April 25, 2019
Mayor Bill de Blasio: We are here to announce the Fiscal 2020 Executive Budget for the City of New York. And I want to start by saying what you're going to see in this budget presentation is a real focus on the fiscal responsibility and ensuring that the city will be strong despite a number of challenges that we have faced. We projected back in February at the time of the preliminary budget, the particular challenge we were facing then from the State budget. We saw some real hits from the State budget and some other things that we were able to push back working with our allies in Albany. But we remain concerned about several other factors, including an uncertain economic picture nationally and globally and certainly unpredictable actions from Washington, particularly in the area of trade that could have a big impact on the larger economy and ultimately on New York City.
So, there's a number of areas of uncertainty still, even though we have resolution on the state situation – and that was clearly a mixed bag for New York City. One of the most important things we said at the time of the preliminary budget announcement was that we would have a very extensive savings program requiring our agencies to find $750 million – in other words, three-quarters of $1 billion in savings between February and April. That savings program has been achieved. And I'll go into details on that. That savings program included for the first time ever a mandatory savings requirement for each agency, a PEG program. And that, too, has been achieved today.
Today, the budget that I will present for Fiscal 2020 totals $92.5 billion. And this budget, you will see, is for a new era that we're entering into where we will focus on fiscal caution, that we will make sure that savings is even more a part of what we do going forward. And there will be some investments, but they will be limited.
So, the most important piece, again, to report is that our agencies, when given the mandate to find savings, they all – I want to give them all credit, they did a fine job, they cooperated, there was a lot of creativity and good work done, and every agency participated fully.
I want to particularly credit OMB in this work. I said at the beginning of the PEG process, OMB would define the dollar figure for each agency. And again, this was not the traditional approach that you saw in some other administrations where across the board percentages were given that all agencies had to meet. This was an agency by agency targeting process. OMB did that work and I think the proof will be in the pudding here. They did it well identifying the right amount for each agency. They worked with them to find the savings.
And I made clear at the time that if any agency was not forthcoming, our Budget Director, Melanie Hartzog, would step in and determine the agency savings herself. I'm pleased to report she did not have to use those police powers and each agency did as they were asked. But further have to report to you that, unfortunately, we met an additional challenge that that $750 million savings target, although ambitious on its face, proved to be insufficient and we found that there was going to be over $150 million in additional unanticipated new needs. And so OMB went back and asked the agencies for additional savings. When that process ended, the agency savings totaled $916 million, close to a billion dollars in savings.
At the outset, I want to thank everyone who's been a part of this process leading up to the executive budget. First Deputy Mayor Dean Fuleihan, and Deputy Mayors Laura Anglin, Vicki Been, Herminia Palacio, Phil Thompson; of course, Chief of Staff Emma Wolfe, our Interim Director of Intergovernmental Affairs, Marco Carrion; my Chief Policy Advisor, Dom Williams; and to Melanie Hartzog and everyone at OMB, thank you as always for your very hard work, your very resourceful work, and for getting us to a good outcome. Also want to thank Speaker Corey Johnson and Finance Chair Danny Dromm. We've been in regular conversations and thank them both for their partnership.
Now, I want to review what's happened in the time from the February preliminary budget to the current executive budget. And, of course the state actions were the most important intervening matter. Back in February, we reported that the Governor's budget proposal had almost $600 million in cuts and unfunded mandates that were directed at New York City. We worked hard with the Legislature and I want to give special thanks to a Speaker Heastie and Leader Andrea Stewart-Cousins – they both were outstanding in their support, making sure that New York City was treated fairly. They, and the members of the Senate and the Assembly, worked very hard with us. I also want to thank our City Hall team, particularly, our Albany office led by Simonia Brown, and everyone who worked hard to make sure that those cuts were mitigated and a lot of allies, a lot of organizations and nonprofits and advocates who worked with us.
So, we were able to beat back some of the cuts, but we still suffered a serious blow to the City's finances. The state budget, in the end, it was not, thank God, the $600 million we faced, it was about half that in the end – about $300 million in cuts and unfunded mandates that now will affect Fiscal '20 and we're going to have to compensate for. That includes $125 million in financial assistance to families in need, TANF funding, and that includes support for people in shelter; $59 million in health services, and that includes money for child and infant immunization, family health, disease prevention, and emergency preparedness; and $25 million lost in education funding.
Now again, we were worried about a much bigger hit on education. In the end it was kept at $25 million, but $25 million, as everyone knows, is real money. All of those areas cut by the State, we are compensating for with our own resources. In addition, the election reform initiative, which was voted right around the time – right before the time of the preliminary budget, the more we analyzed that we saw that there were unfunded mandates, we hope to see those addressed in the State budget. They were not addressed comprehensively in the State budget. We're still hopeful of some State support, but nothing is guaranteed at this moment.
So we have to, for the purpose of budgeting, mark that down as a $96 million budget impact for Fiscal 2020. Again, I want to emphasize these election reforms were exceptionally positive, I supported them fully, obviously believed and still believe they should be funded by the State since they were voted on by the State. These are things like early voting, which will be initiated in November. That's going to be nine days previous to Election Day. All nine days will have early voting at select locations, about a hundred locations, I believe it is around the city; electronic poll books, which we've long needed. That's a great innovation. What, again, we did not expect was that all those costs would be placed on localities at this moment. That's going to be a $96 million burden on the Fiscal 2020 budget. And that's going to be true for localities all over New York State.
As I mentioned earlier, there's also some new needs that emerged since February and we've had to take those seriously and we've had to find resources to address them. That's over $150 million. A couple of the key elements of that – $33 million is related to a special education. We are going to, now as a result of some real steps forward in the kind of programming that DOE can do, we are going to start insourcing more of our special education programming. So, for a long time, if a child needed special education services, the assumption was they could only get them at a facility outside the DOE system if they had a particular level of need. We have found some areas where the DOE programming is doing very, very well at addressing our children's needs, particularly in the area of autism. So we're going to be doing more insourcing, creating more and more programming in our public schools that will be good for those kids and those families. It will also ultimately save us some real money. But that's a $33 million expense upfront.
