Gotham Gazette Sun, 05 Jul 2020 11:40:12 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) De Blasio Offers No Transit Plans as City Heads Toward 'Reopening' intervale ave bx

Mayor de Blasio rides the bus (photo: Edwin J. Torres/Mayor's Office)

New York City is set to begin a phased “reopening” on Monday, June 8, as indicators show significant progress in tackling the COVID-19 pandemic. But as many New Yorkers start heading back to work, Mayor Bill de Blasio has offered no solutions to balance city residents’ need for transportation, maintaining public health by preventing new coronavirus infections, and preventing all-out gridlock if too many New Yorkers turn to cars.

About 5.4 million people rode the New York City subway on an average weekday in 2018 and another 1.8 million rode city buses, according to MTA data. But the pandemic led to a precipitous drop in ridership as the city went into lockdown, and the MTA -- a state authority that runs the subways and buses -- eventually instituted overnight system closures of the subways for thorough cleanings of trains and stations and the removal of homeless people from the system.

With the long-awaited first phase of “reopening” almost upon the city, transit advocates and commuters have been largely left in the dark about how government will ensure that people can safely use mass transit without the fear of contracting the coronavirus and what measures will be put in place to expand mass and other transit offerings. In order to maintain adequate social distancing, trains cannot be packed to the brim as they were during rush hour before the pandemic. Many people, including transit advocates and some elected officials, worry about a major increase in vehicle traffic, further clogging the city’s infamously congested streets and polluting its air. 

For weeks, de Blasio was largely dismissive of calls for a transit plan, insisting that the city was nowhere close to seeing a crush of people commuting and that it was up to the MTA to lead the subway process, which he said the city would participate in. The mayor appeared at ease with the idea of an increase in car use and to have thought little about creative solutions to offer additional or new options to people.

De Blasio estimated that the first phase of reopening – which will allow construction, manufacturing, wholesale, and commercial retail, by pickup only, to resume operation – will involve between 200,000-400,000 people going back to work.

“There’s not always a chance to help people all the time in terms of their transportation needs,” de Blasio said at his daily coronavirus briefing on May 29, when asked about transit plans. “People are going to have to improvise and I believe they will.”

In an interview on WNYC’s The Brian Lehrer Show later that day, de Blasio defended his comments. “I think we're nowhere near the number of people on the road or the number of people in the subways that we normally would have,” he said, noting that more than a million people have lost their jobs while others are working remotely. “Even if everyone uses their car, it's not in the next few months going to create the kind of congestion we're used to by any stretch. So, I want people to feel comfortable with mass transit, but I know a certain number of people are going to use their car. For the next few months, we're going to get by with that. Going forward though, the future is mass transit. In fact, the future has to be a doubling down on mass transit once we get out of this crisis.”

The mayor’s words were further confirmation for his critics that he has never been particularly focused on the woes of commuters, and that his defense of car drivers can override transit policy. Advocates and experts note that though de Blasio does not control the MTA, which is in practice run by the governor, he has authority over the streets and can use his power to expand transit alternatives, expand and build new bike lanes and facilitate a broad expansion of the bus network to handle commuters returning to work while a pandemic is still significantly impacting behavior.

“I think it's fair enough to say that he's passing the buck,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “The city should be doing a lot to reconfigure the streets to take pressure off of the subway system, including just putting out much better protected bike lanes so that as many people as possible can ride a bike to work.”

Gelinas said the city could rent out open air tour buses so that commuters can safely travel to work without worrying that they may get infected in a closed-air environment where virus transmission is more likely. “I don't think they’re being very creative at the city level,” she said.

Compounding the issue has been the apparent lack of coordination, at least on public messaging, between the mayor and the MTA. “Optimally...any type of major announcement, you would have the mayor and the MTA chiefs make it together so that everybody knows everyone is saying the same thing,” Gelinas said. But the mayor and interim MTA New York City Transit President Sarah Feinberg have disagreed publicly, with the mayor saying on Friday that he has received little clarity from the MTA. Feinberg responded on Twitter, “With all due respect. We have no idea what the mayor is talking about. The MTA has briefed City Hall multiple times on reopening, including another productive meeting held just yesterday. If the Mayor has questions, he can pick up the phone and call us at any time.”

As Gelinas noted, “It's not a hallmark of a government that's functioning well during an emergency.”

On Tuesday the mayor called on the MTA to take seven specific steps to meet imminent increased ridership demand, including by increasing service during peak hours, limiting capacity on buses and trains to maintain social distancing, limiting crowding at subway stations, providing face masks, and installing hand sanitizing stations, among others. In his request, de Blasio said the city would provide 1 million masks and called on the MTA to do the same.

Barely two hours later, the MTA put out its own letter to the de Blasio administration outlining the steps it will take to ensure a smooth reopening. In a clear indicator that the two parties did not coordinate their releases, the MTA said the state would provide 1 million masks and called on the city to do the same, after the mayor had already said he would.

The MTA estimated it would need the city to provide it with 3,000 volunteers to help implement the reopening plan as well as to deploy additional NYPD officers in the transit system. And though the plan states that subways and buses will return to “full, regular service” by day one of phase one, an MTA spokesperson told Gotham Gazette that 24-hour subway service will not resume; the 1 a.m. to 5 a.m. nightly overnight cleaning shutdown will continue.

 On Wednesday, June 3, the mayor said he would release plans to expand bus service in the coming days. “We’ve got to get back to the process of creating faster bus service. I'll have more to say on that as we can get through these next days, obviously. But we do want to absolutely deepen that effort,” he said at his daily briefing in response to a reporter’s question. “I think people do feel more safety right now in health terms in the buses than they do in the subways. I want to see people feel healthy and safe about both. But we do need to double down on buses. And we'll certainly have more to say on the specifics of that soon.”

Transit advocates and urban experts believe the mayor is wasting precious time, and was doing so well before the incidents of the last few days with widespread protests against police brutality and significant looting in some pockets of the city. His delays now appear likely to be compounded given he’s now been dealing with a situation that led him to institute a curfew.

