On April 26th, 2017, Mayor de Blasio released an $84.8 billion Fiscal 2018 Executive Budget. The Mayor characterized his program as making “smart targeted investments” in the face of continued fiscal uncertainty. This uncertainty includes both slower tax revenue growth and the erratic policies of the Trump Administration.
Some of the key new investments include air conditioners for every classroom, providing anti-eviction legal services, funding façade repairs at NYCHA, the start of a universal pre-K program for 3 year olds, funding for legal services for immigrants and an effort to increase the number of affordable apartments to households making less than $40,000.
In the face of this fiscal uncertainty, the changes since the Fiscal 2018 Preliminary Budget are modest with only $631 million in new City-funded needs and $165 million in other City funded adjustments in Fiscal 2018. However, the year over year growth of the budget is less modest. Between Fiscal 2017 and Fiscal 2018 the adjusted City funds spending grows at the rate of 5.2 percent, a little bit under the average growth rate during the de Blasio years. This is a bit faster than the Finance Division expects the City’s economy to grow, with nominal gross city product (GCP) growing at 4.7 percent and nominal personal income growing at 4.8 percent during Fiscal 2018. Growth of spending at this pace is fine in the short run but could be hard to sustain in the long run. Outyear budget gaps, which range from $3.6 billion to $2.3 billion are manageable but the fact that they have grown since the Fiscal 2018 Preliminary Budget is troubling.
FY 2017 and FY 2018 Projected Revenue and Spending
Revenue FY 2017 and FY 2018
Expenses FY 2017 and FY 2018
Both OMB and the Finance Division believe the national economy will continue to expand at a slow pace with a low rate of unemployment. The Finance Division believes the chance of recession is low, around 20 percent. OMB and Council Finance agree that the City economy will slow down but will continue to grow and that the City’s labor market will tighten. Real wages will grow, though OMB is more optimistic on this than the Finance Division. Tax revenue growth remains disappointing, a 2.3 percent increase in Fiscal 2017, and 3.0 percent in 2018. This is a far cry from the dynamic years of Fiscal 2011 – Fiscal 2015, when tax revenues grew at an average annual rate of 6.8 percent. Indeed, without the solid performance of the City’s property tax, Fiscal 2017 and Fiscal 2018 would be difficult years.
Fiscal 2018 Executive Financial Plan Summary Dollars in Millions
Source: OMB Fiscal 2018 Executive Financial Plan
The 2018-2027 Ten-Year Capital Strategy totals $95.8 billion (all funds), representing an increase of $6.2 billion or 6.9 percent when compared to the Preliminary Strategy. The Executive Capital Commitment Plan for Fiscal 2017 through 2021 totals $69.8 billion (City and non-City funds, excluding IFA) and reflects an increase of $4.6 billion, from the Fiscal 2018 Preliminary Capital Commitment Plan. The City Council supports and encourages the improvements to the City’s infrastructure scheduled in the Capital Commitment Plan and in the Ten-Year Strategy. However, there remains a genuine concern that the City may not be able to execute all of these projects within the planned timeframe.
Council Preliminary Budget Response
The Fiscal 2018 Executive Budget is the fourth step in the public part of the creation of the City budget. That process started with the release of the Fiscal 2018 Preliminary Budget on January 24th, City Council hearings which began on March 2nd, and the release of the City Council’s Response to the Mayor’s Fiscal 2018 Preliminary Budget on April 3rd.
The Council’s Response also called for the Administration to baseline $133 million to provide continued support for a range of vital services.
The Response included a financial plan on how to adjust the City’s budget to reflect these priorities, and a discussion of how to manage the fiscal uncertainty caused by the Trump Administration. The financial plan included program agency efficiencies as well as cost re-estimates and a revenue forecast.
These recommendations included 63 proposals totaling $431.5 million in expense and $409 million in capital across six broad areas:
Reforming the Capital Plan
Along with its budget priorities, the Council called for continued reform of the City capital plan, to increase transparency and improve oversight.
