The pandemic has thrown the City into an economic crisis. Another idea now under consideration: offering early retirement packages to senior employees who make the most money.

David Friedfel with the fiscal watchdog group Citizens Budget Commission agrees. He said in the rest of the state, the top income tax rate is 8.82% for those earning over $2 million a year. But the city imposes its own income tax as well.

“So when those two are added together, the top rates on people living in New York City is 12.7%,” said Friedfel, who added it’s the second-highest rate in the country, after California.

California’s top tax rate is 13.3% for those making over $1,181,484 a year.

Friedfel said an existing income tax surcharge on New York’s wealthiest makes it difficult to further raise taxes on the rich. That surcharge, enacted in the Great Recession, was supposed to be temporary but has been extended until 2024. If that date does not change, it will have been in effect for nearly two decades by then.

A Citizens Budget Commission study examined the long-held claim by Cuomo and other opponents of increasing taxes on the rich that the wealthy will simply leave New York.

The commission looked at the number of millionaires in New York between 2010 and 2017, a time when the state and the nation were in an economic recovery and the tax surcharge on the wealthy was in effect. It found that over those seven years, the number of millionaires in the nation grew overall but fell in New York.

“New York’s share of millionaires actually decreased by 15%,” Friedfel said. “From 13% of U.S millionaires down to 11%.”

The watchdog Citizens Budget Commission last year recommended counter strategies to school crowding that could save $2.4 billion in the capital budget. They included rezoning districts, repurposing seats and enforcing high school enrollment caps.

“We keep building more schools and we’re still in the same crowded state that we’ve been for 20 years,” CBC President Andrew Rein said on a recent Volcker Alliance webcast. “Yes, we’re in a COVID era and space is a little different, but just generally, I think it provides the example of [alternatives]."

That’s because the state’s deficit is projected to swell to a whopping $17 billion next year.

“Next year’s (budget deficit) is a much bigger problem,” David Friedfel, director of state studies for the non-profit Citizens Budget Commission, told Spectrum News political anchor Susan Arbetter in a recent interview. “That’s another reason why the state needs to take action now. The more you do now, for this year, it makes next year’s gap easier to close.”

"This is no time for empty gestures," wrote City Comptroller Scott Stringer, who is running to succeed Mr. de Blasio next year. "As the Mayor well knows, cutting 1/100th of a percent of the City budget is meaningless in the context of a $4.2-billion budget deficit. Furloughing City workers with little payoff instead of scrubbing the budget for real waste and inefficiency is emblematic of the Mayor's approach to budgeting: a lazy substitute for real work."

Mr. de Blasio's call for increasing city borrowing authorization has already run resistance.

Andrew Rein, president of the Citizens Budget Commission, a pro-business think tank, wrote in a Sept. 15 Daily News op-ed that the Mayor's layoff threat presented a "false choice."

Sean Campion, senior research associate at nonprofit watchdog Citizens Budget Commission, recently authored a report that found that New York’s housing stock growth has not kept pace with job creation, exacerbating the housing crisis. Policy decisions over the years have created uneven levels of allowable density, massive areas with low-density zoning, hard-to-develop vacant lots, and a scarcity of as-of-right development sites. Stringer’s plan seeks to correct some of those issues, but could run up against hurdles, Campion said in an interview.

“[Stringer] called for both more capital and targeting capital better at deep levels of affordability. There's obviously less of that to go around,” he said, pointing to the city’s budget crunch. Even if a Stringer administration kept funding flat, it would mean fewer units get built at deeper affordability. “That trade off is still there. But obviously in a more constrained environment, that's more difficult to do.”

Operational funding will be the bigger challenge, Campion noted, as the city’s revenues have nosedived with big budget gaps expected next year. Stringer has proposed raising those funds by replacing the “regressive and inequitable” mortgage recording tax with a “more progressive” Real Property Transfer Tax, changes that would together raise about $400 million in revenue each year. Those tax amendments, along with 421-a’s expiration, would require approval from the state Legislature.

“Given the budget shortfall plus the declines in just the number of real estate transfers in general, particularly on the commercial side, that could put a dent in that in the short-term,” Campion said.

