Comptroller Stringer Delivers Testimony on New York City’s Preliminary Fiscal Year 2022 Budget Before the New York City Council Committee on Finance

(New York, NY) — Today, New York City Comptroller Scott M. Stringer testified before the New York City Council Committee on Finance’s Fiscal Year 2022 Preliminary Budget Hearing. Additionally, Comptroller Stringer released a report on the Mayor’s Preliminary Fiscal Year 2022 Budget and Financial Plan for Fiscal Years 2021 to 2025.

To read Comptroller Stringer’s report on New York City’s Preliminary Fiscal Year 2021 Budget and Financial Plan for Fiscal Years 2021 to 2025, click here.

To read Comptroller Stringer’s testimony at the New York City Council Committee on Finance’s Fiscal Year 2022 Preliminary Budget Hearing, click here, or see below.

Good afternoon, Chair Dromm, Chair Rosenthal, and members of the Finance Committee.  Thank you for the opportunity to discuss the City’s Fiscal Year 2022 Preliminary Budget. Joining me is Preston Niblack, Deputy Comptroller for Budget.

2021 began on a much more hopeful note than how we ended 2020 — with a new president taking office, and vaccines for COVID-19 finally available. But the challenges of the past year aren’t behind us — not by a long shot.

Our economic recovery has slowed, with job growth actually turning negative in the last couple of months. Small businesses are still struggling. There are 30 percent fewer businesses open today than before the pandemic, and their revenues are down 50 percent. The vaccine rollout remains rocky, with unstable supply and inequitable, unorganized distribution stalling our progress toward a full reopening. And the economic shutdown has taken its toll on property values. These factors have had real impacts on our budget.

One of the most notable developments in the Preliminary Budget was the drop in property tax revenues. For the first time in a quarter century, property tax revenues for the coming year will actually decline. That led to substantially bigger budget gaps, bringing them to over $6 billion dollars.

It was in that context that the Mayor introduced his FY 22 Preliminary Budget. At $92.3 billion dollars, it’s almost $3 billion dollars less than this year’s budget. But as we’ll see, it’s going to grow, with the addition of new federal stimulus funds.

Non-property taxes — especially the personal income tax and business taxes — have held up better than the property tax. That’s helped offset at least some of those bigger gaps.

Why is it that these other taxes have come in higher than expected? Wall Street has raked in $38 billion dollars in profits in the last 3 quarters — more than at any time since the bank bailout of 2009. But at the other end of the spectrum, in the sectors that were hardest hit by the shutdowns — hotels and restaurants, arts and entertainment, and personal services — jobs were still down 37 percent in December compared to their pre-pandemic levels. Those jobs earn on average less than $50,000 dollars, compared to over $200,000 dollars for jobs in the sectors least affected. So the most vulnerable among us were made more vulnerable by shutdowns, and the wealthiest among us are doing fine — they still have jobs, and they’re still making lots of money.

But even though non-property taxes were stronger than expected, there was still a $5.5 billion dollar gap that had to be closed in the Preliminary Budget. The City closed that gap with an additional savings program of $1 billion dollars, drawing down $1.15 billion dollars from next year’s contingency reserves, and refinancing our outstanding debt at lower rates, to save another $326 million dollars next year.

I worked with the Mayor’s Office of Management and Budget to already realize over $800 million dollars in savings this year and next, and I want to thank the excellent Public Finance team in the Comptroller’s Office for their efforts on this front. Altogether, lower debt service costs account for over 40% of the Citywide Savings Plan and I’m proud to have helped achieve this.

The budget expects that lower pension contributions will save us $300 million next year. Our early investments in the Bureau of Asset Management, to make it a modern and highly professional investment advisor to the pension boards, has paid off for retirees and taxpayers alike. So I am proud to announce here that last year, 2020, our pension funds earned over 14 percent. Through December, the pensions funds have earned on average nearly 9 percent a year since the beginning of my tenure — well over the target return of 7 percent.

The biggest component of the gap-closing program was an additional surplus of $2.7 billion dollars from the current year — again, mostly because our income and business taxes have done much better than anticipated. We achieved this without laying off a single worker. As I said at the time — all those layoff threats to our frontline workers were completely unnecessary.

Just because we’ve closed the FY 22 gap doesn’t mean we don’t have work to do to get our own fiscal house in order for the future. It’s important to remember that even when our economic recovery is fully underway again, we still face substantial budget gaps in the future. And there are some risky assumptions in the Mayor’s budget that mean the gaps could be even larger than projected — like unrealistic assumptions about overtime spending or underestimating the costs to place students with special needs in appropriate educational settings.

The State’s budget troubles present additional challenges. Over the last five years, the State has already pushed $1.3 billion in costs onto the City. This year’s budget would cut back $800 million in State education funds, substituting federal funds from December’s stimulus bill instead, plus another $220 million in other costs. The State’s long-term budget prospects could leave us facing even bigger shortfalls in the future — at a time when we will need to make investments to build the new economy of our City.

We must do the work here at home, too. We simply cannot continue with business as usual. For years, I’ve highlighted areas where we continue to spend hundreds of millions of dollars year after year — without proven results.

