De Blasio cites March 1 doomsday should shutdown linger

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Public housing and a variety of social service programs will be at serious risk if the partial federal government shutdown continues, New York Mayor Bill de Blasio said.

Beginning March 1, millions of New Yorkers would lose a combined $500 million monthly in direct federal support, including food stamps and rental assistance, de Blasio told reporters Thursday in the City Hall Blue Room.

"We are in such uncharted territory," de Blasio said. "Unfortunately, today, I have to tell you that things are not OK when it comes to the federal shutdown, that we are now entering nothing less than a full-blown crisis that is about to have massive effects."

Thursday marked the 27th day of the shutdown, centered around a dispute between President Trump, a Republican, and Democratic congressional leaders over funding for a wall along the Mexican border. The president and fellow Republican Mitch McDonnell, the Senate majority leader, say they won't accept a "clean" government funding bill without wall money.

The New York City Housing Authority, already in an operational crisis and facing a roughly $30 billion capital-needs backlog, is in serious peril, the mayor said. NYCHA and the city’s Department of Housing Preservation and Development spend $97 million and $34 million, respectively, in federal dollars per month for this program.

More than 280,000 New Yorkers use the federal Section 8 program to pay their rent.

NYCHA spends $79 million per month for operating expenses such as salaries. A prolonged shutdown, said de Blasio, would affect roughly 10,000 NYCHA employees.

In addition, the shutdown stands to delay the city's conversion of 63,000 NYCHA apartments to Section 8 funding under the federal Rental Assistance Demonstration program, which helps secure private investment for repairs.

“NYCHA’s a problem. The last thing the city needs is for the city to lose subsidies for rent or for capital improvements,” said Howard Cure, director of municipal bond research for Evercore Wealth Management. “Long-term, the city needs to work with the federal government to find a solution for the funding because the city can’t afford it."

The federal shutdown opens the door to greater financial risk for municipalities, Kroll Bond Rating Agency said.

“Over time, economic activity slows due to lack of federal expenditures,” said Kroll. “The full fiscal impact of the federal shutdown will depend on many factors, but the longer the shutdown persists, the greater potential credit implications for states and municipalities.”

According to de Blasio, nearly 1.6 million city residents receive nearly $230 million in federal benefits under the Supplemental Nutrition Assistance Program, or SNAP. The federal government has authorized release of February SNAP and food stamps benefits as early as this week.

“People should plan accordingly, as this is not an additional benefit,” the mayor said.

The city itself spends an estimated $43 million on school lunches.

Having to backstop a plethora of social services for the poorest residents could pressure the city’s budget, according to Cure.

“If you really start taking away things like the SNAP program and school lunches, then it will put spending pressure on the city and you will have cash-flow issues,” he said. “A strong city like New York should be able to rely on reserves or short-term borrowing, but in weaker cities it could start to be a problem.”

In addition, said Cure, cuts in federal transportation programs could also affect the city.

"We have to serve our people, we will serve our people but at this rate we would exhaust all available funds in short order," the mayor said, responding to questions about tapping rainy-day accounts. "We don’t even know if we would be reimbursed because the rules of the game are now so broken,"

Other at-risk programs, according to de Blasio, include Emergency Solutions Grants, for which the city receives about $1 million from the feds per month to help fight homelessness; the Special Supplemental Nutrition Program for Women, Infants and Children, under which city residents receive $26 million from Washington; and opioid-addiction prevention.

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Budgets Bill de Blasio City of New York, NY New York City Housing Authority New York Washington DC