Though CBC has not taken a position on Stringer’s universal affordable housing proposal, Campion did address the idea to do away with 421-a and provide subsidies on a discretionary basis. “Making it discretionary would probably depress housing production,” he said. “There are a lot of faults [with 421-a]. It can be better targeted, it’s expensive. But because it’s as-of-right, developers know what the program is, and they know what they're getting into when they're buying land, running projects.”


“One of the benefits of development in New York City in general is that you can build things as-of-right without discretionary approvals, but we still need 421-a to make the economics work because the tax on multi-family development is so high...Making the tax incentives discretionary effectively makes all development discretionary,” he added.

Despite the ruling, the coalition isn’t giving up. It will now petition on the basis of its non-constitutional claims, said John Gallagher, a spokesperson for the reform group, which includes prominent developers RXR Realty and the Durst Organization, as well as the NAACP and the Citizens Budget Commission.

The shortfalls are expected to become even more severe in the years to come, said David Friedfel, director of state studies at the Citizens Budget Commission. If an enforcement program can generate its own funding through fines, he said, "that is the best chance of something like that being funded."

But, he said, "budgets are all about priorities, so if it is such a priority that state legislators are willing to pull money from somewhere else, then it’s possible, but it’s a harder lift this year than most."

Andrew Rein, the president of the Citizens Budget Commission, argued that six months into this crisis, the mayor should have already produced an efficiency plan and work force reduction plan based on attrition, and that labor and management should have already come together to find significant savings.

“It would be great if this helps dislodge that inertia,” Mr. Rein said. “It’s hard to say if it will.”

Originally, Mr. de Blasio warned that layoffs would start in October, but at the end of August, he backed away from that timeline. He has yet to institute a new deadline by which the unions will have to deliver savings and avert layoffs.

With that threat in mind, the New York League of Conservation Voters and the Citizens Budget Commission have released a new report, exclusively obtained in advance by City & State, with recommendations on how New York can begin hitting its ambitious climate goals through fiscal policies, including repealing or amending certain tax exemptions for fossil fuel purchase and use, and encouraging the use of clean energy sources.

The report argues that these measures would increase gasoline costs, leading to a reduction in its use, and they would increase state tax revenue. “Elected officials should always be stewards of the public dollar, but it's even more important when the state's finances are such that they're talking about making 20% cuts to many types of local aid,” David Friedfel, director of state studies at the CBC, said of the potential revenue such changes could help raise during the current financial crisis.

Another major aspect of the report focuses on local aid reimbursement rates, in particular for school building and transportation aid. Currently, the state spends over $5 billion every year partially reimbursing schools for costs related to building improvements and expansions, and transportation expenses such as buying vehicles and fuel. The report suggests restructuring reimbursement rates to incentivize investments in renewable energy sources and zero-emission vehicles. For example, the state could offer a higher rate of reimbursement if a school or district purchases electric buses, or outfits new buildings with renewable energy heating systems.

Friedfel said that some of these issues, in particular the tax exemptions, can “fly under the radar” because once they are passed, they are generally in place until they are actively repealed. This means that outdated tax exemptions or structures of incentive programs may remain in place because they are not thought about every year in the way that direct spending is. Tighe said that’s exactly why they published the report: to bring attention to these actions the state could be taking. “At the end of the day, we're going to need a lot of different policies in order to accomplish these very ambitious goals and requirements that we've set forth,” Tighe said. “Not encouraging the use of fossil fuels seems like low-hanging fruit.”

The Citizens Budget Commission and the city comptroller have proposed numerous ideas for trimming the budget that they argue should be considered before layoffs or borrowing, both of which are typically considered last resorts.

The commission suggested shrinking the workforce through attrition — around 23,000 workers already leave the administration in a typical year — and changing union work rules or requiring unions to pay health care premiums. The group argues that savings that would shrink spending now and in the years ahead, which are already shaping up to be more dire than this budget cycle.

How does the city determine assessed value? To calculate it, DOF looks at the market value of a property and multiplies that by a percentage: 6 percent for Class 1 properties, and 45 percent for Class 2 ones.

“So the assessed value is much smaller than the market value,” says Ana Champeny, the director of city studies for the Citizens Budget Commission. Because the assessed value is a percentage of the market value, it will always be a lower number.