Don’t count on the state for help.
That’s the message Mark Page, director of New York City’s office of management and budget, expressed Monday before the City Council’s Finance Committee.
Page’s testimony kicked off the council’s budget cycle after Mayor Michael Bloomberg released on Feb. 17 a nearly $66 billion fiscal 2012 budget plan. It closes a $4.6 billion deficit, although $600 million of that depends upon state action. Fiscal 2012 begins July 1.
Page earlier this month asked city departments to cut their budgets for next year by 4%, with the Department of Education and uniformed police officers ordered to reduce theirs by 2%. Those cuts would help generate $600 million of funds and offset potential inaction from the state.
The city wants New York State to restore $200 million of school aid, $200 million of revenue sharing, and approve a bill to reduce the city’s supplement fund payments to city police and firefighter retirees by $200 million.
After traveling up to Albany to speak with state budget officials and legislative staff, Page believes the city must plan to fill the $600 million gap without help from the state. “I didn’t come back feeling good,” he told the Finance Committee.
New York’s Legislature is now hammering out a compromise budget for fiscal 2012, which begins April 1. Included in that plan is cuts in funding for schools and local aid.
“The problem here is you can’t spend money that you haven’t got,” Page said. “And you can see a particular lack of funding as unacceptable … but that is only step one. If that lack of funding is unacceptable, then what are we going to do for the money?”
New York City must absorb a proposed $1 billion cut in state aid for education and adjust for $853 million of federal stimulus funds that are no longer available. Bloomberg’s budget plan includes reducing the number of teachers by 6,000 positions through attrition and layoffs this year and next.
Potential teacher layoffs would range from 4,000 to 4,300. The cost of restoring those workers totals $300 million to $350 million, Page said. One council member suggested possibly tapping into the city’s health care trust fund to retain teachers. That fund will total $2 billion in fiscal 2012, after the city uses $700 million next year.
Some council members mentioned that the state Assembly’s proposal to extend a 8.97% personal income-tax surcharge on those earning $1 million or more could help generate additional revenue for the state and potentially offset sharp cuts in education and other local services. The surcharge will sunset on Dec. 31.
Last week, Bloomberg indicated that he did not favor keeping the tax surcharge on the state’s highest earners. Gov. Andrew Cuomo, a Democrat, also is against extending the so-called millionaire tax, as has the Republican-led Senate.
“If you want to drive business out, you raise taxes,” the mayor said last week during a press conference promoting a $3 billion waterfront development plan. “That’s just not a good strategy right now. Sometimes you can raise taxes, sometimes you have to lower them. ”
To help find savings, Council Speaker Christine Quinn said that she will file legislation to allow the city to examine its contracts with outside operators and root out any overspending. She said contractual services will cost the city $10.2 billion in fiscal 2012, a 4% increase from this year.
“When some city workers face the threat of layoffs and others have to do more with less on a daily basis, it only seems fair that we ask the same kinds of efforts from the city’s outside contractors,” Quinn said during the hearing.
