As Mayor Bill de Blasio enters his seventh year in office, on the heels of a failed presidential bid and at a time when his political clout appears at its nadir, he faces many major challenges and big decisions ahead.

2020, the next-to-last year of his second and final term, begins with a focus on public safety, including recent spikes in anti-Semitic hate crimes, murders, and byciclist fatalities, as well as how the city is adjusting to new state-mandated bail reforms that the mayor has criticized.

As the new year begins, the next budget season follows. The city’s budget has rapidly expanded under de Blasio, with projected spending hitting $94.3 billion for the current fiscal year which ends June 30, 2020, according to the latest budget modification released in November. That’s a whopping $21.6 billion more than the last budget modification under Mayor Michael Bloomberg, shortly before de Blasio took office.

The city’s Office of Management and Budget predicts that spending will break the $100 billion mark within the next two fiscal years, a number that has fiscal watchdogs worried since savings and reserves haven’t increased at the same rate.

The good news is that economic growth the city has seen for years is expected to continue, albeit perhaps at a slower pace, though fears of a recession have not entirely been eliminated. There are some signs of slowing – the growth of the national economy has fallen but the city’s economic growth experienced a slight uptick in the first nine months of 2019 compared to 2018, according to a December 13 report by Comptroller Scott Stringer. The report predicts that the city will have a modest surplus by the end of the current fiscal year (June 30) and that gaps in outyears will be smaller and manageable.

“We're six years into an administration and there hasn't ever really been a big push to reexamine how government is doing things and making sure it's doing it in the most efficient, effective way possible,” said Maria Doulis, vice president at Citizens Budget Commission, a nonprofit fiscal watchdog, noting that the City Council has been more focused on finding savings than the mayor. De Blasio has begrudgingly instituted certain budget savings programs and the results, according to watchdogs, have been more appearance than reality, and certainly more limited than those watchdogs would like.

For much of this year, it seemed that nothing could stand in the way of progressive activists’ agenda in New York. Not conservative backlash, not big money’s lobbying, not even Gov.

Andrew M. Cuomo’s hesitations.

Then came the $6.1 billion budget gap.

But in a sign of how politicized budget negotiations are sure to be, even those assertions have come under scrutiny.

While the factors cited by the budget division did explain growing costs, fiscal experts said, they did not explain why nobody noticed the deficit earlier — or rather, why they did not report it earlier.

In particular, experts have focused on $1.7 billion in Medicaid payments that the state quietly deferred from the end of March to three days later, in April. As a result, those payments were pushed into the following year’s budget — making it appear as if the state had stayed within its Medicaid budget for the year, when it had not.

“They would have seen that this was a problem, and they chose not to act,” said David Friedfel, the director of state studies at the Citizens Budget Commission, a nonpartisan fiscal watchdog.

Health care advocates, providers, insurance plans and others subject to the state’s new 1 percent across-the-board reduction in Medicaid spending are urging the Cuomo administration to take a more targeted approach as it looks to close a $4 billion budget gap in the coming months.

Arguing that the uniform reduction that took effect on Jan. 1 affects providers who did not benefit from recent Medicaid payment increases, health industry officials cautioned that the cut — $124 million for the current fiscal year and $496 million in future fiscal years — would ultimately hurt patients.

They and budget watchdogs raised further concerns about the potential fiscal and health effects of larger Medicaid spending cuts, which are expected to total $1.8 billion by the end of March.

David Friedfel, director of state studies at the Citizens Budget Commission, meanwhile, questioned the timing of the 1 percent reduction, which was announced in the state register on Dec. 31.

“I think they waited much longer than they should have,” he told POLITICO. “If they implemented the reduction sooner, they should have included adjustments in the fiscal year 2020 budget. They knew this was a problem in March.”

The pied-a-terre tax wouldn’t be a substitute for “comprehensive reform” to address disparities in the city property tax, said Ana Champeny, director of city studies at the CBC.

Layering the pied-a-terre tax on top of the existing property tax system “would have an impact on the city’s ability to redistribute tax burdens among city taxpayers,” Champeny said.

