Transcript: Mayor de Blasio Releases Fiscal Year 2016 Executive Budget and Ten-Year Capital Strategy

May 8, 2015

Mayor Bill de Blasio: Okay. Mr. Fuleihan, are you prepared?

Dean Fuleihan, Director, Office of Management and Budget: I am.

Mayor: Then you may sit.

Dean Fuleihan: Thank you.

Mayor: Yes. We’ll call you up when we need you.

Dean Fuleihan: Thank you.

Mayor: All right, good afternoon, everyone. We’re here today to introduce the executive budget for the city. And I’m going to go into some detail about the thought process that led us to this budget, but I’ll summarize by saying we believe this is a moment of great possibility for the city, but it’s also a very complicated moment in our history, and we want to talk about some of those complexities and some of those challenges. And it’s a bit of a crossroads moment, and I want to describe the views we have as an administration about what the city is facing, what our potential is, what the challenges are, and how they came out in this budget document. But the key point you’ll see here – it is a strategic vision, and it’s a forceful strategic vision, but we are convinced these are uncertain times for a number of reasons, and that will be reflected in the strategic approach that we have taken to this budget.

The fact is that far too many New Yorkers – in fact, a majority of New Yorkers – are having trouble making ends meet. Many are struggling. And that reality underlies how we think about budgeting, and how we think about the best way to serve our people and to protect their future and create a stronger future.

We are officially in an economic recovery. That is what the economists say. That is what the federal statistics say. But as we’ll document here, it hasn’t been much of a recovery for many, many New Yorkers, and that has created a series of challenges for us.

In light of these challenges, we’ve chosen a set of priorities to fund. We believe they follow a clear strategy. We’ve had to make a lot of tough choices, but we made those choices with a strategic imperative in mind.

We also have made sure that our fiscal health will remain clear into a future that may come with a lot of turbulence. We have thought about how to preserve our fiscal health regardless of what challenges may come ahead, and you’ll see some of the new and extraordinary measures we’ve taken to protect the long-term fiscal health of the city.

And I will go over the budget. Of course we will take ample questions. But I’ll emphasize at the beginning, the questions will be only on the topic of the city budget.

So first, let me just take a moment to thank everyone who did so much hard work to put this budget together. This is a Herculean task. I want to thank everyone at OMB, and particularly the director of OMB, Dean Fuleihan. They have been working night and day to get us to this day. Of course, our First Deputy Mayor Tony Shorris has been an integral part of all we’ve done in this budget. All the deputy mayors – Richard Buery, Lilliam Barrios-Paoli, and Alicia Glen – have played a key role. I want to thank my new Chief of Staff Tom Snyder, who’s jumped in with both feet into this process. Maya Wiley, my counsel; Emma Wolfe, our director of Intergovernmental Affairs; and Jon Paul Lupo, our director of City Legislative Affairs – thanks to all of them.

Well, first, for the number – the budget for the city of New York that we are proposing is $78.3 billion – $78.3 billion for Fiscal ’16. This is, of course, the largest city budget of any city in the nation by far, and in fact, bigger than all but just a few of our states in this nation.

When we looked at the choices we had to make, and the budgeting process involves literally hundreds and hundreds of choices, we had simple questions. We asked, does the proposed spending improve the lives of everyday New Yorkers? And does it fit into an overall strategy to address the inequality crisis, to build our economy up, and to strengthen our fiscal health?

So we had a pretty rigorous set of goals that we needed to achieve before we approved something, because we know we have to do all of these things. We have to address inequality. We have to build our economy. And we have to strengthen our fiscal health simultaneously.

Clearly, there were some very good things that we were not able to reach in this budget, we were not able to fund, but we believe the things we chose will have the most fundamental impact.

We also know that we have to be very disciplined about the use of our resources going forward, and this budget was created with that idea in mind. We believe it is the basis for a city that will be economically stronger, economically more inclusive, more competitive, both nationally and globally – and this is a crucial element that we have to think about more and more in an ever more globalized world – how to keep the city economically competitive. And some might say there’s a contradiction between strategies related to growth or global competition versus strategies related to addressing inequality. We think those two ideas have to be meshed to create a really strong and stable city for the future.

Again, our long-term fiscal health is an imperative here. And we’re going to talk about some of the challenges that could lead to serious economic downturns that obviously could affect our revenue, could affect our overall economy. So we have invested, with our long-term fiscal health in mind, we’ve asked our city agencies to find real efficiencies and savings. We have boosted our reserves substantially – and I’ll go into detail about that, because we need to be ready for any downturns that could occur – and they could occur sooner than we expect.

We want to make sure we have the cash on hand to deal with the downturn that might come on very suddenly. And recent history, both in terms of the Great Recession, and in terms of the events that plague this city and the challenges that plagued us after 9/11, indicate how quickly a crisis can come on, and why having those reserves is so important.

I daresay in my line of work, it is a lot easier to spend money than to save money, but we believe it is absolutely essential to save money in a very substantial way at this point.

You’ll see some of the choices we made. I’ll give you the rationale. The reserves that we put in place are in fact unprecedented. We believe they are more necessary than ever.

The fact is, we are not just trying to take into consideration the challenges in the economy around us – what’s happening nationally, what’s happening internationally. We’re also very, very clear about the fact that we live in an age where partnership with other levels of government is more uncertain than ever. That’s become, unfortunately, a structural reality we have to deal with. So we’re going to go into detail here about what the absence of federal and state support has done to our budget overall and why we’ve had to compensate in some very real ways.

You’ll see a continuity with the approach we took to the labor contracts. We said last year that that was an area that we came in with tremendous uncertainty we had to address in a long-run, sustainable way – long-range sustainable way. Getting a number of contracts secured has helped. We’re going to take that same kind of concept and apply it in other areas, trying to think about what is economically sustainable.

I’m very proud of the fact that the team, led by Tony Shorris and Dean Fuleihan and Bob Linn, has achieved now 76 percent of our workforce under contract. We’re going to continue to move forward in our efforts to get our entire workforce under contract. We obviously have established clear civilian and uniform patterns. And I think that’s giving the context for making additional progress. So, that’s one of the areas where we’ve been able to take tremendous uncertainty and turn it into certainty.

Obviously, right before this budget process concluded, we had the process around the One New York plan, and One New York, of course, takes us over the horizon not just years, but decades. We were quite clear that we needed a city that was stronger for the long-run, that means more competitive economically, physically having the attributes we needed to sustain our people and growing population; that we have to be a fairer city, a more economically-inclusive city; that we needed environmental sustainability as well as economic sustainability for our people; and, of course, we needed to address resiliency issues, which are more pertinent now than ever before in our history. So, I’ve talked about it before, I’ll say it again, our three mantras when we think about the budget – the budget has to be aggressive, it has to honest, and it has to be responsible. And that’s what we lived by in this process.

Let me talk about the larger economic process. I want to give credit to our photo staff for this excellent slide as we plan for an uncertain future.

The New York City economy has been growing. It has been growing slowly, but at the same time we see so many New Yorkers struggling to get by because of what happened years and years before. Part of what we’re going to document here is how the lingering effects of the great recession have literally created a moment that we’ve never seen before.

We’ve seen in previous economic downturns a bounce-back that fundamentally took people back where they were or even improved their situation. This is different. This has been a recovery that didn’t work; where many, many New Yorkers are actually worst off in the course of the years of this recovery than when they started. And this is a new reality that we’re going to have to address in government at all levels.

The great recession is still being felt deeply. There’s still a lack, in this city, of quality jobs, good paying jobs. The debts and the problems that people experienced during the recession years for many, many families haven’t gone away. They’re still literally carrying the economic burdens from those years.

So, this is what we have to deal with in terms of the lives of the people in our city, but now we have also have to look at what we see in the economic trends around us that give us pause. So, first I want to sort of try and put this in some perspective.

By some metrics you could say, for sure, that the recovery has been very meaningful. And one thing that we’re thrilled about is the level of employment in this city.  We had a recorded in 1969 of 3.78 – excuse me 3.798 million people employed. We have passed that record. That is a very good sign for this city, obviously. We’ve added 120,000 private sector jobs in 2014. That is a growth rate of 3.5 percent. That is a very good thing – as we’re going to talk about shortly, the problem is a lot of those jobs are low-wage jobs. So, the economy is showing here locally some very good signs, but it’s not showing the kind of transcendent dynamic to actually lift people forward where we need them to be.

We obviously see strength in some of our sectors. We’re thrilled about what’s happening with the tech sector. We’re thrilled what’s happening with tourism – 56.4 million visitors last year. But, what you’re going to see over and over again in this information is it’s not penetrating down to the grassroots efficiently, and that’s causing us a lot of concern.

Now, in the good news category as well is the fact that people want to be here as never before. And I give the team at OMB credit, because they did a lot of work on this presentation. And in the process, they found some information that I actually think is very important for New Yorkers to see, because this is something to be proud of. People want to be here. People believe in New York. We have a host of challenges, but thank God we do not have the challenge we had in the 70s or 80s of people having doubt about this city and its possibilities. There is a lot of faith in New York. 483,000 people have moved here since the year 2000.