“The mayor is being very complacent and that complacency can end up being very dangerous,” said Ben Fried, communications director for TransitCenter, a think tank and advocacy group. “He really does have a lot of power to make transit work for people, even in challenging circumstances, because he controls the streets and if he doesn't act on the power he has, then most riders are going to get stuck in traffic and there will be cascading effects that are no good for anyone.”

Last week, TransitCenter and other transit advocacy groups including Riders Alliance, Tri-State Transportation Campaign, NYPIRG Straphangers Campaign, and Northwest Bronx Community and Clergy Coalition wrote to the mayor calling for a network of emergency bus lanes to ensure that essential workers can continue commuting to work smoothly and to prevent additional vehicular traffic on the streets. “Time is of the essence. To lead an equitable recovery for the New Yorkers who have been most affected by the pandemic, City Hall must get out in front of rising car congestion,” the letter reads.

The groups called for 20 miles of busways (where most car traffic is prohibited) and bus lanes for medical facilities and essential workplaces by the end of this month and 20 more miles over the summer, particularly in Queens and the Bronx where the Department of Transportation has already looked at bus priority projects.

“Today, implementing an emergency bus lane network is an urgent matter of racial justice, public health, and economic necessity,” the letter reads. “Nearly half of regular NYC bus commuters are classified as essential workers. The vast majority are black and brown New Yorkers. They are tending to the sick and vulnerable, ensuring the city doesn’t go hungry, and keeping the lights on.”

Fried gave the mayor some credit for ramping up the expansion of bus lanes and pledging to increase bus speeds by 25% by 2020, which he promised in his State of the City speech last year but has made slow progress on. “He risks squandering that progress if he doesn't act now,” Fried said. More bus lanes would mean buses can run more frequently leading to less crowding, Fried noted. “That is the path toward a more successful reopening,” he said.

During his most recent Friday morning Brian Lehrer Show appearance, a caller implored de Blasio to restore millions in planned cuts to his bus lane program. “I'm going to go back and look at this again because I think you're right,” de Blasio told the caller, Beth. The mayor said buses could be somewhat safer than trains and pledged to take a careful look.

“But I think what Beth is saying is ringing a real bell with me that if buses are where people are going to feel more comfortable, then we should lean into buses more and work with the MTA to figure out what's going to help us maximize usage of buses,” de Blasio continued.

Later in the appearance he reiterated he is working with the MTA but also awaiting a plan from the authority. “People have to know that there is a plan to limit the number of people on a subway car or a bus,” de Blasio said. “What that looks like, what that number should be, how it's going to be enforced, how we're going to educate people – and we're ready to partner with the MTA on it.”

As the experts noted, mass transit isn’t an end in itself. It is crucial to the very reopening that de Blasio is trying to undertake. For businesses to get back on their feet, they will need workers and customers, and short of creating safe ways for people to get around, only those within walking distance will be able to shop at stores or dine at restaurants, Gelinas said.

Eli Dvorkin, editorial and policy director at the Center for an Urban Future, a think tank, said, “I see this as a real test of our ability to be prepared to reopen. Without trust in public transit, we're literally going to grind to a standstill.”

“There is a long-term risk of a general breakdown of the transportation system that the city's economy relies on and that is causing people who have the option to leave the city to go somewhere else,” Fried said.

The contrast with other cities has been stark. Early on during the pandemic, de Blasio repeatedly claimed that New York City was uniquely unsuited to instituting widespread open streets, like Seattle had done, for instance. He eventually caved to demands from the City Council and the public and announced a plan to create 100 miles of open streets, where most car traffic is disallowed indefinitely.

“San Francisco and Boston are taking steps to ensure that people can get around without cars,” Fried said. “They're not waiting months to formulate a plan. They are getting stuff done in a matter of weeks and New York really has to be thinking on the same timetable.”

De Blasio has slowly announced more bike lanes, albeit temporary ones that are less effective than alternatives in keeping bicyclists safe, while also cutting funds for permanent bike lanes that were originally proposed in his budget for the next fiscal year.

“He's never really put himself in the pedals of a bicyclist,” Gelinas said. “It's very striking that in Paris, in London, you have the mayors just building out a huge network of bike lanes almost overnight...In Paris, you have the mayor riding a bike and setting a good example.”

She also noted that in cities like Tokyo and Seoul, transit systems have been adapted to ensure that people can travel back and forth safely. “But we don't really have either of those things at the city level,” she said.

On WNYC, de Blasio appeared to acknowledge the need for the plans he has not presented. The subways and buses need to be handled well, the mayor said. “We also know, honestly, a lot of people are just going to refuse to take the bus and subway in the short-term and they're going to try and find other alternatives,” he continued. “We’ve got to navigate all of this. This is so unlike anything we're used to in New York City.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note - this article has been updated with the mayor's comments from his June 3 press briefing. 

De Blasio Offers No Transit Plans as City Heads Toward 'Reopening' Tue, 02 Jun 2020 04:00:00 +0000
Jails, Affordable Housing and Other Capital Projects Delayed as City Grapples with Cash Crunch man bx skyline

New York City building projects are on the chopping block (photo: Michael Appleton/Mayor's Office)

The coronavirus fallout has created a severe cash crunch for New York City, forcing Mayor Bill de Blasio to slash his proposed operating budget for the next fiscal year by $6 billion, with more cuts likely before adoption. At the same time, the city’s cash flow problems mean that its capital plan, a four-year, $67.2 billion agenda that pays for crucial, long-term infrastructure like schools and roads, will also need modification and could mean some major changes to how the city will build for its needs over the next several years.

Over this and next fiscal years, the city intends to spend far fewer funds – about $3.1 billion in fiscal year 2020 and $1 billion in fiscal year 2021 – on building new schools, replacing Rikers Island facilities with borough-based jails, affordable housing preservation and development, new police facilities and equipment, and energy efficiency infrastructure. These cuts to planned spending change the timelines for major infrastructure projects, meaning additional leeway for de Blasio’s successor to shape the city’s capital plan when a new mayor takes office in 2022. 

There are several aspects to the complicated capital budgeting process, including the ten-year capital strategy that assesses infrastructure needs for the next decade; the capital budget itself, which includes funding that cannot be exceeded for the coming fiscal year and the three years after it; and the capital commitment plan, which details the actual amount that will be spent on agency projects. Updated commitment plans are released with each iteration of the mayor’s budget.

