Testimony Of New York City Comptroller Scott M. Stringer Comments On New York City’s FY 2020 Executive Budget Before The New York City Council Finance Committee
Good afternoon, Chair Dromm and members of the Finance Committee. Thank you for the opportunity today to discuss the City’s Fiscal Year 2020 Executive Budget. Joining me is our Deputy Comptroller for Budget, Preston Niblack.
Each year we have an opportunity to consider how best to serve working families and promote policies to empower our communities. Our budget is not about just numbers on a spreadsheet or mere dollars and cents. It’s an expression of our values and a statement about what’s important to us as a City.
Because behind every line item is a human face: a family struggling to keep their home, a working parent on the brink because of the crushing cost of childcare, children growing up in communities without adequate spaces to play. I hope that my testimony today will help ensure that our budget manages our finances for the long term, lifts up our City’s most vulnerable, and moves us forward toward a more affordable and livable city. We cannot and will not stand for anything less.
The national economy has now experienced a decade-long expansion – the longest and strongest in recent history. Since the end of the Great Recession, New York City has added close to 90,000 jobs per year. A booming economy and growing tax revenues has enabled us to invest in critical initiatives, such as Pre-K For All and Right to Counsel.
When I last appeared before you in March, there was considerable anxiety about the national economy: markets had tumbled in the wake of a Federal Reserve rate hike in December, and the threat of a trade war with China was high. The outlook was guarded. Since then, the Federal Reserve has taken a more “dovish” stance on monetary policy, which markets and employers have obviously welcomed. But President Trump’s reckless actions have once again spiked concerns about a trade war with China that will only serve to hurt businesses and workers here at home. The impact of the President’s latest whims must be an important reminder that unpredictable and damaging policy shifts in Washington can quickly undermine confidence and growth in our economy.
One way or another, the rate of economic growth is bound to slow, and job growth will decelerate. We project that within the next four years, job growth in the City will decline to under 30,000 new jobs per year.
Fiscally responsible management of the City’s budget requires taking the long view: not just balancing this year’s budget, but ensuring we take actions today to protect our ability to provide the critical services that New Yorkers rely on tomorrow. I remain concerned that we are simply not doing enough in this regard.
In one of Aesop’s Fables, the grasshopper spends all summer singing instead of storing up food. When the winter comes, he has no stored food to rely on, and he starves. If we fail to take prudent steps to shore up our economic reserves now, when an economic winter comes, our most vulnerable New Yorkers will pay the price for our singing.
With this in mind, I begin with a review of the City’s Fiscal Year 2020 Executive Budget and the Financial Plan.
Over the period of the City’s Financial Plan, through FY 2023, the Administration projects spending to grow at an average annual rate of 2.5 percent. In contrast, revenues are projected to grow at an average rate of 1.7 percent each year, resulting in budget gaps of $3.5 billion in FY 2021, $2.9 billion in FY 2022, and $3.2 billion in FY 2023.
My office expects tax revenues to rise by 3.6 percent per year, higher than the 3.2 percent rate the Office of Management and Budget projects. We expect tax revenues to be $679 million higher this year than was projected in the Executive Budget, rising through the remaining years of the plan to reach nearly $1.8 billion more by FY 2023. The biggest contributor is the property tax, due to both higher anticipated growth in the near term, and a lower level of reserves than what the Administration is forecasting.
We have also identified several significant risks on the spending side of the budget, including overtime and charter school tuition. And the financial plan still does not include funding for the Fair Fares program.
Taken together, our revenue and expense projections result in smaller gaps in the last three years of the plan, compared to the Administration’s forecast.
Nevertheless, our budget remains more vulnerable than it could, or should be.
As I’ve said every year, the City should have a budget cushion – the accumulation of prior-year resources that can be used to balance the budget if needed – of between 12 and 18 percent of spending. But since FY 2017, despite continued strong growth in revenues, progress in increasing the cushion has stalled at around 11 percent. We must continue to set and reach targets to increase our savings to ensure we reach the optimal range of our financial cushion – something we should have been doing for the past five years. In the FY 2020 budget, we should at least reach the bottom of the optimal range.
