Infrastructure upkeep is a key component to New York City's 10-year capital program, city budget Director Dean Fuleihan told members of the City Council's finance committee.
"Our capital planning has prioritized modernizing aging infrastructure, supporting growth and preserving affordability, expanding access to education and economic opportunity, restoring and protecting our waterfront, promoting health and safety, and building stronger connections between communities," Fuleihan said before a packed council chambers at City Hall on Thursday.
The council is considering Mayor Bill de Blasio's $84.7 billion preliminary fiscal 2018 budget and the $89.6 billion 10-year plan. The proposed capital budget is $5.8 billion, or about 6.4%, above the last one approved. The city's charter requires a new submittal of the latter every two years.
The 51-member council must submit a revised fiscal 2018 budget to de Blasio later this month, after which the mayor will release an executive budget. The council must approve the final budget by June 30.
City Comptroller Scott Stringer and representatives of the nonpartisan Independent Budget Office were scheduled to appear before the council later Thursday.
The majority of the planned capital spending, 58%, is in three agencies: the Department of Education ($20.4 billion), the Department of Environmental Protection ($17.7 billion), and the Department of Transportation ($14.2 billion).
De Blasio's strategy includes $459 million increase to the Department of Education in fiscal 2019 to fully fund new school capacity needs; a $1 billion bump to the Department of Environmental Protection for wastewater treatments plant improvements, including $530 worth of upgrades to the North River Wastewater Treatment; an additional $1.8 billion for the Department of Transportation, primarily to pave 1,300 lane miles of highways per year through fiscal 2019; and $1 billion worth of roof repair to the New York City Housing Authority.
"To fund our capital budget, we continue to estimate debt service cautiously, and ensure that debt service does not exceed 15% of city tax revenue – the benchmark of responsible capital financing in the city for years," said Fuleihan. "We try to maintain our credit access."
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and S&P rate them AA. All three assign stable outlooks.
According to Fuleihan, other capital priorities include efforts to complete the third water tunnel; flood-resilience for southeast Queens neighborhoods; state-of-good-repair work on the four East River bridges and roughly 100 other bridge structures; and the rehabilitation of ferry vessels and facilities.
Uncertainty regarding federal aid has hovered over the city budget process. President Trump, in his address to Congress on Tuesday night, proposed a $54 billion defense spending boost with offsetting cuts to non-defense discretionary programs.
"Facing uncertainty in Washington and slow national economic growth, we approach the fiscal 2018 preliminary budget with caution," said Fuleihan.
Council Speaker Melissa Mark-Viverito said the city could lose up to $800 million through federal cuts in social aid programs, including a public housing capital fund that provides nearly $300 for the New York City Housing Authority capital budget and almost $240 with of community development block grants.
"We will continue to monitor these proposals closely," said Mark-Viverito.
In addition, the federal government has only reimbursed the city $7 million of the $25.7 million cost for security at Trump Tower in Midtown between Election Day and Inauguration Day.
Fuleihan told Mark-Viverito that city officials would brief council members on costs related to de Blasio's plan, which the mayor announced last week, to combat homelessness. Fuleihan said the mayor has earmarked for his executive budget an additional $300 million in capital spending over five years for the Department of Homeless Services.
City officials project a budget surplus of nearly $3.1 billion in the current fiscal year that they will use to balance the fiscal 2018 budget. The surplus came almost exclusively from unneeded reserves and the citywide savings program.
Non-property tax collections have been slowing and are now expected to be lower in fiscal years 2017 and 2018 than projected before the start of the fiscal year. According to DiNapoli, if these collections continue to disappoint, closing the out-year budget gaps could be more challenging, especially if the city also has to address unplanned spending or the impact of federal or state actions.
The city's Health + Hospitals Corp. continues to face serious financial challenges, said DiNapoli, including a decline in patient use.
"Nonetheless, the city remains confident that HHC will not require further assistance in the current fiscal year because of expected additional Medicaid payments," said DiNapoli. "HHC could require assistance in the future since its transformation plan relies heavily on federal aid."