And I want to show you what this means – I’m going to – I have my microphone – look at that, it’s working. Here are a bunch of cities – these are mainly Sun Belt cities – San Antonio, Houston, Charlotte, Austin – a lot of them have had a very big increase in population. And certainly, proportionate to where they started, they have percentage-wise grown more than us. But look at – you know, we have almost – right here – 483,000 more people have come to New York City in the last 15 years. If you look about that difference, the growth we’ve experienced is literally far, far beyond any other city in the country in just pure numbers, and that’s something that’s very, very promising if we can build all the right efforts around it to ensure that people have opportunity, and that that growth can be sustained for all our people.

But now, I want to talk to you about this reality of a recovery that really has not been much of a recovery, because this gets to what’s happening at the grassroots in neighborhoods all over the city.

The word “recovery” is very hard to buy into here, because typically, we would think about a recovery, meaning people bounced back – at least got back to zero. In case – in this case, you see something very different. So this is what happened in terms of the income dynamics that people in the recovery years – so this is 2009 to 2013 – look at this – for the bottom fifth, the decline in income of almost 7 percent during the recovery years. So it doesn’t matter if you’re in the bottom fifth, second fifth, third fifth, fourth fifth – this 80 percent of our people, during the recovery, their incomes actually went down in the years that were supposed to be the upturn. Even the top fifth overall – the only group that really saw progress was the top five percent of our income earners. This is the only group in New York City that has benefited from the recovery in any meaningful way. And that gives you an indication of some of the challenges that we face.

This is another slide I think is very important. When you think about a recovery, again, you think about a bounce-back. And in fact, history and statistics prove that the bounce-back occurs. I – a lot of you have heard me talk about while you were on the campaign trail in 2013, and when the – the figure came out from the Bloomberg Administration – the 46 percent of New Yorkers at or near the poverty level. And at that time, I must say, I had worked on these issues, but I was still shocked by that number. And I’ve always been puzzled at how that number got so high. And this slide – actually, I didn’t see it until a few days ago – explains a lot.

So here are previous recent recoveries. This is – during the 1990s, the Clinton Administration, where you see a very clear recovery, and as a recovery occurred, 141,000 people came out of poverty here in this city. Here is the recovery after 9/11. We had a few years of a real tough economy. We came back. 101,000 people came out of poverty. The four years we have here – our data goes through the end of 2013 – 186,000 New Yorkers go into poverty during the quote-unquote “recovery.” So again, this is a very sobering figure, and when I heard that report back in 2013, this explains a lot of where that 46 percent came from. In the years that were supposed to be the good years, unfortunately, people going the wrong way. And that, obviously, is almost half of our population right there.

Other things to recognize – over 1.1 million New Yorkers either unemployed or working part-time involuntarily or looking for work and not able to find it. Where we have seen gains in employment, as I said, some of it is in high-paying jobs. That’s, for example, the tech sector, and film and TV are two areas we’ve had a lot of that. But a lot of the other sectors that have grown – retail, tourism, for example – we’ve seen a lot of minimum wage jobs or low-wage jobs. So on this slide you see a lot of the growth has, unfortunately, aligned to the lower-wage jobs that, as we know, it’s very tough for a family to make ends meet on.

Let’s talk about the number one expense in people’s lives. We talked – we said this year is going to be all about achieving our affordable housing plan. Nothing defines the household economy of New Yorkers more than what they pay in rent – a lot going on on that topic today. So let’s get clear about the fact that for New Yorkers this is becoming a bigger problem. It was always a classic New York problem – it’s becoming a bigger problem now.

In 2014, over half of New Yorkers spent over 30 percent of their income on housing. So that’s when you’re rent-burdened. It means you’re challenged economically by the amount of rent you’re paying. Obviously it undercuts a lot of other things that you need to do in your life, and a lot of other things you would like to do to improve your life. But look at this, because this takes us back – not so long ago – 2002 – it’s 44 percent of New Yorkers were rent-burdened. Here we are, 12 years later, 56 percent of our city rent-burdened. Look how steady that increase has been. And that’s one of the other underlying challenges – that people’s economic realities become more difficult because wages aren’t going up but rent is.

When we rolled out the One New York plan, we focused on a lot of ways that we thought we could really go at these economic challenges and we could go at inequality within the context of the city. We’ve said – and I’ll give the disclaimer again now, because we’re going to talk about the state and federal issues, we’re going to talk about the national and international economy – I profoundly understand the limits of what we can do locally. Our obligation is to do all we can do. And I think the OneNYC plan is a great example of that – especially our commitment to getting 800,000 people out of poverty over the next ten years.

Everyone knows that requires real change in the approach to the minimum wage in Albany, and we’re going to fight very hard for that, and I think the people of this city and state more and more believe in that change. But it also depends on us using the other tools that we have.

So the minimum wage that we’re going to fight for, again, that would allow us to have a measure of local control and get our wage up to $13 an hour in the short term, $15 an hour over the coming years – if we are able to achieve that, that is a centerpiece of what we need to do in this plan. Again, 800,000 people could be lifted out of poverty, as I said in the One New York presentation. That is roughly the size of the entire population of Charlotte, North Carolina.

Adding to this strategy is the other key elements – all of which are in the budget obviously – pre-k for all, affordable housing, IDNYC – each and every one of them contributes to relieving some of the economic challenges that families face. The affordable housing plan – the 200,000 units – is the single biggest impact on improving families’ economic position. But pre-k’s a great example too. A lot of families who don’t have access to our – who had not in the past had access to full-day pre-k would’ve paid $10,000 dollars or more for it. Starting this coming school year, that will be free to any and all New Yorkers who want to take advantage of it. That changes the family bottom line profoundly.

So, there are a lot of things we can do and they contribute greatly to achieving this goal. But, again, a lot of what we need to fight for is at the state and federal level.

By the way, people have asked how OneNYC aligns to this budget and the ten-year capital plan, so there is a tracker – a OneNYC tracker that we’re publishing with this budget that will allow you to see each and every commitment from OneNYC; see where it ends up in the budget, what dollar figure is attached. And we’ll be doing – as Tony Shorris has consistently reminded us – we’ll be doing one-year updates on OneNYC to tell you how we’re doing on those goals and, obviously, the resources we’re spending on them.

Now, why am I concerned about this economy? You could see plenty of stories that suggest things are good and rosy. And certainly consumer confidence is stronger, why am I so concerned? Why do I think it’s uncertain? Because I see so many indicators that suggest a turn could happen at any time. And we believe we can’t afford to be caught looking when we see some clear, clear evidence of a change that could come and could hit us hard.

So, the slowing growth rate is certainly something you have to take very seriously. The gross domestic product of this country grew at 2.4 percent during this recovery. That is the lowest, but for one recovery, the lowest rate of growth in a recovery since 1949.

So, basically, of the post-war recoveries – there’s been 11 of them – this has been the one with the lowest rate of growth during a recovery except for one. We’ve also seen one of the slowest rates of job growth. Remember that phrase a few years ago – people talked about the jobless recovery? Well, that continues to be a challenge.

We’ve seen wages in many cases, in real wage terms, adjusted for inflation going the wrong direction. We’ve seen federal employment contract – this is a big problem – first time since World War II federal employment has contracted. That has a big impact on our economy overall. We are not seeing strength in new housing construction, which is traditionally one of the great employment drivers nationally and locally.

But here’s one that was a brand – a relatively new statistic that caught my full attention.  It’s the last one here. The last quarter – the last quarter for which we have data, U.S. GDP growth essentially ground to a halt – 0.2 percent. You can’t look at the national economy essentially grinding to a halt for a quarter, and not think that that may be a sign of something wrong that we, locally, have to prepare for.

And again, to bring you into the thought process, we have to prepare locally for things beyond our boundaries, and if problems occur we do not expect anyone to come and save us. You know, this is something we’ve talked about a lot in terms of how we deal with security issues. We always look for partnership and support from other levels of government, but we know we have to protect ourselves.

Well, that’s just as true when it comes to our economic reality and our budget. If these dynamics unfortunately prove to be true, we have to make sure we’re in a position to protect ourselves.

Now, look at the global dynamics. I think this is another reason to be concerned.

We are entirely connected to the global economy, obviously, as much or more as any major city in the entire country. When something goes wrong globally, it affects some of our core industries – finance, obviously; tourism; retail. We have a special level of exposure, and so we have to watch these trends.

The IMF predicting that the Eurozone growth will be just 1.5 percent, and nine countries in the Eurozone growing less than 1 pecent. That’s been a problem, and that has now become even more profound.

The world’s third largest economy is Japan. They predict almost no growth at this point. Brazil’s economy is contracted to a 1 percent growth rate. All of these trends aren’t happening in a disconnected manner. They all, unfortunately, are interconnected and they all could have a big impact on us.

And also, this recovery we are in – again, it’s a weak recovery. It’s a questionable recovery on many levels – but, even if you want to believe in the theory of economic recoveries, well then there’s a problem in terms of its length at this point.  This is now a recovery that has lasted officially, according to The Economist, 70 months – seven– zero – ten months longer than the average recovery, and history has shown us time and time again, when recovery sputters out, you can go right into a recession.

So now, the question – what happens when that – when those dominoes start falling, what does it mean? It means the number of pressures start to mount on us. We lose revenue pretty quickly, because the government is obviously exceedingly responsive to what’s happening in the private sector economy around us, so we immediately start to lose revenue. The demand for services go up, because people are laid off in their private sector jobs and other needs come up that they turn to government for. And at that very moment, federal and state governments are also being buffeted so their revenue starts to go down, so they start to cut aid to us.