Charter school costs that are mandated by the State continue to increase steadily. That's an additional $88 million that, at the time the preliminary, we were not able to calculate because we did not have final enrollment numbers and we weren't sure how many charter programs would be up and running for the new year. But now we know that will be an additional $88 million cost for charter schools. And $35 million – and this is the one that really seemed to come out of nowhere – the State of New York, on an administrative level, not through the state budget, basically gave us an additional $35 million cut. There is a system that has a prevailed up to now where for a pretrial mental health evaluations, literally trying to determine if someone was fit for trial in the five boroughs, that process involving psychologists and other experts was a cost that was split by the City and State historically. Just in recent weeks, the State has determined that they will put that cost entirely on New York City. So, that's an additional 35 million that unfortunately we did not seem to have recourse for.
So those new needs have all come up recently, we had to address them. That is part of why we made the decision to go farther on the savings program. So again, $916 million total savings – over a $150 million more than the original projection. And on the PEG program per se, $545 million was the original goal. That goal went up to $629 million. So, $629 million was through specific agency mandated cuts under the PEG program. The agency that had the biggest reductions was the DOE at $104 million. And as I said back in February, the goal of course, whenever possible was to make reductions in areas that were not frontline service, including in some cases personnel. But we now are in a situation with these kinds of dollar figures where certain service levels will be affected.
We had to make decisions about where we thought we could do that with minimal negative impact. We decided that one of the things that could be eliminated was extended learning time at Renewal and Rise schools. As we looked at the situation, we believe that the most important investments we're the ones that included the Community School status and 100 percent Fair Student Funding for those schools. Those will continue. But the extended learning, in terms of the impact per dollar, we decided was something that we could reduce.
There will be modest cuts to subsidies for cultural organizations and that is being done differently depending on the size of the organization, but that's how cultural affairs met their PEG target.
There will be a cost effective new approach to providing seniors in public housing with access to senior centers rather than the "senior clubs" that had been provided by NYCHA directly. Those clubs, we found were underutilized, could not provide the same quality of service as our DFTA programs could. So, seniors will go to an established senior center that specializes in supporting seniors. There'll be free transportation provided that will also save us money while providing a better product to our seniors.
And then after school, while we continue to offer the universal right to after school for middle school kids, we did find that some of that allocation was going underutilized or unutilized. We're taking that money back as part of the savings program.
On the issue head count – in the previous five budgets, headcount consistently increased and that was for strategic reasons. 2000 more officers on patrol with the Police Department, a very substantial increase in teachers with DOE for pre-K and 3-K, more special education staff, more Sanitation staff. There are a variety of specific strategic areas where we invested in more personnel so we could achieve more for the people of this city. This is the first time in the six budgets I've done – this is the first time the headcount is decreasing. It as a modest decrease – a total reduction of 357 positions. But it indicates that we've gotten to a point where at this moment, we can say we're stable essentially on our head count and not expecting it to grow going forward.
And just to summarize, savings overall – the $916 million, that I mentioned, is across the Fiscal '19 and '20 budgets. That's brand new to the executive. If you go back to adoption last June, the overall savings has been $2.5 billion in expense dollars between Fiscal '19 and '20. So combining all areas of savings, $2.5 billion. And then additional to that, the health care savings program – that will be $1.6 billion in Fiscal '20, $1.9 billion in every fiscal year after that.
Reserves continue to be an important topic. I want to say, the City Council continues to focus on it. We continue to focus on it, the Comptroller continues to focus on it. Everyone's focused on it because we all can sense the uncertainty out there. We have kept our reserve levels stable. There's no addition in the budget. There has been a slight increase due to interest income that came in with a retiree health benefits trust fund, but the overall number is stable compared to the June budget. It's $57.2 billion in all reserves combined. That's $1 billion in the General Reserve, $250 million in the Capitol Stabilization Reserve, and $4.47 billion – almost four-and-a-half billion – in the Retiree Health Benefits Trust Fund. And I remind you that that trust fund has increased by $3.6 billion during the time of this administration.
There are not a lot of new investments in this budget as you can imagine given everything else I've told you. There were a few areas where we did invest, in some cases, because we literally had no choice but a couple other areas where we made a choice that we thought was strategic. In terms of what we announced back on Monday on Earth Day, the Green New Deal, the New York City Green New Deal – and this is, again, part of a package of actions that we've taken previously and now we're taking that will reduce emissions by 30 percent by 2030, and that's on top of what the previous administration did. The previous administration did some very good work. We have added a number of additional steps and just the steps in the last five years including the announcement Monday will reduce emissions 30 percent by 2030. That is worth investing money in. And we also in deciding with the Council to put very strong mandates on the private sector in terms of buildings, we wanted to do that for our public sector buildings as well. You know what's good for the goose is good for the gander, as they say. So, we understand buildings are our number-one challenge when it comes to emissions, the City is leading the way with our buildings, and we are adding an additional $60 million in expense dollars to make sure that all City-owned buildings will be energy efficient.
Another area, and this again is one where we want to be supportive of parents, but we also are working under our own belief that the previous effort to address special education was, unfortunately, made artificially onerous for parents – we've tried to make that system simpler but it has come with real costs. So, there's an additional $100 million dollars in Fiscal '20 for tuition payments for special education students – that's related to Carter cases.
The census, obviously, this is a profoundly important issue for New York and we have a very limited window to act on this. We have to make sure all New Yorkers get counted. That's important to our representation in Congress. It's important to guaranteeing that we get enough federal money, our fair share of federal money for school lunches and affordable housing and the SNAP program, and a number of other things. So, we are adding $22 million in Fiscal '20 on top of $4 million that had already been allocated. So, the census going into Fiscal '20 – the census effort will have $26 million to work with for a very heavy outreach initiative working with local nonprofits and a public awareness campaign. I also want to note, we expect a lot of other resources to come in for the census from the philanthropic sector among others.
A few other investments I want to note and they all are very pertinent. They're not huge dollar figures, but very pertinent and sensitive – in the first case, lifesaving. We are providing $15 million in expense funding so that we can take advantage of a new initiative with vehicles for EMS that have been successful in reducing response time. And we're focused on the Bronx where we're having the greatest need to reduce response time. This $15 million initiative will reduce response time in emergencies in the Bronx by 30 seconds per incident. We're following up on a previous commitment to provide additional assistance to kids in shelter. This issue has come up several times before and we've said we had to really hone in on what we thought was the right approach. We've done that now. So, $12 million will be added to the Fiscal '20 budget to support kids in shelter and their education needs. And there are some emergency repair issues that have come up at NYCHA, particularly related to community centers. So, we're providing NYCHA with an additional $6 million for those needs.