She also questioned the validity of using a tax on expensive properties in the city to address a possible statewide budget shortfall, saying that property tax in New York is a local levy intended to fund local government activities.

A consensus seems to have formed in the advisory commission process around the need for improved circuit-breakers and the likelihood of moving cooperatives and residential condominiums into the same taxation class as one-, two, and three-family homes, rather than with rental properties as they are grouped now, Champeny said.

But ironing out the details of implementation remains a challenge, she said.

“We would have liked to have seen a preliminary report from the commission by now, but it’s understandable that they are still working on it,” she said. “It will be important to have that information out there, to move to the next level of conversation. The process is losing momentum.”

As the state Legislature prepares for the upcoming session, a $6.1 billion budget gap hangs over the lawmakers like a dark cloud. It is the state’s largest budget deficit since the Great Recession. Despite Democrats’ legislative successes during their first year after gaining complete control of state government, “they must now show whether they can overcome this more mundane – but potentially more implacable – obstacle: an old-fashioned budget deficit,” according to The New York Times.

Revealed late last year, the projected $6.1 billion budget gap for the coming fiscal year has prompted discussion about how best to move forward, and debate over the two traditional approaches – spending cuts and tax hikes – are unsurprisingly central. Some on the left, like Assembly Speaker Carl Heastie, have been advocating for raising taxes on the wealthy, and others on the right want to start with spending cuts.

In this week’s “Ask the Experts” feature, we asked experts from across the political spectrum to offer their insight on what should be done about New York’s multibillion-dollar problem. Three experts weighed in: Ron Deutsch, executive director of the Fiscal Policy Institute; David Friedfel, director of state studies at the Citizens Budget Commission; and E.J. McMahon, research director at the Empire Center for Public Policy.

New York lawmakers will return to work Monday with big plans and promises — and a $6 billion cloud over their heads.

Democrats, in control of both legislative chambers, are looking to tackle a plethora of issues including health care, marijuana legalization, additional criminal justice reforms, election and campaign finance issues as well as gig economy protections during a slightly abridged legislative session.

Fiscal watchdogs say Dems have room to play around with spending, but will have to focus on specific policy priorities.

“There’s certainly an opportunity to still prioritize spending on things that the Legislature really wants to focus on, it’s just things are a little bit tighter than perhaps they would like,” said David Friedfel, the director of state studies at the fiscal watchdog Citizens Budget Commission.

The CBC has suggested Gov. Cuomo and the Legislature can cut the deficit by reestablishing a Medicaid Redesign Team to find savings, limiting funding to wealthy school districts, reducing economic development spending and reforming retiree health benefits.

Gov. Andrew Cuomo signed a bill this week that will allow New York officials to fast-track the contracting process on public projects. The governor authorized a handful of city agencies to use the “design-build” method, which combines project design and construction contracts to cut through red tape and save dollars.

Good government group the Citizens Budget Commission projects the change could save the city up to $2 billion in 10 years by using design-build for bridge work alone.

“Design Build means less red tape and more new-and-improved libraries, roads, and bridges,” Mayor Bill de Blasio said of the bill’s passage.

The new law applies to any project with a $10 million price tag, and requires a project labor agreement to set wage and other standards. The city says it has already identified 49 projects that could benefit from the method and save the city up to $300 million.

New York governor Andrew Cuomo signed a bill on Tuesday that will allow New York officials to “fast-track the contracting process on public projects,” according to NYC Curbed. According to the New York Post, the bill allows government agencies to combine design and construction project bids into one contract to save time and money using the “design-build” method.

The Citizens Budget Commission projects this change could save the city up to $2 billion in 10 years by using design-build for bridge work alone.

The new law applies to any project with a $10 million price tag, according to Curbed New York, and requires a project labor agreement to set wage and other standards. New York City has already identified 49 projects that could benefit from this method, saving the city up to $300 million.

The state used the design-build model to build the $4 billion Mario M. Cuomo Bridge, and a $1.5 billion expansion of the Jacob Davits Convention Center.

