NYC Faces Ongoing Budget Crisis As De Blasio Pleads For Second Federal Stimulus

In a grim update, Mayor Bill de Blasio presented a balanced budget of $92 billion for the current fiscal year while stressing the dire fiscal straits the city faced, with a sharp decline in job recovery and the arrival of a second wave of the COVID-19 pandemic. 

To make it work, he said an additional federal stimulus was critical. “If there is no stimulus, we're going to have to make extremely difficult choices.”

Those difficult choices involve layoffs, which he’s so far avoided, and cuts to essential services. 

He said this year benefited from higher than expected tax revenue and an initial infusion of federal stimulus funds and FEMA aid. Still, there’s a looming $3.8 billion budget gap in the next fiscal year, which starts in July, though the mayor must close it in his next preliminary budget proposal in early months of 2021.

“We're constantly doing the work of tightening our belts,” de Blasio said at his Monday briefing, pointing to his mandated city worker furloughs and limited savings achieved with agencies and through labor agreements. 

While most budget watchdogs agreed another dose of federal funds was needed to weather the ongoing pandemic, critics said the mayor has not done enough to find recurring savings from agencies or city unions—, and was simply kicking ongoing fiscal threats into future years when he is out of office.

“We are in a fiscal crisis, we need to budget like we are in a fiscal crisis and this budget doesn’t meet the moment,” Andrew Rein, head of the nonpartisan Citizens’ Budget Commission, told Gothamist/WNYC. 

The city is facing a bleak fiscal outlet. As the first round of stimulus funds dries up, the pace of job recovery in the city has slowed dramatically. According to the city’s budget office, of the 900,000 jobs the city lost at the start of the pandemic in March and April, it recovered a third of those jobs by October. But in June, the city’s private sector added 100,000 new jobs, compared to October when it added just 15,000.

At the same time, the city benefited from $748 million more than expected in tax revenues this year, primarily from personal income and business taxes. De Blasio said that revenue is tied to the first round of federal stimulus funds, which enabled the payment of unemployment benefits, tax rebate checks, and business loans.

His administration also negotiated temporary savings with city labor unions, totalling $722 million. These savings are only for the current fiscal year, because the  city struck a deal to postpone union payments until fiscal year 2022. 

While many of those labor agreements averted immediate layoffs, de Blasio said layoffs remain a real possibility for the upcoming fiscal years. 

Rein said a federal stimulus package would “only serve as a bridge” to address the city’s future budget gaps. Ahead of the mayor’s preliminary budget proposal in January for fiscal year 2022, he urged the mayor to take a more aggressive approach to finding savings, cutting city spending, and continuing to shrink the size of the city workforce through attrition and a hiring freeze through the end of the city’s four-year financial plan.

Asked to respond to critics who said he was not doing enough to find savings and relying too much on a federal bailout, de Blasio pushed back, arguing the federal government failed to protect places like New York City from the worst of the COVID-19 crisis. 

“For us to just keep hanging on is the right approach, to get to the day where there's actually the federal support we deserve, and which I absolutely believe is within reach, so we can move forward,” de Blasio said. “If we get what we deserve, we won't lay off anyone. We’ll keep doing the work of serving people,” he added.

The mayor had his first opportunity to make that case to the incoming administration on Monday afternoon. He joined a group of mayors from across the country in a meeting with President-elect Joe Biden and Vice President-elect Kamala Harris. Biden has vowed to make a second federal stimulus plan a priority of his administration.