Call for police budget cuts puts de Blasio in tough spot

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New York Mayor Bill de Blasio wants to cut the police department's budget.

Just how much still depends on several variables linked to the budget process itself, de Blasio said Monday. This includes a back-and-forth with City Council leaders, any additional federal rescue aid related to the COVID-19 pandemic and permission from New York State for further borrowing authority.

De Blasio intends to shift funding from NYPD to youth development and social service programs. “The city will find significant savings in the NYPD budget,” he said.

The move also reflects a nationwide scrutiny of police operations following protests to the death of George Floyd while being arrested by police in Minneapolis. There, a majority of City Council members vowed to “defund” the police department. Mayors of Boston, Los Angeles and elsewhere have also proposed funding shifts from police to community-based social programs.

"While there is no central definition of what it specifically means to 'defund the police,' it is likely advocates are seeking more funds be allocated to social-related spending, at the expense of law enforcement," said Tom Kozlik, head of municipal strategy and credit for Hilltop Securities.

NYPD’s budget is roughly $6 billion, or about 6.7% of de Blasio’s $89.2 billion executive budget for fiscal 2021 that the council is deliberating. The city must finalize a budget by June 30.

"The city will find significant savings in the NYPD budget,” said New York Mayor Bill de Blasio.

In New York, protesters and police clashed for several nights last week.

De Blasio, speaking to reporters at the Brooklyn Navy Yard, declined budget specifics. “I'm not answering today, because we will do that as a part of the negotiation,” the mayor said as the city reopened after nearly three months of lockdown from the coronavirus pandemic.

The City Council’s Progressive Caucus has called for a $1 billion cut to the police budget.

The mayor’s budget office has projected an overall revenue gap of $9 billion through fiscal 2021.

Cutting police spending puts de Blasio in a tight spot. The latest New York Police Deartment statistics show murder up 133% — 42 in May compared with 18 in May 2019. Shootings were up 44% year-over-year for May — 136 compared with 94.

“I’d be very surprised if any agency gets away with anything less than a 10% budget cut,” said Nicole Gelinas, a senior fellow with the Manhattan Institute for Policy Research.

“Of course, we need police reform, things like placard corruption and NYPD hiding disciplinary records. But reform is different from defunding. If we don’t have a police department, what are the long-term implications?”

According to Kozllik, lawmakers should continue to balance safety-related needs when reallocating or decreasing funds originally intended for public safety.

"The original intended purpose of transferred funds is important to consider," he said. "Although, it is important to stress this is a complicated time for lawmakers to have to allocate or reallocate funds as budget shortfalls mount nationwide."

Social unrest poses fiscal and governance credit risks for U.S. states and cities, according to Moody’s Investors Service.

“The unrest comes as state and local governments grapple with a rapid increase in unemployment caused by the coronavirus pandemic, a fast and severe decline in sales and income tax revenue, increased public health costs and a longer trend of growing income inequality,” Moody’s said in a commentary.

Longer-term credit effects, Moody’s added, will hinge on whether disruptions recur.

“New York City is not in control of what happens in some tiny police department in another state,” Gelinas said.

According to Gelinas, retailers with strong business plans can adjust, as long as the civil unrest is temporary.

Boston Mayor Martin Walsh said some police funding reallocation is in order. There, police spending consumes roughly 15% of the municipal budget.

“I think that just arbitrarily cutting the budget is not the answer,” he told a Boston television station.

In Los Angeles, Mayor Eric Garcetti recently supported a police budget cut of up to $150 million, even though the department's budget was set to increase this year.

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City of New York, NY Bill de Blasio Crime and misconduct Coronavirus Hilltop Securities Tom Kozlik Moody's Nicole Gelinas Budgets