New York Mayor Bill de Blasio released his $88.67 billion fiscal 2019 preliminary budget on Thursday, while acknowledging the backdrop of federal and state budgetary unknowns.
Federal budget cuts and recent tax overhaul cast a shadow over the city's finances.
"We proceed mindful of the uncertainty in Washington and in Albany," de Blasio told reporters at an afternoon briefing in the City Hall Blue Room.
Unless Washington acts, said de Blasio, the impact of federal policies on the new budget could reach $700 million, including $400 million to the teetering Health + Hospitals unit. The new tax laws, he said, could further imperil healthcare.
Gone are advance bond refundings, which according to First Deputy Mayor Dean Fuleihan, saved the city roughly $425 million over four years.
"There's no logical explanation for the loss of advance refundings," Fuleihan said on a Bond Buyer podcast.
Albany risks could total more than $750 million. Cuts and budget shifts, he said, could hurt such programs as charter school and child welfare programs.
De Blasio is scheduled to appear before lawmakers next week. "We don't like what we see," he said. "There's a real fight to be had."
Savings, reserves and increased revenue -- partly due to audits -- offset the $750 million added since the November plan and help fund an increase in capital spending, said de Blasio.
Savings include $900 million across fiscal 2018 and 2019, in addition to the $1.3 billion in 2018, 2019 and every year after.
De Blasio also cited a general reserve of $1 billion over four years; a capital stabilization reserve of $250 million over four years; and a retiree health benefits trust fund of $4.25 billion.
"This is the best budget to protect the city, as we keep a watchful eye down I-95 and up the New York State Thruway," he said while presenting the first budget of his second term.
Washington, he said, is far less predictable. "That causes a lot more caution on our part," he said.
The modified capital commitment plan for fiscal 2018-22 authorizes agencies to commit $79.6 billion, of which $71.9 billion will be city-funded. City funds include proceeds of bonds issued by the Municipal Water Finance Authority and the Transitional Finance Authority, plus general obligation bonds.
The capital plan includes an additional $200 million to the New York City Housing Authority over four years to replace boilers and upgrade heating systems at the 20 most problematic public housing developments. In addition, the city has earmarked $9 million in capital and nearly $4 million in expenses for rapid-response teams.
De Blasio said the upgrades will help NYCHA save $5 million annually in energy costs.
NYCHA leadership is under fire over its handling of lead-paint inspections, which triggered probes by the city Department of Investigation and the U.S. Attorney’s Office.
The budget included no funds for the first phase of the Metropolitan Transportation Authority's $836 million subway improvement plan. Gov. Andrew Cuomo said the state would contribute half, but de Blasio to date has balked at any city contribution.
The preliminary budget marks the initial step in the process. The 51-member City Council will hold a new round of hearings and by law, must vote on it by July 1. The past two budgets materialized one month ahead of schedule.
De Blasio could face headwinds in the council with the election of Corey Johnson as speaker. While predecessor Melissa Mark-Viverito was fiercely loyal to the mayor, who hand-picked her, political observers and bond analysts see Johnson as more independent, even though he and the mayor share the same liberal stripe.
“We expect a rigorous budget process. We'll be asking a lot of questions," Johnson told reporters in the City Hall rotunda. "We'll be talking about setting aside reserves for the downturn when it comes, and it will come.
"More money for NYCHA. Good," said Johnson. "It needs to be expedited so improvements are made in a timely manner."
Moody’s Investors Service rates the city’s general obligation bonds Aa2, while S&P Global Ratings and Fitch Ratings rate them AA. All three assign stable outlooks.
The city has $36.7 billion of general obligation debt as of Dec. 31.
This budget process marks the first for Melanie Hartzog as director of the Mayor's Office of Management and Budget. She succeeded Fuleihan when de Blasio promoted Fuleihan following his re-election.
Budget gaps range from $3.2 billion in fiscal 2019 to $1.7 billion in 2022, Hartzog said in a briefing.
Hartzog, who had been OMB’s deputy director for health and social services, is the city’s first African-American budget director.
"She brings a wealth of knowledge," said Fuleihan. "She's a very important part of the mayor's agenda and she will be doing an exceptional job."