What do you do then? It’s pretty classic. You either increase taxes or you cut services, including things like layoffs and attrition of workforce. And everyone suffers. And as we saw during the Great Recession, as the public sector around the country started cutting back personnel, it actually furthered the recession.

In the education field alone, almost a quarter million Americans were laid off during the Great Recession. That was one of the big contributing factors to why the recession went on so long and so deeply, was public sector employment being undermined.

We look at all that and we say that’s a road we do not want to go down. It’s so unfortunately predictable. We’ve seen it before. And so we’re going to buffer ourselves and prepare to block that from happening to the people of this city.

Look at very recent events. None of this is ancient history. This is all quite recent.

Three major shocks to our system occurred – suddenly in each case – that profoundly undercut us economically, undercut our government – of course, the tragedy of 9/11. But you remember, the huge negative economic impact it had for the next several years and certainly what it did to the city government’s ability to bring in revenue and serve people.

The Great Recession goes without saying – was not predicted and occurred on a level absolutely unpredicted in any way and unseen before in that form.

And then, something that’s not about an economic trend is about Mother Nature and extreme weather that we’re dealing with more and more – Hurricane Sandy, the worst natural disaster in the history o the city. And even though there’s been extraordinary efforts to bounce back, those three events happened in the last 15 years – three major, major shocks in just 15 years. We have to prepare with those kind of challenges in mind.

We know when they happen, they can happen in an unpredictable manner, suddenly – that the effects can be felt immediately, literally – and you’re not in a position at that point to respond sufficiently. You have to have had your defenses in place in advance. And that’s what we have built this plan on.

Let me give you a real live example after 9/11. 9/11, obviously beyond all the human tragedy, fundamentally undercut New York City’s ability to serve people, and led to some immediate shocks. And I’ll show you the same for the Great Recession. So after the recession caused by 9/11 locally, New York City ended up having to raise taxes by $2.9 billion dollars. You’ll remember the 18 percent property tax increase that led to that. And $3.6 billion dollars in city services were cut. During the Great Recession, New York City raised taxes by $2.1 billion; and again, similarly, $3.5 billion in cuts to city services. So that’s a pretty clear and consistent pattern of what happens in one of these shocks.

So what happens to people as a result of this? Well, when governments start cutting back, we all know, as I said, it immediately affects, in many cases, employment, and that affects the families of all those who had those government jobs, and it means they’re not in the position to provide the services. But look at the other things that happen – and this is a particularly painful example, because we’re living with it right now – the recession hit, had a very big impact on New York. New York State felt the impact on its budget for the years – the first years of the recession and then into the recovery.

So here we are at the 2011 state budget – this is July 2011, right after the state budget is passed. And you’ll notice, here’s the level of people in shelter in New York City – and you’ll notice it’s relatively stable. Even in the first years of the recession, it’s relatively stable.

But at this moment, both the state of New York and the city of New York decided to end – 100 percent eliminate – the Advantage program that was providing rental subsidies so New Yorkers who were on the verge of ending up in shelter didn’t end up in shelter. These rental subsidies get cut entirely – they’re gone. And then look what happens – an increase of 20,000 people in shelter, and more than ever, families with children, which is not something we saw as much back here. But this is what happened, especially with the economic pressures, and without any option for support – 20,000 more in shelter.

A lot of factors, as I said, the overall economic situation obviously underlied this, the rising cost of housing, but it’s unquestionably true that the decision by the state and the city at that point to take away the number one program we had to fight homelessness is part of why we have a profound homelessness crisis today. Those are decisions that happen when the economy goes bad and when the affect occurs on revenues of governments. That was a very bad decision, but it’s a decision, again, we’re living with years and years later.

And I would note – that number we have today – over 56,000 – 24,000 of them – of the people in shelter today – are children. 24,000 children in our shelter system – that would’ve been unbelievable five or ten years ago.

So as I said, we recognize that we have to be ready to defend ourselves. We have to be ready to deal with whatever’s thrown at us. And why would we say that with such assurance? Because we’ve seen a pattern in recent years of the federal government and the state government letting us down. Whether in good times or bad, the tendency has been not to help us when we’re in need, even though, again, 8.5 million people now, profound needs, aging infrastructure. The pattern is quite clear that our needs have not been responded to. And I would say, bluntly, this is true for cities all over the country.

Federal aid and state aid are inherently uncertain. The federal aid dynamics right now – I don’t think it takes a lot of explanation. There’s – I can’t think of an area of federal support for New York or any other city that anyone predicts is going to grow at this point. Think about affordable housing, mass transit, education – there’s not a single area you can point to with any kind of security.

A lot of us are fighting to improve the transportation bill, which – literally, the Highway Trust Fund runs out at the end of this month – will affect New York and the metropolitan area deeply – roads, bridges, highways, mass transit, everything. There’s no plan, at this moment, of what’s going to happen after the last day of this month. That Highway Trust Fund’s been flat in its spending for 12 years, while the infrastructure of this city and many other cities has declined. That’s one example of a lack of federal support. There are many, many others.

We obviously have seen, now, new proposals in the Congress to even take us backwards to cut back on Medicaid, to cut back on SNAP, meaning the food stamp program – that would have a huge negative impact.

The state? Well, you saw that example – the state’s decision in 2011 to take away our most effective tool for fighting homelessness. They did it again in this last budget. State funding for mentally – excuse me, for supportive housing for people with mental health challenges was slashed by 50 percent.

We asked the state to help us, through the New York New York program, to build 12,000 units of affordable housing and supportive housing for folks in need so they would not be homeless and they would get the services that they needed. Well, the state gave us less than 4,000 units. That’s one example.

We have seen cuts to the kinds of emergency services we provide for the homeless by the state – reducing emergency assistance to homeless families by $22 million just in the last budget – a budget in which the state of New York had a huge surplus. So this is why we are increasingly dubious about the support that we can depend on. Of course, I’ve said many times – we’ve seen in the case of education – Campaign for Fiscal Equity decision made long ago by a Court of Appeals ignored by the state of New York now for years. I think we have a pattern here.

So we have to decide, given that I think it’s fair to say we’re at a crossroads – we have tremendous potential as a city, a lot of positive to work with, but also tremendous challenges. How are we going to build forward? How are we going to be a world-class city, a competitive city? How are we going to give more and more people opportunity? How are we going to protect against those larger economic forces that could disrupt us? How are we going to protect against the lack of support from other levels of government? How are we going make the best out of the resources we have? And we believe this budget answers that question.

There’s a clear investment focus in this budget. We’re going to see that particularly when it comes to our capital funding. We have come to the conclusion that we have to make very substantial additional capital expenditures to invest in the physical reality of this city for the future. Again, we understand if we don’t it we’ll be waiting a long time before anyone else offers to help.

We also know we can do that in a way that still protects our fiscal position.

So, how do we – how do we strike that balance? By being scrupulously fiscally responsible – that pervades every discussion; by making sure that the investments we make are very targeted – obviously constantly finding efficiencies and savings in government; and making sure that – and we look ahead years – we do not have any out-year gap in our budget that we believe is beyond our reach. And part of how we address that is to put in an unprecedented level of reserves, because we believe the reserves are going to be needed in the near term, and we want to make sure that they are well in place.

So let me talk about what we’re doing. We’re raising these reserves – in one case, to an unprecedented level; in one other case, we’re creating a brand new reserve fund to allow us both the fiscal strength but also the ability to support our capital spending.

First, the general reserve is going to an unprecedented level of $1 billion dollars a year – and that is booked all through 2019 – Fiscal 2019. Having $1 billion dollars each year in our general reserve is the first line of defense against a downturn.

Second, we’re raising our Retiree Health Benefit Trust Fund to $2.6 billion. That is enough to pay for an entire year of our employee healthcare costs. Literally, if the economy ground to a halt and another didn’t come in, we would’ve booked enough money to ensure we could pay a whole year of our employee healthcare costs. And this is the number want to keep to each year as a reserve level for the trust fund.

Third – this is brand new – it’s something we innovated in this process – a Capital Stabilization Reserve of half a billion dollars – $500,000 million dollars. This has not been done before by the city of New York, and it’s something we think is necessary because it’s become abundantly clear to us, we have to greatly intensify our capital spending – and I want to describe that.

What – this Stabilization Reserve will give us the ability to reach a higher level of capital spending, but know that even in the event of a downtown, we will still be able to meet our obligations and pay our debt services on a timely manner and retire our debt.

Let me put this in perspective for a moment. More and more all over this city, the challenges we face relate to, one, aging infrastructure – you feel it every day on our roads and you see it on our bridges, you see it in so many ways all over this city; two, the affordable housing crisis, which is, again, deepening; three, growing population – and growing population is affecting us in many, many ways including what could be considered a good thing – so many more people coming in to our public schools, particularly in some neighborhoods, but we have a huge public school overcrowding crisis in some parts of the city.

What is – what unites all of those points? Roads, bridges, highways, creating new schools, creating affordable housing – all of that requires capital spending. And the demands are greater and greater, the infrastructure continues to age, and the absence of federal and state support becomes more profound with each passing year. So when you look at all those factors, we think the logic is clear – increase capital spending to the highest appropriate level.

