De Blasio’s Budget: Progressive or Aggressive?

Written by Nick Powell on . Posted in Budget/Taxes, Economic Development, Education, Environment, Features, Government Operations, Housing, Labor/Unions, News.

What does a “progressive” city budget look like? During his preliminary budget presentation last week, Mayor Bill de Blasio attached his favorite buzzword to a supposedly apolitical document. Through the explicit and implicit priorities laid out in his financial plan, the mayor—who mere months ago dubbed himself a “fiscal conservative”—threw caution to the wind, etching his major policy items into the budget with or without the necessary cooperation from Albany, and despite the element of unpredictability stemming  from the city’s unsettled municipal labor contracts.

“It may sound counterintuitive to some, but we need a balanced budget and a strong and stable city government to facilitate our fight against inequality,” de Blasio said in his presentation.

The major hurdle de Blasio will have to clear in order to deliver on that statement is resolving the aforementioned 152 outstanding union contracts left behind by former Mayor Michael Bloomberg. The cost of settling every single contract will be prohibitive, and could potentially blow a sizable hole in the budget both in the near and long term. To that end, many budget observers were scanning the document this week, looking for areas where de Blasio and his budget director, Dean Fuleihan, might have padded the budget to create a reserve of money to draw on to dole out the years of retroactive pay some of the unions maintain is owed to them.

Mayor Bill de Blasio and his Budget Director Dean Fuleihan (Source: nycmayorsoffice Flickr)

Mayor Bill de Blasio and his Budget Director Dean Fuleihan (Source: nycmayorsoffice Flickr)

Alas, even the most keen-eyed watchdogs found no evidence of budget shenanigans, and, with the exception of the once-depleted Retiree Health Benefits Trust Fund, which de Blasio and Fuleihan replenished with $1 billion and could theoretically use to settle the contracts in part, it appears the mayor will have to get creative in order to find the funds to placate his friends and allies in organized labor. Some budget experts assert that because the money for collective bargaining is not yet set in stone, de Blasio’s financial plan is, for now, hardly discernible from the most recent one issued by his predecessor.

“There aren’t major changes from what Bloomberg laid out in his last budget plan in November,” said Doug Turetsky, communications director for the Independent Budget Office. “It’s fair to say that the budget has a down payment on a number of the initiatives that de Blasio talked about in the campaign, but he’s only been in office six weeks, he’s still getting his administration together.”

Therein lies some of the mystery written into the preliminary budget. Most budget experts agree that Fuleihan was working without a full deck in terms of putting together a robust progressive budget—notably because so many city agencies still lack a commissioner to do any real assessment of their needs.

Moreover, as long as the labor contracts hang in the balance, de Blasio’s budget remains somewhat in flux. The mayor is widely regarded by labor and political insiders as more amenable to the demands of municipal unions than Bloomberg ever was, but some budget analysts believe that a truly forward-thinking budget would factor in the ballooning pension and healthcare costs that put a sizable dent in the city budget.

“Is maintaining unsustainable pension and health benefits for public-sector workers—benefits no longer available in the private sector—really progressive budgeting?” asked Nicole Gelinas, a senior fellow at the Manhattan Institute. “It comes at the cost of investing in infrastructure and other things that can help poor people. It is these benefits costs, now 31 percent of local tax dollars, that define the budget, and de Blasio did not even acknowledge them.”

There is a notion among de Blasio critics that the mayor is sticking to Bloomberg-era payroll projections even as unions will likely ask for raises that would push those estimates up by billions of dollars annually, a discrepancy de Blasio eventually will have to reconcile as contracts are negotiated and he finalizes his executive budget. This line of thinking lends credence to the theory that the mayor will institute pattern bargaining in settling with the unions—i.e. base-lining a certain amount of back pay and salary increases with one or more unions as a precedent for bargaining with others. In fact, some insiders point to the recent settlement the city reached with its 200 environmental officers, where each individual worker received $50,000 in retroactive pay, as a potential harbinger for collective bargaining sessions.

Putting the labor uncertainty aside, de Blasio outlined several immediate actions that appear to make the preliminary budget “progressive.”

De Blasio restored several Bloomberg-era homelessness prevention and runaway youth programs, aiming to keep a pledge to tackle an issue that stymied his predecessor. He relieved the New York City Housing Authority of a portion of its crippling debt so it can better address the seemingly never-ending backlog of repair requests from NYCHA residents. De Blasio also announced a joint initiative with Gov. Andrew Cuomo to cap the rent contribution for people living with HIV and AIDS in city-supported housing, and provided startup funding for a program to provide municipal identification cards to undocumented immigrants.

Of course, the centerpiece of the mayor’s budget is his proposal to establish universal preschool for all 4-year olds and afterschool for every middle school student, paid for through a hike to the personal income tax on high-income earners. The preliminary budget not only accounts for Albany granting de Blasio the home rule rights he has been actively campaigning for in order to raise the tax, but it also factors in an additional $500 million that the mayor maintains the city is owed by the state for school aid.

From the outset of the budget presentation, de Blasio tried to thread the needle between the progressive label he has bestowed upon himself and his administration’s “profound sense of fiscal responsibility.” But is the mayor neglecting that responsibility by assuming an extra $1 billion-plus in funding from the state to finance his robust education plan?

“It’s good for people to understand that the mayor is being very consistent and aggressive in his stance towards Albany,” said James Parrot, deputy director and chief economist at the Fiscal Policy Institute. “Rather than being a supplicant and trying to beg for money from Albany, it’s better to be assertive and make the city’s case and if need be, take it to the voters at some point and get them to reward or punish people, depending on whether they support the city’s agenda in Albany. There’s an element of risk in doing that, but it’s a quality of leadership.”

However, de Blasio was not nearly as emboldened when discussing issues that required federal assistance in his budget presentation. On cuts to food stamps, de Blasio merely outlined the recent cuts made to the program via the recently passed Farm Bill, seemingly resigned to the “federal situation we face.”

A year removed from Superstorm Sandy, the most devastating natural disaster to sweep through the five boroughs in memory, the mayor offered little more than lip service in committing to the continued rehabilitation of affected areas. In lieu of an actual blueprint for recovery, the mayor instead pointed to the remaining federal money owed to the city for Sandy rebuilding, a total of $4.6 billion in unmet needs.

To be fair, in the coming weeks de Blasio will have the opportunity to make more far-reaching changes as he and Fuleihan piece together the executive budget. The mayor’s plan to build 200,000 units of affordable housing, as well as the funding for the New York Police Department’s inspector general to contribute to stop-and-frisk reform should be spelled out when the budget is finalized, and both could further legitimize his progressive credentials. Only at that point will we see whether Cuomo and the Legislature allow de Blasio’s political gambit of aggressively budgeting for his education program to pay off.

Kristen Meriwether contributed reporting. 

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