August 3, 2017
Video available at: https://youtu.be/Tg-HBy4XYEU
Mayor Bill de Blasio: Thank you. Thank you very much, Mr. Chair, and thank you also in your capacity as State Budget Director for the work we’ve all been doing together on behalf of the people of the City and the State. I want to thank the members of this board, everyone for the work you do on behalf of all of us. I appreciate the energy and time you put in. I especially want to acknowledge two indispensable partners in the work we do – our State Comptroller Tom DiNapoli and our City Comptroller Scott Stringer and their staffs for all of their hard work. And a particular thanks to the private members of this board, John Levin and Lawrence Golub for what they do and the perspective they bring to the process. Thank you so much. And of course to Jeffrey Sommer, the acting executive director, thank you for years of working with New York City as we continue on a path of fiscal responsibility and effectiveness.
I want to just note at the outset. Obviously it’s been a year a lot has happened, but I’m always struck when I come to these meetings by the fact that they are so different from what happened in years past, and I’m particularly reflecting upon my experience last night. It was National Night Out against crime last night. It’s the 34th year that’s happened, and it was a very positive experience. I was in all five boroughs, and this was emblematic to me because it was an idea that started when New York City and cities around the country were in the middle of crime waves, and now more and more celebrates the successful work of our police and our communities in fighting crime. I think there’s a clear parallel here. The work of this board was started in crisis and was absolutely essential to saving New York City from the fiscal crisis and putting us back on strong footing. With every passing year there’s always work to do. There’s always challenges to guard against, but I think it’s safe to say when we gather each year we also get to acknowledge real progress and the kinds of things that all of our predecessors wished for for this city. The kind of progress and the kind of stability that was once dreamed of is happening more and more in this city.
So I want to update you on the choices we’ve been making in the last year, particularly the strategic and targeted investments we’ve made in our budget that we believe are central to helping New York City continue to grow and thrive and be economically strong and fiscally stable. And from the beginning, we’ve had a clear commitment to honest and responsible management of the city’s finances. I’ve said many times that we can’t achieve our goals related to a more equitable and inclusive city if we don’t first take care of our fiscal reality. And I know our colleagues at the City Council have shared that view, and that has allowed us to create a sound financial basis for a progressive vision of governance.
I want to update this board with some facts of the Fiscal Year 2018 Adopted Budget. In its final version is $85.24 billion. Our ten-year capital strategy is $95.85 billion. And both the Fiscal 2017 budget and Fiscal 2018 budget are balanced, and as a very positive sign about the state of our decision making here in the city, the adopted budget was the earliest achieved in a quarter-century, point out to a greater and greater consensus between the Mayor’s Office and the City Council in terms of core principles that we want to act on in our budget process.
There’s tremendous amount of partnership and an absence of rancor, and we were able to achieve an early and balanced budget.
Now, I have to say I think this is something that New Yorkers care about a lot and want to see. They want to see their leaders be careful and prudent. And I want to say that both on the executive side and the legislative side there has been a devotion to projecting revenue estimates that are careful and cautious and to increasing our reserves in everything we do. And that’s been a pattern throughout the budget processes of the last four years.
I want to thank the members of my team who have done extraordinary work taking these principles and putting them into action. Of course, our First Deputy Mayor Tony Shorris and my Budget Director Dean Fuleihan, and their teams. They have been the ones to do the hard work of taking these ideas and bringing them to life.
I want to give you, now, Mr. Chairman, a broad overview of the City of New York’s financial health. And I’m happy say it continues to be extremely strong. There’s a lot of good news when it comes to our economy overall.
Jobs in this city have grown at a historic pace. In fact, more than 340,000 new jobs were created in New York City between the beginning of 2014 and the end of 2016. So, in that three-year period, 340,000 new jobs. To give you perspective, that is more than the entire population of St. Louis, Missouri.