Most capital spending is financed with long-term borrowing through the sale of bonds, which requires regular payment of debt service (paying back the borrowing and interest incurred), which is included in the annual expense budget. The city’s debt service for the current fiscal year was roughly 11.5% of annual revenue, which is well below the 15% limit that fiscal watchdogs and the comptroller believe should not be exceeded in any given year.

In de Blasio’s executive budget proposal released earlier this month, the administration did not make significant reductions in capital commitments for the current and next fiscal year. Mostly, the administration moved several capital projects into the out-years of the ten-year capital program, between fiscal years 2024 and 2029. 

Some of the changes follow the general pattern of capital budget planning. The city will often move funds to subsequent years if a project does not get off the ground as intended. The city also had a habit of front-loading projects into the first two years of the capital program even though most took several more years to complete, something the City Council pushed back against, achieving some adjustments in this year’s versions. 

Nonetheless, there were some notable changes to capital spending in the executive budget such as on affordable housing, as first reported by Politico New York, and changes to expected spending on the borough-based jails plan. 

Planned capital spending was reduced for the Department of Correction, which was intended to be used for the construction of four new borough-based jails facilities to replace Rikers Island jails. The $140 million budgeted in the current fiscal year was zeroed out, and in the next fiscal year (FY21), the city expects to spend only $196 million, as opposed to $392 million that was allocated earlier. 

The capital budget for the Department of Housing Preservation and Development (HPD) -- which runs the city’s housing programs, including the mayor’s 12-year, 300,000-unit affordable housing program -- was shrunk from $1.48 billion to $902 million in the current fiscal year (FY20) and from $1.19 billion to $741 million next fiscal year. This funding goes toward subsidizing affordable housing, both newly-built and preservation of rent-regulated deals that are close to expiring, as well as supportive housing and more.

On Tuesday de Blasio called the changes to the housing plan “sad” and “horrible” but necessary, and promised that the housing plan would still be completed down the road. 

The Department of Environmental Protection capital budget is seeing some fluctuation, but an overall increase in the short-term, falling from $2.3 billion to $2.27 billion in the current fiscal year and increasing from $2.37 billion to $2.72 billion in the 2021 fiscal year. The Department of Sanitation saw a drop from $463 million to $264 million in its capital budget for the current fiscal year, but will see its FY21 allocation increase from $522 million to $690 million.

The Department of Education will also see a substantial cut this year and next, from about $4.4 billion to $3.9 billion in the current fiscal and then again from $3.6 billion to $3.22 billion in the next fiscal year. Among the things on the chopping block was planned building of new schools, which reduced from $683 million to $458 million in FY20 and $1.28 billion to $1.05 billion in FY21; spending on “rehabilitation of school components” was also reduced from $926 million to $751 million in FY20 and from $510 million to $379 million in FY21. 

Even the NYPD, which has never struggled for funds under the mayor, was not spared. Its FY20 capital spending projection fell from $540 million to $264 million, while its FY21 spending increased from $339 million to $420 million. The shifts include less planned spending on facilities and vehicles.

One of the bigger capital plan cuts is in planned courts spending. The city will only spend $18.2 million this fiscal year, a drastic cut from the $288 million it had planned largely to reconstruct and renovate court facilities. In FY21, spending is also slated to decrease from $539 million in the preliminary budget to $406 million in the executive budget.

Under Speaker Corey Johnson, the Council has taken a particular interest in the capital budget and has pushed the administration to make more realistic projections for the actual amounts of money that will go into projects each year. Johnson created a subcommittee dedicated to the capital budget, which is chaired by Council Member Vanessa Gibson of the Bronx.

“Due to the COVID pandemic, the current priority is to provide support for New Yorkers and continue city services as millions are now relying on social safety net programs to support themselves and their families during the COVID crisis,” Gibson said in a statement. “The capital process will be delayed to focus on health and safety projects to provide relief for residents, but I will be working with Speaker Corey Johnson and Finance Chair, Daniel Dromm to monitor the situation and ensure that our City Council priority capital projects remain at the forefront of our negotiations.”

That also echoes budget experts from the Citizens Budget Commission and the Manhattan Institute who have repeatedly urged the mayor to streamline and reform the capital budgeting process. There has been some progress over the last few years but not nearly enough, they say. 

“CBC has been saying for a while that the capital budget is too large, and the timing of it is unrealistic, and we've urged them to make sure that it's better targeted,” said Sean Campion, senior research associate at Citizens Budget Commission. 

Part of the issues around capital investments currently stem from uncertainty that the coronavirus has caused in the construction industry and for interest rates for government bonds. The city also has no clarity on whether it will be able to meet its debt service obligations – debt incurred by issuing bonds that is paid on the operating budget side of the ledger – as the federal tax deadline was pushed and revenues coming into the city are delayed. Officials in the city and state are waiting with bated breath (and aggressive advocacy) for the next round of federal stimulus funds that they hope will replace many billions in lost revenue. 

When de Blasio was asked by a reporter on Tuesday specifically about the cuts to HPD, he insisted as much. “This is about slowing down some investments and postponing some things,” he said at his daily coronavirus briefing. 

He added, “[W]hen you think about the budget dynamics, we were dealing with suddenly a massive budget gap. We were dealing with a cash flow crisis on top of that. Anytime that you book a capital project, it has ramifications for the budget. Obviously for the expense side of the budget too because of debt service. We had to slow down a lot of capital investments just to be able to make sure we could pay the bills now. And it's really a horrible situation, but that's what we had to do. But the plan is intact and it will be implemented in the future.”

The federal stimulus, he said, would determine the city’s fiscal future. “There'll be tough choices any way you slice it, but the stimulus, if it actually takes into account what has happened here, all the costs, human and otherwise that have been inflicted on New York City and all that's been lost – and including first and foremost the human loss but then, of course, the horrible impact on the budget that's used to provide services to people – if it's really, really heard and understood and acted on, that stimulus could be a lifesaver for us. And if it's not, we're going to be in an even tougher situation, but that's going to then really govern everything else we have to decide in June.”

