Comptroller Stringer Delivers Remarks at the New York State Financial Control Board Annual Meeting

(New York, NY) — Today, New York City Comptroller Scott M. Stringer testified before the New York State Financial Control Board Annual Meeting. Full text of Comptroller Stringer’s testimony, as prepared for delivery, is available below.

On August 3, Comptroller Stringer released a report on New York City’s Fiscal Year 2021 Adopted Budget. The Comptroller’s report found an overreliance on one-time actions in the adopted budget to close the $8.33 billion shortfall brought about by the economic crisis caused by the COVID-19 pandemic. With significant budget gaps looming next year and beyond, and numerous risks and unknowns to contend with, Comptroller Stringer urged the Administration to begin now to take steps to bring the City’s budget into sustainable balance.  To read the Comptroller’s full report on New York City’s FY 2021 Adopted Budget, click here.

Thank you and good afternoon.

Let me begin by acknowledging Mayor de Blasio, Comptroller DiNapoli, and State Budget Director Mujica.  Let me also welcome the newest members of the Financial Control Board:  Secretary of State Rossana Rosado, Steve Cohen, and my esteemed predecessor, Bill Thompson.

We meet this year under extraordinary circumstances – without question the single most fiscally stressful year since this Board was created in 1975.  In March, driven above all by the goal of protecting public health, the State and the City rightly issued stringent stay-at-home orders and closed all non-essential businesses.

In the space of just a few months, the unemployment rate went from an historic low of 3.4 percent– to an historic high of 20.4 percent.  Among young people, that unemployment rate skyrocketed to 35 percent. One out of every four workers of color is now unemployed. Just as quickly, City revenues slumped as well.  Revenues in the 2021 Adopted Budget are $7 billion dollars below the Mayor’s Preliminary Budget forecast – a decline of 10 percent.

In the ensuing months, the City acted to deal with the growing budget gap for 2021.  The two main pillars of the City’s approach were to draw down its reserves, and to implement a Citywide Savings Program. The savings program generated $2.8 billion to close the gap.

While this sounds impressive, over half of the savings consists of one-time actions, including school closures, cancellation of youth programming and other actions attributed to COVID-19.  Recurring savings equal just 3 percent of agency spending in the outyears of the plan.  And the City used nearly three billion dollars in reserves to balance FY 2021 – including $1.6 billion from the Retiree Health Benefit Trust.

But next year’s gap is at least $4.2 billion – equal to more than 10 percent of agency City-funds spending. We have relied too heavily on reserves, on one-time savings, and on risky assumptions.

The biggest single one-time savings in this year’s budget is from cutting the police overtime budget to $227 million – nearly 60 percent less than fiscal year 2020 spending.  This must be counted as one of the more significant risks to the City’s spending plan. Likewise, the one billion dollars in unspecified labor savings – on top of no raises for two years – are placeholders, not a strategy.

In the coming days we will know the contours of the next federal stimulus. The amount and conditions of that aid will be critical in determining how we move forward.  The Governor has warned of the potential for cuts in local aid of as much as 20 percent.  That’s the equivalent of more than $3 billion dollars for the City, including over $2 billion in aid to our City schools.

If all of this causes you concern – it should.

Now we must confront an even harder challenge.  The second budget year in a recession is always harder than the first.  We face a significant budget gap next year that the current plan simply has not done enough to address.The gap is significant – but not insurmountable. But it is impossible to overstate the importance of acting right away to begin reducing next year’s gap.

Some say we must ask marginalized communities in our city to accept cuts to vital government services in order to close the gap. They say that any other way will drive out wealthier taxpayers from the city. I reject that false choice. I reject the idea that those who have suffered the most should be asked to suffer even more.

My mom died from COVID-19 related complications in a hospital in the Bronx. When I spoke to the doctor after her passing, I noted how difficult it must be to watch grandparents taken away by this deadly virus. The doctor was quick to correct me. In the Bronx, which saw the highest rates of cases, hospitalizations and deaths, we were losing young people and parents, too.

These are people in communities that have borne the brunt of disinvestment for decades – resulting in inequities in education, jobs, and health outcomes, which have left entire generations vulnerable and in harm’s way.

Our first instinct should not be to cut summer youth jobs – when young people are facing a 35 percent unemployment rate.  Our first instinct should not be to threaten layoffs of our frontline workers, the heroes of this pandemic. Our first instinct should be not be to cut funding for the students most in need.

Instead, the City must undertake a serious, agency-by-agency savings program that looks to root out the countless examples of waste and inefficiency in the nooks and crannies of city government. This used to be a regular practice of city government, and it should be again. And we should also ask the wealthiest among us to stand in solidarity with the rest of our city and contribute a bit more to our recovery.

Finally – I recognize that we may eventually arrive at a point where borrowing to cover operating expenses will be on the table.  As City Comptroller, I will insist on knowing exactly why we are borrowing, for what purpose – and how it will be a bridge to a sustainable budget in the long run – before I support any borrowing plan.

We cannot borrow against a future generation of New Yorkers without having first exhausted every other reasonable option.  We have confronted our share of challenges in the past, from the fiscal crisis of the 1970s, to 9/11, and the Great Recession.  Each time, we’ve been forthright about the challenges, we’ve seized opportunities … and we’ve made sacrifices where we had to.

We can and will do it again.

I look forward to working with my State and City colleagues in the months ahead.  As our predecessors did in the 1970s, we must work together to make real choices, through an open dialogue.  We must not only balance our budget – we must imagine a new social compact that treats all New Yorkers, today and tomorrow, with dignity and respect.

Thank you.

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