In this budget – and Dean and Tony will go into more detail on the nuances with you – but we are increasing capital spending by 24 percent. This is a huge jump forward for this city, so that we can achieve the things that have been waiting for so long to be done, that will literally undergird the future of our economy and the future lifestyles of our people.

This is going to allow us to achieve 200,000 units of affordable housing, to build the schools and the pre-k centers we need. It’s going to allow us to do a lot to fix our roads and bridges. There’ll be enough in all these categories, but it will allow us to make profound changes and keep this city competitive. But the only way it works is with this reserve fund.

By laying aside this money, we know we will keep current with our debt service. We know we’ll be able to keep it within recognized levels that are appropriate.

We also know that with this reserve we can do a better job analyzing our capital projects and determining which are viable and which can be done in a cost-efficient manner, and which can’t. Another thing we put a lot of time and energy into is determining what kind of capital spending doesn’t make sense or can’t be done in a reasonable time frame.

So in many cases, we’re going to say no to the things that we don’t think are viable. This underlies our ability to be a strong and competitive city going forward – to have this kind of unprecedented capital spending.

Now, as I said, the only way all this works is to constantly look for savings, because the demands are so great. So I’ve sent a very clear message to our agencies that I expect – not just this year, but in years ahead – very, very substantial efforts to find savings and efficiencies. And every agency has to live within their means, and they have to constantly innovate, and that will be required in a number of ways.

So, what we have here is important because we’ve found a lot of different ways to save money. This $530 million over the next two years – ’16 and ’17 – is a traditional efficiencies and savings – agencies that figured out how to do more with less, figured out that some programs were not working effectively. We said very clearly, if we don’t think something is working – and there’s obviously been some consultant contracts that are a classic example of this – are outmoded, represent a different approach we don’t believe in, we want to get rid of it, we want to save the money – $530 million so far we’ve found in those savings; $400 million in debt service savings because the teams at OMB and finance were smart about making sure that we got the best possible arrangements in our debt service; $300 million in saving at the Health and Hospitals Corporation – we’re doing a lot to bring the Health and Hospitals Corporation into a stronger stance for its future economically. Dr. Raju has been doing a great job, and also has found a lot of cost savings in the process. We’re going to have a lot more to say about NYCHA – in the coming days, we’re going to be offering a bigger reform plan for NYCHA where we’re also going to need to find cost savings because of the profound economic challenges facing NYCHA.

So, this is something that we haven’t seen before, particularly in the case of HHC – this kind of coordinated effort, reaching out not just to the traditional mayoral agencies but to HHC and NYCHA as well, and creating an actual integrated approach to savings. And we think this is going to have a big impact on our future.

Obviously, we’ve talked a lot about the healthcare savings that we achieved in the labor plan. The healthcare savings – this was one of the great challenges in city government – talked about for years, how do you bend the cost curve on healthcare. It is happening now in a big way, and it’s only just begun. And I said this the day we announced it, I am amplifying it here – this is only the first part of a plan to continue to deepen our reductions in health care cost, because we have to be viable for the long term.

It’s working now – we’ve hit the Fiscal ‘15 target of $400 million in savings. We have guaranteed healthcare savings of $3.4 billion through Fiscal ‘18, and then $1.3 billion minimum in savings for every year after Fiscal ‘18. So, we believe that this is an area it’s working, and we will deepen.

So, I’ve talked about the kinds of investments we need to make and how they align to our priorities. Let me go into some of now the investments that are not on the physical side of the city, but are about what we do to support our people.

So, even though you’re going to see a great emphasis on capital spending in this plan, there are some very substantial additions on expense funding that we think are necessary to address some of the key issues we face – and bluntly to right some wrongs; to reach some people who were going unreached and were in deep need; to reach communities that were neglected for too long. And one of the key examples is – comes in the area of mental health. This has been an open secret that has to be addressed.

I want to give my wife tremendous credit for having taken on this task of changing our approach to mental health in the city of New York. And she’s doing it not just with all of her heart, she’s doing it in a very personal way and she is personalizing the story to help all New Yorkers understand we have to talk about this issue and we have to change the way we deal with mental health.

So, we are making a very substantial investment of $54 million in mental health services for the coming fiscal year – $78 million in each out-year thereafter. But, equally important, we’re going to change how we go about providing mental health services and how we connect all the different agencies that address mental care and mental health care issues.

For this year’s immediate efforts, we will have mental health clinics in our renewal schools and in our community schools. We are going to have substance abuse prevention specialist in all the renewal schools; mental health services in all of our family shelters; and, of course, mental health services added at Rikers Island.

NYCHA, as I mentioned, is another area where there has been a tremendous lack of investment. There’s effectively no meaningful state investment. There has been a freeze or worse in terms of federal investment, and the city has had to do all we can to help NYCHA residents through this. We’ve made very, very substantial investments already.

In just the last 16 months, we’ve put $200 million in additional city funds into NYCHA on the expense side. We’re going to do more now. We’re going to eliminate the annual $33 million payment by NYCHA for taxes. If you can imagine, they’re doing a payment in lieu of taxes – a pilot to the city of New York, which, again, just like NYCHA had to pay for police services until we stopped that we had to pay the city taxes – we’re ending that and holding them harmless.

Also, when it comes to the community and senior centers at NYCHA, that’s $22.4 million a year, we are taking that cost off of NYCHA’s budget. We will integrate it into the budgets of Department of Youth and Community Development, and the Department for the Aging.

When you add these new initiatives to what we’ve done before, and then you play it out over the next few years as planned for Fiscal ’19, this is literally an additional half-billion dollars being provided to NYCHA to stabilize its finances. But, as you’ll see in a few days when we go deeper into a plan, a lot more needs to be done for a part of our city that literally houses over 400,000 of our fellow New Yorkers and has been going without investment for a long time.

Let’s talk about homelessness, I talked to you about what’s happened with the lack of state funding, and that’s been profound. We know we have to do all we can do. We are investing $100 million more in Fiscal ’16 – and that’s in part to compensate for the $22 million dollar cut in state aid I mentioned before.

So, we’re providing rental assistance to almost 10,000 households to get them from shelter to housing. Anti-eviction legal work is projected to help almost 14,000 residents who are in many cases harassed out of their homes or in other ways caused to leave their apartments illegally. We can help them stay where they belong, in their apartment – they don’t end up in shelter. We’ve added 100 more shelter beds for homeless and runaway youth, and we, as I said, have added mental health services in all of our family shelters.

We also know that the folks who do so much of the work to help people in need have often not gotten their fair share in terms of their compensation. So, we looked at folks in the non-profit agencies that work with the city. They’re not city employees, but they’re folks who work at non-profit agencies that do a lot of work under city contract – a lot in the social service area.

We based our projections on not 35,000 people but 35,000, as they say in the personnel business, full-time equivalents – meaning, based if we were reaching out to 35,000 full-time people, what would it take to help give them a better situation. In fact, we’ll be able to reach many more because many people work part-time.

So, this group of social service workers and others – for years and years, even back when I was in the City Council, I remember leaders of these organizations coming to me and pleading for a cost of living increase for people who don’t get paid that much to begin with. Their pleas were ignored until now. And I am very pleased to say that we will be providing a 2.5 percent wage hike for these 35,000 – again, not individuals, but full-time equivalents for Fiscal ‘16. And within that group, there’s about 10,000 people who have been making minimum wage and we are going to take them up to $11.50 an hour as a minimum. Many of them, thankfully, also do have health benefits and other benefits. And that is consistent with the level of our city living wage policy.

Okay. In the vein of safety, we are dealing with many, many challenges, and obviously we know that public safety underlies everything, and getting that part of the equation right allows so many of the other things we’re trying to do to work. I can’t be thankful enough for the great work of the NYPD.

As you’ve seen, as we come into this year, we do face some challenges as always, but the overall index for major crimes continues to go down. NYPD is doing an outstanding job. And we are pleased that a number of other reforms are starting to take root that I think will allow the NYPD to do even more with the resources it has – he technology that we’ve committed to – the smartphones and the tablets; the retraining; obviously the amount of time that our officers will now have freed up from things like unnecessary stop-and-frisks and marijuana arrests for low-level possession. A whole series of reforms have been undertaken by Commissioner Bratton and his team that we believe will allow much more time and energy to be applied to serious crime, and that our NYPD officers will be able to more effectively work on priorities.

At the same time, we have profound problems in other areas that we know do need a lot more investment in other parts of our criminal justice system, and obviously we’ve been all of us in the administration very straight forward about the challenges we face on Rikers Island.

Now when it comes to corrections – the Department of Correction – we have a lot of work to do. I do see some very promising sign, and I want to commend Commissioner Ponte and his team for the reforms they’ve made. But we know additional resources are necessary, so we’re adding $36.4 million in the coming fiscal year for our 14-point anti-violence plan. This includes a canine program to keep weapons and drugs out of the jail. This includes new strategies and new training to help stop fights between inmates before they happen. This includes comprehensive security camera coverage of the entire island, and a number of additional efforts to provide inmates with education and activities that actually profoundly decrease the amount of violence, keeping them occupied with something productive. We have put a lot into the Department of Corrections already. We will continue to make those investments as we stabilize the situation and turn it around.