The homelessness crisis in our city is heartbreaking and frustrating. We’re spending $3 billion a year on homelessness — twice as much now as we did seven years ago. But the single-adult shelter population has reached an all time high of 20 thousand New Yorkers and more than 21 thousand of our children sleep in shelter every night. It is unacceptable to continue spending more than 3 billion dollars a year and not make a measurable difference for New Yorkers in crisis.

We’re spending over $400,000 dollars a year to incarcerate one person on Rikers Island — while violence continues to climb. We must redirect resources to programming and treatment that can help prevent incarceration, reduce violence within the jails, and help people succeed in their communities after they leave.

And with the pandemic exacerbating mental health challenges, especially for our young people, we’re spending $200 million dollars a year on mental health programs without sufficient accountability, data, or measurable outcomes to show for it. This spending must be evaluated and agencies must be held accountable for producing measurable results.

There is some good news, which is that we will have federal stimulus funds coming in — which will give us some much needed resources. The same morning the Mayor released his preliminary budget, we got word that the Biden Administration was going to pick up 100 percent of our eligible COVID disaster-relief spending — worth an estimated $1 billion in extra funding. And on Friday, the House of Representatives passed President Biden’s $1.9 trillion dollar American Rescue Plan, which includes $350 billion dollars in aid for hard-pressed state and local governments — including $5.6 billion to New York City.

Let’s remember an important fact, though: Stimulus money is temporary. It will give us some help this year and next, maybe even a little the year after that. But after that, it is gone. We need to strategically use these federal funds to relieve the suffering of New Yorkers, to jump-start our economic recovery and to lay the groundwork for a new, fairer economy. Doing that will be the best use of those one-time stimulus funds, to position us to stand on our own two feet when that money is gone, and to build a better future for all New Yorkers.

We must use the FEMA reimbursement money to help families who are still struggling through this pandemic, and to give our economy the shot in the arm it needs to bring back jobs for the hundreds of thousands of New Yorkers who are still without one. Families are anxious and suffering. Even with unemployment benefits, they’re falling behind on the rent. They’re struggling to feed their families. We must make sure they are getting the help they need.

We must cancel rent for the hundreds of thousands of New Yorkers who have fallen behind through no fault of their own. And we must ensure that every New Yorker — regardless of immigration status — has access to the benefits and support they need during this pandemic. Two weeks ago, I called for a $25 million dollar emergency food program for New Yorkers left out of federal and state safety net programs. Now we have the funds — we must feed every family in our City that needs it.

We must invest in our schools to ensure that they are able to operate full-time next year. Many of them will need new ventilation systems, air purifiers, and other modifications, and we will need programs to address the learning loss and emotional trauma of the past year.

We must bring justice to the thousands of taxi medallion owners and drivers who are crushed under a mountain of debt. Many have been forced into bankruptcy already. We can bring all the parties together and solve this problem before it ruins even more lives.

And we need to help jump-start our economy. More than 2,800 small businesses closed this summer, and that number has only grown in the months since. If they don’t re-open, hundreds of thousands of unemployed workers won’t have jobs to go back to. So we must use those extra federal funds to help businesses re-open and give our economy the boost it needs this Spring.

Millions of square feet of retail space currently sit unused. We should give retailers tax breaks for locating in high-vacancy corridors throughout the City. We need to help struggling restaurants with tax credits or grants until it’s possible for them to fill their seats with customers again.

There are thousands of workers in small firms that support Broadway and the performing arts with costumes and sets, and everything else that goes into a performance. These are good-paying jobs — often union jobs. They need help surviving until Broadway and other performance venues can re-open again.

Most of all, we need to ensure that all New Yorkers have equitable and easy access to vaccines. Without that, there is no recovery. These are the kinds of ideas we need now, to take advantage of those federal dollars and get our people back to work and open our City up for business again.

Those are our immediate needs, which we can use stimulus funds to help meet. And while the next round of stimulus funds can provide the down payment to start building a new economy, we cannot simply re-open the same economy we closed. The new economy we build must be fairer and more just, with benefits that are more widely shared and that helps right the historic wrongs of the past.

For that, we will need new investments: investments in new affordable housing, investments to rebuild NYCHA, investments in childcare, investments in healthcare to correct inequities in access and outcomes, investments in public safety to end the criminalization of poverty and mass incarceration and move us toward a new, public health-focused model, investments in transit and to make streets safe and friendly for walking and bicycling and investments in resiliency for all of our neighborhoods and to build a new green economy for the future of our city and our planet.

For these investments, we will need new resources and new revenue streams. That’s why I support the Invest in Our New York agenda. We can use stimulus funds to start these new investments — because we must act now, and take advantage of the moment. But we must carry them forward, and for that we will need a stable and steady revenue base.

We have reached a crucial moment in the extraordinary history of the COVID-19 pandemic and the Great Lockdown. We can start to see the light at the end of the tunnel. But we cannot go back to a status quo that wasn’t working before the pandemic and is not going to serve us now.

We have a challenge before us — and an opportunity. The challenge is to create a new, better New York with more opportunity, more justice, more fairness. The opportunity is to seize this moment to make the investments we need to realize that vision.

Thank you, and I’m happy to take your questions.

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