NYC Council raises concerns over Fiscal 2019 capital budget plans
The New York City Council highlighted five areas of concern in its preliminary response to Mayor Bill de Blasio’s $45.9 billion capital budget for Fiscal 2019-2022 and accompanying $79.6 billion capital commitment plan for Fiscal 2018-2022.
The council issued its response to the mayor’s plans, which were released last month when de Blasio unveiled his $89.1 billion Fiscal 2019 executive budget.
The Council urged: more descriptive budget lines in the capital budget; an end to frontloading of the capital commitment plan; a correction in the capital commitment rate; a reduction in excess appropriations in the capital commitment plan; and steps to encourage minority- and women owned business participation.
With respect to transparency, the council noted in its response that there are 1,812 budget lines in the executive budget for funding of about 12,216 projects.
“The Council would like to break up the 56 budget lines in the executive capital commitment plan with over 50 projects in them. These budget lines should be broken down into multiples lines with more specific budget line descriptions, which would add much needed transparency to the capital budget.”
In February, the mayor unveiled his preliminary budget and over the next two months the council held public hearings on it. At the end of April, de Blasio released the executive budget, a revised budget that took into account some of the Council’s recommendations.
The Council is now holding a second round of hearings after which it and the mayor will negotiate adjustments. A final budget agreement must be reached before July 1, the beginning of the next fiscal year. Over the past few years, the budgets have been approved early and in record time.
On Tuesday, officials from the mayor’s Office of Management and Budget testified before the Council’s Finance Committee, chaired by Councilman Daniel Dromm.
Kenneth Godiner, OMB’s first deputy director, testified before the committee that the authorized commitments for Fiscal 2019 are 19.1 billion.
He said OMB had taken some actions the Council had urged when the preliminary budget was released.
“We have taken significant steps to reduce appropriations as the Council recommended. Since the preliminary plan, we proposed nearly $5.8 billion in rescindments from prior capital budgets,” Godiner said. “By eliminating these appropriations from prior capital budgets, we present a better reflection of the capital plan in its current state.”
Godiner highlighted capital investment the OMB has made since the release of the preliminary plan, including:
- $164 million of funding for the N.Y. Metropolitan Transportation Authority "Action Plan," bringing the city’s total contribution to the MTA's capital plan to $2.6 billion;
- $58 million moved from the out-years to the current budget to accelerate heating system upgrades at NYCHA developments;
- $300 million invested to make improvements in the NYC Ferry system;
- an additional $103 million allocated to install 3,000 permanent security barriers;
- $553 million invested in projects to maintain the sewer system and water supply; and
- an additional $38 million allocated on neighborhood infrastructure as part of the East Midtown Rezoning Plan.
The Council also looked at city bond financing and debt service. The executive plan estimates $50.6 billion in long-term borrowing between Fiscal 2018 and 2022 to pay for the commitment plan, off from the $51.2 billion that was forecast in the preliminary plan.
The Council said that while the city’s debt issuance remains well below the constitutional limit of $98.2 billion, there are several factors that should be monitored since the city’s debt service is projected to rise as a percentage of city revenues. The Council also said the city has an above-average debt burden per capita compared with other cities.
The plan includes $180.5 million in debt service savings for Fiscal 2018, primarily from re-estimates of debt service costs related to variable-rate bonds and the retention of state building aid revenue by the Transitional Finance Agency. The savings are in addition to $144.3 million in savings found in the November and preliminary plans form 2018.
The city has $37.6 billion of general obligation debt outstanding as of March 31. 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.