So that's the expense budget. I want to conclude with the capital budget and want to start by just putting into context that this administration believes in aggressive capital spending. We always do it with a watchful eye to our debt service levels, a watchful eye to everything that we have done to keep ourselves fiscally stable. And as everyone knows, we've actually seen some progress lately in terms of our ratings. So, we take the fiscal responsibility mandate very seriously, but we also believe there's room for additional capital spending and it has a hugely positive impact on the City and its future.
First, giving you the overall figures – so the 10-year capital strategy, $116.9 billion, $117 billion. The number one area by far is expanding school capacity and improving school facilities, $16.4 billion. The next is related to safety and repair – safety improvements to roads and bridges and repairs and repaving. And the repaving effort is going to be kept at the very aggressive level it has been at, which has been the all-time high, $13.1 billion for all of those DOT initiatives. The next is continuing our affordable housing program at the very intense rate it has been at, $9.7 billion. We'll be coming back once Deputy Mayor Been has a chance to put some additional ideas together on how to increase the number of units accessible to the lowest income New Yorkers and to seniors. That's something we'll have more to say on in the coming weeks. But this number – bless you – this number is $9.7 billion. The borough-based jails program, DOC, $8.7 billion over the 10-year plan. And then for DEP's repairs and expansion efforts in terms of sewer and water infrastructure, $6.5 billion.
The big changes since preliminary – first and foremost for Department of Corrections, a $7.7 billion increase over the 10-year plan. Want to make clear that the end point for that investment for the borough-based jails is now 2026. We have reduced the timeline for construction by one year and we're now aiming for 2026, and that is the entire cost we anticipate for that building program. Also, want to emphasize, once those borough-based facilities are built, we expect them to be multigenerational. I remind you, Rikers was built initially 85 years ago, even though things were added over time, we believe this investment will be, not necessarily once and for all, but once and for a long time, and it's something the City will not have to invest in again thereafter for generations.
Department of Transportation gets in addition, since the preliminary, of almost $1 billion – $890 million for additional safety improvements, Vision Zero, and road repair, bridge repair. The Department of Environmental Protection, almost half a billion – $447 million to support additional efforts with water and sewer system.
So, that is the capital side. And just to sum up the executive budget, obviously, the focus here has been on savings and stability, prudent fiscal management, and making sure that we can always adjust to difficult circumstances around us. Again, my thanks to OMB for acting very quickly and agilely on the savings mandate and surpassing their goal. At the same time we're going to keep making smart investments where we see the need, and all of it focused on becoming the fairest big city in America.
Few words in Spanish –
[Mayor de Blasio speaks in Spanish]
With that, want to introduce our hardworking Budget Director who will go over some of the more technical slides and then we will be taking questions from all of you on this budget presentation. OMB Director, Melanie Hartzog –
Director Melanie Hartzog, Office of Management and Budget: Thank you, Mayor.
Okay. I will quickly walk us through the changes since our preliminary budget for February.
As a Mayor said, the Fiscal Year '20 Executive Budget is $92.5 billion. Fiscal Years '19 and '20 remain balanced and our out-year gaps are manageable. Fiscal Year '21, we have $3.48 billion; '22 is $2.88 billion' and '23 is $3.16 billion. In terms of revenue changes, were reflected in increase in tax revenues, very modest with the yearly growth rate of three percent in Fiscal Year '19 and 3.7 percent in Fiscal Year '20.
As the Mayor mentioned, our savings program, which includes a PEG, yielded savings of $420 million in Fiscal Year 2019 and $496 million in Fiscal Year 2020, for a total savings of $916 million in savings. As we approach the end of the fiscal year, we are reducing our Fiscal Year 2019 general reserves. This is a routine adjustment made at the executive budget.
Moving on to all funds – this slide reflects total funding including federal and state dollars. As you can see, the Fiscal Year '20 all funds budget of $92.5 billion and our City funds budget is $68.2 billion. We've maintained our highest level of reserves at $5.72 billion and continue with our cautious estimates on revenue and debt service.
Let's move on to the next slide. So the 10-year capital strategy is $116.9 billion. This chart illustrates what types of projects those funds are for. Our largest capital investment is in infrastructure and it's important to note that in the 10-year capital strategy, 75 percent of our investment is in maintaining and improving our asset base.
Finally, we have the City's debt service obligation. This graph shows that we keep our debt service payments below 15 percent of the city tax revenue. This is a benchmark for responsible capital financing. Even as our capital investments grow over time, we still maintain a responsible level of debt service payments in relation to city tax revenue.
And that is the overview of our budget. We can go into more detail for the technical briefing.
Mayor: Thank you very much, Melanie. And a reminder of that last point that Melanie made – the [inaudible] structure investments by the City continue to grow because we still have, nowhere in sight, a federal infrastructure program. And again, you know, we're a city that has really doubled down on capital spending for infrastructure and a lot of places can't do that. And we do it as best we can. And yet we have massive, massive needs we can't get to, and there is no federal alternative at this moment. So that is what we face. With that, looking forward to questions –
Question: Are there are cuts to the Thrive NYC program –
Question: How much?
Director Hartzog: In Fiscal Year '19 it's $9 million reduction. This is to Right Size and Mental Health Service Corp program. Moving forward for Fiscal Year 20 and out we will further revise the program, we'll come back to everyone at adoption with more details.
Question: So you don't know how much you are [inaudible] from Thrive yet?
Director Hartzog: I just said it, that's the $9 million.
Mayor: She said $9 million for the current and she will come back at adoption with an update.
Director Hartzog: Thank you, sir.
Question: When you spoke in February you sounded pretty concerned about the slowdown of the expansion, you didn't mention as much about that now. Do you have a sense that the economy is doing better than you thought it was doing in February?
Mayor: No, we just – we at this point are looking at so many contradictory developments, we don't have a way to make full sense of them is the truth. I mean the volatility of the policy changes in Washington are impossible to trace at this point. You know as I said then we think a lot corporate executives, a lot of economists think there's a real chance of recession this year or next. But nothing has changed, the reason I didn't add anything is nothing has changed since preliminary. We still are worried and that's why we kept this very modest.
Question: It looks like some of these taxes [inaudible] is coming down. Do you think that's an indicator of anything, is that something you are watching?