The City’s Capital Commitment plan vastly exceeds the ability of the City to execute capital projects. In many cases the level of excess appropriations is so large that the Administration can make significant mid-year changes without seeking capital modifications from the Council. The Administration has made a significant effort to rectify this situation by reducing excess appropriations by $3.2 billion in the Executive Budget. The Council is encouraged by this and looks forward to OMB’s continued monitoring of excess appropriations moving forward.
The completion of too many capital projects has become a frustratingly slow process. The Office of Management and Budget has agreed that much work is needed to begin moving capital projects at a reasonable pace and has agreed to establish a task force with Council representatives, as well as key stakeholders at capital intensive City agencies, to address the myriad issues that are delaying the City’s capital projects. In the meantime, the Council had called for a more accurate planning timeline in the Executive Capital Commitment Plan. Unfortunately, the Executive Capital Commitment Plan offers more of the same as $4.6 billion in planned commitments have been added to an already record breaking Preliminary Capital Commitment Plan. The Council looks forward to working with the Office of Management and Budget to deliver a more accurate and transparent Adopted Capital Commitment Plan, that will rectify this issue.
City Council Recommendations: Fiscal 2018 Executive Budget
Listed below are Council recommendations that were included in the Fiscal 2018 Executive Budget:
Enhance Services for Immigrant New Yorkers
The Council called for a comprehensive package of immigrant services, including baselined funding for the New York Immigrant Family Unity Project (NYIFUP), complex legal cases and the Unaccompanied Minors and Families Initiative.
The Council also called for the creation of family resource centers for immigrants, and launch of a citywide Know Your Rights campaign. The Fiscal 2018 Executive Budget partially answered these calls by adding approximately $18.1 million in the Human Resource Administration’s (HRA) budget for legal defense for immigrants and expansion of Action NYC.
Bolster the Administration for Children’s Services (ACS)
The Council called on the Administration to bolster funding for key ACS child welfare services. The Fiscal 2018 Executive Budget includes $24.1 million in new needs for ACS, which will provide training coaches to all Child Protection Supervisors as an effort to address attrition rates and strengthen management, additional resources for preventive services referral and case conferencing to expedite referrals to preventive services and transition families from preventive services who no longer are in need of the service, and increase staffing at Children’s Center to meet the need.
Department of Correction
The Council called on the administration to scuttle its plan to build a new jail on Rikers Island, to fund construction of a training academy and to move adolescents off Rikers Island. The Fiscal 2018 Executive Budget answers these calls and adds a new jail facilities project, with a budget of $1.1 billion for borough-based jails, transfers the $170 million adolescent project facility to ACS’ capital budget and adds $100 million for new training academy.
Air Condition Public Schools
The Council called upon the Administration to air condition all New York City public schools. The Fiscal 2018 Executive Budget commits $5 million in Fiscal 2018, growing to $6 million in the outyears, to provide for the installation of air conditioners in every instructional space that is currently without one by 2022. This work will begin in 2018 in 2,000 classrooms at 114 buildings. Each year the DOE plans to provide at least 2,200 classrooms with air conditioners.
Animal Care Centers
The Council called on the Administration to fund construction of new animal care centers. The Administration responded with a significant investment in animal welfare. The Executive Capital Commitment Plan includes $79.2 million for the construction and renovation of the City’s animal care centers, including $7.1 million in Fiscal 2018; $44.6 million in Fiscal 2019; and $27.5 million in Fiscal 2020. The increased capital funding will enable the City to site, build and outfit new centers, and make improvements and renovations to existing animal care centers.
Reduction of Excess Appropriations
In the Preliminary Budget Response, the Council called upon OMB to reduce excess appropriations in budget lines that had no plan to commit those dollars. These excess appropriations in some cases allowed the Administration to add new projects to the capital plan without coming to the City Council for approval. The Administration recognized this fact and has reduced excess appropriations by $3.2 billion in the Executive Capital Budget.
