New York Gov. Andrew Cuomo has proposed a nearly $1 billion increase, including $338 million more in foundation aid, the main bucket of school assistance. On Tuesday, the Democratic leadership of the state Assembly and Senate proposed a $1.6-billion boost in school aid, including about $1.2 billion in foundation aid.

The state Board of Regents, which sets education policy, wants more. Regents say the state owes districts $4.1 billion in foundation aid, which should be phased in over three years. The governor calls that formula obsolete and emphasizes that New York spends more per pupil, on average, than any other state.

Budget watchdogs warn that taxpayers won’t tolerate jumps in spending. The Citizens Budget Commission, for example, says the aid formula is deeply flawed, and a $164 million aid increase overall, targeted to the neediest districts, would suffice.

David Friedfel, director of state studies at the commission, said that when state and local taxes rise, “you have pressure on high-wealth earners to leave the state, and when they do they take all their tax dollars with them.”

The 2019 Charter Revision Commission, which is looking at ways to improve the city’s central governing document, heard suggestions on Monday from community-based organizations, fiscal watchdogs, and former and current city officials about potential changes to the city’s byzantine budgeting process.

Over the course of more than three hours, experts weighed in on the city’s flawed contract procurement system, the severe lack of transparency in spending on capital projects, the possibility of creating a rainy day fund for the city, and measures to generally improve accountability in city spending. There was general agreement that city procurement needs to be overhauled to make it more efficient and transparent, but broader opposition to changes in the budgeting process and the administration’s ability to set revenues and expenditures.

The one-house budget proposal from Assembly Democrats strengthens the planned restoration of oversight powers for state Comptroller Tom DiNapoli by writing them into statute.

The budget unveiled by Gov. Andrew M. Cuomo’s in January returned the comptroller’s pre-audit power, which he was stripped of in 2011, but would require constant renewal every year. By including this authority in an “Article VII” budget bill, the Assembly Democrats are proposing to write the language into state law, effectively making it permanent.
Restoration of the power has been a major concern for good government and transparency groups, including Reinvent Albany and the Citizens Budget Commission.

CBC director of state studies David Friedfel hypothesized that the missing oversight might have contributed to “some of the problems with the Buffalo Billion bidding.”

“It’s possible some of those problems could have been prevented if they were subject to (the comptroller’s) oversight before being signed,” Friedfel said.

It’s not clear whether the Senate Democrats will embrace the same tactic as their legislative colleagues, but we’ll be watching for their one-house budget.

As New York City’s budget process gets underway, one top fiscal watchdog group has cautioned that steps are needed to plan for our immediate future.

We understand that good economic times can’t last forever, and another period of downturn will inevitably come. That’s why now is the time to pay close attention to the experts who are calling for smart budget prescriptions

The Citizens Budget Commission (CBC) recently warned that a projected shortfall from any potential future downturn would be more dramatic than previously anticipated. The first year of a potential recession could result in an $8.8 billion budget gap, and the City would lose up to $20 billion in lost tax revenue over a three-year period. The CBC report warned further that current reserves would not cover those gaps.

As the city works toward improving the living conditions at New York City Housing Authority buildings, one nonprofit has some advice for its new federal monitor.
The Citizens Budget Commission, a nonpartisan organization that aims to improve city and state services, released six guidelines Friday that it said would set NYCHA and its monitor Bart Schwartz on the right path.

“The appointment of a federal monitor is an opportunity to improve NYCHA’s operations and address the poor physical conditions of its developments,” the CBC said Friday.
“With a clear set of priorities and a focus on accountability, productivity, and efficiency, the monitor can be positive force for change.”

Schwartz, a former top prosecutor in the office of the U.S. attorney for the Southern District of New York, was tapped for the new position by federal prosecutors and U.S. Department of Housing and Urban Development officials under a lawsuit settlement between the city and the federal government. The housing authority had been accused of misleading the public and federal government with regard to its lead testing and abatement efforts as well as other unsafe living conditions such as mold, heating issues and broken elevators.

