Empire Center fiscal expert E.J. McMahon is warning that the local economic outlook is “the grimmest on record,” thanks to the pandemic — yet you’d barely know it from the budget Mayor Bill de Blasio unveiled Thursday.
De Blasio aims to trim spending to $97.4 billion this year and $89.3 billion next year, based on estimates of a 3.5 percent drop in tax revenues through June and 8.3 percent in fiscal year 2021.
That may sound bold, but when you adjust for back surpluses the mayor is using to balance the books, it turns out his plan actually increases city-funded spending slightly, the city’s Independent Budget Office reports.
And this after years of soaring budgets: City-funded outlays through 2020 rose 32 percent since de Blasio took office. The payroll headcount is up 12 percent, to the highest level in recent history.
In sounding the alarm, McMahon cites new jobless numbers (1.1 million more New Yorkers out of work as of April 4) and a Federal Reserve report noting that “indicators of regional business activity plunged to historic lows in early April,” with one key index fallen to “well below any historical precedent,” including the Great Recession.
Yet de Blasio’s plan relies heavily on short-term patches — back surpluses, raiding reserves, re-estimating costs downward and federal aid not likely to recur. And his revenue projections are rosier than other budget experts’.
As the Citizens Budget Commission puts it, the plan uses “optimistic assumptions” about federal and state aid and fails to aim for sufficient “recurring savings.”
The mayor’s approach might carry the city for a while and even be enough if the economy bounces back quickly. But even he now projects three straight yearly shortfalls of about $5 billion each after next year.
And many of his cuts are really just savings from programs suspended because of the virus, such as summer pools. As the CBC notes, “the two-year, $2.7 billion savings program totals less than 2 percent of the budget.”
New Yorkers can hope for the best in terms of an economic rebound, but at a time like this, it sure would’ve been prudent for their mayor to plan for the worst.
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