Mayor: We are watching everything and Melanie may want to add. We are watching everything. Look the big picture we see modest revenue growth. It was not – you know what saw back in December was very worrisome. It has not been as bad as that. And yet it's not like we turned some great corner. I think we anticipate for the foreseeable future only modest revenue growth. A lot of uncertainty out there. But sort of, I'm not an economist but in macroeconomic terms we are not seeing a big set of changes in the city economy at this point. It's again, that nagging uncertainty of a lot of factors out there that are hard to trace. Do you want to add? Okay. Anyone else? Yes Julia.
Question: The $300 million difference between preliminary and now on the expense. I just want to make sure where that was from. I think it was like the TANF, the medical services, the education. Did you say we don't have money yet for the election improvement?
Mayor: No, we had to, it was a mandate. We had to accommodate it and we believe in it. So yes, in one way, it's a very straight forward way to interpret this is, that you know, at the time of preliminary we did not indicate the state cuts as final in our budget because we knew there was going to be a fight over each and every one and we were hoping to stop some of them. The grand total in the end was $300 million. And you are right, that is quite similar to the difference between the preliminary and the executive.
Question: Just to make clear, that's the TANF, health services, education, election, special education –
Mayor: Well again, so let me give you the highlights again just to over communicate. $125 million is TANF and that was the full cut projected in the Governor's budget went through and Melanie help me, I think the $59 million in health services was also fully projected in the Governor's original budget?
Director Hartzog: Yes.
Mayor: Okay so those two despite a real effort to try and beat them back in the Legislature we were unsuccessful. That's almost $200 million between them. Education was the area where we were most successful and that' started as a $300 million potential full cut. Ended up at only $25 million, that's not nothing but that's a hell of a lot better. And then the thing that really was the curve ball was the election reform being unfunded. Again at the time of preliminary we were hoping that there would be a funding mechanism to go with that. That did not come to pass. There's a small amount that we are still trying to understand how to access but it's not anywhere near enough and it's not guaranteed. So $96 million to implement the election reforms in Fiscal 20 at this moment fully unfunded. Yes.
Question: Mr. Mayor, the watchdog Citizens [inaudible] this week recommended that the City would be better off having a dedicated rainy day fund, better withstand withdrawal as opposed to the series of mechanisms you have now for savings. So what's your reaction to that?
Mayor: Look, I think it's a – I understand the point and it's fair point in a dynamic where we had years and years to build up that reserve more deeply. I think it would be a commendable idea. But I would argue in the here and now, getting to $5.72 billion which New York City has never had before and most other places wouldn't even be able to dream of. That's really healthy and it's being treated as a true reserve. And I want to give the City Council credit too. They have been very, very focused on building that reserve and treating it as a reserve. So I think for right now, we are doing things in a very sober way. I think in an ideal world, yes, it would be great to go even farther. But for now, this gives us a lot of protection in the case there was a downturn. Yes.
Question: So we know there's a looming strike among pre-K providers – in this budget proposal as well as the one in February assumed or – you're proposing the continued expanding pre-K. How do you reconcile that, the sort of, the strike issue among providers but also plan to expand pre-K. Like what are the challenges?
Mayor: Sure, sure. The, look, let's start on the strategy. I think it really has been proven now that a focus on early child education is an extraordinarily good investment. Our kids are getting so much out of it because they are getting early childhood education at the time when they are intellectually growing the most, their earliest years. Parents, and I've talked to parents all the time about this. It means a lot to them that they have something they can depend on in terms of their life, their schedule, that they have an expense taken off their backs. This has been a hugely successful initiative and we intend to keep growing it terms of 3-K. That being said we want to work with the folks who do such important work in the nonprofits to help them. We did that in the beginning of this administration. You know they had gone for years without their issues being addressed at all. We made a major step forward to giving them better pay package. We want to find ways to help them. We are in constant discussion. I don't take it as an article of faith that there's going to be strike. I think there's a real dialogue happening and I think we have a good chance of adverting a strike. These are not city workers obviously. So they are covered by a different law. But we have a good chance of adverting that strike because we are in dialogue and we are trying to get to a long term outcome that could work for everybody.
So I would argue to you that the sanctity of reaching our kids and our families is what comes first. Every additional child that can get into 3-K is good for New York City. We also want to continually address the concerns of the folks who do the work and I think we will find some ways to do that. Way back.
Question: So the City is cutting extended time, at low performing Department of Education schools but that's been a significant part of actually having comprehensive support for these students so what else is the City doing if they are no longer going to have this extended time?
Mayor: Well, as you know we've been changing that whole approach and what we will continue to do is all of those schools, those Rise and Renewal schools will continue to get 100 percent fair student funding levels. They will continue to have community school status with additional support and funding that goes with that. But that particular piece, the extended learning time, we were not seeing the kind of outcomes for the dollars being spent that we needed. And every agency was asked to find savings and the scheme of things and the choices that could be made, we thought this was the best way to do it at DOE, amongst other things DOE did other things as well. But this one was a legitimate choice. Again those schools will continue to get other types of support. Yes.
Question: When the [inaudible] some of the agencies talked about finding revenue or making cuts. Do you have a sense of the $916 million is cuts and how much is additional revenue that agencies spends?
Mayor: I want Melanie to speak to that and obviously Melanie talk about what you are putting out publically in terms of detail as well.
Director Hartzog: So why don't I give you the numbers over the course of the two years by category and then in the technical briefing we have the city wide savings program and we can go into more details. I can give you a few examples of some now. So in terms of efficacies in the PEG target across the two years, Fiscal years '19 and '20, it's $209 million. The hiring freeze in terms of the salary cross are $88.2 million, the fringe costs associated with that are in our central citywide savings program and those are $28.5 million. The revenue estimates are $145 million and service reductions and expense estimates are $186 million. Just so we are clear, the hiring freeze, the fringe that I gave you, the $27.5 million, that's part of the citywide savings program, not in the PEG, still in the fringe side.
So in terms of some examples of the program – the Mayor mentioned and of course we talked about the Renewals but in terms of procurement efficiencies, DOE is putting $26 million in procurement efficiencies, that's on top of what they presented at the preliminary budget of $20 million. Or I should say it was a little higher between the two years or the two plans they get to $49 million in reductions in procurement spending, over the two years.