Campion and Nicole Gelinas, senior fellow at the Manhattan Institute, said the city needs to focus on routine maintenance work, ensuring that the infrastructure that undergirds the city – its bridges, tunnels, streets, and sewers – do not degrade. They also noted that the city is not close to its debt limit yet, so it should be able to cover capital costs through borrowing. “There's no immediate crunch,” Campion said. 

“It could present an opportunity to focus on priority investments, things that need to get done in the short-term, before focusing on longer term resiliency or rebuilding,” he added.

Gelinas said the city’s debt could rise out of control in the out-years if interest rates on long-term bonds go up, though the rates are in flux as the Federal Reserve announced that it is buying up to $500 billion in municipal bonds. Nevertheless, Gelinas said the situation should prompt some introspection from the administration about whether there are more cost-effective options for big infrastructure investments.

For instance, on the jails plan, with its cost reaching as high as $889 million in fiscal year 2022 and $2.1 billion in 2023. “I think they're really going to have to rethink whether they can do this or whether they're going to have to build new jails more cheaply at Rikers Island,” she said. “At least compare the costs of the two and then decide.”

“As we go into deeper rounds of cuts, we just have to protect core tax-generating infrastructure,” she insisted, pointing to the rebuilding of the Brooklyn-Queens Expressway (BQE) as a project that shouldn’t be abandoned. The city will have to push non-essential projects to later years, she said, holding out hope on a federal infrastructure package that could come to the rescue and spur job creation and economic growth. 

Council Member Brad Lander, a Democrat who is running for comptroller in 2021, took that point further, saying the city should take advantage of the fact that it can receive federal stimulus money and should make sure key capital investments are not reduced, particularly if they can boost jobs in the short-term. “When you're doing that, you are investing in the future. You are saying, ‘In order to make investments that are critical at this moment, we're going to incur debt that will have to be paid back in the future,’” he said. If the city commits to investing in affordable housing, it would also build confidence in the market, Lander said.  

Lander insisted that what the city should not do is borrow funds to balance the operational budget, which would require permission from the state Legislature. The mayor has suggested that measure as a last resort. “That's like taking out a loan to buy your groceries,” said Lander. “It's not good to take out a loan to buy your groceries because you’re still going to need to buy groceries next month or next year, and then you're going to be paying for your groceries twice.”

Council Member Helen Rosenthal, a Manhattan Democrat and also a comptroller candidate, expressed a different opinion. Rosenthal said the city should be seeking that borrowing authority from Albany right now. “The fundamental problem right now is we don't have any cash,” she said. “The right thing to do is to borrow money and continue to push Congress and the federal government to get local aid.”

As someone who previously worked at the city’s budget office, Rosenthal noted that the changes to the capital budget are simply routine, with lump sum funding being shifted from one fiscal year to the next, and that it’s too soon to tell if specific projects are going to be left on the cutting floor, and said that’s not really what the focus should be right now.

“If we can’t feed people today, we should be borrowing money to make sure we’re feeding people,” she said.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Jails, Affordable Housing and Other Capital Projects Delayed as City Grapples with Cash Crunch Wed, 29 Apr 2020 04:00:00 +0000
Amid 'Really Tough Process' Adjusting to Coronavirus Recession, De Blasio Set to Release Executive Budget de Blasio city budget coronavirus executive

Mayor de Blasio gives a budget presentation (photo: Ed Reed/Mayor's Office)

For his first six years in office, Mayor Bill de Blasio enjoyed the fruits of a booming economy and massively increased the size and cost of city government. But this week, he will present his executive budget proposal for the 2021 fiscal year facing a possible $6 billion revenue shortfall, hundreds of millions in cuts and cost shifts from the state, and almost complete uncertainty about the future as the coronavirus outbreak continues with New York City at its epicenter. 

De Blasio’s preliminary budget proposal for the 2021 fiscal year, which begins July 1, was a $95.3 billion spending plan, up more than $20 billion since he took office in 2014. Year after year, the mayor has taken advantage of quickly growing tax revenue, increasing the municipal worker headcount by more than 30,000 and only paying lip service to finding savings and efficiencies at city agencies. Though his administration kept putting away money in reserves – nearly $6 billion for the current fiscal year – budget watchdogs warned that it would be insufficient to survive a sustained recession. What the city faces now is no mere economic downturn.

Coronavirus, estimated to have now killed more than 10,000 New Yorkers as of April 14, presents a fiscal crisis of unprecedented proportions. It’s unlike previous recessions, which had cost the city between $15-20 billion in lost revenue over three years. There is no clear end in sight to the crisis and no guarantee that even once it is over, the city will be able to bounce back as quickly as it did in the past. That has forced the mayor toward the first truly hard budget choices of his tenure.

The city has already found $1.3 billion in savings and cost re-estimates under a Program to Eliminate the Gap (PEG) that the mayor quickly instituted after the outbreak. But far from recurring savings, it includes programmatic cuts and delays that may not be sustainable, and some will be far from palatable to New Yorkers. It also reflects adjusted spending estimates as a result of the coronavirus’ impact on how city residents access local government.

For instance, the PEG includes a $100 million reduction in fair student funding, and $124 million saved by cancelling the Summer Youth Employment Program. It delays the expansion of the 3K for All program, temporarily reducing expenditure by $43 million. It includes $52 million that wasn’t spent on snow removal this winter, though there’s no guarantee that next year will be as mild a season. Another $106 million is meant to come from a hiring freeze and vacancy reductions at city agencies.

The mayor has even said the city may have to consider borrowing in the short-term to cover costs, for which it would need authorization from the state Legislature.

“[W]e've had to go through a really tough process around cuts to the budget and savings and PEG program,” de Blasio said at his daily coronavirus briefing on Tuesday, when he was asked about the prospect of seeking that authority from Albany. “But we're going to have to look at everything to figure out how we get through this.”

Mayoral spokesperson Laura Feyer would not say whether the city plans to draw on its reserves to cover costs for the coming year, among other details about cash-flows and prepayments that Gotham Gazette inquired about. “We will be presenting the budget this week and will have more to say then,” she said in an email. “One thing you can count on now and always: we are committed to keeping New Yorkers fed, safe, healthy and sheltered.”

