Good evening and thank you for the opportunity to participate.

I’m Andrew Rein, President of the Citizens Budget Commission.

We look forward to being a resource to the Commission by providing our recommendations and feedback on issues that others and you may raise.

CBC is pleased to provide the following Recommendations and Options. I will briefly review, and we have provided a detailed memo as well. Given the CRC’s timeframe, these are preliminary and will be refined in sufficient time to assist the CRC in completing its work.

Our Preliminary Recommendations focus on three areas to improve the Charter: Fiscal Integrity and Stability, Management Quality and Efficiency, and Resident Feedback.

First, to improve the City’s Fiscal Integrity and Stability, we recommend five Charter revisions.

Number 1: Create Rainy Day Fund Deposit, Withdrawal, and Balance Rules

Currently, Rainy Day Fund deposits are not mandated, making it unlikely the City will make sufficient deposits in good times. Furthermore, the Fund could be used even when there is no rain.

At minimum, the Charter should require: mandatory deposits; withdrawals limited to a recession or severe emergency; and a target size. CBC currently is developing specific proposals that are likely to include a) the economic conditions under which to require mandatory deposits, b) guidance on mandatory deposit size, and c) how to define a recession and severe emergency.  

Number 2: Create the Retiree Health Benefits Trust in the Charter and Establish Rules for Deposits and Use

The RHBT now is only established in law and has been inappropriately used as a Rainy Day Fund.

The Charter should establish the RHBT to ensure it is available to accumulate resources to pay for the City’s long-term liability for retiree benefits. The Charter also should require annual deposits sufficient to pay the current year cost of retiree benefits plus some additional deposit, so the City’s massive long-term liability starts to get funded. The Charter also should not allow the RHBT to be used as a de-facto rainy day fund, since we now have a true one.

Number 3: Strengthen Requirements for Legislative Fiscal Impact Statements

Legislation has often been introduced and sometimes passed that has massive and potentially destabilizing fiscal impacts. Improving the Charter’s Fiscal Impact Statement requirements to add sunshine can increase the likelihood fiscal needs are considered when passing legislation.

The Charter should require impact statements be published earlier, so the Council and the public have time to consider them. To increase the likelihood that long-run affordability is better promoted, CBC is developing two possible approaches. One is to require the statement to identify a preferred way to pay for the proposal—such as offsetting savings or local revenues, though without requiring the “pay-for” be enacted. The other is whether and how to limit the City’s obligation to implement a newly enacted policy that has major budget implications, if it has not been incorporated into the budget; however, such a requirement only should be designed so that it does not remove appropriate authority from the legislative branch.

Number 4: Improve the Accuracy of Financial Plan Estimates

The Charter’s requirement that revenue and expenditure estimates be reasonable and appropriate is good, but should be bolstered. Underbudgeting has increased to unprecedented levels, distorting the budget picture and fiscal debate.

CBC’s additional research will refine three possible approaches: 1) to require the City to provide details of its estimates when the City or State Comptrollers identify estimates that vary significantly from the Executive’s financial plan; 2) to require Comptroller certification; and 3) to require explanations of significant year-to-year variances—such as when dollars fall off a cliff but the program is assumed to continue.

Number 5: Cap Debt Service at 15 Percent of Tax Revenues to Help Ensure that Long-Term Debt Is Affordable

The second improvement area is Management Quality and Efficiency.

Performance management requires both robust data, and a management review and accountability process. To complement the Mayor's Management Report, the Charter should set forth a framework—its management, planning, scope, periodicity, and reporting—for a comprehensive performance management process.

The third improvement area is Resident Feedback.

The Charter should require the City to conduct and publish a statistically valid resident feedback survey at least every five years, with results at the Community Board level and by key demographics. To respond to needs and improve management, the City should receive feedback about the quality of services and the quality of life straight from New Yorkers, the customers of City government.

I’m happy to answer any questions, and thank you again for the opportunity to be here today.