Mayor: [Inaudible] what we are putting out publically in the way of detail?
Director Hartzog: It's the citywide savings document. It details all of the initiatives within, both the PEG initiatives as well as the total citywide [inaudible] debt service numbers and that booklet will be available and I can address all of our questions at the technical briefing about each initiative.
Question: So I'm not positive I'm reading this right but it looks like the Office of the Mayor is cutting $58 million Fiscal Year 2019 and then nothing beyond that. Is your office paying its fair share? It seems like you are asking for higher cuts from the other departments?
Mayor: Let me start and then turn to Melanie. Look, everything was specific to each department and again we did not and I want to be explicit about this – we didn't say everyone cut five percent, everyone three percent. We decided what we thought made sense in terms of the historical reality of different agencies in terms of what work they were doing, what was needed to get our core initiatives and strategies done. Everything is strategy driven. A core set of things and the example this week with the Green New Deal, that's strategic, that is something we regard as mission critical to New York City's future. So we've adjusted according to what we think achieves a strategy. It is different agency by agency. But to the specific question on Office of the Mayor, Fiscal '19 versus Fiscal '20.
Director Hartzog: I think you were actually asking about the savings of $58 million, that was in, the biggest chunk of that is actually related to FEMA. It's $50 million that we were able to go back thanks to the great work of our team at OMB and work with FEMA to reconcile a number of different claims and we were able to get $50 million back. So it's a onetime infusion of cash which then offsets as part of our citywide savings program.
Mayor: Okay, who hasn't gone? Yes.
Question: How much funding are you sending to the Office of the Tenant Advocate that you created?
Mayor: Again now?
Question: The Office of the Tenant Advocate.
Mayor: Tenant Advocate? Tenant Protection, Office of Tenant Protection. How much is in the budget? Do we have it or do we need to check it?
Question: Is it a shift [inaudible]?
Mayor: Well I don't actually know if we did it from existing or did it as a new budget line but we will get that to you. Who hasn't gone? Yes.
Question: Looking at the Census funding, you said you increased it by $22 million –
Question: The Council would ask for [inaudible] is $40 million. So I'm just wondering sort of how you made a significant increase from the $4 million you originally proposed – how did you reach the $26 million and why is it so much less than the Council suggested?
Mayor: Well I mean I was Council member so I say this with real respect. The Council often time asks for very big numbers of lots of things and we have to make some tough choices in how we present the executive budget. And I just met with Council Members and we went through everything. We believe $26 million is a lot to achieve the mission and again there is some actual federal funding and support that we think will be put into play. There is some state funding. We expect a lot of focus from the philanthropic center – excuse me, sector – I keep saying that. There's a lot of pieces in play and we think they are going to add up. We also are going to instruct all city agencies to support the effort because city agencies interact with New Yorkers all the time and to constantly remind people about the Census, educate them about it, answer their question etcetera. So that's a lot of built in capacity beyond the newly budgeted money. But look we will have a discussion with the Council between now and adoption and if it's something that they prioritize we might end up doing something else. Yes, go ahead.
Question: You were talking about the unfunded election reform mandates and you kind of threw out a number for the early voting sites –
Question: 100 sites, you know, Boards of Elections don't need to set their sites until May 1st so I'm sort of – that's a bigger number than I think –
Mayor: That's a working number and we had to budget now, you know, again agree the Board of Elections will look at the situation and we don't have direct jurisdiction. But you know, that's our estimate based on what we now know and we thought it was a pretty fair estimate, again that electronic poll book thing element is a really big piece of the equation too, that is a given in this equation.
Who hasn't gone? Way back, Yoav?
Question: One question on capital, one on expense. On the capital side, the $9.7 billion for affordable housing, is that an increase over what was in there in preliminary and, if so –
Mayor: We made a huge increase two years ago and went from 200,000 units to 300,000 units. This is consistent with the preliminary, as I said, our new Deputy Mayor is going to come back with some additional proposals, we'll be talking about that, but this is stable since the preliminary.
Question: Okay, and on the [inaudible] you added a $100 million for Carter Cases in Fiscal '20 but the budget in both '19 and '20 were roughly the same for Carter Cases. Is there a reason why your – you don't have to add that same – or roughly that same amount in the [inaudible].
Mayor: I'll let the expert speak to that.
Director Hertzog: I think what you're asking is, is the budget for the Fiscal year '20 lower than fiscal year '19 in Carters Cases?
Question: They were approximately –
Director Hertzog: The same.
Question: The same previously, you're adding a $100 million in Fiscal '20, one would assume that you would have to add similar amount this year or you – are you only anticipating those additional costs in the coming fiscal year?
Director Hertzog: At this point in time we're anticipating – we've reflected for Fiscal Year '19, what we believe the projected cost to end Fiscal Year '19 for Carter Cases. Moving forward as the Mayor talked about, we made the investment of $33 million for the insourcing to build further on our capacity for special education services with the idea that we could right size the Carter Program. So as we build that capacity, more children are able to come into the public school system to access specialized education services and therefore we anticipate that our spending could go down over the course of the next Fiscal Year on Carters. So we're going to continue to monitor that and as we move into next Fiscal Year assess what the spending is, what the ramp up is in the Department of Education on their special education services, and if we make any changes it will be reflected in the future plan update.
Mayor: Who hasn't gone? [Inaudible].
Question: Mr. Mayor?
Mayor: You haven't gone.
Question: Thank you. Does this Executive Budget include any funding from tax increases or State or federal assistance?
Mayor: Well there's – I mean obviously we did not have a tax increase. There's no tax increase, tax rate increase, income, property, anything, there is – you see the impact of the Albany dynamics when it's laid out here where we took some hits. The federal government, you know, again we don't know what's going to happen ahead with the federal government. It's a good rule of thumb but we haven't seen any major changes of late. So, you know, this really reflects the Albany cuts and new expenses that have emerged and, you know, a very cautious approach going forward because we see a lot of open questions with the economy and the federal government. Yes?
Question: Yes, I have a question about spending. Just looking at numbers from the Independent Budget Office in 2014 spending was about $72 billion, now you're proposing $92 billion. Of course, revenue has also increased, total debt numbers have increased, so my question is, are you just spending too much money?