Now, I want to go into a couple of other points related to NYPD. We have, as I said, been adding to the NYPD budget in a number of ways. Obviously the investments in technology, the investments in training, in the ShotSpotter Program – we’re going to be adding more to ShotSpotter here in this budget, we think it’s tremendously promising and, again, an area where it’s going to increase the efficiency of policing. Protective vests, body cameras – there’s a whole host of investments we’re making already, both capital investments and expense investments, let alone the fact that we’re making major new investments in terms of the labor contracts.

So we will continue to provide a lot to the NYPD. But again, we see all of these elements providing for a much greater effectiveness by the NYPD, and again their number right now – the numbers that they have produced, the effect that they have had on the people of this city has been outstanding in recent years. 2014, a record low year for crime – and, again, in most crime areas, decreases continue in crime because of their outstanding work. So we have made a series of investments. We think they will all continue to achieve more effectiveness for the NYPD.

Finally, one point on Vision Zero — we are adding several key additional elements, $5.2 million through DOT, signal retiming, additional work on intersections and roadway markings.

Vision Zero is working also. We had record low number of pedestrian deaths last year. Those numbers continue to go down this year. We are going to continue to invest in Vision Zero.

I want to cover a few more things. Small business – we’re doing a lot to try and help small business, particularly when it comes to their relationship with the Department of Buildings. We’re doing a lot to streamline the Department of Buildings and make it more supportive of small business. We’re also doing some important new initiatives to support local manufacturing.

Another thing that’s important to economic development and opportunity in one of our boroughs in particular is – in Staten Island, of course – our commitment to 24/7 Staten Island Ferry service – and we’re very proud of that, and we think that’s going to be helpful to Staten Island in many ways in terms of improving both its economy and its residential options.

Now, I’m not going to talk a lot about pre-k – I think I’ve done that many times before. I’m only going to say one thing – this time we will get this next school year to 100 percent universal full-time pre-k for every child in the city. We are – to achieve that, we’re taking $114 million and adding it to the budget so we can get to this level, in addition to the state aid that we receive previously. We think we’re going to be – give or take – 70,000 seats. And one thing I want to say here, because I think it’s striking – again, I’d seen some charts, but not this one. This is how little an investment New York City made in pre-k for all these years until very, very recently, and then it went up just a little. This is where we’re going to be in September, and this is an outstanding statement about the future of the city and how educated our workforce is going to be.

Again, I’ve talked about the community and renewal schools. We’ve invested $150 million already in the renewal schools. We’ll be adding $50 million more in Fiscal ’16; $76 million every year thereafter. We started with the additional period of school for each renewal school, the after-school programs, new personnel as needed, community schools in every renewal school program. We’re now adding intensive tutoring and counseling services, more AP classes, mental health counseling, summer programs, vision screening – we’re going to just keep adding elements to turn these schools around. We think all of these pieces are going to have a profound impact. And again, each and every one of our community and renewal schools will receive the 100 percent fair student funding level.

Afterschool, another area I’ve been profoundly interested in. We got state money this year. We’re going to use that now to take afterschool up to 107,000 kids at the middle school level. That, again, will be a universal program. So any child at middle school level who needs afterschool will have it guaranteed to them with this level of funding.

CUNY – we’re putting in a lot of resources in CUNY, particularly with a focus on STEM programs, with a particular motivation to help our young people get to CUNY – whether  a two-year degree or a four-year degree, get into the technology sector where there are good paying jobs – so, $29 million more for STEM and other programs in CUNY.

And just a couple more things I want to say in terms of taking you back to the capital side. I keep talking about competition – and I think it’s important to keep in mind – you know, the world – the rest of the world is not standing still. We have to make tremendous investments in this city. This is part of why we have such an emphasis on capital spending in this plan.

Look at two obvious competitors – London and Beijing – London, $23 billion dollar rail project – their national government understands London is the key to the U.K.’s economy, so they’re doing a $23 billion dollar project to transform their mass transit. Beijing has a new international airport – eight runways and the ability – it will have eight runways and it will have the ability to handle 130 million passengers a year. That’s what localities are doing with national governments that are truly partners because they understand that if their leading cities aren’t strong, their national economies can’t be strong. That’s the backdrop.

We intend to remain one of the great dynamic urban economies of the world. But again, we don’t have the national partner. We’re going to find ways to do all we can with what we have. And we believe that these investments will be transformative.

So the ten-year capital strategy will be $83.8 billion – $83.8 billion over ten years, of which $75.5 billion will be city funds. The first four years of this plan represent, as I said, a 24 percent increase over the four-year plan I presented a year ago at the last executive budget. And we think this is a realistic estimate of what we need to do that is still within our means.

Now, again, we’re very concerned about maintaining fiscal responsibility at all times – so in terms of debt service, keeping debt service in an acceptable range. The recognized standard among the rating agencies and monitors is keeping debt service below 15 percent of tax revenue. And this is where we’ve been as a city in the last few years, and this is where we go between now and 2025 – so very consistent with the last few years. And again, we’ve added the Capital Stabilization Reserve as an additional buffer.

The investments we will make on the capital side, as I said, affordable housing, infrastructure, a lot that will support human capital and sustainability and resiliency.

The affordable housing piece of this equation – it’s not a shock that we’re in the situation we’re in. This has been obviously a market-driven reality. The history of this city is that housing growth was determined by market forces. The market will play a big role going forward, to say the least, but in this instance, from this point on, the unprecedented investment levels that the city is making will also have a profound impact on the trajectory of our housing market, and the very aggressive approach that this city is taking will reshape our housing dynamic and maximize affordability. So $7.5 billion for our Housing New York plan – double the capital commitment of the previous administration.

I’m going to give the previous administration credit – they had a robust affordable housing plan. Ours is twice as strong in terms of its capital spending per se, let alone the additional $2 billion that were put in place for infrastructure related to affordable housing; the 200,000 units, again, bigger than anything attempted in this city before on this kind of ten-year timeline. We believe that we can not only achieve this, but this time do it the right way in terms of community needs, and bake into the process the infrastructure that people need to support this kind of growth.

So between two elements in here and our infrastructure plan, over $2 billion will be devoted to making sure that when we rezone a neighborhood, the infrastructure needs are accounted for on the front end. Or even when we see extensive amount of additional affordable housing in a non-rezoned area putting a strain on existing infrastructure, that we have resources to account for that and address it.

I’ll talk about transportation for a moment. We have increased our annual contribution to the MTA. We ceded to the request that was stated by the MTA in their original budget process – $125 million a year, and then we added some additional small amount of money for a matching-fund program that took us to $657 million over the course of this plan. We also provide support for the MTA in a number of hundreds of millions of dollars in other pools of money, and Dean and Tony can go over that with you. That happens every year. But just in the last days, we’ve provided some crucial support for the MTA. I don’t take anything personally – I did not get a thank-you note, but I’m okay with that.

As a result of the Vanderbilt corridor rezoning, there will be over $200 million in capital investment for the MTA in the Grand Central Station complex, one of the busiest transportation hubs anywhere in this country. As a result of land use plan determined by this administration and the City Council, the MTA will receive an over-$200 million benefit.

I’ve said we will keep trying to get the state to live up to its responsibilities vis-a-vis the MTA, and we’ll certainly keep trying to get the federal government to do so as well.

Now, I mentioned that one of the things that certainly all New Yorkers feel deeply is the state of our roads and bridges and highways. We are going to make a major investment to address these challenges, because this, again, if you think about a strong city economically, if you think about a world-class city that can compete, we have to have better infrastructure. So we’ll be investing $12.6 billion dollars in the Department of Transportation over ten years. $7.8 billion will go to restoring and rehabilitating some of the 784 bridges that are under DOT’s control. $1.6 billion will go to resurface roads over ten years. 2,500 miles of roads will be resurfaced through Fiscal ’17. So if you want a visual, that’s as if you drove from New York City to Las Vegas – appealing prospect, as this press conference wears on. 2,500 miles from New York City to Las Vegas – that is how much we will resurface in Fiscal ’16 and ’17. And over the next two years, we will resurface the FDR Drive, which has been particularly troubled and obviously is quintessentially one of the gateways in terms of our international status in this world and has to be addressed.

Because there’s been a lot of enthusiasm about this, part of our budget – I received a message, and I’m going to share it with you now. And I want you to know – even though there’s not enough bipartisanship in Washington or Albany, there is bipartisanship here in New York City. I received this just a few hours ago from Staten Island Borough President Jimmy Oddo – I’ll bring it out here.

[Laughter]

Okay. This is his message about – Anna, I want to make sure you get this. It’s a quality visual, Anna. And he signed it. I didn’t check what he read, so I’m not going to read it.

[Laughter]

Oh, I’m going to read it. He says – Mr. Oddo, the borough president, says, “Mr. Mayor, you didn’t create this problem, but you are the one to begin to fix it. Well done and thank you. Pave, baby, pave!”

Okay. That’s our visual for today. We accept stray visuals here at City Hall – anyone who walks up with one.

So, that’s the roads, bridges, highways a lot of other infrastructure we don’t see, but nothing could be more important to our health and wellbeing. And so we’re putting $14.7 billion dollars over ten years for our water and sewer system.

Crucially, $2.6 billion of this is to make sure our water is reliably available and safe to drink. $1.2 billion is to address a very persistent problem in southeast Queens of flooding that has affected whole neighborhoods in southeast Queens for a longtime, because of decisions made decades ago. We want to turn that around.