It’s unclear what new savings or savings plans de Blasio will announce when he presents the executive budget this week. 

There could be some relief, as the city is anxiously awaiting the next round of emergency funding from the federal government, which is currently being negotiated among Congressional leaders and the Trump administration and may be aimed at state and local governments experiencing steep revenue shortfalls. In media appearances on Wednesday morning, de Blasio emphasized that those funds will be crucial, particularly in ensuring that the city's emergency response mechanisms and services aren't hobbled. "We're not going to be able to provide basic services and actually have a normal society if we don't get help from the federal government so we can restart, so we can actually have a livable working city again," the mayor said on CNN's New Day. "If it doesn't come from the federal government, it's not going to happen. So Congress has got to get back and do a stimulus that helps cities, helps states, helps everyone get back on their feet and actually sustain a normal economy again."

But there is also the possibility of mid-year cuts from the state, with the recently-approved state budget allowing Governor Andrew Cuomo to periodically reduce spending if state revenues should come in below already-lowered expectations. As it stands, the budget could add several additional costs to the city’s books, including $200 million for healthcare, among others.

[Read: 10 Ways the New State Budget Impacts New York City]

There are also new costs the city is accruing in fighting the coronavirus, such as additional spending on emergency food and related services. The city has already spent hundreds of millions of dollars on its coronavirus response, the mayor's office told Gotham Gazette.

In an analysis released March 23, city Comptroller Scott Stringer projected the city already faces losses of up to $6 billion in revenue between the current and next fiscal year from the economic effects of the coronavirus.

“The City should explore all budget actions that protect essential services, the social safety net, and our long-term fiscal health, and the federal government must step up with substantial financial support for New York City as the epicenter of this crisis,” said Hazel Crampton-Hays, a spokesperson for Stringer, in a statement to Gotham Gazette. “In that context, while it would be premature to rule out any specific course of action, we urge caution before the City engages in borrowing to cover operating costs, which would create debt service obligations that have the potential to crowd out funds for the very services and people we are trying to protect.”

The city often uses revenue surpluses at the end of the fiscal year to prepay certain costs, such as debt service, for the next fiscal year. As the comptroller noted in his analysis, the city expected a surplus of $2.7 billion, and if those funds are used to balance the budget, then next year’s budget gap would potentially increase to $4.5 billion, a number that would have to be closed by the time a spending plan is approved in June.

The City Council is the other key participant in the city budget process. A spokesperson for Council Speaker Corey Johnson said, “We are facing unprecedented budget challenges with rapid shortfalls in revenue and rising unemployment, but we must continue to deliver for the thousands of New Yorkers who rely on that social safety net, especially our most vulnerable populations: the elderly, homeless, disabled and low-income families. We are going to have to make very hard decisions about where to find savings and efficiencies. At this point, nothing is off the table.”

Johnson has said the City Council is working to develop ways to hold budget hearings digitally -- the Council was in the midst of its hearings on de Blasio’s preliminary budget when the coronavirus shutdown began. On April 7, Johnson and Council members who chair budget committees offered a formal response to the mayor’s budget, noting that de Blasio’s spending plan was released in early January when the city was in a very different place.

“The impact of COVID-19 on our economy has been much like the effect of the virus itself – sudden and with a quick decline,” said Johnson, Finance Committee Chair Danny Dromm, and Capital Budget Subcommittee Chair Vanessa Gibson.

They gave their “estimation of the components of the baseline budget that are essential and must be preserved even in the face of impending budget cuts,” and while recognizing the need to cut the budget, said “as we make the tough decisions about where to find savings and efficiencies, it is imperative that the basic social safety net programs remain untouched, and in some cases expanded with additional investments.”

They identified seven key areas for protection and even increased funding: Maintaining Public Health; Addressing Food Insecurity; Protecting the Senior Population; Keeping New Yorkers Housed; Supporting Human Services Providers; Protecting Tenants and Small Property Owners; and Supporting Small Business.

Budget watchdogs have several prescriptions to rein in costs, though some may be hard pills to swallow for the mayor. While it will not help in the current crisis, they have renewed a push for creating a dedicated rainy day fund, which requires state legislative approval. And they all agree though that short-term borrowing should not be the mayor’s first instinct.

“Borrowing funds is the last resort,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit watchdog organization. “The first step is to look at savings and make significant changes. That certainly hasn't been the pattern in this administration but we need bold action now.”

Rein said the mayor should deliver, at minimum, a $3 billion savings plan for the next fiscal year focused on agency efficiencies, with savings that will recur year after year. “This is not a one year problem,” he said. 

[Read: Coronavirus Recession Makes New York City Rainy Day Fund More Urgent, Watchdogs and Legislators Say]

The outyears will also be impossible to predict, since there’s no telling when people will be able to go back to work and when major industries that the city relies on like tourism, food service, and hospitality will recover. “We haven't experienced a shock of this kind before so it’s not readily clear what the response from tourists, from New Yorkers, from businesses will be in terms of how quickly people get back to normal,’ said Ana Champeny, Citizens Budget Commission’s director of city studies.

Nicole Gelinas, senior fellow at the Manhattan Institute, said the “easiest thing” would be to institute a public sector wage freeze, which could save the city a significant chunk of money but is an unpopular decision that the mayor is unlikely to embrace.

Part of the problem with planning the budget, Gelinas noted, is not knowing the level of aid to expect from the federal government. “Unless we get tens of billions of dollars of federal aid in the Northeast or Mid-Atlantic, we're going to not have a very good recovery,” she said, “and then you don't want what should be a temporary crisis to become a permanent crisis."

Gelinas said the city should focus on maintaining core services – such as fire, police, EMS, corrections, and sanitation – instead of cutting them, which is what she criticized in the mayor’s $1.3 billion PEG.

“I think it's disturbing how quickly they went to make cuts to frontline services,” she said, noting the cuts to bike lane construction and organics collection programs. “If that's the first thing you're going to cut that saves you like a tiny, tiny fraction of a percentage of the budget, it doesn't seem like you’re starting out in the right frame of mind.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note - this article has been updated with the mayor's comments from a CNN New Day interview. 

