New York City Mayor Bill de Blasio on Wednesday proposed a $74 billion preliminary budget for fiscal 2015 and four-year financial plan through 2018 that he called "the first step in a complex and collaborative process."
It includes a $1 billion cushion to help settle his biggest budgetary variable, yet-to-be negotiated deals for expired labor contracts.
De Blasio, who took office last month, must forge agreements -- all of which have expired, some as far back as six years ago -- with 152 municipal labor unions, who are demanding retroactive back pay.
New contracts could cost the city as much as $8 billion.
"We're in the great unknown here. We are very sober about these challenges. We've never had these many prospects," he told reporters. "In contract negotiations we'll have to build in some cost savings. That's the X factor."
The budget proposal includes a $1 billion to the retiree health benefits trust fund that predecessor Michael Bloomberg's administration had drained. The fund pays for the cost of retiree health benefits for city workers, including health insurance, welfare funds and Medicare Part B reimbursements.
State and federal funding is another big variable, de Blasio said.
The budget "contains a double dose of good news: there is more money than had been anticipated, and it will be put to prudent use," said Carol Kellermann, president of the Citizens Budget Commission watchdog organization.
The mayor continued the inequality theme of his State of the City speech two days earlier, insisting that the state legislature pass a tax on wealthy New Yorkers to pay for universal pre-kindergarten and after-school programs. His stance has put him at odds with Gov. Andrew Cuomo and some legislative leaders in Albany. Cuomo said last month he wants to fund universal pre-K statewide.
Under de Blasio's plan, a .0534% increase in the personal income tax rate for households earning more than $500,000 annually would add $530 million to the city coffers.
"We're fundamentally convinced this is the right way forward," de Blasio said at a news conference. He also called for an additional $500 million to fund improvements for New York City schools.
"The mayor seemed set on setting the tone for his administration and separating it from that of Mayor Bloomberg," said Morningstar analyst Rachel Barkley. "New core values have been assigned to the new administration budgeting progress: fiscal responsibility, a progressive agenda and honesty and transparency.
"He cited multiple times in his budget address that fiscal responsibility and progressive social programs are not mutually exclusive."
Education forms the centerpiece for the mayor's fiscal agenda, Barkley said. "As noted in the budget address, only one in four New York City high school students currently meet the state definition of college readiness, stressing the need for educational investments in the city," she said.
De Blasio also called for balancing progressive governance with fiscal responsibility. "It may seem counterintuitive to some," he said.
The mayor included nearly $5 million for fiscal 2014 and an ongoing $1.8 million in fiscal 2015 for the Department of Consumer Affairs to implement the new paid sick leave law.
De Blasio projects a $1.1 billion deficit for fiscal 2016. While he acknowledged that fiscal 2014 and 2015 budgets were balanced, he added that rollovers of $1 billion and $1.8 billion from fiscal years were necessary.
The mayor also included $52 million of payments for New York City Housing Authority policing, to free up the beleaguered agency to tackle its repair backlog.
He has also pegged $600 million to various reserve funds and added $35 million to the Department of Sanitation for snow removal. Another big storm is expected for Thursday.
De Blasio said his administration would have "more to say" about the city's capital budget in April.
According to city budget director Dean Fuleihan, the budget reflects some debt-service savings -- $277 million for fiscal 2014 and $87 million for fiscal 2015 through bond refundings and interest-rate adjustments.
Moody's Investors Service rates the city's general obligation bonds Aa2, while Fitch Ratings and Standard & Poor's assign AA ratings.
The mayor will present his executive budget in the spring. The 51-member City Council must approve the budget by July 1, when fiscal 2015 begins.
