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Mayor de Blasio Delivers Testimony on New York State Budget

January 30, 2017

Mayor Bill de Blasio: Well, I want to thank everyone, and particularly thank the chairs for the opportunity to be here today. Senator Young and Assemblymember Farrell – thank you for your leadership of this joint hearing. And I want to also thank your ranking members, Senator Krueger and Assemblyman Oaks.

I want to say, on behalf of the people of the city, a thank you to the legislative leadership across the board to – Speaker Heastie; Majority Leader Flanagan; Democratic Conference Leader Stewart-Cousins; IDC Conference Leader Klein; Assembly Minority Leader Kolb; and all the members of the State Legislature here and across the board. Thank you for your partnership and your support for the people of New York City.

I want to thank two members of my team who will be joining me and will participate as warranted in the Q&A – of course you know them both – Dean Fuleihan, our Director of the New York City Office of Management and Budget; and Sherif Soliman, the City’s Director for State Legislative Affairs.

I want to say upfront that the Legislature has been a crucial partner and that is important to all the work we do on behalf of the people of New York City. And of course, we are all in this together. New York City – in all the ways that we attempt to contribute to the larger State of New York and all the ways that the State of New York works with us – this is part of a continuum. And we see our role as continuing to be an economic engine for the State as a whole and for the region. And obviously, we are the State’s primary gateway to the rest of the world and we know we have to play that role well.

I think it’s fair to say that the City of New York can only reach its full potential with the support of the State of New York. I also think it’s fair to say that New York State succeeds when New York City succeeds, and New York City succeeds when New York State succeeds. It’s a truly symbiotic relationship.

And at this moment, I can say – and I’m happy to report to you – that New York City is succeeding most clearly in the vein of economic growth. In the last two full years for which have full information – 2014 and 2015 – New York City created more jobs itself than all but four states in the country, and that helped push forward New York State’s overall gains in terms of economic growth and job creation.

And of course, New York City accounts for almost 43 percent of the State’s total population, 46 percent of the State’s jobs, and 60 percent of the State’s tax revenue.

So, we are very happy to play those roles, but we also know we have profound challenges and issues we have to address in terms of our 8.5 million people. Examples are clear – 58 percent of New York State’s Medicaid recipients live in New York City; 53 percent of the State’s Free and Reduced Price Lunch students attend school in New York City. So, we have some of the most powerful ways of contributing to the State. We also have some of the biggest challenges in the State.

We’re investing in our latest budget, in the people of our city, but, at the same time, we’re demanding savings from our City agencies. We’re setting aside unprecedented reserves and we’re spending within our means. Proud to say that just last week, one of the rating agencies – Moody’s – noted that our, “diverse, vibrant economy drives growth needed to keep pace with fixed costs,” and gave us a very positive review of our fiscal standing.

Now, we have to continue our economic strength and our economic growth for the good of all. And we face a variety of challenges, but we are prepared to address them head-on. We also know that we have to ensure for all of you that when we ask for State assistance that we can show you we’re getting the maximum impact from that State assistance and the maximum bang for the buck.

Examples are clear – you – all the members of the Legislature – played a crucial role in allowing us to build out our pre-K program. Now, 70,000 four-year-olds are enrolled in pre-K, and we’re making sure that that investment pays off. Again, I want to offer my profound thanks on behalf of the parents of the City of New York for your support in allowing us to achieve this success.

This is part of a bigger initiative called Equity and Excellence to fundamentally alter and improve our school system. And we’ve already seen results with higher graduation rates and higher test scores. And we believe those trends will continue because of these investments. So that’s an example of State support that’s having a real and tangible impact in a very efficient manner.

Also, want to say in terms of affordable housing – we are ahead of schedule in our initiative to build and preserve 200,000 affordable apartments – enough for half a million people. Already, over the three years of this plan – 62,000 apartments have been either financed and built or preserved already. And that immediately is enough affordable housing for almost 200,000 New Yorkers. That is the most affordable apartments – particularly in the last year – the most affordable apartments affordable apartments created or preserved in a single year since the time a quarter-century ago – that we have a set a record for the last quarter-century for the pace of that production.