Establishment of a Capital Task Force
The Council has repeatedly expressed its frustration with the pace of capital projects. In an effort to increase the speed and efficiency of capital projects OMB has agreed to the Council’s request to establish an oversight task force consisting of OMB and capital intensive City agencies to eliminate unnecessary delays and establish best practices moving forward.
Listed below are Council recommendations that were not included in the Fiscal 2018 Executive Budget:
Year of the Senior
The Council called for a $60 million budget increase for core senior services for the City’s growing senior population which the Administration did not include in the Executive Budget.
Summer Youth Employment
Recognizing the critical importance of the Summer Youth Employment Program, as well as the gap between the supply of and demand for positions, the Council called upon the Administration to expand the program above the 65,000 slots funded to offer 80,000 jobs in Fiscal 2018 with an enhancement of $27.9 million above the baselined amount.
Expand Work, Learn, Grow (WLG)
The Council called on the Administration to baseline and increase the total budget for WLG to support 12,000 year-round jobs for youth. The Executive Budget does not include any funding for WLG in Fiscal 2018.
Restore SONYC Summer Programming
The Fiscal 2018 Preliminary Budget added $15 million to support a total of 22,800 summer programming slots in School’s Out NYC (SONYC), the City’s after-school program for middle school students, for one year. The Council called on the Administration to baseline and restore funding to bring the number of slots to 34,000. This would bring the program to its original Fiscal 2015 budget of $27.7 million. The Executive Budget does not include any additional funding for SONYC Summer in Fiscal 2018.
Balancing the Budget
Even with slowing non-property tax revenue growth and proposed new agency spending, the Mayor’s Executive Budget manages to keep Fiscals 2017 and 2018 balanced as required by the City’s Charter.
Source: OMB Fiscal 2018 Executive Budget
The new Financial Plan sees weakening of non-property tax revenues with $453 million and $567 million less than was expected at the Preliminary Budget for Fiscal 2017 and 2018 respectively. In addition, the Administration adds a net cost of city-funded agency spending of $235 million Fiscal 2017 and $631 million in Fiscal 2018. This is in addition to adjustments of current agency spending that offset by a net $50 million in Fiscal 2017, but adds $165 million Fiscal 2018. Altogether, these actions create budget gaps in Fiscals 2017 and 2018 of $638 million and $1,363 million, respectively.
These gaps are offset by the citywide savings program (discussed later in this report), a reduction in the current year’s property tax reserve that typically occurs at this point, recognition of new audit revenue, and several one-time actions.
One-time Actions to Close Budget Gaps
- A miscellaneous revenue increase which is largely driven by two one-off actions $30 million from the sale of the Brooklyn Heights Library Branch site as part of its redevelopment
- $80 million in Dept. of Education bank accounts that are recognized in the City’s budget for the first time (and therefore show up as revenues).
- A pension cost adjustment by the actuary, resulting in a reduction of pension costs by $18 million in Fiscal 2017 and $247 million in Fiscal 2018.
- A further drawdown of a reserve fund to cover any disallowance of State or federal categorical grants. The Preliminary Budget had already drawn down $200 million, and the Executive Budget draws down a further $413 million, leaving around $500 million in that account.
All together these actions create new resources of $1.3 billion and $690 million in Fiscal 2017 and 2018 respectively.
This increase in Fiscal 2017 resources more than covers the new $638 million gap, and so the remaining $673 million is rolled into Fiscal 2018, helping to balance that year. This roll is achieved by prepaying $400 million in Fiscal 2018 payments to the Retiree’s Health Benefit Trust and $273 million in Fiscal 2018 debt service payments.
The City’s $86.7 billion Fiscal 2018 Executive Budget is $4.6 billion greater than the $82.1 billion Fiscal 2017 Adopted Budget. City funds (City tax and non-tax revenues) total $61.1 billion, up $1.8 billion from the $59.3 billion in the Fiscal 2017 Adopted Budget.
