Broad cuts seen in $92B budget
Mayor de Blasio's preliminary budget proposal will require city departments to make spending cuts for the first time in his administration — as personal income tax revenue plummets by nearly a billion dollars compared to last year.
Still, the proposed budget has grown again — this year to $92.2 billion, up from last year's $89 billion adopted budget.
“We well may have to limit some of our investments or slow down some of our investments or in fact to cut some programs and some investments outright,” de Blasio said. “We have some tough choices up ahead under any scenario.”
Part of the reason for the $935 million income tax drop is that last year's personal income tax revenue was unusually high due to changes in the federal tax law. Last June, the city projected that it would take in $12.45 billion in personal income tax this year. After strong collections through November, that revised upwards by $300 million — only for the tax revenues to tank in December and January, forcing them to revise things back to down to the original projection.
For the first time, de Blasio said he would mandate that city agencies cut some of their costs — though he said they could also hit their targets by raising new revenue — through what is called a Program to Eliminate the Gap, or PEG. In the past, Mayor Michael Bloomberg had usually set a percentage by which agencies must slash spending, but de Blasio said he will assign each agency a dollar amount it must save.
“We wanted to come up with a tailor-made structure based on protecting our strategic imperatives, but also looking at which agencies we thought had more to give, and working hard to get them to tighten their belt and make some choices,” he said.
The cuts won't hurt “frontline” services, like police or fire responses to emergencies, the mayor said, but he expected every city agency to make them. He cited things like the Department of Education's budget for consultants as an area ripe for savings.
Also for the first time, the city is not adding any money to its reserves, which now contain more than $5 billion.
But despite the need to scrimp and save, de Blasio said he had no regrets about his past spending — the budget has risen precipitously since his first year in office, when it was $75 billion. He said that spending was an investment into the city that had paid off — and noted the city's habit of putting money in reserves.
“If this is the beginning of a real challenge, we're turning rapidly now. We see the iceberg up ahead and we're turning now, and there's time to make the turn. So I wouldn't change anything in the past,” de Blasio said.
Between the PEG and a partial hiring freeze, the city is looking to save $750 million ahead of the mayor's executive budget proposal in two months. The city has also identified another $1 billion in savings, according to the Mayor's office.
“I think a PEG program that looks at efficiencies in city agencies is long overdue,” Controller Scott Stringer said Thursday. “I've said for many years that as part of the budget process we should always look for savings.”
Council Speaker Corey Johnson warned the Council, which must approve the eventual budget, won't support any cuts to vital services.