Finally, want to note, in the vein of impact, that your support has been part of our ongoing effort to make the City of New York the safest big city in America. We’re proud to say that the numbers have come in for 2016 and, once again, we’ve seen a reduction in crime across the board in New York City, while we’ve improved the relationship between police and community through our neighborhood policing initiative – another example of investments that have consistently paid off.

Now we’re going to continue our efforts to keep our City’s economy vibrant and strong. And this is consistent in the Fiscal ‘18 Preliminary Budget that I presented last week.

A few examples I want to offer you – we obviously know that for our continued efforts on public safety – to succeed we need to keep training and equipping our police officers more effectively. So we’re investing $10.4 million to install bullet-resistant windows in every NYPD patrol car.

We know the city succeeds when people can afford to be there, and we know we have a particular obligation to those residents who live in public housing – over 400,000 New Yorkers. And we have to provide them safe and secure housing. And the City of New York has made a commitment to invest $1 billion over the next 10 years to fix the roofs at 729 NYCHA buildings that have been found to have leaks that cause health problems for the residents.

This will allow us to reach literally all of the buildings that have serious roof problems causing health concerns for residents. We know we succeed when our students have the right environment to learn in and are not subjected to overcrowding. And we know overcrowding has been a particular concern for members of the Senate and the Assembly from New York City. So, we’re tackling the problem head-on by investing an additional $495 million to build 38,000 new school seats – part of the next five-year plan. That total cost will be $4.6 billion. Again, by creating 38,000 new school seats, we will substantially address overcrowding issues.

Finally, we know that investment in infrastructure is absolutely necessary to sustain economic growth, so we’re fully funding $303 million dollars’ worth of construction on the Brooklyn and Queens stretch of the third water tunnel. Nothing more important, obviously, than providing clean and safe water to our residents and having redundancy against all potential challengers. Third water tunnel – the foundation is built, meaning the tunnel itself is in place. It will be filled by the end of this year with water. It will be operational and available as redundancy in the event of the emergency. And then the additional work to add shafts and other elements will be done with the $303 million.

So, when it comes to what we’re able to do with our resources and with your support, we feel confident about the progress we’re making. But where we feel real uncertainty is on the federal front. And we know that those uncertainties are sharp and profound. Already of course, we’ve seen new policies that lead us to be very concerned about their impact on the people of New York City – just last week, of course, the executive order on immigration, which has raised a host of concerns, and which I believe fundamentally runs contrary to the values of New York City. We believe we will be on a firm legal footing to challenge it and will do so as needed.

But this is only a beginning. The great concern we have ahead, of course, is on the budgetary front – what will the impact of proposals from the Trump administration and Republican Congress be in terms of a potential cut to services and funding that the federal government currently provides? This is a great unknown and will have a huge impact on not only the City budget, but of course on the State budget that you’re debating right now.

One crucial example that we all are concerned about – we do not know what direction efforts to repeal the Affordable Care Act will take. ACA now covers 1.6 million New York City residents.  Changes to the Affordable Care Act – or cuts to Medicaid, would have an enormous impact on both the well-being of our people and on our ability to fund our public hospital system – our Health and Hospitals Corporation.

Out of the 1.2 million patients who depend upon our public hospital system, 30 percent are currently uninsured and 45 percent are on Medicaid.  Should the ACA be repealed, we believe that up to 200,000 of our public hospital patients could lose their insurance, not only endangering their health, but potentially costing our public hospital system hundreds of millions of dollars in revenue. So, we are quite clear that any actions taken in Washington could create real pain for both state and city government. That’s why it’s so important that we ask your support in making sure that the State budget insulates and protects local governments and our work given these great uncertainties.

I want to comment briefly on the State Executive Budget, where we certainly see some very good news but also some areas of concern. In terms of education, the City of New York certainly appreciates deeply that the new Excelsior Scholarship Program – when added to existing tuition assistance programs promises to further ease tuition costs for low-and middle-income students in our state. We are also gratified to see continued support for the Dream Act, which is particularly important at this moment in history.

The executive budget continues the commitment to cap local Medicaid costs and assumes control of Medicaid administration. We certainly appreciate and support that. This will save the City of New York $130 million. We appreciate this commitment and we know that the city can assist the state in Medicaid reimbursements without the specific $50 million New York City mandate that was added in this budget.  