Our unemployment rate today stands at just 4.4 percent, close to a 40-year low. And the unemployment rate is roughly half of what it was when this administration began in January of 2014.
And very importantly we’re seeing economic growth across all five boroughs. We sought an inclusive approach to economic development and we’re seeing that come into being. Brooklyn, in fact, is leading the way with 16.7 percent private sector job growth since 2013.
Interestingly as well, and this is certainly pertinent to the dynamics that existed when this board was first founded and did so much to save this city – our economy today is so different, so much more diverse, and our economy is increasingly less reliant on Wall Street and the financial industry, which now accounts for 18.1 percent of the city's wages, down from over 25 percent before the great recession, so just about a decade ago.
Our workforce, like our economy is becoming stronger and more diverse, and this is very pertinent to the moment in history that we're living through and I think New York City provides an object lesson to those who are trying to understand the role of immigrants in our economy. Anyone who argues that immigrants have a negative impact on economic development should come to New York City and see our example. Over half of our business owners are immigrants and 45 percent of our labor force is made up of foreign born workers, up from 31 percent in 1990. We continue to be more prosperous, more unified in so many ways across our neighborhoods and certainly safer as well.
So there's ample reason to be positive about our economy but there are serious reasons for caution at the same time. And this, Mr. Chairman, was very much on our minds in the budget process. In keeping with our commitment to an honest and responsible approach to budgeting, we have reduced our revenue estimates for fiscal year 2018 by $416 million since the Financial Control Board meeting last year. We've also taken into account the deep uncertainty we face at the federal level. And I think that nicely written sentence only begins to express the dynamics we all watch in Washington, D.C. Deep uncertainty is an understatement.
We're working every day with members of the Senate and the House with our Washington office of the city of New York, with other city's offices in New York, with the business community, labor community, healthcare community. We're working with all of them to try and monitor and act on developments that occur at the White House and in The Congress. We can all agree, it's been a roller coaster and an ever changing situation. But one thing I can note is that, in particular, mayors around the country have worked together in a bi-partisan manner to try and address some of these challenges in Washington, try and influence our Senators and members of Congress to respect and understand the crucial role our city's play in our economy.
But that being said, there are huge challenges. There are proposed drastic cuts in the budget proposal that came from the White House and obviously we see a desire in the House of Representatives in particular for major, major cuts to some of the areas of funding most important to New York City and other cities. And there continue to be efforts to repeal or undermine the Affordable Care Act, despite the activity in the last days, we know that this issue remains quite live and there are many twists and turns ahead in the road. The impact on this city is extraordinary, knowing that as many as 1.6 million New Yorkers are in danger of losing their health insurance if the Affordable Care Act were repealed. And that has massive ramifications for the ability of people in this city to be healthy but also for our budget, including the budget for our public healthcare system.
In addition, there are many proposed major cuts to funding for services New Yorkers depend on and that includes cuts that are in the proposed house plan that would undercut the way that so many New Yorkers get food for their families, get affordable healthcare and get income security. This includes the SNAP program, WIC, Tanith, Medicaid and Medicare, all of them could sustain major cuts in the next few months and we have to take that into account and we’ll continue to in our budget process.
So we know that we have to be ready for any eventuality coming out of Washington and so we prepared with that in mind. Our cautious revenue and debt projections and manageable out year gaps are consistent with the current economic situation and with our ongoing commitment to setting aside unprecedented reserves and to finding additional savings. We've achieved the highest level of general reserves of any administration in city history, $1.2 billion in fiscal '18 alone and $1 billion annually in fiscal years '19 through '21, compared to the traditional level of 300 million.
Working with the City Council we established the first ever Capital Stabilization Reserve. It's now at $250 million each year over the four year financial plan. And that is in the addition to the Retiree Health Benefits Trust Fund, which is at a record high now of $4.2 billion. Of that figure $3.4 billion is the result of actions taken by our administration, working with our partners in the City Council.