Mayor: No, I can say that definitively. We're very comfortable. OMB to their credit, they are cautious by nature and very professional. A lot of folks at OMB have been here a longtime and understand the whole history of New York City and a lot of us came of age, you know, watching the aftermath of the fiscal crisis and we take all of this very seriously. But we also have a growing city, a city with an immense number of challenges, we have a non-participant federal government, and a minimally participant State government in terms of trying to address so much of what we're dealing with which is why you see for example a huge capital program. We're doing things in capital that we've never had to do in the past at this kind of level because there is nowhere else to turn but it has to be done. We have a, you know, extraordinarily dynamic economy. We're – you know, we've been growing in so many ways, but our infrastructure continues to age and if we don't deal with it, you know, it's quite clear no one else is going to.
So I'm very comfortable on the capital side that we're doing the right thing, very comfortable that the debt service created by that is appropriate in terms of level. And those other investments we've made, especially in what led to that headcount increase up until now – again now we're starting to change that, but previously I'll happily have a debate with anyone about the outcomes. I'm very, very comfortable with the 200,000 more officers on patrol and what that yielded with the new pre-K teachers, 3-K teachers, special-ED teachers, what that achieved. Go down the list, I feel the investments have paid off for the people of this city. So no, I wouldn't change it, and look, in the middle of all of this we got a rating increase. So clearly, objective, outside independent entities looking at our fiscal status think we are in good shape. Who has not gone? Anyone who has not gone? Gloria.
Question: Mr. Mayor, so there's $960 million in savings and $629 a lone form the PEG, so what's the other $287 million?
Mayor: Damn good question.
Director Hertzog: It's a combination of debt service savings across the two years of $131 million and it's a number different – it's our fleet citywide savings initiative that the Mayor announced several weeks ago, the executive order, and that's $14 million. Tied to that is vehicle right sizing of 2.2. There is a portion of this that we're saving on utility funds. So there's a number of different things in it. We can go through it in the technical briefing and we can walk you through it each year.
Question: Okay and I guess my question about the - $104 million in cuts to DOE it has to funding, is that – was all that money going to the [inaudible] program?
Director Hertzog: No, no, it was not. So I mentioned one component of it which was a reduction in their procurement spending so there are several different initiatives that actually make up the $100 million of baseline savings. We can go through it in the technical briefing.
Question: Okay, and my last question is, I know you – sorry – asked all agencies doing cuts but are there any agencies that didn't actually come up with any cuts or that just couldn't deliver on that request by – in any way?
Director Hertzog: There was one small agency, the Commission on Human Rights, a very small Mayoralty Agency, we felt very strongly that, you know, it's such a small amount – I think it was a little less than $200,000 if I'm remembering – in the bigger scheme of our citywide savings we felt that was perfectly fine for them not to achieve that piece of it. But overall, citywide, we have achieved – overachieved the target.
Mayor: The – just say two things. One, we're getting the exact number on that Rise and Renewal PEG – $19 million – so when that – just to give you context on that DOE number of $104 million from the PEG program, $19 million was from Rise and Renewal and obviously there will be a number of other – do you want to add - another number of elements that Melanie will go over in the technical briefing. Also on Human Rights, another factor there, and again a very small agency, but that for the previous 20 years before we came here was an agency that went through really disproportionate staffing cuts for reasons of the agenda of the previous administration. So, we really wanted to be mindful of that in the way we handled things.
Who has not gone? Jeff?
Question: [Inaudible] talk a little bit more about the criteria that [inaudible] million cuts at Thrive, and, going forward, what will you be looking for in terms of finding greater cuts [inaudible].
Mayor: Okay, I'm – just one second. I'm handing this back. The question is new funding versus reprogram – so, you'll do that in a second. The issue is – and again I want to emphasize what I feel strongly, what the First Lady feels strongly – Thrive was a foundational effort to address a problem that had never been addressed systematically before and we were going to do things that had never been tried, and we believed that there was real evidence for the approach in each case. But we also knew the only way we would be able to prove that each initiative was worth investing in long term was by starting it and trying it in real terms.
In most cases, the results have been very positive. In a couple of cases, less so, and this Mental Health Service Corp is one example where – and you can get the details from Melanie and from Susan Herman – but the specific outcomes did not match the expectations and in that case it did not make sense to continue it. And that money was given back as part of the PEG.
Who has not gone – one more time? Yes?
Question: I'm just curious if, like, which agency had the most difficulty in making the $916 million cuts, and what there reason was.
Mayor: I will only start by saying that the agency we asked the most of was the Department of Education, obviously. And for them to do it, they did have to go in programmatic elements – in other words, they couldn't just do it only with overhead or only with personnel. They had to get into programmatic areas. As to whether there was a particular example of one agency that had a tougher time than another – I'm not sure that's the way you see it. That's not how Melanie sees it.
It's that – everyone was asked to do it. Everyone did do it. I want to give the agencies credit. No one likes to do this kind of thing but they all did, they did it on schedule. When pushed to go farther, they worked with OMB.
Now, on the answer on the Office of Tenant Protection – do we have that answer? So, it's basically funds moved from one purpose to another?
Mayor: Okay. And out of the DOB budget or something else?
Mayor: Could you write that in a handwriting I can understand? We'll try that one again in a moment. Okay, has anyone not gone? That's all I ask in life. I think his degree in hieroglyphics is coming in handy here.
Question: So, a couple questions, Mr. Mayor – the first, in the fact sheet it says that the State cuts for health services including cuts that would affect the measles outbreak response, I was wondering if you could talk a little bit about that. And then I was hoping you could expand on the decision to move, like, closer the date to have the borough-based jails built and what the date was before that.
Mayor: Well, the original plan that was announced right there in the rotunda was a 10-year vision which was consistent with the Lippman report and our own analysis. We have worked hard to start to cut that back and – both in terms of trying to create a more efficient pathway and also hopefully seeing benefits from a more steadily decreasing inmate population. We've been – look, we've pushed the inmate population down steadily. We're under 8,000. We came in – someone help me – I think it was around 11,000. We're now under 8,000 for our citywide inmate population. So, we're pushing about a 30 percent decrease. That's been very systematic including, what I often report to all of you and I think is worth some real examination journalistically, the fact that we have through the extraordinary efforts of the NYPD – there were 150,000 fewer arrests in 2018 than 2013. And this is a profound reason why we're seeing a reduction in mass incarceration.