There is a three-year extension of mayoral control in the executive budget. I think it’s fair to say that educators, business leaders and civic leaders alike have called for a multi-year renewal. There is a strong and bipartisan consensus on this. Let’s resolve to address this issue right away through the budget process.

I am obviously pleased to see election reform in the executive budget. I want to thank the Assembly for passing an election reform package last year, including early voting, which is absolutely necessary given the realities of modern lives and peoples’ schedule. Early voting and same-day registration are fundamental reforms we need to improve the Democratic process. 

I continue to support Raise the Age and know we’ll be a better and a fairer state if we get this done. While we wait for legislative reform in this area, my administration has already made a commitment to move 16-and-17-year-olds off of Rikers Island.

We are also pleased the Governor announced support for speedy trial reform. New Yorkers deserve their day in court; the principles of fairness and justice demand that we ensure that day in court as expeditiously as possible. I’d like to commend Speaker Heastie for his leadership on this issue as well as members of the Assembly Democratic Conference for championing these issues.

I also support changes to our bail system that would reduce our reliance on money bail and would allow judges to consider whether a defendant poses a danger to the community when making bail determinations. New York City has expanded supervised release so that 3,300 individuals a year can be safely supervised in the community instead of being detained. Detain those who pose a public safety risk and releasing those who can safely remain in the [inaudible] – doing both those things is good public policy. And I look forward to working with you on these issues during this session.

I now want to talk about the larger economic reality of our city and how this State budget affects us. We’re still dealing with extraordinary challenges in terms of affordability in our city and income inequality that it widespread. It is a problem everywhere and I think everyone was struck by the recent Oxfam report that made clear that eight individuals possess as much wealth as one-half of the residents of this globe. And, we also know that the wealthiest among us have every reason to expect a major new tax break at the federal level given the proposals already put forward by President Trump and Congress. We think in light of the fact that the wealthiest will be receiving a substantial federal tax break that it’s time that they pay their share of the state and local taxes. So I join the Senate Assembly Majority’s push to extend and deepen the millionaire’s tax. This is critical to all we are trying to do to improve our economy and support our people. For similar reasons, I believe the time is now to enact a mansion tax for New York City high value home sales. That means homes that start with a sales price of $2 million or higher. The people who would be affected can certainly afford this additional tax and the revenue would be used to keep 25,000 senior citizens in their home at an affordable level. This would be an additional 25,000 senior citizens who would get affordable housing as a result of this proposal. Moreover in this uncertain federal climate, identifying local revenue sources for affordable housing preservation is paramount. I think it’s fair to say one of the areas most threatened by potential federal budget cuts is affordable housing, public housing, Section 8 – all the things that so many of our residents in New York City and across the State depend on to be able to afford to live.

Now, a few areas of concern that the City of New York has with the executive budget – first, we’re concerned about the 421-a tax abatement program.  We worked hard with so many of you to eliminate the old and broken version of the 421-a program which subsidized luxury housing without enough affordable housing in return. We advanced a proposal in 2015 that set forth some clear principles for what 421-a should look like – one, more affordability per city tax dollar spent. It’s a matter of fairness to our tax payers; two, that we could no longer subsidize luxury housing; and three, that the developer got a tax exemption in anywhere in New York City they had to provide affordable housing in return. Those were the core principles. The State’s current proposal represents a departure from these principles to illustrate if the old broken 421-a program was extended, the per unit subsidy would have been $614,000 and have likely would have produced only 12,400 affordable apartments over 10 years. By contrast, our proposal from 2015 had a per-unit subsidy of $421,700 and would have produced almost twice as much affordable housing – 25,500 affordable apartments, enough on average for over 75,000 New Yorkers. In other words, it meant fewer taxpayer dollars spent for each apartment and more affordable housing created. Now the State’s current proposal, the per-unit subsidy would be $544,300 and produce 21,750 affordable apartments over 10 years. In other words, more than $100,000 per-unit above the cost of our proposal with less affordable housing. 

Now, we’re concerned by the additional costs imposed by the State’s current proposal. But, we obviously look forward to a conversation on how we can work together. With that being said we are even more concerned with the potential expansion of any condominium program as negotiations proceed. And we’re concerned that we not creep back into the direction of the old and broken system. We are particularly adamant that we cannot support a plan that reverts back to subsidizing luxury condominiums.

