Mayor Bill de Blasio's $92.28 billion preliminary budget for New York City for the fiscal year 2022, presented during a press briefing Thursday, focuses on a path to recovery and closing a substantial budget gap, all while addressing the disparity brought on by the ongoing pandemic.
The pandemic has brought $5.9 billion of unexpected costs as unemployment skyrocketed to 20 percent and remains at over 12.1 percent. The mayor notes that the skyrocketing costs come as tax revenue continues to decrease. The city has lost $10.5 billion in tax revenue from fiscal year 2020 to fiscal year 2022.
According to the mayor, there is a $1.5 billion revenue decline due to the pandemic, driven by $2.5 billion decline in property tax revenue that is not going to come in that the city initially expected. However, de Blasio notes that the new loss experienced by the city is partially offset by an increase from income taxes, since, as he noted, "the rich got richer" during the pandemic.
Meanwhile, the budget gap that the city must close has increased substantially, and now totals around $5.25 billion, an increase from the $3.75 billion budget gap in November 2020, de Blasio said.
De Blasio said investing in recovery means continuing investing in the city's COVID response, including the Test & Trace Corps and vaccine campaigns, closing the COVID Achievement Gap in city schools, and strengthening the essential services strained by the pandemic.
During his preliminary budget press conference Thursday, de Blasio went on to address how his budget proposal will not only lead to recovery, but close the budget gap.
"We're closing that gap with the PEG program that cuts from the different agencies across the board, the pension savings, with other reduction and expenses we've found, reforms to our debt service to save money there, labor savings and some areas where we are seeing increased revenue," he said.
The mayor said the city managed to save $1.3 billion after telling each city agency last November that more ways to save money or cut costs must be found. The city also implemented a strict attrition and hiring management system in which agencies can hire one person for each three that leave the agency (though there are exceptions to this rule, like the healthcare field, he said). Since January 2020, the city has reduced headcount by 7,000, according to the mayor. However, the plan is to reduce headcount by 5,000 more which will save $349 million over the fiscal years 2021 and 2022.
Additionally, the new pension system proposal from the city actuary will save $430 million for fiscal year 2021 and $300 million in fiscal year 2022. The plan also reduces long-term risk to the pension fund. The new pension system proposal would allow the city to use the pension investment gains instead of having to wait and take them in increments over six years, and lowering the expected rate of return on city pension funds to strengthen the long-term solvency of the pension system.
De Blasio also said the mayor's office tightened its spending belt with a 13 percent cut compared to last year. Additionally, citywide there was $3.6 billion in savings since last June.
De Blasio said the state as a whole is facing a huge fiscal problem as well. If the state doesn't receive sufficient federal stimulus, the state may try to cut aid to localities by up to $8 billion, this would mean up to $4 billion in cuts to New York City. Because of this, the mayor made a call for the state to tax the wealthy.
"There is plenty of money in the state, it's just in the wrong hands," he said. "Let's tax the wealthy at the level they deserve and then we can avoid these horrible cuts to things like our schools, healthcare, our seniors. We are going to fight these cuts, obviously, if the state feels compelled to move them."
Another challenge the city faces is assistance in terms of adequately reopening up schools and closing the COVID Achievement Gap, which surrounds its $2.3 billion share of a $4 billion COVID relief package sent to the state that was earmarked for education. However, because of the federal language that didn't require the money to go to localities, according to the mayor, the city is asking the state to prevent the supplantation of these funds.
Meanwhile, the mayor said the city is keeping its commitment to not raise property tax rates, because "state law causes property assessments to go up even in the middle of a crisis." The mayor said that the city will provide a rebate to homeowners who own and live in a one- to three-family home with a market value of less than $500,000.
Part of this relief will be brought on by U.S. Sen. Charles Schumer (D-NY) and his discussions with President-elect Joe Biden and his team. The incoming administration’s FEMA will deliver roughly $2 billion more to New York City and New York State for COVID-19 relief.
Schumer has been pushing for 100 percent FEMA cost share since the crisis began.
“President-elect Biden is laser-focused on America’s economic recovery, and this recovery begins with tackling the costs states and local governments have incurred in managing the pandemic,” Schumer said in a statement. “For New York, the costs have been huge and will take years to overcome entirely, but achieving my goal of 100% FEMA cost share to the city and state will mean a sigh of relief for all New Yorkers because these critical dollars will help protect essential services and workers while we deal with badly burdened budgets that have been gut-punched by COVID. I am glad we could get this done even before the President-elect is sworn in because it shows how we will be hitting the ground running come January 20th.”
However, de Blasio said even with the good news surrounding the FEMA funds, the city and state still need a comprehensive COVID stimulus package.
The preliminary budget also seeks to invest in critical needs and COVID-19 related recovery, including:
- COVID Test & Trace Corps: $200 million in fiscal year 2021;
- Learning Bridges for students in hybrid learning: $62 million in fiscal year 2021;
- Ensuring no New Yorker goes hungry by providing food relief through GetFood NYC: $52 million in fiscal year 2021;
- Social and emotional learning for students: $35 million in fiscal year 2022;
- Continue the expansion of WiFi in shelters: $14M in fiscal year 2021, $3 million in fiscal year 2022;
- Extra resources for answering 311 calls when traffic is high due to COVID-19: $10 million in fiscal year 2021 and $10 million in fiscal year 2022;
- 70,000 slots for Summer Youth Employment: $132 million in fiscal year 2022.
Overall, in the preliminary budget, the city has achieved a total of $2.2 billion in savings over fiscal years 2021 and 2022.