Under the agreement, the federal monitor was given the ability to approve NYCHA’s action plans and issue quarterly reports detailing the authority’s compliance with the settlement, among other powers. HUD, meanwhile, will continue to help fund NYCHA, which is receiving about $1.5 billion from the agency this year.

The CBC suggested the following guidelines:
• NYCHA’s goals should be ambitious but realistic, with a system in place that gauges progress and ensures accountability.
• Since the agreement has no added federal funding, Schwartz should advocate for changing HUD policies to increase NYCHA’s funding levels.
• Pressure Gov. Andrew M. Cuomo’s administration to release long-held and much-needed funding for NYCHA capital repairs. While the state has set aside $450 million in each of its last two budgets, none of that has been released, per the CBC.
• Use NYCHA 2.0, a renovation strategy put forth by the de Blasio administration in 2018, as a launching point so that consulting work required under the agreement can focus on ideas that haven’t already been explored.
• Urge the city to fully fund and implement its NYCHA 2.0 strategy.
• Modernize NYCHA’s operations by reviewing and updating labor contracts in a way that greatly improves workforce productivity, starting with negotiating for regular work shifts on evenings and weekends.

New York's upgrade by Moody's Investors Service will help the city's capital program "for years to come," Mayor Bill de Blasio's budget director told city council members.

"As a result, we expect to see lower borrowing costs and additional savings," Melanie Hartzog told City Council members at a budget hearing Wednesday. "Further, the market for our bonds will diversify and grow."

Moody's on Friday elevated the city's general obligation bonds to Aa1, its second-highest level, from Aa2, citing strong financial management and the city’s economic diversity. It was Moody's highest rating of the city and its first upgrade in nine years.

Hartzog said her office has not estimated borrowing costs related to the upgrade. She spoke during a City Hall joint hearing of the finance committee and its capital markets subcommittee, which are reviewing de Blasio's $92.2 billion preliminary budget and $104.1 billion, 10-year capital program.

Riley Edwards, a research associate with the Citizens Budget Commission, called on city officials to identify "significantly more" than $750 million in savings. Efficiencies, he said, could include redesigning programs or services; streamlining through technology; identifying alternate service providers, including the private sector; and sharing resources across agencies.

The state comptroller has come out with revenue projections that will limit the ability to spend more money in the state budget. Under law, the governor and Legislature have to abide by those numbers — but that hasn’t stopped interest groups and some lawmakers from saying that they will increase spending.

Comptroller Tom DiNapoli issued his report on state revenues after the governor and Legislature failed to agree on their own estimates by the March 1 deadline. The Senate and Assembly said there’s about an additional half-billion dollars available in revenues than the governor predicts to spend on programs like education and health care.

DiNapoli, in a letter to lawmakers, essentially split the difference between the Legislature and the governor, determining that the state has $190 million more than Cuomo originally estimated.



The governor’s budget director, Robert Mujica, immediately said the extra money should be saved in the state’s rainy day fund because economists are warning of a downturn later next year.

The budget watchdog group Citizens Budget Commission said that’s a wise idea. The group’s David Friedfel said given the economic instabilities, lawmakers should go even further.

“What they could do, which would be an even better idea, would be to curtail spending growth even more,” Friedfel said, “and deposit those extra funds into the rainy day reserves as well.”

But he admits that would be difficult in the current political climate. Numerous advocacy groups and many Democratic lawmakers, who are in control of both houses of the Legislature for the first time in years, want to give at least $1 billion more in funds to public schools and the state and city university systems.

Three bad economic signals in the past month—weak retail sales, a disappointing report on gross domestic product and a huge trade deficit—has the word recession in the headlines. But if you're afraid one is about to hit New York City, don't be.

Revised numbers for 2018 released Thursday by the state Labor Department increased the gain in jobs for last year by 52,000. The agency now estimates there were 4.6 million jobs in the city last month. The exact figure, 4,598,700, is also a surprisingly impressive 95,000 higher than it was in December 2017. These figures reinforce the headline on the city comptroller’s quarterly economic report issued a month ago: "NYC Economy Surges in Q4 2018."

