A new analysis from a fiscal watchdog group claims City Hall is obscuring the scope of NYC’s budget crisis.

As reported by the NY Post, Mayor Bill de Blasio’s budget is counting on $1 billion in recurring savings from the Big Apple’s labor unions — but these concessions have not yet been agreed to. The Citizens Budget Commission (CBC) said that the city hasn’t even publicly presented a plan with which to reach this goal. “I look at this as a fake part of the budget. This $1 billion in labor savings is a fiction until they come up with a plan,” said Andrew Rein, head of the budget watchdog group. “Fictional savings in the budget is masking the depth of the problem.”

Mayor Bill de Blasio has listed the $1 billion in savings, which is not yet a reality, to keep the city’s explosive budget deficits in check, not just this year but for the next four years. For 2022, the labor savings keeps the $92.3 billion budget from dipping into the red, says the CBC. If the labor cuts don’t materialize, in 2023, City Hall’s deficit will expand to $5.3 billion, instead of the $4.3 billion currently projected. Without the $1 Billion gimmick, the budget for 2024 and 2025 similarly jump, and those budget gaps may surpass $5 billion, as per CBC’s analysis.

Financial transaction taxes force trading activity to migrate to more efficient markets. This is neither an empty threat nor mere conjecture. When France imposed such taxes in 2012, a third of the trading volume in French public companies moved to London and elsewhere, according to the Securities Industry and Financial Markets Association. Italy introduced one in 2013, resulting in a rise in volatility. When Sweden imposed a financial transactions tax in 1984, volume migrated to London until the tax was rescinded.

Proponents think reinstating New York’s stock-transfer tax will fill the state’s coffers and ease its budget challenges. But the nonpartisan Citizens Budget Commission said that if it had been collected this past fiscal year, the stock-transfer tax would have yielded only a third of the revenue its advocates estimate: “In fact, the State would likely amass even less, since firms might avoid the tax by using new technology or relocating the trading portion of their businesses outside New York.”

This year's mayoral race, currently featuring dozens of candidates, has come with an endless stream of forums and debates. Due to the ongoing pandemic, these are hosted remotely and are available live for public viewing on various platforms like Zoom and Facebook — but they aren't always easy to find, as they aren't highly publicized.

Wednesday, February 24th

4-6 p.m. Citizens Budget Commission Announces Mayoral Candidate Forum Focused on Fiscal Crisis

About 54% of the pension fund is invested in the stock market, with additional investments in cash, bonds, mortgages, real estate and other ventures.

"High returns are good for taxpayers who support the pension system and retirees and employees who are members of it," said Andrew Rein of the independent Citizens Budget Commission. "Still, economic uncertainty nationally persists and there could be further volatility in the markets."

This is the Citizens Budget Commission's basis for opposing a revival of the stock transfer tax. "If the tax goes back into effect as written, many trades would simply move to other states to avoid the tax," the group wrote in the fall, adding that widening the tax the way the Wall Street Tax proposal states "would put New York securities firms at a competitive disadvantage."

As Gov. Andrew Cuomo and Mayor Bill de Blasio prepared their proposed budgets for the coming fiscal year, neither chose to make dramatic, targeted spending cuts, instead calling on the federal government to provide more aid, fiscal watchdog groups said. That doesn't address the underlying issues, said Andrew Rein, president of Citizens Budget Commission.



"They need and deserve more aid, but the way to think about this in part is whatever aid comes will be time limited, yet we have a long-run fiscal problem," Rein said. "We’re going to be sitting here in fiscal 2023, ‘24, and we’re going to have the same problem."

The ferry system brought $53 million in net costs for EDC for fiscal year 2020, according to the corporation’s financial statements. In 2019, the watchdog group Citizens Budget Commission calculated that when a passenger spends $2.75 for a ticket, the government spends $9.34 to subsidize the trip.



“It’s sort of unclear exactly how the composition of subsidies changed,” said Sean Campion, a senior research associate for the Citizens Budget Commission who has studied the substantial costs to taxpayers of keeping NYC Ferry’s six routes running.

The CBC analysis shows a 4.3% decrease in year-over-year property tax revenue for a total decline of $1.3 billion.


“It’s unprecedented, and it’s almost all concentrated in commercial properties,” said Ana Champeny, director of city studies at the CBC, who added the hotel industry, the retail industry and office buildings all have higher vacancy rates and lower asking rents.


CBC data shows total market value for the city is down 5%, while Class 4 commercial property is down 16%.

“There is no question that the MTA is the lifeblood of the region’s economy, so we have to keep one eye on that capital investment, and we know that part of what they are doing to try to keep the operating budget solvent is dipping into what they had planned to invest in the capital program,” said Andrew Rein, president of the Citizens Budget Commission, a nonpartisan fiscal monitor. “They are in a dire fiscal situation on the operating budget side, and their capital plan is at risk of underinvestment.”

“As hard as it is, the administration does need to fight three intertwined crises: health, economic, and fiscal. It needs to do all three at once,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog and policy think tank. “Obviously, the health piece is so proximate that it gets a lot of attention. But New York needs to not only survive the pandemic recession, it needs to thrive after it. So we need the economic piece to be strong.”



“The workload is heavy. But you have to be able to address what you need to do today and plan for tomorrow, the next month, the next year, frankly the next few years. And we haven't seen enough of that. We just haven't,” he added.

Andrew Rein, president of the Citizens Budget Commission, a nonpartisan watchdog, said Mr. Cuomo could have plugged his budget hole without increasing taxes by, for example, reducing economic-development spending and trimming state aid to wealthy school districts.

Though urban and economic experts concede that the mayor is juggling multiple crises, they’ve been disappointed with his play-it-by-ear approach. Even their optimism about the city’s prospects under President Joe Biden and the new Democrat-led federal government likely to send more money to the city is tempered by de Blasio’s lack of vision.



“As hard as it is, the administration does need to fight three intertwined crises: health, economic, and fiscal. It needs to do all three at once,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog and policy think tank. “Obviously, the health piece is so proximate that it gets a lot of attention. But New York needs to not only survive the pandemic recession, it needs to thrive after it. So we need the economic piece to be strong.”

“The workload is heavy. But you have to be able to address what you need to do today and plan for tomorrow, the next month, the next year, frankly the next few years. And we haven't seen enough of that. We just haven't,” he added.

CBC’s Rein said the mayor needs to present plans of growth for jobs, the economy, and housing as the basis for any recovery, provide direct support to small, medium, and large businesses, and ensure that the city’s schools remain open and attractive. “New York City government has to be a better partner, they need better customer service,” he said, about reducing regulations and red tape for businesses. But, overall, he said, “You need to, in a certain sense, carve out some of your staff, your intellectual capacity, and then your operational time to move on these fronts.”