Andrew Rein, president of the watchdog Citizens Budget Commission, calls borrowing versus layoffs a “false choice.”

“Instead, the mayor should use the tools at his disposal, including greater efficiency, cost-cutting, and spending restraint at agencies; workforce reduction through attrition; and collaborating with labor unions on reasonable solutions,” Rein said.
The $88.2 billion fiscal 2021 city budget adopted on July 1 committed $1 billion to recurring savings from negotiations with labor unions. “However, to date apparently no savings have been agreed upon,” Rein said.

CBC cited 18 ways the city and labor unions can meet the target and avoid layoffs in a report by director of city studies Ana Champeny and vice president Maria Doulis. They include an overhaul of health insurance benefits and improving productivity through changes to work rules codified.

“Savings from fully implementing these options far exceeds $1 billion,” Rein said. “Additional savings also should come from a much more assertive hiring freeze, which will allow attrition to reduce the workforce rather than layoffs.”

DiNapoli said the governments’ employer contribution for most workers in the state pension system will rise to 16.2% of their payroll, from 14.6%. For the Police and Fire Retirement System pension, the government cost will rise to 28.3% of payroll, from 24.4%. The higher costs will be for the 2021-22 fiscal year and won't have to be collected until Feb. 1, 2022. DiNapoli in 2012 instituted a two-year forecast to give governments more time to budget for increases.

“Although expected given recent market volatility, this is bad news for state and local taxpayers,” said David Friedfel of the independent Citizens Budget Commission. “The increase in contribution rates will increase state costs above current projections for next year, making the projected $17 billion deficit worse.”

But Maria Doulis, vice president of strategy, operations and communications at the Citizens Budget Commission, said the mayor created a false dichotomy and that other options exist besides layoffs and borrowing, both of which she believes should be avoided. She argued that borrowing would simply push the problem down the road and saddle future generations with debt. Doulis said that now that the unions have been called back to the negotiating table, there is still more they can offer that would avoid major layoffs. “In every fiscal crisis since the 1970s, the labor unions have come to the table to negotiate,” Doulis said. “The labor unions have understood they are key stakeholders and they come to the table with some concessions.”

Doulis said that health care costs is the major area to find savings, and that the city could ask union members and perhaps retirees as well to pay a portion of their health care premiums. She pointed out that the city has already been working for years with the unions through their umbrella group, the Municipal Labor Council, to find health care savings. That council is also handling the current negotiations to find additional savings. “Spreading the cost out throughout the entire workforce is obviously preferable to laying off 22,000 workers and their families,” Doulis said.

David Friedfel, the director of state studies with the Citizens Budget Commission, agreed the federal government should fund U.S. states and localities, but that the state should reduce capital spending to minimize impact on cuts to essential services.

“That could be a large part in closing the budget gap,” Friedfel said Tuesday.

Friedfel reviewed the Citizens Budget Commission’s state budget recommendations the nonpartisan, nonprofit organization released in May. The commission discouraged against broad 20 percent cuts to spending areas such as education, as cuts to the state’s 713 school districts should be targeted to the largest and wealthiest districts.

“If you slash all payments in an equal percentage, you end up hurting the highest-need school districts the most,” Friedfel said. “It’s really an unfair way to do it. They would have been much better to target those cuts to those districts that can absorb them best.”
New York’s top 1 percent of wage earners pay about 40 percent of the state’s personal income tax, or about $20 billion, Friedfel said. If lawmakers increased taxes on the wealthiest New Yorkers this year, tax filing deadlines would prevent the state from receiving full annual revenue from the change for about two years.

“It would require significant sacrifice in order to close this year’s gap,” Friedfel said, adding the state forecasts an $8 billion-plus budget gap this year, and more than a $17 billion shortfall next year.

New York has the nation’s second-highest combined tax rate at 12.7 percent. California boasts the nation’s combined highest at 13.3 percent. Raising the state’s taxes further could drive the wealthiest New Yorkers across state lines, Friedfel said.

ith multibillion budget gaps in the offing, Mayor Bill de Blasio and labor groups have done little to search for actual savings in their contracts, preferring instead to lay off the city’s lowest-ranked workers or seek costly options such as borrowing authority from Albany and inducing early retirement, a watchdog group said Wednesday.

The Citizens Budget Commission laid out 18 ways that the city can save more than $1 billion by tinkering with union contracts or losing headcount through attrition.