“Design Build means less red tape and more new-and-improved libraries, roads, and bridges,” Mayor Bill de Blasio said of the bill’s passage.

f you have a rent-controlled apartment in New York City, it may come at a higher price than you realize.

As Swedish economist Assar Lindbeck once wrote, “In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”

The expansion makes permanent rent-control rules for some 1 million New York City units. Rent control critics warn these new laws will cause a raise in rents on most people — except those living in rent-controlled apartments, who are sometimes well-heeled.

In fact, in 2017, upper-income households occupied 12 percent of pre-1974 rent-stabilized units — or 98,780 units — according to the Citizens Budget Commission (CBC) report “Reconsidering Rent Regulation Reforms.”

The CBC study found that of the upper income stabilized households, 28,377 earn more than $200,000 a year.

Gov. Andrew Cuomo signed the “design build” legislation Tuesday that will allow New York City to save millions on public construction projects.

The bill allows government agencies to combine design and construction project bids into one contract to save dollars and time. Fiscal watchdog group, the Citizens Budget Commission, estimates the measure could save the city $2 billion over 10 years.

The law will provide project labor agreements to use union labor and language for hiring of minority contractors.

“The State has repeatedly demonstrated the value of design-build, successfully deploying design-build to [deliver] projects on time and on budget statewide, including in New York City,” said Cuomo in his bill approval message.

Right before Christmas, Governor Andrew Cuomo handed out $760 million in so-called capital grants and state tax credits throughout New York. One goodie he doled out to the tune of $3.5 million was for the construction of a hip-hop museum in the Bronx.

When grappling with his first budget in 2011, Cuomo condemned “Members Items”— pork awarded by legislative leaders to members who behaved themselves and towed the party line during the legislative session — as a waste of taxpayer dollars.

After being praised by editorials and the good government crowd for eliminating this abuse, Cuomo turned around and established his own pork machine via Regional Economic Development Councils.

Since 2011, Cuomo has handed out over $6.2 billion of goodies to local businesses and communities. And anyone who thinks the grants are not politically connected should get their heads examined.

A report released in December by the Citizens Budget Commission, an independent fiscal watchdog, questioned the selection process: “…the implementation of REDC has shortcomings. Many of the projects are unrelated to regional or state economic development strategies. Projects tied to strategies are dispersed among industries and areas within each region such that no single strategy garners the sustained, intensive investment necessary to spur lasting economic growth. Finally, REDC activity is opaque, with inadequate follow-up reporting on each project and inconsistent of regional performance.”

Reforming New York’s property tax system has for decades confounded mayors, legislatures, and governors who have struggled with (or avoided) the technical and political consequences of changing a long-standing system commonly described as outdated and irrational. When Mayor Bill de Blasio finishes his second term at the end of 2021, there is a chance he will be leaving office in the same boat.


With the latest delay in recommendations from the city’s Advisory Commission on Property Tax Reform, formed by de Blasio and City Council Speaker Corey Johnson in 2018, it is becoming increasingly doubtful the mayor will be able to make a full-fledged push for reform in Albany, where much relevant power resides, before his final year in office. If history is any indication, lawmakers may take years to work changes through the halls of the State Capitol. That would leave the bulk of whatever reform is passed, if any, to be implemented after de Blasio has left City Hall.

De Blasio also faced mounting pressure from his Republican challenger, Assemblymember Nicole Malliotakis, who made real estate tax reform a central issue in her campaign.

While calling such an undertaking a “huge, huge effort” and tempering expectations of a “quick fix” the mayor told reporters at the April 2017 news conference, “I'm telling people I'm going to do it. And if you look at my batting average of what I say I'm going to do, I do what I say I'm going to do.”


Just one day before voters elected him to his second term, on November 6, 2017, de Blasio appeared at an Association for a Better New York event, where during an audience question-and-answer session, then-president of Citizens Budget Commission Carol Kellermann asked de Blasio about the lawsuit and his plans to address property tax reform in his all-but-certain second term.