An analysis of the de Blasio Administration’s proposed $2.3 billion in cuts to NYC’s capital budget shows more economic harm than relief, with the loss of thousands of jobs, affordable housing units, and infrastructure improvements
NEW YORK — New analysis from Councilmembers Brad Lander and Vanessa Gibson, in partnership with the New York Housing Conference, shows that proposed cuts to New York City’s capital investment program would cause more economic harm than relief, saving almost no money in the near term, while costing New York City more than 20,000 units of affordable housing and as many as 15,000 jobs, just as the City begins to face the economic crisis produced by the COVID-19 pandemic.
A white paper released today by Councilmembers Lander and Gibson argues that the de Blasio administration’s proposed $2.3 billion in cuts to the four-year capital spending plan, including cuts to his signature affordable housing program, economic development projects, and essential infrastructure repairs, offer only de minimis budget relief, at the expense of housing, jobs and economic stimulus that will slow the city’s recovery. The impact of these cuts will be borne disproportionately by people-of-color, as hundreds of millions of dollars of opportunities for M/WBEs, construction jobs, and affordable housing units are eliminated.
The councilmembers were joined in a press conference by the New York Housing Conference and other housing advocates who released a letter today signed by over 160 organizations and 13 elected officials urging the Mayor to reverse cuts to the affordable housing budget. As more and more tenants face June 1st without the ability to pay their rent and the city’s affordable housing crisis grows, advocates say this is not the time to delay financing for the creation and preservation of over 20,000 units of affordable housing. A recording of the press conference is available here.
“Cutting the capital budget brings no real fiscal relief, but it does very real damage to our city’s economic and social recovery,” said Councilmember Brad Lander, deputy leader for policy. “Long-term capital investments in affordable housing, infrastructure, and economic development are one of the City’s few counter-cyclical strategies to create jobs and stimulate the economy in the coming months, and to strengthen our city for the long term. Eliminating affordable housing means more New Yorkers facing eviction and homelessness. Losing jobs means more New Yorkers unemployed. Delaying infrastructure repairs means higher costs in the future.”
“The city is experiencing an unprecedented budget shortfall due to the COVID-19 pandemic,” said Council Member Vanessa L. Gibson, chair of the subcommittee on the capital budget. “We understand that deep, painful cuts must be made to ensure the city continues to provide services, but cuts to the capital budget will not bring in additional savings. Through the capital budget, jobs are created and contracts are awarded to firms to invest in our infrastructure. Cutting or delaying capital projects further exacerbates job losses in New York City , especially for New Yorkers of color. At a time in which our community is hurting, we cannot attempt to balance the budget on their backs.”
Mayor de Blasio’s Executive Budget proposes to reduce the City’s Capital Commitment Plan for Fiscal Years 2020-2024 by $2.3 billion, from $85.2 billion (per the Preliminary Budget issued in January) to $83.2 billion (per the Executive Budget issued in April). The largest cuts are to the NYC Economic Development Corporation ($1.262 billion for job creation and neighborhood development projects), NYC Department of Transportation ($480 million for bridge and road repairs), and NYC Department of Correction ($472 million for borough-based jails construction). The NYC Department of Housing Preservation and Development will see a cut of over $1 billion in FY20 and FY21, more than 40% of its capital program for affordable housing.
Lander and Gibson’s analysis concludes that these cuts will not help the City address the estimated loss of $9 billion in revenue over FY20 and FY21, will not help the City balance its operating budget, and will not strengthen the City’s fiscal position. Capital projects take several years to complete and new debt is issued only as those projects proceed. So the proposed cuts to the capital budget will have no impact on the revenue gap the City is facing in FY20 and FY21. The savings from the proposed cuts to the capital budget will not be achieved until approximately 2027. Even then, they will likely yield less than $100 million in annual debt service savings (just 1% of the projected revenue shortfall, and 0.1% of the City’s total budget).
For a future savings of just 0.1% of the city’s budget, that would not even be realized until FY27, New York City would lose:
- 5,000 new and 15,000 preserved affordable and supportive housing units,
- 9,200 construction jobs and 14,500 fewer jobs overall,
- Over $800 million for bridge maintenance, road resurfacing, and underwater pier maintenance that will cost more in the future if repairs are delayed,
- Hundreds of millions in lost contracts for minority and women-owned businesses (M/WBEs).
Cuts to the capital budget are not necessary to improve New York City’s fiscal position. As the brief outlines, New York City’s current debt service levels are well below both the constitutional ceiling and recommendations from economists. As a result, New York City’s bonds continue to be well received by the markets, and all of its issuing authorities have maintained AA ratings or better. Earlier this month, the Transitional Finance Authority sold over $1 billion in new bonds, with yields on 20-year bonds below 3%
A broad coalition of housing advocates and developers came together to oppose the cuts to affordable housing in the proposed Department of Housing Preservation and Development budget. Their letter, signed by over 150 organizations and 10 elected officials, urges the Mayor to spare the affordable housing budget from cuts, arguing that housing is critical for public health and an important tool to jumpstart jobs, spending and the local economy.
“Affordable housing intersects with public health, with job creation, and with the long-term needs of our shared communities,” said Council Member Robert E. Cornegy, Jr. “These counterproductive capital budget cuts would set all those aims back. That is thousands of housing units, thousands of jobs, hundreds of contracts with MWBEs, and millions more in maintenance costs. All set back for an attempt at minimal savings to the budget. That is why I stand with colleagues and advocates in opposition to these unwise and unwarranted capital budget cut proposals. We must protect affordable housing and other critical investments through this crisis.”
“The New York Housing Conference opposes these cuts. Together with more than 150 housing and community organizations, religious organizations and homeless advocates, we call on Mayor de Blasio to fully fund affordable housing production. The Mayor’s plan to cut $1 billion from the housing budget, will result in the loss of 21,000 units of desperately needed affordable housing, which is needed now more than ever. It is needed to allow people to socially distance during a health crisis and to avoid homelessness during a major recession,” said Rachel Fee, Executive Director, New York Housing Conference.
“Affordable housing development paves the path toward the economic recovery that our city desperately needs,” said Jolie Milstein, president and CEO of the New York State Association for Affordable Housing. “Now is not the time to cut funding that will create jobs, spur spending in neighborhoods and, most importantly, bring safe and secure homes to vulnerable New Yorkers. We urge the restoration of this vital capital funding.”
“Housing is healthcare. These cuts would represent a huge missed opportunity to get serious about our tale of two cities. Cutting the housing budget at this critical juncture in our city is ill-conceived and short-sighted,” said Jessica Katz, Executive Director, Citizens Housing and Planning Council.
“This week — and these last few months — have starkly shown us the face of systemic racism in our city and our society: in the murder of George Floyd; in the police reactions to protests and in the hugely disproportionate impact of COVID-19 on people of color and poor neighborhoods. But it has long been a point of fact in homelessness – people of color are disproportionately homeless and disproportionately eligible for the programs that address their homelessness: affordable and supportive housing. Now is not the time to cut funding for programs that begin to address that disparity. It would be adding an intolerable insult on top of incalculable injury,” said Laura Mascuch, Executive Director, Supportive Housing Network of New York.