We’ve also gone back in terms of our water rate. We had, through the water board, issued a water rate that was the lowest rate increase in ten years, but we looked at that water rate and determined that we needed to go farther. So, we have reduced that by an additional $40 million dollars overall – and I think, Michael Howard Saul, is this your last week on the job?

Michael Saul: Yes it is.

Mayor: Well, your article helped us realize our mistake. So I want to thank you for being a good citizen. And we are reducing $40 million dollars off the water bills of the people of this city.

Michael Saul: I did call about that yesterday, but thank you.

[Laughter]

Mayor: Hey, all in good time.

[Laughter]

Okay.

Now, I talked about schools and obviously school overcrowding – so again, the DOE capital plan – next five years, $13.5 billion. We’re going to particularly focus on areas of the city where we have overcrowding problems. Remember we – while we’re trying to build new schools and pre-k centers, we also have to keep the schools we have working, and more than 170 of our schools are at least 100 years old, to put in perspective how big a challenge that is.

We’re also focusing on libraries. There’s been a lot of interest in this lately. We’re making a $300 million dollar investment over 10 years in our libraries. This is a much greater long-term investment than has been made in recent years. It’s not everything our libraries want, but we think it will help give them a sound basis to work from.

And we – as you saw in OneNYC – are very committed to retrofitting all our city buildings, and keeping our goal of 80 percent emission reduction by 2050. So, we have dedicated $1.8 billion to that retrofit effort, so we can achieve the retrofit of all our city buildings by 2025.

I have told you almost everything I want to tell you. Dean is going to come up for just a moment. I’m going to offer you a few words in Spanish, and then we are going to start questions.

But the goal here is to make us a city strong for the long-term, a city ready to grow, a city sustainable and resilient, and a city where there’s actually opportunity for people, and a city that can literally maintain that even if we are buffeted by bad times. That is the core idea here of all we have put into this plan.

With that, I want to welcome – now you’ve had a chance to sit down for a while, Dean – our budget director, Dean Fuleihan.

Dean Fuleihan: Thank you Mr. Mayor. I’m going to be very brief. I’m just going to focus – an overview on the financial plan, really the change from the last plan. So, we can go to the first slide. I’ll just walk through this. We’ll focus on this one slide and then I’m going to hand it back over to the mayor.

The very top shows the gaps that we walked into this executive budget with. It goes through the revenue changes, so we are recognizing the – well, the moderate growth. In our cautious forecast, there is additional revenue that we’re putting to good use here.

It’s offset, though, by the taxi medallion – a reduction and a more thoughtful, actually, plan then we inherited on how we’re going to – how we’re going to schedule the remaining taxi medallions. So, for the next fiscal year there will not – for Fiscal ’16, there are no taxi medallion sales, and instead of $500 million a year it’s between 300 and 350 range going out.

The NYCHA pilot payment that the mayor – that was actually revenue to the city, we were taxing NYCHA. So, that $33 million comes off through the entire financial plan.

The mayor raised at the very end the water and sewer rental payments. That is the reduction planned over time, which is an additional $40 million that we are recommending in this budget and will take effect – I believe, the water board acts tomorrow.

On agency expenses – so, there are the targeted expenses that the mayor identified that add up in the current year $200 and $700 million. In the next year, the cost of living adjustment for our service providers – primarily social service providers – and this also includes making sure that everyone is at – earning at least $11.50 in that sector of our economy. There – I’ll just say, it’s very technical, but there are pension changes in there, actuarial changes that occur. This actually offsets actuarial benefits that we were receiving only a few months ago, so it somewhat equals out between the two plans.

And then the additional $280 million to the Retiree Health Benefit Trust Fund – that’s what brings it up to the $2.6 billion number the mayor identified. And that’s what allows us in any one given fiscal year to make sure we an annual payment, no matter what else happens.

The citywide savings program the mayor highlighted – that we had actually worked not just within our own city agencies – HHC is there, they’re not in this number. There’s some other numbers in here in terms of fund transfers and so on that historically would be put in a savings book. And we do have a savings book for you. So, we will detail each one of the dollars behind – behind that line.

The net expense change in ’16 is $474 million, and then we do the really historic – the historic increases to our general reserve of $1 billion. So, traditionally these have been at about $350 – the maximum under the prior administration have been $400 million. These will now be $1 billion dollars of reserves. And then for the first time ever, the capital – the Capital Stabilization Reserve at $500 million. And we end up – the very bottom line – using resources from the current year to make sure that both ’15 and Fiscal Year ’16 are perfectly in balance. And then those out year gaps that we have, that the mayor cited, that are low compared to prior gaps, but nevertheless are still challenging and something we have to meet.

And with that, I’ll turn it back to you.

Mayor: All right – just a few words in Spanish and then we will take questions.

[Mayor de Blasio speaks in Spanish]

Mayor: With that, we welcome your questions.

Question: Mayor de Blasio, one thing that’s not in this budget is funding for 1,000 new police officers the City Council had asked you for, well, last year and this year. I was wondering if you could explain to us a little bit more about why that’s not in the budget, why don’t you think [inaudible]?

Mayor: I’ve had a number of conversations with the commissioner, very productive conversations about the future of the police force. I think we’re constantly looking for ways to help make this city safer. And ways to use the resources we have better. And certainly one of the things he’s particularly excited about is the impact that technology will have on making our police force stronger, and keeping everyone safer – New Yorkers in all neighborhoods, but also keeping our officers safer. So, I think some very good things are happening. I think, obviously, the commissioner is interested in any additional resources that he can get and put to good use. The council has been made its position clear. We will certainly continue our discussions with the council. And as everyone knows, in the budget process until the whole process is complete there’s any number of potential outcomes. So, we’ll continue very productive conversations with the council on police issues and some other areas that they want to explore further options on. But I think my central point is I’m very confident in what’s happening right now with the resources we have. In fact, I think the NYPD is getting better all the time. I think Commissioner Bratton’s leadership and Chief O’Neill’s leadership have been outstanding. And I think they’re making this a stronger organization. So, in terms of the priorities I’m trying to address all over this city, I’m presenting the budget that I believe is in the best interest of all New Yorkers. But of course, we’re going to have a very thorough process with the City Council, and we do understand how deeply they care about this issue.

Question: When some council members spoke to the press today, they said that some of your rationale was with officers doing fewer stops, as stop-and-frisk, they’re out on the street. I was just wondering if you could maybe elaborate.

Mayor: Of course. Look, I think this is – important to look at the history we do have. We have 16 months that tells us a lot. [inaudible] we have a record crime reduction in 2014 after we already knew 2013 was an extraordinary year – 2013 was in the previous administration. And I give Mayor Bloomberg and Commissioner Kelly a lot of credit for what they achieved in 2013. In fact, a lot of people told me as I was preparing to take office, there was no way you could beat 2013, it was such a great year. Well, in comes Commissioner Bratton and the work of his team, and the men and women of the NYPD gave us a record-setting year in 2014 in the vast majority of areas. So, they did better than the year that was supposed to be the year to end all years. Why? Well, I think great leadership, great strategies, but also a lot of time and energy was freed up even last year from the clear reduction in stops – a highpoint of 700,000 in 2011; last year, we were about 46,000 stops. That’s a huge amount of time and energy that was applied to other and I think much more important and much more fair uses. As we saw in the latter part of last year, 65 percent reduction in the number of marijuana arrests for low-level possession. That time and energy went to other work. The technology has literally started to improve as we speak. We’ve already seen, more recently, what ShotSpotter is doing right now to improve the response of our police to criminal situations. So, I think what’s happening – and the retraining I mentioned – I think retraining is starting to have an effect. All of these pieces are going to deepen. This year – in the course of this year the NYPD is going to be a lot stronger then it was because it will be better trained than it was a year or two ago; it will have better technology; and a lot more time and energy will be applied to getting guns off the streets and going after serious crime, rather than unnecessary stops or arrests for low-level marijuana possession. So, all of this is adding up and going in the right direction from my point of view. And I think that’s a good strong strategy. And the numbers back it up. The first four months of this year, the reduction across the board in – overall, I should say, reduction in the major crime index says a lot about how effective the NYPD is, and how it is getting stronger. But we will certainly have a thorough process with the council. And, you know, we’ll be very open to finding a compromise, which is what we do in the legislative process.

Question: Some council members [inaudible] it’s not necessarily that they’re concerned that crime is going up or will immediately go up [inaudible], but that it takes police, currently, too long to get to quality-of-life types of complaints like noise or somebody drunk passed out on the curb – you know, those kinds of – a bicycle accident, one council member mentioned. Is it your feeling that the police department is in fact taking too long to get there?

Mayor: I think they’re getting better at response time too because of the fact that more time and energy is being freed up. But it’s very interesting how you start your question. I think it’s accurate. Council members who represent, you know, the grassroots saying they’re actually not concerned about crime going up because they see how well the NYPD is doing, and how these changes are starting to take effect. I think the – we don’t have the perfect number to quantify how much human time and energy has been saved by the change in the stop-and-frisk policy over just four years, or the change in the marijuana arrest policy over the last year. But I guarantee you it’s an immense amount of time. And the strategic focus is going more and more to both ending serious crime, but also to improving response time to legitimate community complaints. So, I think we’re on the right track, but we will certainly continue to hone this discussion with the council.

Question: [inaudible]

Mayor: Reserve?