The Plan increases projected spending by adding $244 million for new needs in Fiscal 2017 and $737.2 million in new needs for Fiscal 2018. Other adjustments add $420.5 billion in Fiscal 2017
and save $516.3 million in Fiscal 2018. Other adjustments include savings, as well as spending re-estimates, unit of appropriation realignments, and technical changes.
Some of the major adjustments include:
- $222.7 million increase to the Police Department’s budget for collectively bargained wage increase
- $44 million loss of State aid for foster care that is replaced with City funding in the Administration for Children’s Services budget
- Overall reduction of $129.9 million in State Aid in the Department of Education’s Fiscal 2018 Budget.
- $246.9 million reduction in the pension budget
The new needs in the Fiscal 2018 Executive Budget increase citywide headcount by 1,244 full time positions. The combined total value of new needs included in the November 2016 Financial Plan, the Preliminary 2017 Financial Plan and the Executive 2017 Financial Plan were $1.3 billion for Fiscal 2018.
The headcount increase accompanying these new needs was 2,208 full-time positions. Last year, $1.95 million in new needs funding was added to the budget along with an increase of 6,963 full-time positions. The table below shows the total value of new needs added to each agency’s budget for Fiscal 2017 and 2018.
Spending Changes FY 2018 Executive Budget
Homeless Shelter Spending
The Fiscal 2018 Executive Budget increases the Department
of Homeless Services (DHS) shelter budget by $54 million in Fiscal 2017, and $120.9 million in Fiscal 2018.
Since the Adoption of the Fiscal 2017 Budget, $259.7 million has been added for Fiscal 2017 and $255.6 for Fiscal 2018. The shelter budget now totals $1.3 billion in Fiscal 2018, or approximately or 83 percent of DHS’ overall budget of $1.6 billion.
The Plan adds another $111 million in Fiscal 2018, increasing to $146 million by 2020, to both increase the rates DHS pays to shelter providers and to convert of non contracted facilities to contract. This is expected to rationalize reimbursement rates across programs and providers and thereby improve the quality of shelters and services, as well as increase accountability.
Education New Needs
The Fiscal 2018 Executive Budget for the Department of Education (DOE) adds a total of $103.5 million ($92.3 million in City funding) for new needs in Fiscal 2018.
3-K for All Beginning in the Fall of 2017, New York City will offer free preschool to
three year olds in School Districts 7 (South Bronx) and 23 (Brownsville Brooklyn). The total cost in Fiscal 2018 for this program is $16.5 million in City funds; it grows to $156.8 million by 2021 and operating in eight districts.
EarlyLearn Transfer- Quality Enhancements The Administration plans to transfer ACS’ early childhood care and education program, Early Learn to DOE. The budget transfers $510.9 million beginning in Fiscal 2019: $240.9 million in City funds, $10.4 million in State funds, and $259.6 million in federal funds to DOE. In addition, the Fiscal 2018 Executive Budget includes $20.1 million for DOE to provide operational support and professional development to Early Learn providers and prepare for the program transfer.
Pre-K for All The Fiscal 2018 Executive Budget adds $11.2 million in City funds in Fiscal 2018 and in the outyears, and $9.2 million in federal funds in Fiscal 2018 only for Pre-K.
Students in Shelters This program was first funded in the Fiscal 2017 Executive Plan at $10.3 million and continues in the Fiscal 2018 plan. However, once again this is for one year only and not baselined. This is especially concerning since there is a
headcount increase associated with this. This funding supports several programs aimed at supporting schools with the highest concentrations of students in shelters, including placing social workers in elementary schools, literacy coaches in shelters to prove support after school and health and mental health services in schools.
Air Conditioners The Fiscal 2018 Executive Plan commits $5 million in Fiscal 2018, growing to $6 million in the outyears, to provide for the installation of air conditioners in all classrooms and auditoriums used as classrooms by 2022. This work will begin in 2018 in 2,000 classrooms at 114 buildings. Each year the DOE plans to provide at least 2,200 classrooms with air conditioners.