The number of government jobs in the city was bumped up by 38,000 with the city accounting for all but 1,500 of the additions. An updated chart from the Citizens Budget Commission certainly shows what the mayor has done to head count, and it is quite a financial burden.

Dave Friedfel, Director of State Studies at the Citizens Budget Commission, broke down the latest with school aid funding.

State Comptroller Tom DiNapoli’s conservative revenue forecast hasn’t altered Senate Demcorats’ plan to increase education aid.

“No, no, no, no,” said Senate Majority Leader Andrea Stewart-Cousins on Wednesday, when asked if the state’s bleak revenue outlook will mean decreasing state education aid, which is one of the largest areas of spending in the budget each year.

Gov. Andrew M. Cuomo initially proposed increasing education aid by about $1 billion, a 3.6 percent increase from last year, which wasn’t enough for most education advocates and Democratic lawmakers. Education funding remained steady in his amended budget last month, which took steps to close a developing $2.6 billion revenue shortfall for the coming fiscal year.

David Friedfel, director of state studies for the Citizens Budget Commission, had hoped the state’s revenue predicament would lead to an examination of the annual investment in education. “We would advocate for cutting some education aid, especially for the richer districts, but the legislature hasn’t indicated any support for that yet,” he said on Tuesday.

A group of Upstate New York lawmakers this winter revived a question that has been raised periodically for decades: Should the region split from the rest of New York and become its own state?

Assemblyman Stephen Hawley, R-Batavia, wants New Yorkers to vote on a referendum that would create a 51st state out of the counties north of New York City and its suburbs.

If Upstate New York split from the rest of the state, the net result would be a big increase in taxes or severe cuts to services for its residents and businesses, said David Friedfel, director of state studies at the nonprofit Citizens Budget Commission.

“In order to continue spending at the same level, the Upstate region outside of the Capital Region would have to have either a 50 percent increase in taxes or would have to cut spending by a third to keep taxes at the same level,” Friedfel said.

Upstate would also lose the source of economic development incentives paid for largely with settlement funds from New York City-based banks, said Friedfel, of the Citizens Budget Commission.

He said those who suggest New York’s taxes and regulations are holding back Upstate New York should look at New York City and its suburbs.

“Compare the economies,” Friedfel said. “New York City poses additional restrictions on private business beyond the state, and they have the strongest economy in the state.”

Wouldn’t it just be better if the city was running its own transit system instead of the governor and his unaccountable MTA?

On Tuesday, Speaker Corey Johnson is expected to unveil a comprehensive roadmap for just that: a city takeover of its buses and subways. After all, city riders, city tolls and city taxes pay for most of the system anyway — and Johnson has already said he isn’t convinced that the governor’s congestion pricing plan would truly put all of the toll money in a lockbox exclusively for New York City’s transit needs.

Who pays?

Even if the city proved the superiority of its management, however, the state would still control transit funding. The city is unable to levy taxes without state approval. The debate in Albany over who pays and who gets paid would remain mostly intact.

Meanwhile, the city would assume responsibility for New York City Transit and MTA Bus Company’s combined $12-billion operating budget, which represents 13 percent of the $92-billion FY 2020 budget proposed by the de Blasio administration. It would also likely assume responsibility for those agencies’ $40-billion maintenance bill as well as their share of the MTA’s $41-billion debt.

Consider the city’s inability to find the cash to address NYCHA’s $32-billion capital needs — and multiply that by at least two-fold.

“Even if there was a way to basically leave long-term debt behind, the work that needs to be done at transit would require a lot of new borrowing, and that’s going to weigh on the city’s current debt-load,” Citizens Budget Commission infrastructure expert Jamison Dague told Streetsblog. “It’s a huge new expense and capital infrastructure asset that’s going to require a lot of investment.”