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De Blasio and Council, Facing Fiscal Crisis Over Virus, Agree on Budget With Big Cuts

Bowing to political pressure and a bleak fiscal reality that evoked municipal crises of decades past, New York City officials on Monday agreed to an austerity budget that includes drastic cuts to city services and a $1 billion shift of resources out of the New York Police Department.

New York, like the rest of the country, was forced to lock down its economy to limit the effects of the coronavirus pandemic, which has taken 22,000 lives in the city. The shutdown helped control the spread of the virus, but it also created a $9 billion revenue shortfall that will have a sharp impact on New Yorkers’ lives.

Mayor Bill de Blasio had already shrunk estimated spending by $7.4 billion earlier this year, but needed to find another $1 billion in savings before the city’s July 1 budget deadline for the coming fiscal year. The gloomy $87 billion budget is nearly $6 billion less than the one the city approved last year.

At the same time, another budgetary priority emerged from the police killing of George Floyd in Minneapolis, as calls to defund the Police Department grew in New York. That effort came to include Mr. de Blasio’s negotiating partner, the Council speaker, Corey Johnson, who earlier this month embraced activists’ calls to cut $1 billion from the department’s $6 billion operating budget.

The mayor and the City Council agreed on Monday to reach that $1 billion in cuts by, among other things, canceling the planned hiring of 1,163 police officers.

But slightly less than half of the $1 billion in cuts will come from a budgetary sleight of hand: School safety officers, who are currently under the auspices of the Police Department, will be moved to the authority of the Department of Education, according to three Council members familiar with the plan.

Mr. de Blasio still believes the city needs to find $1 billion in labor savings or face 22,000 layoffs, unless the federal government comes through with aid or the state grants the city borrowing authority, according to Mr. de Blasio’s spokeswoman, Freddi Goldstein.

The budget is expected to be passed on Tuesday by the full 51-member City Council, although it is expected to garner more than a dozen “no” votes, split between Council members who oppose cutting police funding at a time when crime is rising and Council members who think the police cuts do not go far enough.

Councilman Ben Kallos, a Democrat who represents the Upper East Side, said he planned to vote no on the budget, in part because he said the police cuts were insufficient.

“It is worse than it was before,” Mr. Kallos said in an interview.

“We are not seeing a meaningful reduction in head count and the changes that people are literally marching in the streets for,” he said. “I don’t think anyone marching for Black Lives Matter is doing it to see school safety agents moved from the N.Y.P.D. budget to the schools budget.”

Councilman Brad Lander, a Brooklyn Democrat, said he would also vote against the budget because he said the changes to Police Department funding were not “real meaningful cuts.” Among other things, he is skeptical that the Police Department will actually achieve $350 million in overtime reduction costs, as the city argued would happen.

The redistribution of Police Department resources to other departments achieves political and possibly policy ends, but will do little to close the city’s yawning budget gap.

To close that gap, the city will demand across-the-board savings from city agencies, and slash services that city residents have come to rely on, such as eliminating the residential composting program and closing city pools for the summer.

Trash pickups will be reduced, and overnight service on the Staten Island Ferry will be curtailed. Fewer police traffic agents will be deployed at intersections, and tree pruning and tree stump removal will be less frequent.

And for the first time in his tenure, the mayor drew down on the city’s reserves, tapping $4 billion in savings to help balance the budget, much of it from the retiree health benefits fund, a move that does not affect retiree benefits in the short term.

But the budget is expected to restore more than $100 million in funding for youth programs that had been cut under the mayor’s executive budget, according to a City Council member. Ms. Goldstein, the mayor’s spokeswoman, declined to confirm that number.

“The mayor had two goals for this budget: maintain safety and invest in youth and our hardest-hit communities — all while facing the toughest fiscal situation the city has seen in decades,” Ms. Goldstein said. “We believe we presented a plan that accomplishes that mission and look forward to working with the Council to pass a budget that helps this city rebuild stronger.”

Gov. Andrew M. Cuomo and the State Legislature have declined to give New York City the authority to borrow money to pay for operating costs, even though the state has granted that authority to the state’s Metropolitan Transportation Authority, and to itself.

  • Updated June 24, 2020

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“The New York City bond ratings went up in the last 12 months, for God sakes, this is not the 1970s,” the mayor said on Monday, shortly before Mr. Cuomo invoked the 1970s as a rationale for why he was reluctant to grant the borrowing authority to New York City.

Mr. de Blasio has not provided a detailed enough plan about how he would use the borrowed money, said Mike Murphy, a spokesman for the Democratic majority in the State Senate. After speaking with Senate Democrats on Monday, Scott M. Stringer, the city comptroller and a 2021 mayoral candidate, agreed.

“The mayor has requested $7 billion and now $5 billion in borrowing authority without providing data or rationale,” Mr. Stringer said in a statement. “Our children do not owe the mayor a blank check.”

The city’s budget has grown drastically under Mr. de Blasio — from roughly $73 billion in 2014 to $92 billion in 2019.

Budget hawks at the Citizens Budget Commission, a nonpartisan civic group, have argued that Mr. de Blasio is ignoring other levers at his disposal that are politically difficult to pull but that preclude burdening future generations with having to repay long-term debt.

In addition to the possible layoffs, the mayor could cut some 9,000 jobs through attrition from the city’s work force of nearly 330,000, whose head count has expanded some 30,000 since Mr. de Blasio took office. He could also negotiate with labor to require more employees to contribute to their health care premiums.

“The longer we sit around and bow to the altar of borrowing or federal aid, the less we actually try to solve the problems,” said Andrew Rein, the Citizens Budget Commission’s president. “All the risk is on the downside. The chance that it gets worse is high.”

Budget experts anticipate the economic situation to markedly worsen in the 2022 fiscal year, in part because of the city’s diminishing reserves. Based on the mayor’s last budget plan, the Independent Budget Office estimates that the city will face a $6 billion shortfall next year.

The city has also taken hits from the loss of state aid and Mr. Cuomo’s successful efforts to shift state costs to the city, such as Metropolitan Transportation Authority capital funding.

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