New York Mayor Bill de Blasio's executive budget reflects a sound city economy, analysts said after he unveiled his proposed
"The budget appears pretty solid and it helps that the economy is doing well," said Howard Cure, director of municipal bond credit research for Evercore Wealth Management LLC. "That makes it easier to balance the budget and set aside reserves."
De Blasio's proposed 10-year, $83.8 billion capital plan - up 24% from his preliminary estimate in February -- can expect greater scrutiny in the capital markets.
"We are going to look at it very closely," said Maria Doulis, director of city studies for the Citizens Budget Commission watchdog organization. "That's a large increase."
The capital plan makes significant investments in infrastructure, housing, sustainability and resiliency.
"The interesting issue is more on the capital side," said Cure, who said de Blasio must synchronize his affordable housing initiatives with state leaders. Upheaval, however, presides in Albany with the future of State Senate majority leader Dean Skelos, R-Rockville Centre, up in the air. Skelos is facing federal corruption charges.
De Blasio on Thursday balanced themes of income equality and fiscal health in his budget speech at City Hall.
"We think these ideas have to be meshed to create a strong and stable city for the future," de Blasio said in a late-afternoon City Hall speech.
The 51-member City Council must approve the spending plan by June 30.
De Blasio's budget "strikes a balance strikes a balance between targeting resources toward our city's most important challenges and setting aside funds for the future," said city Comptroller Scott Stringer, who expects to issue a detailed analysis of the spending plan later in the spring.
The mayor could face a tussle with the council over police hiring. His budget did not include the hiring of 1,000 additional police officers - council Speaker Melissa Mark-Viverito expressed disappointment -- although de Blasio on Thursday left the door open for further discussion.
"The budget dance is not over," said Doulis. "The dance is a little different now."
De Blasio must also finalize a contract with uniformed police officers, one of his last pieces in the union contract puzzle. Inheriting an entire municipal workforce with expired contracts when he replaced Michael Bloomberg last year, de Blasio has settled with 76% of the city workforce, following a pattern set with the May 2014 agreement with the United Federation of teachers.
The mayor warned about budgetary stresses beyond New York's control, referencing the Sept. 11 terrorist attacks and Hurricane Sandy, both of which forced large tax increases and service cuts; he also cited cuts in state and federal aid, a low rate of growth in the gross domestic product during the post-recession recovery, and slow job growth.
"We're at a crossroads moment," he said. "We're facing uncertain times for a number of reasons. We have to prepare locally for what goes on beyond our borders and we cannot expect people to come and save us."
De Blasio's plan puts $1 billion annually into the general reserve fund through 2019 --which he called "the first line of defense against a downturn" -- and increases reserves in the retiree health benefits trust fund to $2.6 billion.
The mayor said his budget recognizes more than $2.5 billion in savings across fiscal 2015 and 2016. While Doulis praised that as a "good first step," she said agency plans should include information on per-unit costs and performance targets to assess priorities and performance, which she said has been rarely done in the past.
The capital reserve fund, said de Blasio, would enable the city to keep current with its debt service and better analyze the feasibility of capital projects. Moody's Investors Service rates the city's roughly $40 billion of general obligation debt Aa2. Fitch Ratings and Standard & Poor's rate it AA.
De Blasio said debt would remain within 15% of tax revenue, a popular yardstick with bond rating agencies. "We've been very consistent the past few years," he said.
His budget includes $54 million for mental health services, expanding to $78 million in fiscal 2017, and $33 million a year to eliminate the annual payment in lieu of taxes by the New York City Housing Authority as part of an overhaul of the agency that he will announce within days.
Earlier in the week, de Blasio said the city would pump an additional $29 million into the City University of New York system for science, technology, engineering and math programs. That amount would increase to $51 million the following year.
The capital plan includes an increase in the city's contribution to the Metropolitan Transportation Authority's five-year capital plan to $657 million, which administration officials acknowledged days earlier. This, he said, complements other city investments in the MTA.
MTA Chairman Thomas Prendergast on Monday requested $2.5 billion over five years, including $1 billion to help finish construction of the Second Avenue subway. De Blasio said he generally supports the MTA's efforts to fully fund its proposed $32 billion capital plan, which has a $15 billion hole and still needs the approval of a state capital program review board.
"I did not get a thank-you note [from Prendergast], but I'm OK with that," said de Blasio.
Other capital initiatives in the city plan include $12.6 billion to build out transportation infrastructure, including $7.8 billion to restore and rehabilitate bridges; $14.7 billion for the Department of Environmental Protection's water and sewer system; $902 million for public libraries; $13.5 billion for the Department of Education's five-year capital plan; and $1.8 billion for de Blasio's green buildings plan.