Amid 'Really Tough Process' Adjusting to Coronavirus Recession, De Blasio Set to Release Executive Budget Tue, 14 Apr 2020 04:00:00 +0000
Coronavirus Recession Makes New York City Rainy Day Fund More Urgent, Watchdogs and Legislators Say fiscal year prelim

Mayor de Blasio gives a budget presentation (photo: Michael Appleton/Mayor's Office)

As Mayor Bill de Blasio desperately searches for solutions to the city’s financial woes caused by the coronavirus outbreak, lawmakers and fiscal watchdogs are advocating for legislation that, had it been approved years ago, would have helped the city better weather just such a storm by allowing it to create a dedicated fund for fiscal emergencies.

In January, de Blasio had proposed a $95.3 billion budget for the next fiscal year, which begins July 1, that was a more than $20 billion increase in spending since he took office in 2014. But the coronavirus burst the bubble of consistent economic growth that the city had enjoyed for nearly a decade and allowed de Blasio and the City Council to so drastically expand spending. The recession brought on by the pandemic now threatens to lead to a more than $6 billion drop in projected city revenue, which will need to be made up for through some combination of reserves, cuts, federal funding, and other measures.

It’s the kind of rainy day that budget watchdogs including City Comptroller Scott Stringer and organizations like the Citizens Budget Commission and the Manhattan Institute had been sounding the alarm about for years, insisting that the city’s reserves, just under $6 billion currently, would be completely wiped out in the face of a sustained economic downturn. And none of those predictions came close to imagining a scenario where the city would be the country’s epicenter of a viral outbreak wreaking havoc across the world.

The city’s current reserve funds include $1 billion in the general reserve, $250 million in the capital stabilization reserves, and $4.7 billion in the Retiree Health Benefits Trust fund. But those funds cannot be placed in a separate savings pot and built up each year, because of the state law that determines how the city budgets its money. A dedicated “rainy day fund” is prevented by the Financial Emergency Act of 1975 – passed by the state Legislature when the city faced insolvency – which requires the city’s budget to be balanced. Revenues must equal expenditures -- even the reserves are achieved through a form of annual fiscal tricks.

State Senator Brian Benjamin, a Manhattan Democrat who is exploring a 2021 run for city Comptroller, proposed legislation in October that would give the city the authority to create a municipal contingency and tax stabilization reserve fund. Though it is too late for the city to put away additional rainy day funds for this fiscal crisis, Benjamin said the coronavirus fallout highlights the need to create a savings system for the next eventual crisis the city will face.

“This is the moment where this makes the most sense from a forward planning standpoint,” Benjamin said in a phone interview. “What I have every intention to make sure we get
this year is, in this moment when we’re feeling the pain, when we're making the cuts that we have to make on the state level, we have to make big cuts on the city level, we make the right decision to create a rainy day fund to help the future legislators have more options.”

In last year’s general election, New York City voters overwhelmingly approved a ballot question that would change the City Charter to facilitate the creation of a rainy day fund. It now only requires state authorization.

“It doesn't say you have to put in $5 billion now, $10 billion now, $20 billion now,” Benjamin said of his bill. “It just creates the apparatus that can then allow things to occur. So that to me should be a no brainer.”

Benjamin’s bill comes with strict safeguards for when the city could dip into a rainy day fund. It would only be allowed in the case of an economic recession, where the city sees two consecutive quarters of negative economic growth. He insisted that provision is crucial so the city does not use the fund for one-time purposes that would otherwise be unjustified.

Assemblymember Robert Carroll has sponsored a companion bill to Benjamin's proposal. Last week, the two legislators and Brooklyn Borough President Eric Adams wrote to Governor Andrew Cuomo, calling on him to support the legislation and quickly activate a rainy day fund for the city.

Despite the companion bill, however, it seems any final legislation may end up being a compromise. A separate bill has been proposed by Assemblymember Edward Braunstein, though it does not contain the same safeguard as Benjamin’s and Carroll's proposal. Benjamin has been negotiating with Mayor de Blasio’s office and Braunstein to create a version they can all agree on, and he said that the Senate leadership has been supportive.

“We're reviewing the bills,” said Laura Feyer, a mayoral spokesperson on budget matters.

Mike Murphy, a spokesperson for Senate Majority Leader Andrea Stewart-Cousins, said in an email, “It is something we will have to discuss as a conference.” A spokesperson for Assembly Speaker Carl Heastie did not respond to a request for comment.

Budget watchdogs have been pushing de Blasio to create more robust reserves for years, particularly as they watched expenditure skyrocketing under his tenure with inadequate controls on waste and inefficiency.

Citizens Budget Commission, which helped lead the charge for the rainy day ballot measure put forth by a Charter Revision Commission, last year recommended that the city put away the equivalent of 17% of tax revenues in order to survive a recession like previous ones, which could lead to an estimated $15-20 billion drop in revenue over three years. Deposits in the fund should be mandatory during times of growth, and the fund should be established with strong criteria for when it is utilized.

“If we had this rainy day fund in place and had followed CBC’s guidelines for the recovery that is now over, we would be in a radically different position in the city,” said Andrew Rein, CBC president, in a phone interview, estimating that the fund would have held $9 billion by now.

Rein emphasized the importance of restriction on using the fund. “If you open it up wider, it can be used for a slush fund, for a minor occurrence, to fund new programs,” he said.

Besides an economic recession, CBC also recommends allowing the fund to be used in “severe emergencies” that are clearly defined in the law. “There should be some sort of guideposts to tell you what is ‘severe’ and so we recommended something like at least a 1% drop in expected revenues or 1% increase in spending so that you're not tapping the funds for what is sort of smaller expenses that come up,” said Ana Champeny, CBC’s director of city studies.

Though the mayor has repeatedly insisted that city reserves are at “historic levels” compared to past administrations, fiscal watchdogs like CBC and the Manhattan Institute’s Nicole Gelinas note that the $4.7 billion Retiree Health Benefits Trust fund does not count as a true reserve. That money, they say, should only be used for its intended purpose, to provide retirement benefits for municipal employees, rather than to help the city cover its expenses in times of emergencies.