Costs will balloon in that instance without improving affordability, which is the core objective of that program and we’d have to ask at that point whether we were repeating mistakes of the past and spending taxpayer dollars to subsidize luxury housing, which I think is fair to say our taxpayers would not approve of. A secondary concern is education. There appears to be an effort to eliminate the State’s commitment to fully fund the shortfall in aid owed to high-need school districts all over the State of New York. And, almost a decade ago, the State charted a course of reform on how school aid was allocated. After lawsuits, a study commission, a financial crisis, and many budgets later, this vital commitment has yet to be completely fulfilled.

The State must continue its commitment to funding the Campaign for Fiscal Equity settlement. The City is doing its part. Since 2008, the City’s share of education spending has increased from 49 percent to 57 percent, while the State share has declined from 41 percent to 37 percent. The State shortfall is currently $1.6 billion.

We are doing our part to provide equitable funding to our schools but we need the State’s partnership, and we need the State to do more. 

When I came into office, many schools were at just 81 percent of the Fair Student Funding level, and the citywide average was 88 percent. 

Over two years, with your help – with the help of State assistance, we increased the citywide average to 91 percent, with no school below 87 percent of the formula.  All, by the way – all of our Community and Renewal Schools are at 100 percent of their Fair Student Funding level.

Now, if the State provides a similar increase in education aid as it did over the last two years, we intend to go to a citywide average of 92.5 percent with no school below 90 percent next year. And with the State’s continuation of the commitment to CFE, the City is committed to raising all schools to a minimum of 100 percent by Fiscal ‘21. 

On another front, the State is also proposing a much needed consolidation in the administration of grant funding for pre-K. We support the goals of streamlining to address the administrative burden on school districts that come with complying with separate funding structures, standards and reporting requirements.

However, the proposal also plans to cut the per seat rate at a cost of $34 million, or the equivalent of 3,400 slots in New York City. The State has made a giant leap forward of the last years in supporting pre-K. But this proposal and this proposed cut is a leap backwards and counter to all the progress that we’ve made with your partnership in ensuring that 70,000 four year olds had full-day high-quality pre-K program. This rate cut should not go forward.

Additionally, the State is proposing to increase and shift charter school costs it has been paying previously. The proposal strips State support away from charter schools and transfers the cost to school districts abruptly and to an exorbitant degree. For New York City alone this would mean $198.3 million less funding for our schools. 

If the State chooses to enact this increase in funding for charter schools, then it should cover the costs and fund it separately from our basic school aid as it has for the past four years.

The Executive Budget also removes the geographic cap on charter schools in New York City.  The Legislature recently raised the cap, and there are currently 30 charters available for New York City, in addition to 29 schools already approved to open. This is ample and there is no need to raise the cap at this time.

Third, there are several cuts in the State Executive Budget that are going to have an effect on thousands and thousands of New Yorkers.

These cuts include, first of all, $32.5 million through Fiscal ‘18 for public health programs, chipping away at the long history of State partnership in health funding in areas including disease control and emergency preparedness particularly related to our efforts against Zika, maternal and child health programs such as Newborn Home Visiting programs, HIV prevention activities, school-based health services, naloxone education and distribution to address the opioid crisis, and public health campaigns on anti-smoking and obesity-related illnesses

There is a cut of almost $66 million through Fiscal ‘18 with the shift of State costs for the education and care provided to 8,900 foster care youth.

There’s a cut of $25.5 million through Fiscal ‘18 through the redirection of senior center funding affecting 65 neighborhood programs for seniors serving over 6,000 seniors per day.

There’s a cut of almost $30 million through Fiscal ‘18 with the elimination of the State share in funding services for more than 800 special education students who have highly specialized needs.

These are also key areas of need for the City that the budget does not address.

We must all together note the glaring and inexplicable omission of New York City in the Design Build authorization in the budget. The Executive Budget extends and expands Design Build for State agencies, State authorities, and counties outside of New York City.

According to a 2016 report by the State Empire State Development Corporation which evaluated projects in New York State, Design Build accelerated dozens of projects and saved taxpayers billions of dollars. 