Anti-Eviction Legal Services
The Executive Plan adds $15.1 million in Fiscal 2018, increasing to $71 million in Fiscal 2021 to the Human Resources Administration (HRA) to provide legal representation or advice to tenants facing eviction in Housing Court, making the City of New York the first city in the United States to do so.
Legal Services for Immigrants
Beginning in 2018, baselined funding of $18.1 million in HRA will be provided for legal counsel for immigrants. This funding will cover representation for New Yorkers facing deportation and other pressing immigration challenges, including those who are in detention, unaccompanied children and asylum seekers.
Campaign Matching Funds
The Campaign Finance Board’s (CFB) Fiscal 2018 Executive Budget adds $43 million to provide matching funds for participating candidates for the 2017 election cycle. In 2013, the last mayoral election cycle, $38.3 million in public matching funds were issued to candidates for city office.
The 2018 Executive Budget provides additional $42.5 million for the 2017
election cycle which includes the Mayoral election and many city Council races. Because the
Board is budgeted on a year-to-year basis, it is common for anticipated budget shortfalls to
be addressed in the Executive Budget.
HealingNYC – Combating the Opioid Epidemic
The Fiscal 2018 Executive Budget includes $38 million in baselined funding for the City’s comprehensive plan to reduce opioid overdose deaths by 35 percent over the next five years. Of the total, $18 million is allocated to the NYPD, $9.85 million to H+H; $8.2 million to DOHMH; and $1.6 million to OCME.
Jails to Jobs
The Fiscal 2018 Executive Budget includes baselined funding of $10 million for the Administration’s recently announced jails to jobs initiative. The program will provide every person in the Department of Correction’s custody re-entry services to help connect them with jobs and opportunities outside jail, as well as vocational, educational, and therapeutic programming.
The Executive Plan provides $12.8 million over the next three fiscal years for SBS to prepare 3,000 workers to take on environmentally friendly jobs in construction, building operation and solar installation. Funding for this initiative totals $2.8 million in Fiscal 2018, $4.6 million in Fiscal 2019 and $5.4 million in Fiscal 2020.
SYEP Minimum Wage Increase
The Fiscal 2018 Executive Budget includes $15.6 million to support minimum wage increases of $2 per hour for 60,000 participants in the Summer Youth Employment Program (SYEP), reflecting the minimum wage increase for workers in New York City from $9 per hour to $11 per hour on December 31, 2016. While these funds have only been added for one year, it is anticipated that the Administration will add funds for the program’s outyears after the release of its next request for proposals.
The Fiscal 2018 Executive Budget includes $10.7 million to add 3,600 program slots to School’s Out NYC (SONYC), the City’s afterschool program for middle school students. New slots are expected to be available by Fall 2017 and will support programming during the school year.
Private School Security Initiative
The Executive Plan includes $19.8 million to provide security guards for an estimated 299 non-public schools. Funding is provided for Fiscal 2018 only. This initiative is the result of Local Law 2 of 2015 passed by the Council in December of 2016.
School Bus Program
The Executive Plan includes $31.5 million in Fiscal 2017 for the School Bus Grant Program. The program supports the employment of bus workers who were impacted by changes in DOE’s contracts for school bus transportation. The funding will be used to support the worker salaries. The new funding for Fiscal 2017 ($31.5 million) is in addition to the $1.6 million already budgeted for Fiscal 2017 – bringing the program’s total budget for Fiscal 2017 to over $33 million.
FDNY Technology Upgrades
In the Executive Plan, the Fire Department receives additional funding of $20 million in fiscal 2018 for technology upgrades and equipment. The Department’s 2018 Executive Budget includes $3.4 million for upgrades to the computer aided dispatch system, $7.9 million for replacement radios, and $4.1 million for a replacement electronic Patient Care Report system.
Additional EMS Tours
The Executive Plan adds nine replacement ambulance tours previously run by Montefiore Medical Center. The additional tours are projected to cost $2.2 million in Fiscal 2018, increasing to $2.4 million by 2020 and would require staffing of 38 full-time positions.
New Needs by Agency FY 2017 and FY 2018
REMAINDER OF REPORT