“I think that it's worth creating a rainy day fund as part of the next state budget cycle and trying to look beyond the crisis to long-term reforms,” said Gelinas, noting that it’s far too late to be useful for the current crisis.

She also pointed out that the lack of a robust rainy day fund has left the city riddled with uncertainty and couched in a wait-and-see posture as Congress negotiates over the next round of emergency relief.

De Blasio has already announced some steps to shore up city finances, including a new Program to Eliminate the Gap (PEG), which requires agencies to identify certain savings for the mayor to evaluate, to cover some of the shortfall. But the administration has so far only found ways to reduce $1.3 billion in spending. Those cuts are mostly programmatic, and are neither recurring savings nor actual efficiencies in government function, experts have pointed out. Many of them simply reflect lower-than-expected expenditures because of the fallout of the coronavirus outbreak.

De Blasio has indicated more cuts to his spending plan are likely when he presents his Executive Budge, due April 23. That outline will then form the basis for further negotiations with the City Council. The city is also awaiting the possibility of a federal bailout of municipal finances in a fourth coronavirus package that is being negotiated.

And the mayor has also floated the idea of short-term borrowing to meet expenditure needs, which is also precluded by the Financial Emergency Act.

“If we did have a $5 billion or $10 billion cushion, we would be in a much better position to say, ‘Okay, let's see where things are in six months,’” Gelinas said. “Is the pandemic over? Have people come back to the city? Have businesses reopened? But we have very little room for error. We're basically so dependent on the federal government right now.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note - this article has been updated to reference Assemblymember Robert Carroll's bill and a letter sent by him, Senator Benjamin and Brooklyn BP Adams to Governor Cuomo. 

Coronavirus Recession Makes New York City Rainy Day Fund More Urgent, Watchdogs and Legislators Say Mon, 13 Apr 2020 04:00:00 +0000
‘Possibility of a Prolonged Recession’: Coronavirus Could Wreak Havoc on City, State Budgets de Blasio Cuomo budget coronavirus

Major challenges now & ahead for Mayor & Governor (photo: Rob Bennett/Mayor's Office)

New York has weathered financial storms before, including after the 2008 recession and the September terror attacks in 2001. But the COVID-19 pandemic threatens to eclipse the scope of both those emergencies. The fiscal impact on the economy is impossible to predict with any certainty but suffice it to say, it will put a major dent in the city’s and state’s budgets for the coming fiscal year.

In January, Governor Andrew Cuomo proposed a $178 billion executive budget for the 2021 fiscal year that begins April 1, which includes $105.8 billion in state operational spending (the rest comes from federal funds). In New York City, Mayor Bill de Blasio’s own preliminary budget proposal was for $95.3 billion for the fiscal year that starts July 1.

But state and city resources are expected to be taxed to their limits as officials mobilize to combat the spread of the coronavirus, while tax revenues to all levels of government plummet. Bars and restaurants have closed. Hotels are empty. Broadway is shuttered. Tourism is at a standstill. The cumulative impact on city and state tax receipts is expected to be in the billions, particularly as the pandemic could also trigger an economic recession that experts had already been expecting in some form.

New York State Comptroller Thomas DiNapoli released an estimate of the fiscal impact on state revenues on Tuesday, at the request of Governor Cuomo. He predicted that “the most optimistic revenue scenario” would be that tax receipts to the state are $4 billion lower than executive budget projections (of roughly $88 billion) and, if the stock market continues to decline and a recession sets in, that figure could be $7 billion. “Definitive estimates of the COVID-19 impact on the economy and State revenues are not possible, in part because the ultimate health and social impacts of the virus are currently unknowable,” the comptroller wrote.

DiNapoli noted that it would be tough to quantify mitigating actions by the federal government that could have a positive effect such as increasing unemployment insurance or assuming a greater share of state Medicaid costs.

“[O]ur budget as we prepared it is possibly overly optimistic,” Cuomo said in response to the comptroller’s projections on Tuesday, at his daily briefing on the coronavirus. State budget director Robert Mujica also noted that the comptroller’s estimate was done before a major stock market sell off on Monday and that the state will also have to wait to see whether the federal government decides to extend the date for filing personal income taxes, which make up the major share of state revenue.

“It really goes back to, essentially, the federal government will have to step in here to deal with this because we will have our own liquidity issues if we don’t get some relief,” Mujica said.

He said any state budget adopted during the pandemic would need to be adaptable. “We don’t know how long this is going to we need a budget that’s in place that gives us the flexibility to hold payments back, modulate things, move payments ahead of time for health care.”

Cuomo said that if revenues continue to slow as he expects, “we have to have a built-in mechanism to adjust the expenditures.” (The governor has in the recent past pushed through measures to give himself more budget flexibility.)

The projections are dire, particularly as the state budget season already began with an expected budget gap of $6.1 billion, mostly from rising Medicaid costs that the governor hoped to close through another overhaul of the state Medicaid program. The state’s reserves are also a paltry $2.5 billion (which includes $428 million that is planned to be added by the end of the current fiscal year).

In the city, Comptroller Scott Stringer estimated that, conservatively, the coronavirus would lead to a $3.2 billion loss in city revenue over the next six months based on declining sales in restaurants, retail, and real estate, and falling occupancy rates at hotels.

Stringer called on the mayor to aggressively take steps to cut $1.4 billion in spending across city agencies, with lower savings mandates for social services agencies and exemptions for the Department of Health and Mental Hygiene and NYC Health + Hospitals, which are obviously on the frontlines of fighting the virus and its medical aftermath. He also urged measures to protect small businesses and the non-profit human service providers that the city contracts with for many vital programs.

“As we brace for the economic fallout of the COVID-19 pandemic, we must protect our children, our seniors, our small businesses, and the arts and cultural organizations that are core to our economy and our identity as a city,” Stringer said in a statement. “We’re facing the possibility of a prolonged recession — we need to save now, before it’s too late, if we’re going to weather the downturn ahead.”

The city does have a fairly robust well of reserve funding – nearly $6 billion – but Stringer and other watchdogs like the nonprofit Citizens Budget Commission have warned the de Blasio administration for years that those funds would be insufficient to survive a prolonged recession, which seems more likely by the day.