“The Mayor presents New Yorkers with a false choice: either borrow to fund operations or lay off 22,000 municipal employees,” Andrew Rein, president of the budget commission, said in a statement. “Neither currently is necessary and both have far reaching negative impacts.”

Maria Doulis of the Citizens' Budget Commission says there are better alternatives to layoffs and saddling the city with more debt. WNYC's Brigid Bergin explains.

State lawmakers and fiscal watchdogs are trying to make sense of Mayor de Blasio’s math as the city seeks approval from Albany to borrow billions.

Days after delaying sending out pink slips to 22,000 city workers, Hizzoner argued Wednesday that his $5 billion borrowing request covers a baseline of $1 billion baked into both this year — and next year’s budget.

“The billion dollars for this fiscal year is what we need to stop the layoffs, but then a reminder: the next fiscal year starts July 1st with the same billion-dollar hole implicitly because that’s just part of the permanent budget,” de Blasio told reporters during a morning briefing.

The claim left some scratching their heads as they balked at the suggestion any part of the city spending plan, which is negotiated annually, is permanent and said the mayor has yet to utilize cost-cutting tools at his disposal.

Andrew Rein from the Citizens Budget Commission said the mayor was discussing $1 billion in recurring savings from negotiations with labor unions, but chided de Blasio for presenting the public a false choice by saying that the city either needs to borrow to fund operations or lay off 22,000 municipal employees.

“Neither currently is necessary and both have far-reaching negative impacts,” he said.

The CBC issued a report earlier in the day outlining nearly two dozen ways the city and labor unions could save $1 billion or more, including an aggressive hiring freeze, which would allow attrition to reduce the workforce rather than layoffs, consolidating individual welfare funds and reforming health insurance benefits.

The new proposal hasn’t received the support of Gov. Andrew M. Cuomo or legislative leaders, or from the independent Citizens Budget Commission. They said they fear it would prompt Wall Street firms to leave New York for other cities or trade exclusively online, decimating one of the state’s biggest industries and revenue sources. That projected revenue also varies widely each year — from $16 billion in 2008 to $4 billion in 2019 — which creates uncertainty, experts said.

“The advent of the internet and online trading have enabled stock traders to engage in their livelihood from anywhere in the world,” said David Friedfel of the Citizens Budget Commission. “If only trades that go through New York exchanges are subject to the tax, it will put New York-based traders at a competitive disadvantage and provide an incentive for them to conduct business outside of New York state.”

Layoffs are always difficult, but it would still leave the city with thousands more workers than when de Blasio took office. Private-sector workers, meanwhile, have seen both layoffs and pay cuts amid the pandemic.

Borrowing should be a last resort. As the Citizens Budget Commission’s Maria Doulis suggests, the city could dodge new debt or layoffs by just getting its workers to kick in a few bucks a month for health-care costs.

But this mayor is constitutionally unable to stand up to the municipal unions to protect the larger public. A profile in courage, he’s not.

What are the consequences?

People who leave will no longer pay personal income tax to the city, dealing a potential blow to the city’s budget, said Maria Doulis, vice president of strategy and operations at the Citizens Budget Commission, a nonpartisan fiscal watchdog.

That could hinder the city’s ability to maintain police and sanitation services, she said.

But Mayor Bill de Blasio said this week that he had no doubt that New Yorkers who left during the pandemic would eventually return.

“If you don’t think New York City is coming back,” Mr. de Blasio said, “then you don’t know New York City.”

Experts have warned that the flight of wealthy New Yorkers will deprive the city of badly needed tax revenue to maintain services like police and sanitation that are vital if it hopes to recover from the COVID-19 pandemic.

‘What is worrisome is that the high-income earners, particularly those with more than $1million, provide a substantial amount of resources to the New York City budget,’ said Maria Doulis, vice president of strategy and operations at the nonpartisan Citizens Budget Commission.

‘To lose them would really represent a blow to the budget.’

The flight out of New York City could inhibit the city’s economic recovery and its ability to maintain quality-of-life services like the police and sanitation, said Maria Doulis, vice president of strategy and operations at the Citizens Budget Commission, a nonpartisan fiscal watchdog.

“What is worrisome is that the high-income earners, particularly those with more than $1 million, provide a substantial amount of resources to the New York City budget,” Ms. Doulis said. “To lose them would really represent a blow to the budget.”

Mayor Bill de Blasio said this week that he had no doubt that New Yorkers who left during the pandemic would eventually return, though he appeared to be referring more to people who had temporarily moved elsewhere, including to second homes.