Question: Does the money come from revenue or does it come from bonds?

Mayor: Revenue. It’s city expense money – I think I said it a couple of times [inaudible] but I’ll try again.

[Laughter]

Mayor: I thought I really gave you a lot of verbiage. So, looking at that 15-percent level that we don’t want to go beyond, this allows us always to have a buffer. If we had a downturn – and Dean, you might want to give one of your colorful examples – if we had a downturn and our revenues are negatively affected, we still have to keep making those payments. This is a reserve that allows us to make the payments.

Anything to add?

Dean Fuleihan: Sure. In that chart that the mayor showed, historically going back really right to after the fiscal crisis, we saw very high debt ratio to the city tax revenue. If you look at periods of recession you’re going to see it goes above that 15 percent. This is to assure – we are trying to put forward a capital plan that, while meeting our commitments and our priorities can actually have a buffer where we can step in and make sure that we continue to meet that obligation.

Question: [inaudible]

Mayor: So, to give credit to the City Council, the City Council has been pushing the idea of pay-as-you-go, you know, pay-go, capital spending, and Dean can give you a better explanation than I can. But that’s a slightly different tool. We actually didn’t think in that narrow term – take the money and specifically apply it to the capital projects. We in our discussions recognized there might be another way to do things, which is take the money, hold it on the expense side, but use it as necessary to address the debt service challenge. That would allow us the freedom to take our capital spending up to a high enough level. So, it’s really a hedge in a sense. It’s a way of protecting against the circumstance where those payments would be hard to make – keeping those payments on schedule. Another piece of the equation is that, as Dean pointed out, having the ability [inaudible] of money that you can test some capital project to see if they are worthy and effective. We think that’s going to save us money in the long run. We think it’s going to help us determine that if a capital project is sound – great let’s move it, move it quickly. If it’s not sound, it comes right off the books and reduces our capital burden. So, in both senses we think this a clever – we hope a clever use of expense money to actually strengthen what we’re doing on capital. And I think the big point here, which has been dawning on me more and more over the recent years – remember I started in this sort of immediate line in the year 2002 in the City Council. I think what people are concerned about is more and more on the capital side. I don’t think that was as true ten years ago, 12 years ago. I think now with the aging infrastructure, the growth of the city etcetera that obviously, you know – the housing costs, which literally the day I walked in the door in the City Council, you know, I could not have imagined in my wildest dreams the cost of housing being where it is now in New York City. So, I think all of that has come together to actually make our capital needs even more profound. And so, we’re trying to find a way to stretch as far as we can on that front.

Question: Follow-on [inaudible], can you give us more examples of the types of savings, you know, [inaudible]? What types of cuts, programs that were eliminated – more specifics?

Dean Fuleihan: There are – there are – there are many different ones. For example, DOE reprogrammed over $40 million dollars of federal money from one category that’s being used now in struggling schools. There are specific – we’ll give you a list – actually, we’ll get the book. And we’ll actually walk through it with you. So, I’ll come back. I’m going to get the book.

Mayor: You’re going to get the book, then you’ll come back.

Question: Mr. Mayor, the City Council also proposed this bail fund as well as universal free lunches, yet again. I’m assuming they’re not in this proposal. If not, why? And are you entertaining either of those ideas?

Mayor: We’re very interested in the question of bail reform in general. And the bail fund is one of those possible tools. We need to talk it through with them and with, obviously, key law enforcement officials – more to figure out the best way to go about it. But there is a problem related to bail that is intensifying our population at Rikers, in many ways, unnecessarily. So we’re trying to figure out how to do it. The bail fund is one of the options. So that’s unresolved but we will have a productive conversation. On school lunch front – we had one year at the middle school level, per agreement with the council. The results are mixed so far, in terms of the impact it’s having, meaning the additional number of children who are taking advantage of it has not been that large so far. So we’re – we’ve agreed with the council already – we want to extend that for another year at the middle school level to get a more thorough test and to see how far we can take it.

Question: Mr. Mayor, I have a question about education spending. First, it’s about the renewal program. You mentioned the extra – the [inaudible], but for the actual renewal school program, how much of the $150 million are you investing next year [inaudible]? And the second part is, for charter school rent for private space, how much are you setting aside for that?

Mayor: The second one on the rent – Tony and Dean, tell me if you have a handy number. But the $150 million was a base-level commitment that was going to go, obviously, multiple years. So the additional money we’re adding for things like the AP classes, for the tutoring programs, etcetera – is on top of that. Do you want to do –

Dean Fuleihan: We’re doing $108 million next year – additional – in the renewal schools. Yes.

Mayor: What was the second question – was the charter school rent. Does either one of you have that or you have to get back? We need to get back on that one, okay.  On the other thing about renewal schools to remember – this is an interesting fact that we haven’t really dwelled on. Our goal is to make them no longer renewal schools, to strengthen them to the point that they’re not part of that list any longer. And then when we get to that point, of course, we’ll keep supporting them in other ways, but not with that particular set of interventions, which means that budget will change depending on how many schools are on that list at any given point. Wait, wait – we have a – going back one?

Dean Fuleihan: Yes, on the renewal schools – so the renewal schools, with the base that the mayor identified, and what we put on – what the mayor listed here is new – it will be $158 million dollars next year.

Question: [inaudible] three years?

Dean Fuleihan: Next year, in Fiscal Year ’16.

Mayor: Okay, why don’t you guys write it out, because we have the original commitment and then the new programs – we’re going to write it out so they can understand it clearly. Okay, Anna?

Question: In terms of the resurfacing and the new lane miles that you guys are adding, there’s already some concern on Staten Island that the type – the method –

Mayor: We just announced it and there’s already some concern. Come on, let’s be positive, people!

Question: – that the way you guys are resurfacing these roads is part of the problem, and so I was wondering if you guys had any plans to, kind of, look into different ways –

Mayor: My plan’s been endorsed by the Staten Island borough president. I don’t know who you’re talking to. I’m talking to the Staten Island borough president.

Question: Just a couple of Islanders have called me recently as the budget process continues – they are wondering if the city is looking into different ways to resurface roads, such as expanding the use of rubberized asphalt, so –

Mayor: I’m not going to – I’m not going to pretend to be an expert on that. I don’t know – Tony, are you an expert on rubberized asphalt?

First Deputy Mayor Tony Shorris: I will be soon.

Mayor: Okay, Tony Shorris will be soon. We’ll certainly have Polly Trottenberg talk to you about that. Yes?

Question: How are you guys going to ensure that the new lane miles will be, you know – cover all the boroughs and be equitable?

Mayor: It’s something we do all the time. I have said from the beginning, it’s a five-borough government. Every strategy we have is focused on five-borough equity. In fact, a lot of our policies have helped to compensate for years where there wasn’t such equity by making sure the outer boroughs did particularly well in some of our initiatives. So, that’s just baked into what we do.

Question: When you talk about cost savings [inaudible] NYCHA, does that mean there’s going to be any cuts in services –

Mayor: Okay, we’re going to have a plan for the revitalization of NYCHA come out in the coming days. NYCHA’s finances are in a very, very difficult state. So we’re going to have to make a series of tough decisions. Obviously, whatever we do, our first concern is protecting the tenants – the residents, and making sure their quality of life is good and that their housing is affordable and sustained. But we do have a number of economic challenges we’re going to have to face, but it’ll be appropriate to go through that with you when we have the plan.

Question: [inaudible] the NYPD for a second. You have often spoken about Commissioner Bratton as the best police commissioner in the nation. Obviously, as you know, he’s calling for an increase in the number of police officers. He said last month, “We will get additional police officers. I’m very confident of that.” What should New Yorkers make of what you’re saying today that you don’t agree him?

Mayor: I – Commissioner Bratton and I see eye to eye on strategy and on the goals for the police department and where we want to take it. I don’t know a commissioner of any agency who doesn’t want more resources. I’ve been at this work a long time – every single one wants more resources – and very validly. There’s so much that they would like to do if they had additional resources. So I don’t think there’s any contradiction. He has a vision of what he thinks he can do with the additional resources – I think’s it’s a very earnest vision. He is hopeful it comes to pass. My job is to make a series of tough decisions about how we allocate our resources. I’m presenting an executive budget. But guess what? It’s a democracy. There is a legislative branch. We’re going to have a real give and take with them in a good way and come to some kind of understanding of where we need to go – happens every year. But this is what I think is right – and I think the commissioner is speaking from his heart too, and I believe in the end, we’ll all find a way forward. 

Question: [inaudible]

Mayor: I think that is something for our internal discussions. Grace?

Question: The heads of the library systems in the city just put out a joint statement expressing disappointment over funding in the budget for libraries, saying that the additional funds in the capital budget for libraries is really just money that’s been pushed over from their annual operating costs, and that, in fact, [inaudible] –

Mayor: I’m going to – Tony or [inaudible] can decide which one they want. I don’t think that’s accurate. I know they wanted a lot of money. They came in with a huge request. And as I said, we’ve put more into their capital needs than has been done in recent memory. And we think it’s a very strong beginning, and obviously that’s also going to be a topic we work with the City Council on, but I don’t think their assessment is accurate.

Question: What they’re saying is they’re getting $10 billion dollars less than they did –

Dean Fuleihan: So, capital is completely different. This is an unusual – we have put forward $300 million where they’ve never had $300 million before. So that just is not accurate. So this is the first time the city has ever put forward that kind of capital spending. I believe what you’re talking about are the expense pieces, which traditionally happen at adoption.

