City could have $4.8B more in tax revenue than projected
By Brian Pascus
June 2, 2022
With billions of unexpected dollars on hand, the battle at City Hall before the budget deadline will be over what to do with it.
The mayor has already been locked in negotiations with the City Council that reveal contrasting visions. The mayor’s preliminary budget proposal in February reduced spending by $2.3 billion and included sharp cuts to the city’s workforce. The council’s counterproposal in April called for a total spending increase of $4.3 billion, of which $3 billion would be placed in reserves.
Following the publication of the council's proposal, the mayor offered an additional $1.2 billion in spending.
When asked yesterday about the influx of taxpayer dollars, the mayor stressed that he plans to put much of this new money away and that he doesn’t want these dollars to “burn a hole” in the city’s pocket.
“We have union contracts that are coming up. We have the Healthcare Stabilization Fund that's going to cost us billions, and we must be smart with taxpayers’ dollars,” Adams said. “And so, we are going to make sure we put money into our rainy day fund and our reserves to be prepared for all of those contracts, for all of those emergencies.”
Budget hawks view inflation, rising material costs, supply chain challenges and the threat of recession as harbingers of an impending economic downturn. As markets decline and deal-making dries up, tax collections from Wall Street will suffer as well.
“We said put $2.3 billion [of the $3.3 billion] into the rainy day fund. It’s the smart thing to do,” Champeny said. “Put it aside because things are so uncertain going forward.”
The city’s rainy day reserves stand at $500 million today, although they are expected to rise to $1.2 billion by the end of the year once maneuvering from the 2021 and 2022 budget agreements are completed, Jain said.
“You’re getting a lot of money at this point in the year,” he said. “We’re saying: Don’t try to spend it all. Try to set some aside if revenues don’t come in as high as you assumed, so you can backfill next year with the positive funds you have from this year.”
Adams may be hard-pressed to find agreement on rainy day savings with the City Council and an activist Democratic base—in part because of lofty promises he made on the campaign trail.
Adams promised affordable housing activists that he would spend $4 billion annually on affordable housing construction and preservation within both the New York City Housing Authority and the Department of Housing Preservation and Development. Last month the mayor said he would increase spending on affordable housing by an additional $5 billion over 10 years, beyond what he proposed in his preliminary budget in February.
Council Speaker Adrienne Adams upped the ante , however, and called for a $4 billion infusion to the city capital plan, roughly $1.5 billion more per year than budgeted by the mayor.
“This is a great opportunity for Mayor Adams to make good on his promise of $4 billion for housing capital annually,” said Rachel Fee, executive director of the New York Housing Conference, a research and advocacy organization. “If the city is in a better financial position, they should use it [the money] to solve our affordability and housing crisis.”
There’s also the campaign promise Adams made to spend 1% of the city budget on parks preservation and cleanup. As matters stand, the mayor has set aside close to $600 million for the Parks Department in a $99.7 billion budget proposal.
Adam Ganser, executive director of New Yorkers for Parks, a nonprofit, said that without the $1 billion in new funding, roughly 1,800 positions in the City Cleanup Corps will disappear and contribute to a decline in parks maintenance. He added that before the 1970s recession, the city spent roughly 1.5% of its budget on parks.
“Our parks have been underfunded for 40 years, and he ran on a message that he’s going to double down on parks,” Ganser said. “We trust this is still a priority for him.
Read the full article online at Crain's New York Business