As the city enters a new year and Mayor de Blasio enters a new term, there’s much to be glad about here in Queens. But we’re New Yorkers. There’s also much to be concerned about, and many demands to be made of our re-elected mayor and new City Council.

On the positive side, we just can’t say enough about the stunning, continuous drop in violent crime. Murders are down to the lowest levels seen since the ’50s at least — since the late ’20s in fact, if historical sources are correct.

In some other areas, he’s been lucky the economy is doing so well. It’s enabled him to expand the city workforce from a little more than 270,000 full-timers when he took office to nearly 295,000 now. That may mean better services — though many in Queens would say they can’t tell — but it comes at the cost of about $100,000 per employee per year, according to the Citizens Budget Commission. Better hope that stock market bubble doesn’t burst anytime soon, though history says it will. And whether it does sooner or later, changes in federal policy are going to force belt-tightening. They already are among those taxpayers with significant state and local tax write-offs, and neither City Hall nor Albany can just pretend things will go on as they have forever.

Gov. Andrew Cuomo this week embraced virtually every idea that has been floated to diminish the impact of the Republican tax bill on New Yorkers. Most media coverage of the governor’s action—and of the ideas themselves—has been far too naive.

The tax bill is likely to have enormous impacts in New York. To assess them, the Citizens Budget Commission and the CUNY Graduate School of Journalism (where I run the programs on business and fiscal reporting) will hold a special morning conference on the tax bill and New York Jan. 24.

We’ll announce a keynote speaker next week. Already set are two panels, the first one detailing the likely impacts and the second on how the state and city should pick up the pieces.

As for the Cuomo ideas, there are reasons to be skeptical.

The sectors creating the most jobs in New York have relatively low wages and the city’s poverty rate remains high, said the watchdog Citizens Budget Commission.

That requires corrective measures, CBC said in a report on Mayor Bill de Blasio’s first-term achievements in economic development. The mayor began his second and final term on Monday.

Economic development efforts in 2016 totaled $3.2 billion.

“The city provides businesses with billions of dollars in subsidies annually, and it is imperative that those funds be used cost-effectively," said CBC president Carol Kellermann. "Our report sets clear standards for how the mayor should improve economic development policies during the second term in order to ensure the public gets the maximum return on its investments."

New York Gov. Andrew Cuomo delivered his eighth State of the State address Wednesday amid an expanding budget deficit and facing $2 billion in federal cuts.

Cuomo stressed during the nearly two-hour speech in Albany that challenging fiscal times lie ahead for the 2019 fiscal year that begins April 1, with an estimated $4 billion budget gap. The Citizen Budget Commission estimates New York's shortfall will number between $4.4 billion to $6.3 billion before accounting for recent tax overhaul changes in Washington.

“These are challenging times and we have to rise to the challenges,” said Cuomo. “Washington released an economic arrow aimed at the heart of New York.”

David Friedfel, the CBC’s director of state studies, wrote in a Dec. 18 report that Cuomo in recent years has addressed budget gaps by shifting costs from state operating funds or across fiscal years along with utilizing one-time revenues.

He said the current budget challenge is due partly to $1.2 billion in property tax relief rebates owed in the 2019 fiscal year that may need to be re-examined. The state also adopted income tax cuts in 2017 that are projected to reduce state revenues by $236 million by the close of the 2018 fiscal year calendar and $1.1 billion for 2019, according to Friedfel.

Subway meltdowns and hobbled commuter train service defined 2017 for straphangers, who found their day-to-day travel obstructed by the very system driving the city’s economic engine.

Rampant, system-wide delays from signal and electrical system failures in the subway coupled with a repair backlog in Penn Station that required eight weeks of reduced LIRR service, was dubbed the “summer of hell” by Gov. Andrew Cuomo.

Cuomo is looking to tighten the MTA’s belt and prevent funds from slipping away.

A report from the Citizens Budget Commission, a non-profit organization which studies government spending, said a bill to allow bus drivers to give out an extra free transfer to straphangers would see the MTA lose up $40 million annually.

On Dec. 21, Cuomo vetoed the bill.

They'll fight and disagree over it, but Job One for Gov. Andrew Cuomo and lawmakers this session will be dealing with a yawning budget shortfall.

It will be neither easy nor quick.

"We start with a $4 billion deficit," the governor said in December.

Much stems from a drop in income tax revenue, combined with New York's voracious appetite for spending growth, particularly on schools and Medicaid.

"People made less in 2016 than what they estimated," said David Friedfel, director of state studies at the Citizens Budget Commission, a fiscal watchdog group.

The third year of a property tax relief credit will mean an average rebate check of $380 for property owners statewide.

Eligible taxpayers must have already qualified for a STAR property tax rebate and earn less than $275,000 a year. Lower-income filers will receive a proportionally greater tax break.

While politically popular, the property tax relief programs have drawn fire from several fiscal analysts.

“We are opposed to the property tax relief credit,” said David J. Friedfel of the independent Citizens Budget Commission. “It sends additional benefits to wealthy suburbs that have chosen to tax themselves at higher rates.”

The Independent Democratic Conference in the state Senate is calling for elimination of New York City’s income tax on residents who make less than $50,000.

That would affect 2.2 million people — nearly a quarter of the city’s population.

Married couples would save up to $1,456 a year and singles $1,060.

“This relief will leave these individuals with over $1,000 more a year in their pockets, money they desperately need to make the rent and fill their other expenses,” the IDC said as part of its “One New Yorker Budget Agenda.”

Sounds great — but there’s a big catch: The city would have to absorb the $352.1 million annual budget hit.

