FLOATING CITY DEBT BALLOON
Blaz ducking cuts, asking pols if he can borrow way out of bug trouble
Mayor de Blasio is seeking to raise the city’s borrowing capacity to cover its operating expenses — a move fiscal watchdogs say is premature given the “woefully inadequate” effort he’s put toward trimming the city’s $90 billion budget.
De Blasio’s recent push to increase the city’s debt limit was confirmed by four sources with knowledge of the situation.
The de Blasio administration approached city Comptroller Scott Stringer and state Assembly Speaker Carl Heastie for support, they said.
With the city spending $3.4 billion on fighting COVID-19 and projected revenue loss through next June now at $9 billion, de
Blasio spokeswoman Freddi Goldstein said the administration has to “explore every option possible,” especially while it waits for Senate Republicans to act on the latest federal stimulus package.
“We are spending every dollar we have to save lives and feed families — all while losing revenue every second,” she said. “New Yorkers cannot cover the cost.”
Stringer press secretary Hazel Crampton-Hays said “it’s too soon to rule out any budget action,” but that de Blasio’s priority should be fighting for federal relief.
“Before we explore borrowing against the future of our children, there are many other steps we can take to protect our fiscal health,” she said.
Heastie’s office did not respond to a request for comment.
An expansion of the city’s borrowing capacity for operating expenses would have to be approved by the state.
“Borrowing should be the last consideration after all the other options are exhausted,” said Andrew Rein, president of the fiscal watchdog Citizens Budget Commission. “This is not the time. It’s too early.”
Other budget-balancing options in the face of the COVID-19 fiscal fallout include making cuts and raising city property taxes. Both options are politically fraught.
Depending on the extent to which the city makes cuts, layoffs would anger union leaders, who would be sure to remember them — whether when it comes to de Blasio’s future political ambitions, or those of his wife, Chirlane McCray, who’s mulling a run for Brooklyn borough president.
Backing cuts could also affect the ambitions of Stringer, City Council Speaker Corey Johnson and the current Brooklyn borough president, Eric Adams — all three of whom are planning to run in the next mayoral race. The ability to borrow more could conceivably put off such cuts — a win for unions.
Raising city property taxes is also sure to lead to a backlash among homeowners and landlords now feeling the economic pain associated with the coronavirus
pandemic.
De Blasio has already begun trimming the city budget and has tasked agency heads with finding efficiencies in their respective realms, but fiscal hawks have criticized him for not going far enough.
Borrowing to pay for the city’s daily operating expenses — expenses that include teachers’ salaries, cops on the street and trash pickup, among myriad other functions — is particularly problematic, say veterans of city fiscal policy.
“When you’re looking at a substantial reduction in your revenue, adding debt service costs without the means to pay for them could put the city in a deep hole that there’s no obvious way out of,” said Kathryn Wylde, president of the nonprofit Partnership for New York City.
Under state law — the same law that created the Municipal Assistance Corp., or the MAC, during the 1970s fiscal crisis — the city is now prohibited from funding its operating expenses with borrowed money. To change that, the state Legislature would have to pass a new law to allow the borrowing. Gov. Cuomo would also have to give his approval.
Cuomo spokeswoman Dani Lever said his administration does not have a position on the matter right now.
Rein said that de Blasio’s efforts to trim the city’s spending plan — a budget that has grown by approximately $20 billion during his tenure — have been “woefully inadequate.”
“If anyone thinks we’re going to get out of the biggest fiscal crisis in generations without pain and sacrifice they’re kidding themselves,” he said.