Question: Mr. Mayor, you focused a lot today on the concerns [inaudible] possible [inaudible] federal and state funding and –

Mayor: No, no – no possible about it. It’s happening as we speak, but go on. It’s part of our landscape right now.

Question: I know you included a lot more money than in recent years in the reserves, but at the same time, these out-year gaps have grown quite a bit since February –  $500 and $800 million a year. Why not put any money into, you know, paying those down? And also, why not have agencies cut their budgets? I know they’ve come up with savings, but they’re also spending [inaudible].

Mayor: Well, again, the – first of all, I’m going to go to the last page of the book. The out-year gaps – $1.572 for ’17 and $1.967 for ’18 are well within the kinds of gap levels for out-years that we have been able to sustain for quite a while in the last decade or more in New York City. Then you look at Fiscal ’19 – $2.881 – obviously, that’s an area of concern – we have more work to do on that front – but Fiscal ’19 is a ways away. So we think this is, you know, a strong plan and very, very consistent with past plans that were successful. We think the reserves are crucial for maintaining what we’re doing now that we have to do. I mean, right here, we’re having a conversation about whether we should increase the police force and any number of other needs that people want to anticipate. What I’m talking about is trying to protect what we already have so we don’t lose it in a downturn. I don’t think most New Yorkers want to see services cut, or city employees laid off or attrited out. I don’t think most New Yorkers want an increase in property tax. And I’m very adamant about creating a plan where we will not have to increase property taxes and where we can protect the level of service we provide now. So, that’s why this plan is structured the way it is. And that’s why the reserves are in place. As for our savings plans, I think we’ve gotten very substantial savings by trying to figure out what works and what doesn’t, rather than – what I think is a somewhat artificial approach that’s been used over the years to just give an agency a percentage they had to hit. I think what that led to, in many cases, was unrealistic savings – meaning savings that actually didn’t materialize but were there on paper, or very destructive savings as happened with ACS. ACS saw a huge percentage of cuts – and not an agency that has a lot of political support, if you will. And over the previous administration, it was cut severely and that had a very detrimental impact. So, I don’t think the traditional PEG approach is always the right way to go. But if we come upon hard times, as I am saying will happen sooner or later, we will have to then do much more aggressive cost-cutting and it will be more like a traditional PEG program, and I hope a much better version. But you know, we know that that is in the [inaudible] at some point if we hit that crisis.

Question: [inaudible] public safety [inaudible] – why would you support that [inaudible]?

Mayor: Again, it’s choices we have to make with the resources we have. We believe – although it’s a very valid area for discussion and we’ll keep looking at it for sure, we believe that the resources we have now can provide protection to communities. We understand there’s some very challenging times we’re in. But we also know the NYPD in particular is tremendously able at addressing the challenges we face, even when they’re [inaudible]. So we feel good about our ability to protect people now. But that will be an ongoing discussion in the future if there’s other ways that we can provide help to schools in terms of security – that’s just not in this budget because we can’t find a way to appropriately do it now.

Question: [inaudible] an increase in the capital funding. Part of what they’re saying is that their operating budget is being cut, so that [inaudible] hiring more staff, more days. So if you can speak to that –

Mayor: Hold on, [inaudible] –

Question: The goals that you have for [inaudible]?

Mayor: Which one of you is going first? Okay, Dean is going first. Then Tony will decide what he thinks of it.
    
Dean Fuleihan: So, once again, the – what the money you’re talking about is – was added at adoption last year, and it’s traditionally part of a discussion that does happen at adoption. So the money has not been cut, the money is there now, and it traditionally, and has always been this way, has been a discussion at adoption. The unusual piece that the mayor has done in this budget is the $300 million first-time commitment in the executive budget so they can have a stable, long-term capital plan because that’s actually been the core of their argument – they could not plan for the future on how to do repairs. It doesn’t mean, by the way, that once again at adoption they won’t receive additional funds, which has traditionally happened.

Question: I know this is technical – it might be for Mr. Fuleihan – but can you explain what’s going on with the taxi medallions, and also the pension – I assume it’s the pension payment?

Dean Fuleihan: So the taxi medallions is simple. We – there was a very aggressive schedule that had been – that – that had been developed several years ago. This is a much more thoughtful approach to the sale of medallions. It’s less aggressive, it’s more in keeping with what’s happened in the past, so it – there is no sales anticipated in ‘16. That’s why you see the reduction in the medallions. But the assumption is that these medallions will still be sold. They’ll be done in a more thoughtful way, between 300 and 350 a year in the out-years. It’s that simple.

On the actuarial changes to the pension system, no – I can’t really – we’ll – we – I will try to get you the best explanation I can.

Mayor: You can, just not easily at a press conference.

Phil Walzak: Let’s do a couple more, maybe also a pen-and-pad briefing after this.
Mayor: Pen-and-pad briefing up there. That’s – I love how people turn around when I’m pointing at them. Assume it’s you! Feel good!

Question: Is there a particular plan or strategy for the $50 million that NYCHA will save? And will the Department of Community Development or the Department for Aging be getting more money to –

Mayor: Now wait, which – I’m sorry. Which piece are you referring to?

Question: So for both the waiver for the pilot payment and for transferring the senior community centers to other agencies, is there a specific plan or strategy for what will happen with the money saved?

Mayor: So NYCHA has consistent budget deficits. So just basic operations are not — there’s not enough revenue to cover basic operations. So what we’re trying to do is obviously take burdens off of NYCHA so they can cover their basic operating costs. That being said, we think a lot has to be done to improve the operations and save money, because we see the structural reality. So that’s what we’ll address in the upcoming plan.

Question: And also, to follow, is there any — will the Department of Youth and Community Development or the Department for Aging be getting more resources to help [inaudible]

Mayor: Yeah. No, that’s a – I – we should have said that explicitly. Yes. The money – thank you. Alicia is doing the shifted. It will be paid for through the city budget but in the city agencies, therefore not on NYCHA’s bottom line.

Question: And they’ll be getting additional resources?

Mayor: Yes, absolutely.

Question: Mr. Mayor, just wondering if you can clarify the pre-k budget. Is the city putting $114 million dollars toward that and if so, is that because the state did not put in the full $300 in, or did the cost go up?

Mayor: No, the state’s putting the full $300 in. Remember the original request — I remember my history quite well – was $340. State didn’t do it in the first year, they didn’t do it in the second year – they did $300. So that’s one piece. The regents has suggested $370, I think it was, so we think the state, had they gotten closer to the regent level, we almost would have been there. But, no — the fact is that the build-out of this plan, first of all, it’s more popular than even we knew it would be, so we’re hitting the high end of our numbers. Also the physical build-out is proving to be a challenge in the sense that we had to find a lot more space in a number of neighborhoods where there’s school overcrowding. So we didn’t have the option to go into our existing schools and find additional space. So, just added costs, but we believe very, very firmly that this program is working beautifully. We’re getting tremendous response from parents. The response in the registration period was beyond – no one in this team thought it was possible to get 68,000 kids signed up in the first round of registration in April and May. It is literally beyond our wildest dreams. And so, we know the costs are going to be higher than anticipated but absolutely worthy.

Phil Walzak: Last call, guys.

Mayor: Gloria, did you have something else?

Question: Thank you. There’s no mention of veterans in the budget. There’s been some concerns from the veterans’ community recently that you are not putting anything on – in the budget, or have not rolled out anything that specifically targets veterans’ needs, other than homelessness stuff, which is aided by a federal grant. I was wondering —

Mayor: Well, it’s not – the federal grant is only a piece – a piece of that equation, so let’s be clear. Yeah, I mean, I just want – [inaudible] could be seen two ways. I just want to say that it is a piece, just for clarity, a piece of the equation, but we have to put a lot of our own resources in as well. To be clear, the first responsibility, obviously, should belong at our federal government level, and that has not been realized. So we believe, the city of New York, that we need to do all we can within our means to reach our veterans and support them. The most profound example of that is we have committed very publicly to ending veteran homelessness by the end of this year, and a huge amount of effort is being put into that, well beyond any federal funding. So that’s one example. The mental health services that we’re talking about will reach veterans in many forms, as will a lot of the other work we’re doing, because, again, if you talk about veterans across the board, veterans are part of, you know, every community – all different income levels, etcetera. Veterans will be, you know — get affordable housing units through our affordable housing plan, will get job training through our job training plan, etcetera. And I think our central initiative is exceedingly bold and we’re very comfortable putting ourselves on the hook to achieve that goal. We’ll certainly keep talking to veterans’ organizations about other things that we can appropriately do, and General Sutton’s leading the way on that effort. But I feel very comfortable in terms of what a city should be doing. We are doing it very aggressively.

All right – wait — Dean Fuleihan, with a final word.

Dean Fuleihan: Just, just, just – just – yes, just to come back on the efficiencies. So once again in the – in the book, there are listed examples. DOT is doing more efficient lighting for $4.2 million; Department of Environmental Protection is doing methane gas recapture for $4.5. So there are examples through this. There’s insourcing as well, so we have a list of examples.

Mayor: With that, I will say we have a list of examples, and thank you for sitting through this long and fascinating presentation. Thank you, everyone.

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