So, that part is working and we're very encouraged by the State reforms although we haven't fully analyzed their meaning and what it means for timelines and building size and everything else. We feel confident looking at everything we know for sure, that we can get the entire building effort done nine years from day one – so that will be 2026.
Question: So, is that when Rikers will close or will it take another year to move everything to –
Mayor: No, once – there will be movements all along the way to achieve the building plan because two of our existing facilities have to be taken offline during the building period. But no, that's the anticipated day of Rikers no longer being needed, the barge no longer being needed, all inmates in the four borough-based facilities – turn off the lights on the facilities at Rikers Island and then start the process of using Rikers Island for a new and positive use for this city. So, that's nine years – I'm sorry, the first part of your question?
Question: I wanted to know the [inaudible] –
Mayor: Yeah, so, look this – this came up in our briefing with the City Council earlier. I mean, I just want to give those two examples of health services and the TANF cuts. When we saw those proposed, we knew we did not have a choice. God forbid the cut went through, we were going to have to fill that gap. These were two things we simply couldn't walk away from. So, we are going to be using City money to make up for that cut. So, there will be continuity of service. The reason we wanted people to see what this means is there's real – these cuts from Albany, they sound like numbers, these are serious things – child and infant immunization, family health, disease prevention, emergency preparedness.
You know, it begs the question – should these be the kind of cuts New York City is receiving? But it's the reality and so we will compensate for it.
Question: I was curious – does that mean that the State cut funding so that you guys could give kids vaccinations or, like –
Mayor: It means they cut funding from areas that were very important and sensitive and we have to make it up and we are going to make it up, and we are going to make it up, and the service all will continue. But it's a reminder of how serious the human impact is of these cuts. If we weren't able to fund continuing those services – these are real things that would be deeply felt.
Question: I just wanted to follow up, I'm sorry – you've said in the past that you like going around City Hall and turning off the lights. Are you planning on turning off the lights at Rikers yourself, too?
Mayor: That would be fun. I won't have the joy of being in office to do that but I would love to be a part of that. Rich?
Question: Mr. Mayor, are pension costs involved here [inaudible]?
Mayor: No one would ever call you naive, Rich. Pension costs and how they reflect in the budget –
Director Hartzog: The pension costs are reflected in the overall miscellaneous budget. And so, when we go through the technical briefing, I can walk you through it and we did have some changes – adding funding to the pensions budget in this plan. We can also walk you through that in detail.
Mayor: The hieroglyphics continue. Okay, bottom line for Fiscal '20, the cost of the Tenant Protection Office will be $713,000 and that is from already existing resources. Yes? Right there – just assume it's you. Go ahead.
Question: How much money are you allocating for the new Civic Engagement Commission?
Mayor: That's a great one too –
Question: Have you saved any money by naming [inaudible] –
Mayor: Oh, c'mon, that's silly. We will happily tell you the amount for the Commission.
Go ahead, Sally.
Question: I have questions about three different agencies. I'm just curious –
Mayor: Hold on. I'm sorry, my apology. Civic Engagement – $300,000 for the current fiscal year; $2.4 million for Fiscal '20 – staff of seven people.
Question: I'm curious and kind of intrigued by your comment about the Human Rights Commission, is there anything you can – and I had two other agency questions – is there anything else you can add to that?
Mayor: Yeah, they cut a lot in their mandate and their mission from 1994 until the year 2013, so –
Question: [Inaudible] political decision?
Mayor: It was strategic. It was strategic, meaning, I think in the previous administrations there was less focus put on the Commission and its work, and it's – you know, I worked with them quite a bit when I was in the Council and it was important. We believe that their work is really important. We've tried to strengthen them, but they had a special historical dynamic in my view.
Mayor: Yeah, please, hold on – Melanie?
Director Hartzog: I just want to clarify that it's not that they didn't produce any savings. We gave them a target of $422,000 and they achieved $200,000 worth of it. In the bigger scheme of $912 that we've actually achieved in this plan –
Director Hartzog: I'm sorry [inaudible] I'm just saying that the $222,000 –
Mayor: Now you've got my numbers confused –
Director Hartzog: I just meant in the bigger scheme of what we were able to achieve with our citywide savings, the $222,000 was pretty small.
Question: It looks like the – if I'm reading this right, it looks like the Office of Emergency Management is going down from about $59 million in '19 to $39 million in '20, and then $29 million in '21. And most agencies over, you know, this trajectory are going up.
Mayor: Just say it again so Melanie could hear it –
Director Hartzog: I heard it, it's a great question. It actually reflective of federal grants that we get, and we typically do not actually add that funding until we actually get the grant. So, that's what the case is for the Office of Emergency Management, but there are other agencies that also, until we get the grant, we don't actually modify the budget and reflect that funding.
Question: [Inaudible] one third agency question and I'm done. The Department of Education, despite the $104 million, is going up over that same time period 25-to-27 roughly – billion. Is that mostly 3-K, or is there some other program accounting for that?
Director Hartzog: Sure. So, in terms of the growth in education, if you just look at the adopted budget to the executive budget, the difference there has a lot to do with special education, the charter schools, and 3-K. It's actually in that order in terms of dollars.
Question: Two questions –
Mayor: [Inaudible] go ahead –
Question: On your [inaudible] strategic funding initiatives, the energy efficiency for the City buildings, for the Green New Deal, and then the fair count on the census – some would say those would be great in a presidential stump speech. Wondering what political calculations went into those initiatives?
Mayor: The – again, nice try, but I didn't schedule the 2020 Census. We have been talking for a long time about the danger that we are facing as a city, that if this census is not accurate, there's a very real chance we lose a member of the House of Representatives, there's a real chance we could lose literally billions of dollars in funding for affordable housing, for education, for food programs. I mean, this is serious, serious stuff. We know that there has been a problem previously getting an accurate count in the census. But now we've got a culture of fear that has been created by the current administration in Washington, and we have an immigration question that hasn't been on the census in 70 years, which clearly was put there for the purpose of discouraging involvement. That's a very dangerous scenario for New York City and we might get a profound undercount that just doesn't represent our reality and deprives us of funding and representation artificially, which I think, bluntly, is the plan of the Trump Administration – and not just for New York City, but for other places that they don't want to be fair to. So, it's a lot like the SALT cuts and the tax bill – a lot of this appears to be very political. So, we knew that we had to fund a vigorous effort to ensure people were actually counted and that they knew it was safe to be counted. So, that was going to happen anyway because of everything that's happened in the last few years particularly. On the New York City Green New Deal, that initiative, the core – the building mandates both for the public buildings and the private buildings – that was announced, I believe it was September 2014, at the United Nations. We can get you a copy of the speech – and a very different time and place. That vision of having a very aggressive approach to building retrofits and, if necessary, building mandates was laid out literally then. And this came to fruition, even though we would have preferred a voluntary system, there was no choice but to go to a mandated one. Working with the City Council, we had a lot of agreement on that. And now, that requires us to also put more into the budget to achieve those mandates. So, these are things that have been, I think, in many ways, a long time coming.
