What a difference an election can make.
Mayor de Blasio has proposed $6 billion in new spending for the fiscal year that starts July 1 above his Jan. 14 preliminary financial plan, including several thousand new hires as part of what he called a "recovery budget" that would be "a radical investment in working families to drive economic growth in every neighborhood."
Cleanup Corps Jobs Effort
The city will launch a New Deal-style jobs program dubbed the City Cleanup Corps; redesign the way it responds to mental-health crises; fully fund universal pre-kindergarten education for 3-year-olds, and expand its capacity for early-childhood special education
Mr. de Blasio April 26 presented a thumbnail sketch of the $98.6-billion plan that will be the starting point for negotiations with the City Council ahead of the July 1 deadline for the budget.
"A recovery for all of us starts by investing in working families across New York City," he told reporters. "We are meeting the moment with direct investments in education, small businesses, open space and public health, and we are building up reserves to continue our strong fiscal foundation for the future. "
The Mayor outlined several coronavirus-inspired investments he said would make the city the "Public Health Capital of the World" including an NYC Public Health Corps, new family home visits and health services for first-time parents, as well as the formation of a Pandemic Response Institute.
Driven by Biden's Aid
Six days before President Biden's Jan. 20 inauguration that set in motion the $1.9-trillion American Rescue Plan, Mr. de Blasio had said he intended to cut 5,000 jobs via attrition, on top of the 7,000 that went unfilled the previous year.
But the infusion of $6 billion in Federal pandemic-relief aid under the Biden plan, in addition to an estimated $7 billion in Federal aid for education has led the Mayor to loosen the reins on replacing workers who depart. Instead of requiring that three workers leave the payroll for every one who is hired, the ratio will be 2-to-1. He noted that with 313,000 employees currently on the payroll, there are 17,000 fewer than before the pandemic's impact created a major fiscal squeeze.
The city's reversal of fortune had several other key aspects: the Biden Administration's providing full reimbursement of $1 billion the city spent as part of its COVID response; tax receipts that exceeded projections by more than $1 billion, and Albany rescinding nearly all the cuts and cost shifts imposed on the city in January.
But State Comptroller Thomas P. DiNapoli said Mr. de Blasio's plan counted too much on a quick resurgence of the city's economy, with "significant budget gaps" for the three-year period starting July 1, 2022, covering much of the term of whoever succeeds him Jan. 1.
Projections Too Rosy?
Referring to the fiscal year that will end June 30, Mr. DiNapoli said in a statement, "The city projects employment growth to double from January projections and reach 4.5 million jobs in FY2021, but the timing of the return of real-estate values, commuters and tourists leave forecasts uncertain. The city is projecting further improvement in both income and corporate taxes. The city is projecting further improvement in both income and corporate taxes, while revising sales taxes downward and keeping property taxes flat. Any decline in these revenues due to a slower-than-expected recovery or behavioral changes related to increases in state income or corporate tax rates, which push the city's combined income and corporate tax rates to the highest rates in the country, would widen the budget gaps."
According to the Mayor, "the city's robust vaccination campaign" has already sparked an economic rebound, producing a gain of 100,000 jobs from December 2020 to March 2021 and the projected gain of "400,000 more to reach a total of 4.5 million jobs by the end of 2021."
His optimism was also reflected in the announcement shortly before the budget proposal that 9,500 managers and other employees who are ineligible for union representation who had been furloughed last fall would now have those unpaid days reclassified as paid vacation and be compensated for the time off.
As a safeguard, the budget blueprint would add $1.8 billion to city budget reserves, including $1.6 billion to the Retiree Health Benefits Trust in FY21 and $200 million to the General Reserve. "This brings total reserves in Fiscal Year 2022 to $4.59 billion, including $3.8 billion in the Retiree Health Benefits Trust, $493 million in the Rainy Day Fund, and $300 million in the General Reserve" according to the administration.
"The Executive Budget is breath-taking in the range of new investments from 3-K to mental health to the City Cleanup Corps that will enhance the well-being of millions of New Yorkers," said James Parrott, the director of Economic and Fiscal Policies at the New School's Center for New York City Affairs. "Some of these initiatives will boost job growth, but I remain concerned that the depth of the jobs deficit caused by the pandemic will require greater efforts. Workers of color are bearing the brunt of the job losses. We cannot afford to see double-digit unemployment rates for black and brown New Yorkers continue through all of 2021 and into 2022."
Andrew S. Rein, president of the business-funded Citizens Budget Commission, offered criticism from the other side of the spectrum saying the budget plan includes "some commendable components but fails to leverage the historic opportunity enabled by Federal aid, state education support, and higher tax revenue to both provide essential services now and stabilize the city's fiscal future."
"Furthermore," he said, "the city plans on reversing its recent progress in shrinking the workforce by adding 5,000 more staff," he said. "Had the City spread the Federal money more evenly over a few years, it would have had time to restructure spending to increase efficiency and preserve services. Instead, most of the Federal funds are used within two years."
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