Forcing budget discipline on big spender Bill
New York Daily News
Read the original op-ed here.
Last week, Mayor de Blasio released an executive budget detailing $90.8 billion in spending in fiscal year 2019. This proposal is much like previous de Blasio budgets: Revenues are up, spending and personnel are growing, and little is being done to put the city on firmer footing for the long term.
As the City Council reviews the budget and begins its negotiations in advance of the start of the fiscal year on July 1, it should limit growth in agency spending, confine its own requests to those with the most significant impact, and push to use additional city resources, if any, to make investments with a long-term payoff.
De Blasio’s budget, the first of his second term, adds nearly $1 billion in annual agency expenses in fiscal year 2019 — without including any major citywide initiatives as important as universal prekindergarten, the mayor’s signature issue in the first term. Examples of new initiatives or increased costs include $158 million for sheltering the homeless, a $41 million cybersecurity initiative, $30 million to achieve universal literacy by third grade and $16 million for pedestrian ramps.
The budget also increases city spending by $530 million in response to state actions. The city was forced to provide $254 million for the Subway Action Plan, and it will cost $108 million to implement the first phase of Raise the Age, a major criminal justice reform required under state law. The mayor also made a policy decision to backfill $140 million in less-than-expected state school aid and to replace $30 million in lost state support for the Close to Home juvenile justice program rather than reduce these services.
As a result of all these spending increases, city-funded expenditures will grow 5.8% — more than twice the rate of inflation — between fiscal years 2018 and 2019, to $67.4 billion. And this does not yet account for any of the City Council’s spending requests, which total more than $600 million, or for new costs that may be required to comply with federal and state oversight of NYCHA.
Strong revenues, particularly from property taxes, have allowed the budget to swell by 24%, or almost $13 billion, since the mayor’s first year in office in 2014. City government has grown by more than 33,000 positions, as all agencies have been busy hiring. The mayor points to reserves as evidence of fiscal responsibility, but this budget makes no additions to reserves, which total $1.25 billion annually. Reserves at this level can be an important short-term stabilizing force in the face of economic or other risks, but they do little to improve the city’s long-term fiscal health.
While the budget process is led and shaped by the mayor, the Council has the “power of the purse” and should do three things in its hearings and in negotiations with the mayor:
First, carefully scrutinize spending proposals. The mayor characterizes spending as “investment”; sound investments have positive returns. Commissioners should justify new spending, account for the performance of existing programs and specify how they are saving on costs by improving operations.
The Citizens Budget Commission has documented that few agencies are finding efficiencies; in total, they amount to less than 0.1% of city-funded spending. More can and should be done.
Second, limit the Council’s own agenda to those items that provide the most return on investment. In recent years, the City Council has added more than $350 million to the operating budget. Adopting the Fair Fares proposal, estimated to cost $212 million, would be impactful and would benefit the constituents of all Council members.
Finally, devote any additional resources to uses that will reduce long-term fiscal burdens. The mayor and Council should make a deposit to the Retiree Health Benefits Trust Fund to help defray the city’s $90 billion obligation for the health benefits of public retirees. De Blasio and the Council have made annual deposits to the fund, which is now $4.25 billion, and this year should be no exception.
Similarly, surplus revenues should be used to purchase capital assets, such as equipment and vehicles, outright instead of incurring new debt. Debt repaid by city tax dollars is more than $76 billion next year and is expected to grow to $96 billion in just four years. That’s too high.
Merely maintaining current budget reserves is neither the beginning nor end of fiscal stewardship; spending restraint and prudent use of resources to ease long-term burdens are necessary, too.