Across the entire state, a confluence of factors may wreak havoc on jobs and income. The economy gets a large portion of revenue from Wall Street, which has been roiled by the effects of the coronavirus on global markets. Out-of-work employees not only won’t be paying taxes, but there’s already been a surge of applications for unemployment benefits that will itself tap state resources in a significant way. And the largest growing employment sector has been health care, which accounted for 40% of job growth in New York City in 2019. Within that, home health services accounted for 78% of health care jobs added and is one segment where providers and clients will be particularly vulnerable to the virus itself.

For fiscal watchdogs who have raised red flags about increasing state and city spending for years and warned about stormy weather on the horizon, the rainy day they expected is here albeit in a form than they imagined.

E.J. McMahon, founder and research director of the Empire Center for Public Policy, urged in a blog post on Tuesday that the state should swiftly pass a budget that gives the governor the flexibility to which Cuomo alluded. McMahon pointed out that, as currently written, the law limits how the governor can adjust spending once a budget is adopted. He can either cut from agency spending, which makes up one-fifth of the budget or cut local assistance funding by 1% of state operating funds, which would amount to just over $1 billion.

“Even assuming the governor squeezes 10 percent out of agency operations, the further cuts allowed by the discretionary provision would fall $1 billion short of DiNapoli’s best-case revenue scenario, and $4 billion short of the worst case,” McMahon wrote. He said the longer it takes to resolve the budget, the worse the problem will be and it will fall squarely at the governor’s feet regardless.

DiNapoli is also pointing out that if the federal government takes what appears to be a likely step of allowing people to file their taxes at a new deadline past the typical April 15 date, that could impact the state’s receipts, even temporarily, and cause cash flow issues.

New York City, with its reliance on property taxes, may be more steady over the next few months than New York State. Maria Doulis, vice president of Citizens Budget Commission, said it’s unclear “whether this is sort of a blip and then economic activity rebounds or whether it is going to punch us into a more prolonged recession.” She pointed out that in previous recessions, the city lost between $15-20 billion in revenue over three years compared to projections. “What the city has available to deal with that is just a fraction of that amount,” she said.

Doulis said it was surprising that the mayor has not already announced a Program to Eliminate the Gap, which would mandate savings and efficiency targets at city agencies. Unlike the state, the city’s budget is required by law to be balanced so that expenditures match revenues. “While the response [to the coronavirus] is going to necessitate greater spending on certain areas, it's all the more important to tighten the belt in the other areas of the budget,” Doulis said.

“This is something that's affecting all state and local governments and it's not clear that New York will be disproportionately favored in any federal government response,” she said.

Nicole Gelinas, senior fellow at the Manhattan Institute, believes the city may be hit harder than what the comptroller has estimated. She noted that taxes dropped by nearly $3 billion “almost overnight” after the 2008 recession, about an 8% reduction. “If we were to lose 8% of tax revenues this time, looking at next year's budget, we'd be looking at a $5 billion tax revenue drop,” she said.

Gelinas noted that the coronavirus pandemic is also unlike the effects that the recession or the September 11, 2001 terror attacks had on the city’s economy. The attacks did not lead to an extended virtual shutdown of the city and most businesses outside of ground zero that did close were soon back up and running. After the recession, the tourism industry helped the city rebound faster than other municipalities.

“This is a very different case. I mean, we have huge swaths of the economy just shut down,” Gelinas said.

The emergency might require drastic budget measures, she said, noting that spending has gone up by $20 billion under de Blasio. “We didn't enter this from a very good condition but the fact of the matter is now it's a pretty big emergency. So I don't think we're gonna get out of this just by cutting back the workers that de Blasio added to the payroll, which in itself is a difficult thing to do,” she said of the mayor’s massive expansion of the city workforce.

The city may also have to take unpopular steps to contend with the crisis, including by potentially instituting a wage freeze for municipal employees who have received raises through union contracts. “This is certainly going to rival the 1970s fiscal crisis in terms of the immediate cash crunch that it gives us,” she said.

Gelinas also worries that the property tax base would be hit by restaurants, retailers, and commercial tenants seeking moratoriums on their rent.

James Parrott, an economist at the New School, told the Wall Street Journal that the city could lose as many as 500,000 jobs by the end of the month, while Gelinas believes that number is also an understatement. She noted that the leisure and hospitality industries employ 450,000 New Yorkers and nearly 60% of those are likely facing temporary layoffs. Retail has another 340,000, which won’t be as badly affected, but will probably see “double digit percentage declines” nonetheless. And the financial industry will probably also see layoffs with markets cratering.

And though the city budget may not be affected by it, Gelinas also noted that the MTA will “run out of cash very quickly” as New Yorkers stop using mass transit during the pandemic (transit authority leadership asked the federal government for a $4 billion bailout on Tuesday).

Ronnie Lowenstein, executive director of the city’s Independent Budget Office, echoed Gelinas on the unique aspects of this current fiscal emergency. She noted that the city was already heading into a downturn when the September 11, 2001 attacks happened, and while the federal government pumped aid to the city, the state relaxed financial rules for the budget. “And the city fought its way back,” Lowenstein said.

The 2008 recession, on the other hand, was precipitated by the subprime mortgage crisis, which had less impact on a city that’s mostly home to renters than some might assume, and again the federal government soon intervened to bail out some Wall Street banks. Jobs contracted but at a far lower rate than previous recessions and even far lower than the national average.

“It's hard to see how New York could be so lucky a third time in a row,” Lowenstein said.

Assuming the state does not suspend the requirements that the city balance its budget, Lowenstein said there are three options, which may all leave the city at the mercy of the state and federal government: “Tap into other levels of government for aid or find ways to raise revenues either permanently or temporarily, almost all of which, except for the rate on the property tax, has to go to Albany.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

‘Possibility of a Prolonged Recession’: Coronavirus Could Wreak Havoc on City, State Budgets Tue, 17 Mar 2020 04:00:00 +0000
Max & Murphy Podcast: The MTA's New $52 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

by Ben Max, Gotham Gazette

Read more by this writer.

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 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.”

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. 

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 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!

by Ben Max, Gotham Gazette

Read more by this writer.

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 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

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. 

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 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.

by Dave Colon, Gotham Gazette

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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