdog, city Comptroller Scott Stringer, declined to comment on the mansion tax proposal. The comptroller has not released any fiscal analysis of the proposal.

At the Wednesday rally in Albany, de Blasio reiterated the need for the mansion tax. “Here’s the bottom line, right now, there are seniors struggling to get by in New York City and all over New York State,” he said. “There are seniors struggling to get by because so many of them are on fixed incomes. So many of them don’t have a way to get more income but the cost of housing keeps going up...We owe it to them to get it right, and asking the wealthy to pay their fair share so our seniors can have decent life is a thing we call common sense.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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Budget Watchdogs Question De Blasio’s 'Mansion Tax' Thu, 23 Mar 2017 04:00:00 +0000