The IDC earlier leaked a plan to divert $431.5 million in city sales tax revenue to the MTA.
The latest proposal is the brainchild of Sen. Marisol Alcantara, an IDC member who represents northern Manhattan.

A budget watchdog dismissed both ideas as fiscally irresponsible.

“It’s not a good idea to suggest revenue losses at a time when the federal government is changing its tax policy,” said Carol Kellermann, president of the Citizens Budget Commission.

“I don’t think Albany should be proposing revenue losses without offering alternatives to make up for the losses. Three hundred fifty-two million dollars is a lot of money that helps provide services to needy people in New York City.”

A powerful force in New York public affairs for more than a half-century, the transit union has seen the number of workers decline during the last 30 years. Labor costs have risen, primarily because of pension liabilities, but now consume a smaller share of the budget. Debt service has climbed.

New York City Transit paid $6.2 billion in wages and benefits for the 44,256 workers and bosses who operate the subways and buses. That works out to average compensation of $140,000, essentially the same as workers in city agencies, according to Jamison Dague, the director of infrastructure studies at the Citizens Budget Commission.

While much of the focus on tax reform in Washington, D.C., has been on the loss of property tax deductions and the outsize effect it could have on revenue for the city, budget experts are warning there’s more bad news in the tax plan for cities like New York.

With Republicans on the cusp of a historic victory on their tax-cut proposal, H.R. 1 (115), budget watchdogs are warning that cuts to commuter benefits, cuts to historic preservation funding and an end to advance refunding — all included in the tax reform plan — seem tailor-made to deliver the most hurt to urban centers.

Carol Kellermann, president of the Citizens Budget Commission, a nonpartisan budget and finance think tank in New York, said the removal of the advance refunding provision could have detrimental effects on the city’s ability to show savings, which could ultimately lead to a reduction in city services.

New York City has relied on advance refunding for years to save money. Every year the city has presented significant debt service savings thanks to the budget move, which the CBC acknowledges is not necessarily prudent budgeting.

“There’s been about $2 billion in debt service savings,” Kellermann said. “Half of that comes from advance refunding, so this is going to eliminate one of the sources of budget savings.

“They have done it, and now the change is coming at a time when they may be facing real concerns because they’re not going to be able to use that anymore — it’s a source of savings that is going to be constrained going forward,” she added.

With the state facing a larger than usual expected budget shortfall for its next fiscal year, Governor Andrew Cuomo has been railing against the devastating impact proposed federal tax reforms would have on New York state finances.

The controversial reform plan that is still being negotiated in Washington, D.C. would either modify or completely eliminate the ability of New Yorkers to deduct state and local taxes from federal tax burdens and likely have deep economic impact for heavily Democratic states like New York, which typically have higher state and local taxes. As of Thursday, Republicans in the House and Senate say they have agreed on a tentative deal that would cap deductions at $10,000, reports NBC News. While negotiations are ongoing, Congress is expected to vote on a final deal this week.

Comptroller DiNapoli has repeatedly urged that the state take steps to eliminate projected budget gaps and achieve structural budget balance, including, for example, minimizing use of one-time resources to support recurring spending and avoiding the use of administrative or accounting actions that lower the appearance of spending but do not eliminate the state’s obligation.

These recommendations are echoed by the fiscal watchdog group Citizens Budget Commission (CBC), which has highlighted how the state has created the appearance of meeting the 2 percent cap on spending increases by shifting certain personnel expenses to the capital budget.

"Education, Medicaid, and personnel are the three things that he could target. We certainly think a lot of the economic development spending should be curtailed, but that's a slightly smaller pot," said David Friedfel, director of state studies at CBC.

After seven years and billion of dollars in awards, Howard Zemsky can't picture the state Regional Economic Development Council program disappearing.

"It's so fundamental to the way we do economic development now," the state's development czar told reporters Wednesday after the annual REDC awards ceremony at the new downtown convention center. "It would be impossible to imagine it wouldn't happen, truthfully. I think it's the right way to do economic development for all the reasons you've heard, but mostly the fact that we have strategic plans: We evaluate all the projects against and through the lens of those plans."

The Citizens Budget Commission concluded in an analysis last year that with some regions losing employment in industry sectors repeatedly targeted by the REDCs, it's time for the councils to rethink their strategies.

For example, the councils have tended to focus on tourism, agriculture, technology, health care and manufacturing. Looking at manufacturing specifically, regional employment trends showed negative growth in six of the 10 areas, the CBC found. (Capital Region growth, however, outpaced the entire state and country at 18 percent between 2010 and 2015.)
Still, tourism, agriculture and health care all saw employment growth across all regions.

The CBC concluded it might be time for state government to change its strategy as well. The report's authors suggested that rather than grant-based development — that is to say, grants given directly to a company — the state should consider regulatory and tax reform, enhanced career and technical education or infrastructure investment.

Grant-based initiatives for individual companies are "definitely the type of spending that could be cut back, specifically those disbursements where it's not tied to a long-term specific program," CBC Director of State Studies David Friedfel said Wednesday.
Friedfel wasn't dismissive of the regional approach. He noted that aside from direct business grants, other funding — such as that for waterfront revitalization and energy efficiency projects — is handed out through the council process. For example, in addition to money for projects being conducted by for-profit businesses, in the Capital Region $7.9 million was awarded Wednesday for sewer improvement projects in various municipalities.

"Getting all those people into a room while utilizing state resources has a benefit," Friedfel said. "They're able to get a better grasp on what's going on in their region. It also hopefully will decrease the amount of intra-regional competition for economic development."