De Blasio Offers $98.6 Billion NYC Budget Flush With Federal Aid
(Bloomberg) -- New York Mayor Bill de Blasio proposed a $98.6 billion budget for a city still reeling from economic losses brought by the pandemic lockdown but saved from imminent fiscal collapse by about $14 billion in federal aid.
The spending plan for fiscal 2022 would take effect July 1, and requires approval from a City Council that has increasingly charted an independent course from the term-limited mayor on funding the police department and other issues.
The budget represented a sharp turnaround from the bleak picture de Blasio forecast in February with a $92.3 billion preliminary budget. The city will receive $12.9 billion in stimulus and another $1.3 billion in Federal Emergency Management Agency reimbursements for Covid-19 related costs such as vaccinations, testing and medical staffing, he said. City tax revenue also exceeded expectations by $1.5 billion in the current and last fiscal years.
The change in fortune permits spending for expanded mental health and educational opportunities for students returning to school, aid to small businesses, neighborhood-based anti-violence groups and climate-change adaptability, de Blasio said. The mayor also proposed several programs focused on services to the poor, after a year in which he has emphasized the pandemic’s disproportionate impact on minorities and immigrants.
“We are meeting the moment with direct investments in education, small businesses, open space and public health, and we are building up reserves to continue our strong fiscal foundation for the future,” de Blasio said in a prepared statement. He vowed the city would “emerge from this challenge stronger, fairer, cleaner, greener and safer than ever.”
At the Citizens Budget Commission, a non-profit fiscal monitoring group, President Andrew Rein said the city should spend its windfall of federal and state aid over several years. He warned against spending on new programs the city must pay for in the future without federal aid. Agencies should look for savings, such as consolidating sanitation truck routes and union pension funds, he said.
“Federal aid has given the city a runway to sustain our governing costs, and we should not waste the opportunity,” Rein said. “We’re out of the crisis and have time to plan on ways to avoid giving the next mayor a fiscal crisis.”
De Blasio has little incentive to hold back spending on staffing, pensions and health care expenses because he’s in his last year, said Howard Cure, director of municipal bond research for Evercore Wealth Management.
“The city will recuperate from this pandemic since the talent, wealth and creativity of its citizens and companies will continue to attract the best and the brightest,” Cure said. “Having reserves in place and not being overly reliant on state and federal aid is the prudent approach.”
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