New York Mayor Bill de Blasio on Thursday released his $82.1 billion preliminary budget that balances spending initiatives with possible state aid cuts and an economic downturn.
"It addresses the needs of New Yorkers through targeted investments, while protecting the city against the many risks ahead," de Blasio told an overflow crowd of reporters during a late-afternoon press conference in the City Hall Blue Room.
The City Council must approve the spending plan for fiscal 2017, which will begin July 1. Last year's budget was $78 billion.
The budget proposal maintains reserves and adds $1 billion to the citywide savings program. De Blasio said the city now has about $5 billion in reserves overall.
Gov. Andrew Cuomo, in his Jan. 13 budget message, called on the city to pay much more toward the City University of New York senior colleges and Medicaid. By some estimates, CUNY and Medicaid cuts could blow nearly a $1 billion hole in the city's balance sheet.
"No other state requires local governments to pay as much toward Medicaid as New York," the Citizens Budget Commission watchdog organization said in a Thursday commentary.
Cuomo, however, backtracked days later and said his message was merely a starting point for discussions about efficiencies within CUNY.
"I am taking the governor at his word and will hold him to that word," said de Blasio, who will address the legislature Tuesday about the budget. "The [City] Council and legislators all over the city feel the same way. I've spoken to [Cuomo] several times and we're working in good faith that we will not have large cuts."
De Blasio's presentation was low key compared with Cuomo's bells-and-whistles announcement last week.
"Yeah, boring is good sometimes," said the grinning mayor. "It's boring but the point is, it's a good boring. There are lots of reserves and fiscal caution."
Reserves total about 6% of the budget. City Comptroller Scott Stringer and bond rating agencies favor a double-digit percentage.
"Based on what we know today, I'm confident that this is right," said de Blasio. "The rating agencies want more reserves, but they think we're doing well. This is the balance point; $5 billion is a very healthy number by any means."
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
Reserves include $1 billion each year in the general reserve and $3.4 billion in the retiree health benefit trust, in addition to the $1.1 billion in citywide savings program for fiscal 2016 and 2017 combined. "We have to be ready for a scenario in which we go it alone," the mayor said.
The latter program includes $667 million in agency savings and $407 million in debt service savings, both over two years.
De Blasio acknowledged the city's vulnerability to the headwinds confronting the global economy, such as China's stock market having dropped 42% since its peak in June.
The proposed budget adds $600 million a year to maintain pensions through a $9.4 billion commitment for fiscal 2017. The extra amount is in addition to costs associated with lower earnings on pension investments for 2015, as Stringer's office reported in November.
The city has also earmarked $337 million in relief for teetering New York Health & Hospitals, the former Health & Hospitals Corp. Its patients are covered by Medicaid or are entirely uninsured, and the federal government is cutting reimbursements the uninsured patients while Medicaid doesn't cover the costs of care, "leaving Health and Hospitals to pick up millions of dollars in costs," de Blasio said.
According to Dean Fuleihan, director of the city Office of Management and Budget, the city will face budget gaps of $2.3 billion, $2.9 billion and $2.7 billion in fiscal 2018 through 2020, respectively.
