De Blasio orders agency budget cuts as New York pandemic worsens

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New York Mayor Bill de Blasio is requiring city agencies to make budget cuts amid the worsening fiscal impact of COVID-19.

Speaking to reporters, de Blasio cited 12,339 confirmed cases in the city, or 35% of the count across the U.S. New York’s death count reached 125 on Monday night. The state and city are scrambling for hospital beds, with supplies such as surgical masks “absolutely critical.”

“Every agency will be asked to help," said New York Mayor Bill de Blasio.

De Blasio, with no specifics, said his Office of Management and Budget, run by Director Melanie Hartzog, will run point on a “program to eliminate the gap,” or PEG.

“That means a mandatory initiative requiring city agencies to cut their spending,” de Blasio said. “This is going to be a very difficult exercise. Given the backdrop of this crisis. I want to be very clear, we will not cut spending related to COVID-19 response. If it has anything to do directly with stopping the spread of coronavirus, of course, that's where we're going to prioritize spending.

“That's where a lot of our new spending is. But outside of that area, every agency will be asked to help. All in different ways,” the mayor added. “Looking ahead, just weeks until the next step in our budget process, the executive budget.”

City Comptroller Scott Stringer called on de Blasio to require department heads to identify savings equal to 4% of their city-funds budget with exceptions for the Department of Health and Mental Hygiene, Health + Hospitals and social service agencies.

Later Monday, Stringer praised de Blasio for his initiative.

“The vital services for our most vulnerable populations and institutions during the economic fallout of COVID-19 will depend on responsibly saving today, as will the level of relief our city can deliver to the hotel, restaurant, entertainment, social service and retail workers who are bearing the brunt of this crisis,” Stringer said. ""I stand ready to facilitate and assist the city’s response to this emergency with everything in my power.”

Stringer has estimated a financial hit for the city at up to $6 billion.

The watchdog Citizens Budget Commission, long a proponent of PEG initiatives, said “[de Blasio was] right to implement a PEG now; agencies should act quickly and aggressively to identify recurring savings.”

De Blasio presented his $95.3 billion preliminary budget in late January and by law must release his executive budget next month. The mayor and the 51-member council must finalize a spending plan by July 1.

Confusion in Washington has sent states and cities scrambling across the country for solutions, according to Gary Sasse, founding director at Bryant University’s Hassenfeld Institute for Public Leadership in Smithfield, Rhode Island.

“There’s no national leadership,” Sasse said. “[President] Trump has bungled this whole thing terribly. There has been a lack of clarity and certainty about what states can expect.”

The Federal Emergency Management Agency said Tuesday that the Trump administration will invoke the Defense Production Act, a measure dating to the Korean War, part of the response to the pandemic.

Sasse said Trump should have invoked the act sooner.

“This isn’t socializing anything,” he said. “It’s ‘we need masks, let’s make them.’ It’s wrong to have [New York Gov.] Andrew Cuomo competing with other states and running up the costs.”

Moody’s rates the city's general obligation bonds Aa1. S&P Global Ratings and Fitch Ratings both rate them AA. All three assign stable outlooks. The city holds $38 billion of GO debt, according to Stringer's office.

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