If the City also had access to this tool, similar benefits would be realized. Our capital agencies have identified $7.3 billion in projects, with around $450 million in immediate savings. If the rest of New York State has access to Design Build, New York City certainly should as well as a matter of common sense.

Now, I’d like to discuss for just a moment the homeless crisis facing New York City. And I wasn’t to be clear up front – my administration is fundamentally dissatisfied with the current homelessness situation in our city. Next month, we will be announcing a new comprehensive vision for addressing it. 

Homelessness has been a growing problem in our city for decades and only gotten worse in the years since 2011 when the Advantage rental assistance program was cancelled. 

There is much more to do, and we have made meaningful progress however over the last three years. 

Without our new initiatives, we project instead of the 60,000-plus people who are in shelter now, that that number would be over 70,000. We have evidence that some of our initiatives are working more constantly including the fact that our anti-eviction legal services program has helped to reduce evictions by 24 percent since 2013.  We know our new HOME-STAT initiative, the most comprehensive program to address street homelessness anywhere in the United States which began last year, has already brought 690 individuals off the streets and into safer surroundings where they can get support. 

Of course, the best way to address homelessness is to prevent it from happening in the first place.  That is why I’m pleased to support Assemblyman Andrew Hevesi’s Home Stability Support proposal which deserves serious consideration in this budget process.

Home Stability Support would create a statewide, primarily state- and federally-funded rental subsidy program designed to keep people in their homes and out of shelter.

It recognizes the State’s responsibility in providing rental assistance and provides an option to local governments to go even farther in their own efforts. And I will tell you right now, rest assured New York City will do its share if this initiative is passed. 

I look forward to working with all of you and Assemblyman Hevesi to ensure the final product is one that can have an immediate impact on people’s lives while not imposing an unfunded mandate on local governments.

Now I want to turn for a moment to the Memorandum of Understanding on housing that would unlock $2 billion in housing funding authorized in last year’s State budget. 

Housing is the single biggest expense for our residents and we welcome additional affordable homes financed by the State as we continue to work together to meet the needs of so many New Yorkers who are one paycheck away from not being able to afford their rent or their mortgage.
Negotiating and signing the MOU is also critical because it would facilitate the production of supportive housing units that offer residents an apartment and services to keep their lives on track and help us to fundamentally address the problem of homelessness. 

My administration announced a commitment to fund 15,000 apartments for supportive housing over the next 15 years – the largest commitment ever made by the City of New York. We’ve budgeted the necessary resources and our first 550 apartments will be available this year for people in need. Over the next five years, New York City will produce 4,000 apartments that will address the needs of our most vulnerable residents and have a direct impact on reducing our shelter population. 

But we have a related concern when it comes to public housing. While the City has made a very substantial commitment to capital improvements for public housing, as I mentioned $1 billion committed to fix the roofs in over 700 buildings. The current total from the State falls short and we ask your assistance in providing help to the 400,000 people who live in public housing. I want to thank Speaker Carl Heastie and the Assembly Democratic Conference to add to that funding. 

As I wrap up, I want to underscore the importance of partnering with you and with all community leaders to address the housing crisis.

As I said, in February, I will present a comprehensive vision related to homelessness. And one thing that we will do as part of that vision address a concern that many of you have raised about community notification. We will include a notification process for you and for community leaders that will be implemented immediately upon the announcement next month. 

And post-notification, we will proceed with meaningful community engagement, one that facilitates dialogue between City officials, elected officials, and community leaders ensuring there’s a clear framework and timeline for any shelter opening, and making sure that we’re connecting shelter residents to their schools, jobs, and community supports while addressing the concerns of neighborhood residents at the same time.

I want to conclude my testimony by reflecting on how much of our work – all of our work is happening under clouds of uncertainty. Under the new administration in Washington, we all must live with the possibility that many things will change and very much in unexpected ways. I think the events of the last 48 hours certainly illustrate that. 

I can assure everyone that no matter what happens in Washington, New York City will do its part to remain a growing and vibrant economic anchor for our region and our state. But in the face of unprecedented uncertainty from the federal level, your partnership is more important than ever. Now more than ever, it’s important to remember a simple truth in terms of the relationship between New York City and New York State, we are all in this together. 

Thank you, Chairs, for the opportunity to be here.

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