New York Mayor Bill de Blasio warned about several variables as he released his $92.2 billion preliminary budget for fiscal 2020.
De Blasio, in his sixth budget presentation, cited a possible second federal government shutdown, an uncertain national economy and $600 million worth of cuts and cost shifts the state government has proposed for FY20.
“We see the iceberg up ahead,” said New York Mayor Bill de Blasio.
Michael Appleton/Mayoral Photography Office
“The word preliminary is very pertinent in this case,” he told reporters in the City Hall Blue Room on Thursday. “We’re dealing with some very unusual circumstances. We see the iceberg up ahead.”
His proposed budget is up nearly 2% from his November financial plan and 3% from the plan he and the City Council approved last June. Spending is up roughly 23% since de Blasio took office in January 2014.
The largest component of the roughly $3 billion increase from last year’s adopted plan is $1.5 billion for labor costs. Others include education, $632 million; debt service, $358 million; and fringe benefits, $325 million.
By law, the 51-member council must vote on it by July 1, when the new fiscal year starts. The last three budgets passed early. The mayor will make tweaks to his executive budget in the spring following a round of City Council hearings.
In a worst-case scenario regarding Washington and Albany, “we’ll make hard decisions based on our strategic imperatives,” he said. “There are some things we are not going to do.”
The mayor also offered a 10-year, $104.1 billion capital budget that emphasizes affordable housing, road and bridge repair, street safety, clean water, school capacity expansion and climate resilience.
Since July 1, 2018, the city has issued $1.2 billion in general obligation bonds for capital purposes and $831 million in GO refunding bonds.
Moody’s Investors Service rates the city’s general obligation bonds Aa2. Fitch Ratings and S&P Global Ratings rate them AA. All three assign stable outlooks.
The city has roughly $38 billion of general obligation debt as of Dec. 31, according to city Comptroller Scott Stringer’s office.
Savings, said de Blasio, include $1 billion across FY19 and FY20 in addition to healthcare savings of $1.6 billion in FY20, $1.9 billion in FY21 and every year after. Reserves total $1.25 billion in each year of the financial plan: $1 billion in general reserve and $250 million in the capital stabilization reserve. A separate retiree health benefits trust fund contains $4.5 billion, according to the mayor.
According to budget Director Melanie Hartzog, debt service as a percentage of tax revenues remains under 15%. “That’s a benchmark of responsible financing,” she said.
Hartzog said the FY19 and FY20 budgets are balanced, the latter through prepayments. The city projects outyear gaps of $3.5 billion, $2.9 billion and $3.3 billion for fiscal 2021 through 2023, respectively.
Proposed cuts from Albany could include $300 million in education funding; $125 million in assistance to needy families; $59 million in vital health sources; and $13 million for youth crime prevention.
Compounding the state’s situation is a $2.3 billion shortfall in current-year income tax revenue and a projected $1.6 billion gap for next year.
De Blasio called for a “peg” program to tie city departments’ budgets to performance, an additional $750 million in savings by April and said the city would extend a partial hiring freeze.
While the budget contains no additional funding for the state-run Metropolitan Transportation Authority, which operates the city’s subways and buses, it calls for $2.7 million annually on street management to speed bus travel. It earmarks a further $106 million to continue the “fair fares” discount program for low-income transit riders.
De Blasio is optimistic that Albany lawmakers could pass full-throttle design-build project delivery authority for the city. It now has limited use on projects, such as NYCHA work and the Brooklyn-Queens Expressway rehabilitation.
“It’s more of a public issue,” he said. “More and more people realize that you can save big money on major capital projects.”