Buoyed by an infusion of federal stimulus funds, Mayor Bill de Blasio on Monday outlined his $98.6 billion executive budget, which would be the largest in NYC history if agreed to by the City Council. The final budget plan for the next fiscal year aims to lift the city out of the pandemic’s economic devastation, with big boosts to education, small businesses, public health, and tourism–while also increasing the money set aside in the city’s rainy day and reserve accounts.
The proposal, and near-jubilant tone in which de Blasio presented it, stood in stark contrast to his preliminary $92 billion budget proposed in January, which was framed as an austerity budget driven by a series of bleak economic indicators, including a historic drop in property tax revenue and double-digit unemployment.
In a message that mixed both gratitude and relief, de Blasio thanked Democratic leaders in Washington D.C., including President Joseph Biden, House Speaker Nancy Pelosi and New York Senator and Majority Leader Chuck Schumer for coming to the aid of localities like New York.
“Now because of the stimulus, because of the support we’re finally getting, we’re able to make a huge comeback,” said de Blasio. “This is a good news budget if ever there was one.”
Altogether, the city is set to receive more than $14 billion in federal aid, including $5.9 billion in direct local aid, $7 billion for education and $1.3 billion from FEMA to pay for expenses related to COVID-19 costs such as vaccinations, testing, emergency food programs and additional staff.
In addition, the city benefited from better-than-expected tax revenues, exceeding its projections for an additional $1.6 billion in the current fiscal year, and another $164 million for fiscal year 2022, thanks to increased revenue from corporate and personal income taxes, according to budget officials.
The injection of federal funds also helped shore up the state budget, which reached its $212 billion budget agreement earlier this month, preventing any cuts from trickling down to the city.
To the contrary, the state budget provided a boost, especially in terms of education funding. With Democrats in Albany controlling both houses, the state legislature pushed through higher taxes for the wealthiest New Yorkers, which will allow for a major increase in annual funding for schools, finally meeting the requirements of a court mandate dating back 15 years. The state budget increased annual funding for city schools by over $1 billion.
De Blasio said his budget proposal seeks to dramatically increase initiatives to advance equity, particularly for youth, with “profound” investments in student learning and mental health.
Since he entered City Hall eight years ago, de Blasio has made expanding early-childhood education a priority, and his largely successful push for universal pre-K is seen as one of his most significant achievements.
De Blasio’s latest education proposal includes expanding free preschool for 3-year-olds to all of the city’s school districts, putting the city on track to have free seats available for all eligible 3-year-olds in two years. The budget proposal would also address a gap in the universal pre-K program by increasing funding for special-education preschool classes, which have failed to meet demand.
Many of the education programs included in the presentation were previously announced by the mayor, including an expansion of summer school, fully funding individual schools under the city’s ‘fair student’ formula and not clawing back funding from schools with lower-than-expected enrollment during the pandemic.
He also proposed spending $500 million to assess students’ academic progress during the pandemic and provide them with tutoring. He said the city should address the acute challenges special-education students have experienced during the pandemic by using $236 million to increase speech therapy, physical therapy and counseling. He called for the city to expand ‘community schools’ that provide wraparound support services for students, and offer more PSAL athletic programs at schools that have not had them.
The mayor said the infusion of dollars from the feds and state lawmakers will “finally allow us to create the school system we wanted all along.”
To help speed the recovery, the mayor said the city would focus on investment in the public health sector, building out infrastructure and lab space with a $300 million capital investment and launching a Pandemic Response Institute with another $20 million in capital funds.
While the city has started to see an uptick on the jobs front, with the return of 100,000 jobs between December 2020 and March 2021, after a loss of half a million last year, the mayor said the city would invest $234 million in a City Clean Up Corps which will hire 10,000 people to respond to graffiti and trash complaints while also completing neighborhood beautification projects, like painting murals, tending to community gardens and maintaining the city’s popular Open Streets program. The corps, which de Blasio announced earlier this month without a price tag, would be among the items covered by federal stimulus dollars.
For small businesses, the mayor proposed a $100 million grant program for owners in low and moderate income neighborhoods, with the goal of providing direct aid to businesses that continue to struggle with the fallout from the pandemic.
He said the city also planned to launch a historic tourism campaign, providing $25 million to NYC & Co to lure back tourists, an industry that was decimated by the pandemic-driven shutdowns. After hitting a record high of more than 66 million visitors in 2019, the numbers shrunk to just 22 million by the end of 2020. Current forecasts estimate tourism numbers will rise this year, with an estimated 36.4 million visitors, but won’t return to pre-pandemic levels for another five years.
A major sticking point in budget negotiations last year was over funding for the New York City Police Department. Criminal justice advocates urged lawmakers to reduce the NYPD’s operating budget of nearly $5 billion by at least $1 billion, but the administration has not fully followed through on that reduction.
As gun violence continues to plague many neighborhoods, the mayor proposed increased funding for a series of community-based initiatives, including $27 million to expand the Cure Violence program, which deploys trusted violence interrupters into areas where shootings are on the rise.
Asked directly about the size of the NYPD’s budget in the coming fiscal year, the mayor suggested it would rise slightly to pay for additional programs on the civilian side. Budget officials also said the city has no plans to increase the NYPD’s uniform headcount, which is currently about 35,000.
In addition to the spending plan, the mayor proposed setting aside $1.8 billion in reserve funds, which would mostly consist of $1.6 billion for the Retiree Health Benefits Trust fund for this fiscal year, plus $200 million for the general reserve. Total reserve funds for next year are nearly $4.6 billion, with $3.8 billion set aside for retiree health benefits, nearly $500 million for the city’s Rainy Day fund and $300 million in the general reserve.
While the plan cited nearly $3.9 billions in savings through the next fiscal year, budget watchdogs said the mayor had not done enough to reduce costs across city agencies, and raised concerns about the use of federal funds to pay for new programs as opposed to using those funds to address looming budget gaps.
“Basically he uses a lot of the federal money right up front in the first two years,” said Andrew Rein, head of the Citizens Budget Commission, a nonpartisan nonprofit that scrutinizes city and state finances. Rein said budget gaps projected to exceed $4 billion were on the horizon, starting in 2023.
“You haven’t put a dent into the fiscal problems in the future so you are kind of kicking the can down the road into the back of the next mayor’s head,” he said.
But the mayor defended his choices, declaring, “You have to spend money to make money.”
“We need to come back strong,” de Blasio said, stressing his budget office projected these new investments would help the city bring back more jobs by the end of the year. “I think that is actually the smart way to approach this moment and make it sustainable.”
The mayor dismissed any suggestion that he was leaving his successor with fewer fiscal options by using so much of the stimulus funds now. “They are going to be able to have a lot of choices because we will hand them a strong economy and the revenue that goes with it,” de Blasio said.
The executive budget will once again be examined by the City Council, which will conduct another round of agency budget hearings. A final, balanced budget agreement between the mayor and the Council must be reached ahead of the start of the new fiscal year on July 1st.