It's important to note that we have contributed to the Retiree Health Benefits Trust every single year of my administration, something no other administration has done before. Our total reserves for fiscal year 2018 now stand at 5.65 billion, the highest ever achieved in our city's history. Under this administration, our city has continued to receive the highest credit ratings in our history. Obviously, those two facts are related.
Rating agencies have cited our commitment to setting aside unprecedented reserves as a big reason for our strong ratings. Now as we build record setting reserves, I've been clear it must continue to find new savings through steps like overtime control, using physical space more efficiently and procuring goods and services more effectively. We had $1 billion in savings in November, another $1.1 billion in January and $700 million of the Executive Budget across fiscal years 2017 and '18 and nearly 400 million more in adoption in June.
Our healthcare agreement with Municipal Labor Committee will result in an additional 1.3 billion in healthcare savings in fiscal '18 and will, we believe, result in better care for the people who work for New York City.
We've also implemented a partial hiring freeze for certain managerial and administrative staff. This will result in $100 million in savings without affecting the core functions of government or our priorities for helping the people of New York City.
To continue achieving savings and efficiencies, I've directed OMB to find new savings for the upcoming November Financial Plan update.
Now as we manage our resources and we keep an eye on the evolving economic landscape and certainly events in our nation's capital, we are constantly investing at the same time to make this a better and fairer city for all. I just want to talk very briefly about some of the most important investments we're making. We've invested in unquestionably our most precious resource, our children and their futures. And this year we set our city on a course to provide full time, high quality, early childhood education for every three year old in the City of New York whose family wants and needs it. We will spend $36 million in the next school year, ramping up to $177 million by the school year starting in 2020 to achieve this goal.
Now we know this is a tremendously effective investment. An MIT study found that every dollar invested in quality early education saves tax payers as much as $13 in public education, criminal justice, and welfare costs. And 3K for all is part of a larger vision for our schools called Equity and Excellence that seeks to fundamentally improve our school system. We have a lot more to do on that front to say the least but we are seeing some historic success. Graduation rates are at an all time high, drop out rates are at an all time low.
Now, another crucial question, one I hear most from New Yorkers is the question of how we address the affordability crisis, particularly the affordable housing crisis in this city. Our fiscal 2018 budget fights this crisis on two important fronts. First, we're making a wide variety of investments in affordable housing, including $1.9 billion of capital funds to set aside 10,000 affordable apartments within our housing plan for those who need them most: seniors, veterans, and low income New Yorkers. We are also continuing to make needed investments to support the 400,000 New Yorkers who live in our public housing buildings and legal assistance for every tenant facing eviction in housing court.
Another crucial front we are investing in a plan to create 100,000 good paying jobs for the city over the next decade. This includes $136 million capital investment to create a made in New York campus in Sunset Park, Brooklyn that will be home to 1500 good jobs when it opens in 2020. This is the kind of investment we believe will help to ensure our economic strength and the growing diversity of our economy going forward.
Obviously, everything we do has to be undergirded by keeping the city safe and making it safer. We can't have an effective economy, we can't have good schools, we can't do any of the things we seek to do if we don't have a safe city. And we're investing to make sure that America's safest big city is, in fact, safer than ever going forward. We're giving the police even more tools and more training to achieve that. Examples include $6.9 million to deepen our efforts to combat domestic violence and $700,000 investment to expand the use of shot spotter, the cutting edge tool that allows police to pinpoint where gunfire is taking place, which has been extraordinarily helpful in stopping violence and finding perpetrators.
Also, and this is a very sad reality, we – this city and in cities all around the country and rural areas as well, we're all confronting the opioid crisis and the plague of lethal overdoses. We've initiated a new plan, Healing NYC, a $38 million initiative to reduce opioid deaths by 35 percent over the next five years. This is a very, very tough challenge, but we believe we can make a big difference with these investments.