To do that, we would need $2.1 billion more in reserves by the time the FY 2020 budget is adopted. And we should plan to increase our target by 1 percentage point each year, reaching 15 percent by FY 2023. This plan is both completely realistic and urgently necessary.
To achieve these targets we need to generate more recurring agency savings. The Mayor finally decided call a PEG a PEG – but then failed to deliver a meaningful one. The $420 million in savings this year, and $496 million next year, sounds impressive. But it relies heavily on the hiring freeze and not enough on real agency efficiencies, and the savings fail to pay for new spending.
The Executive Budget PEG program still amounts to less than 1 percent of agency spending. I recognize that it can be difficult to ask agencies to do a thorough scrub of their budgets at a time when the City’s coffers are seemingly full. But I think we can – and must – demand more.
Not only must City agencies contribute more to savings, they must be held accountable for the public money they spend. Last year I introduced the Comptroller’s Watch List to highlight agencies with high spending growth and lackluster results. This year the agencies on the list include two from last year – the Department of Correction, and spending on homeless services – and one new agency, the Department of Buildings.
Despite significant efforts and increased spending, the number of New Yorkers who sleep in homeless shelters continues to rise. We are now on pace to spend more than $3.2 billion next year across all agencies on homelessness. But it is unacceptable to continue spending that much and not make a dent in the homeless population. As I said last November when I released our proposal for a new approach to meeting the crisis of housing affordability, we cannot continue to have two separate policy tracks – one for homelessness, and one for housing. They are one and the same problem, and the solution is to focus on providing affordable housing for those with the lowest incomes and the highest rent burdens. This is a moral crisis – and what we are doing today simply isn’t working. It’s time to recognize that reality, and meet the problem head on with a new approach.
Similarly, our City jails now spend more than $300,000 per year to house one person on Rikers Island. As we have reported for five years now, the jail population has been steadily falling, yet the costs are growing and despite a concerted effort, the culture of violence has not abated. Again, we cannot simply spend more and more money, year after year, and not see results.
Since 2014, the Department of Buildings has increased its budget by over 60 percent and its staffing by 50 percent. And yet, accidents, injuries, and fatalities are rising at an even faster rate. The number of construction-related accidents more than tripled between FY 2014 and FY 2018 and shows no signs of abating this year. Injuries and – tragically – fatalities, have gone up at a similar rate.
I know that the Council is well aware of the problem, and passed essential legislation in 2017 to address the issue. We need to ensure that new spending and requirements will make a meaningful difference.
Another area that has drawn our attention is ThriveNYC. My office has been asking questions about all aspects of Thrive, and made an extensive request for data. But our initial review of the information they provided to us leaves lingering concerns and questions. It remains fundamentally unclear exactly what it means to be part of Thrive, how much the City is spending on Thrive programs, and how well Thrive is doing.
Today, I sent a letter to City Hall outlining our concerns and questions, and urging much more transparency regarding Thrive. I know that we all commend the effort to address the mental health needs of all New Yorkers without regard to financial or other circumstances, and I hope that the Council’s work will continue to improve Thrive and its outcomes for vulnerable New Yorkers. The public deserves the assurance that its money is being spent effectively and on ensuring that we can provide truly critical services to those who need them.
As Roe v. Wade comes under head-on assault in states like Alabama and Georgia, we in New York must protect safe and affordable access to abortion, without shame, pressure, or punishment. And we must defend abortion access not only for New Yorkers, but for women who live in states where legislatures are ripping away rights enshrined in constitutional law since 1973. That’s why I urge you to ensure that abortion is accessible to all women, without regard to ability to pay, by supporting the Fund Abortion NYC Coalition’s proposal for an additional $250,000 this year for the New York Abortion Access Fund.
It’s a small price to pay to protect a fundamental right.
I hope my message today is clear, because it’s increasingly urgent. The economic growth we’ve relied on in recent years is slowing down. The Mayor’s agency savings are a start, but we need to do a lot more.
We need to prepare our City so that regardless of what may come our way, we can protect and uplift all of our communities. For our present, for our future, and for every working family, let’s deliver a budget that takes the long view and shows what New York is all about.
Thank you very much.
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