Go ahead –
Question: Two questions. The first – and apologies if you've answered it – but how much is the City spending on efforts to stop this current measles outbreak?
Mayor: I did not answer that and I appreciate the question. People can collect that, or maybe they have it handy – okay, this is so far since the beginning of this outbreak in the fall, right? $1.2 million so far, and that is for the testing in the cases, the enforcement activities, and the infection control activities. So, $1.2 million so far – obviously, we're trying to resolve this issue we hope in the coming weeks. But that's something we will keep putting the resources in we need to.
Question: And the second question is – it realties to the $50 million received from FEMA. Do you know what specific projects and money – I guess, refunded or received?
Director Hartzog: It was administrative costs over the course of –
Unknown: From the beginning of the disaster –
Director Hartzog: From the beginning of the disaster – so, it was funding that we had [inaudible] with FEMA reconciled for administrative costs that the City bore that we wanted to actually get reimbursed for. That actually happened, that's us recognizing the $50 million.
Mayor: Who's up. Way back – Yoav?
Question: I just want to make sure I'm reading this right. The agency expense changes show $636 million in new costs in Fiscal '19, $829 million in new costs in Fiscal '20, which is close to $1.5 billion combined. Can you give us a better sense of what the big ticket items are there? [Inaudible] detailed a few but not nearly that much.
Director Hartzog: Sure. So, we talked about the Carter Cases, we also have the retrofitting, which we also discussed. Over the course of the two years, that's $60 million. We have to pay for, in addition to what the Mayor discussed terms of State budget hits, we have three election cycles – so, that's $44.3 million. We have a number of different agencies – it's a smattering of little different things across agencies – IT needs in the PD department for $22.6 million. And so, it's a pretty exhaustive list of smaller items that we can go through in the technical briefing, but those are some of the big ones.
Mayor: Who's up? Gloria?
Question: Mr. Mayor, I don't see many, or any of some of what the Council said were their priorities, including funding for more security at public schools, funding for people who need immigration lawyers – the Family Unity Project – meals for seniors, etcetera. Are any of the Council's priorities in here and what's the –
Mayor: One of the big issues that we saw in the Council budget response, and we took it very seriously, was the variety of savings and efficiency proposals. And actually, we were already working on some of them, we saw others that we wanted to work on more. So, there's actually a very high level of correlation between what OMB did and a lot of what the Council suggested on savings and efficiencies. But in terms of new programming, as you can see here, there's very little new programming going on – that's just the fiscal reality we're in. So, we did not choose to make a lot of new investments in general, and the few that we made. I'm sure the Council agrees with us on the census funding even though they ideally might want more, I'm sure they would not have wanted to see any less. I know they agree with us on the New York City Green New Deal and the need to fully fund that. They've been – as I heard upstairs earlier in the briefing – vociferous on trying to ensure that special-ED kids got better services and parents didn't have to struggle so much. And clearly, in the effort to get off Rikers – the number-one big change on the capital side – the Council has been absolutely united with us on that. So, I think there's a lot of unity of purpose, there just wasn't room in the budget to add new major measures. But, you know, in the discussion between now and adopted, we're going to – as we always do, we'll focus on their priorities and I'm sure some of those will be reflected.
Question: So, there's a chance that we could see the budget go up even a little more if the Council funds some of their initiatives as well, right?
Mayor: Every year we work with the Council on some of their priorities. It all interrelates with revenue. So, that's not a yes or a no answer because we have to see what happens to revenue, we have to see what happens to expenses that could be beyond our control. If we have resources, we always work with the Council on some of their priorities. Another one, that Mel handed me a note on, is, the Council was adamant about reflecting the students in shelter needs, and that obviously has gone in as well. So, again, I think there's a high level of unity. But if some resources are available, we will absolutely be focusing on some of their priorities.
Freddi Goldstein: Two more –
Mayor: Go ahead, Rich.
Question: Mr. Mayor, years ago, Senator Everett Dirksen used to say, a million here, a million there, pretty soon you're talking about real money. Now –
Mayor: Great American quote, Rich.
Question: Now, we're talking about billions of dollars. Do you find this $92.5 billion number dazzling and how does it rank the City among cities in the U.S., the world, or anywhere if anybody happens to know, or –
Mayor: I don't know cities, but, if we were a State, we would be the third largest state budget in the country – that I know – California, New York State, New York City. And our workforce is the second largest – the only state that has a larger workforce than New York City is California. So, we – look, we're New Yorkers. We are people who demand a lot. This is literally the culture of this place and who we are, right? We're a place that is intense and active all of the time and people want a lot – they want the best police force on earth, they want the best fire department, they want the best public health department. It's a 24/7 city. There's so much that we spend on that people here demand. And we're a union town and we believe in the labor movement and we believe in giving people fair wages and benefits, and all of that adds up. I think it works, I really do. I mean, we look at the formula of New York City, it may have taken a while for us to, you know, pull it all together and get out of some of the lean years, but, right now, what's going on in New York City is working. And it's a heavy investment model, but it yields a lot of great results for every-day people. So, it's a big number, but I think it's worth it.
Question: Do you know doing budgets?
Mayor: Ah – so –
I like what budgets allow us to do. Do I like doing budgets – I like what budgets allow us to do. I like the strategic element of deciding where to really put your chips. And, you know, I came in wanting to do pre-K and I had to work with my esteemed colleagues here to figure out how to make it work. That game of chess, trying to figure out how to make it work is really intriguing. I don't think anyone loves everything that has to do with budgeting, but, if it helps you get to the outcome, it's worth it.
Let's see if there's anything left before we go – going once, twice –
See you Saturday night, everybody. Thank you.