To conclude, I want to thank the Financial Control Board, as always. This generation and generations before for helping New York City to be strong, our administration has been guided by very clear values related to fiscal responsibility, transparency and fairness. Three and a half years into this administration we are proud to say, we have a proven record of discipline and effective fiscal and programmatic management and you can see in the strategic investments we've made, they are all focused on keeping the city safe, keeping the economy growing and making sure it is inclusive. We know the savings that we have demanded and found from our agencies are essential to this mission, as are the historic reserves we have set aside. And we know these investments ultimately change the lives of New Yorkers for the better and make this city all it should be for our people.
There's a lot more work to be done but we believe New York City is on a path to be stronger and fairer for the long term and I thank you again for all the efforts of all the members of the board that have helped us to move forward and will help us in the future to be a stronger city. Thank you so much.
Acting Chair of the State Financial Control Board and State Budget Director, Robert Mujica: Thank you, Mr. Mayor. Comptroller DiNapoli, do you have any comments on the city's financial plan?
Director Mujica: Thank you, Mr. Levin. Mr. Mayor, do you have any comments in response to those comments?
Mayor: Yes. Just a brief few responses. That last point, I want to affirm strongly. I think we're in a non-linear time in history, and I certainly think the events of the last few months are about as non-linear as it gets and that is true of, first and foremost, the dynamic in Washington, but I think you're right also to expand that out to the ever changing dynamics of the stock market and of the economy overall. We're all trying to understand, as policy makers, what changing technology, automation, etc. what is all this going to do to our workforce and what is it going to do to the demands placed on government. There's a number of issues in flux, so I think, my way of saying it would be, affirming you, we should not get too comfortable, we should constantly be questioning our assumptions and prepare to be agile in response to very quickly changing events.
I want to also affirm, we are devoted to a series of things I think respond to several of the comments. We're absolutely devoted to adding savings consistently in general. And we believe, I think everyone here would unite, everyone around the table as we've all watched government closely, the day when government is perfectly efficient and has no more savings available, someone call me that day. I don't think we'll ever get that phone call. We know it's work that'll go on for years and decades to constantly perfect this work and there's therefore the upside of that is there are always more savings and efficiencies to be achieved.
I think in terms of the healthcare dynamic, we've all known that we have to figure out long term solutions around pension costs, we all agree on that, and we think there are some big efforts that we're working with the comptrollers on and are devoted to for the long term but we also, I think, honestly would acknowledge the area we can have more impact on more quickly is healthcare costs for public employees. I think the last agreement was very affirming to me that there's, again, much more where that came from. There's a willingness from our labor partners to think creatively. They understand this is about the longer term fiscal health of the city, they understand that if they want government to be effective, we have to keep finding healthcare savings, and I think there's a surprisingly strong atmosphere of partnership compared to, sort of, what the assumptions were previously. I think everyone has become sober together about the fact that we have to do a lot more on that front, and it is available to us.
So, on the reserves, I understand your point and appreciate your point about different ways we might go about it, particularly in terms of the retiree reserve, but I'm going to argue the point where I think we all have a common ground is, our goal is to keep adding. We understand the challenge, and we don't want to look away from it. So our goal is to keep adding. I think the uncertainty point, to some extent, makes it hard to lock into a particular formula. Maybe, you know, I think a lot of us would've expected at this moment, if we had this good economic news, we could be thinking about some long term structural reforms. We did not see the curve ball of the November 8th election. So I would argue the prudent course is, we have to see the reality is in Washington, certainly through this budget cycle, through the tax reform and I agree 100 percent there's a tremendous danger around the potential ending of deductibility for state and local taxes. That's a huge x-factor in this equation. So I would argue we need at least this next year to understand what that Washington dynamic is. But rest assured, we are devoted to increasing reserves every year, and we believe that is going to be possible for the foreseeable future. Thank you. Thank you so much.
Director Mujica: All right. The meeting is adjourned. Thank you everyone.
Mayor: Thank you.