What Will de Blasio’s Promises Cost?

by Joanna Plucinska and Daniel Mescon

New York Mayor Bill de Blasio blows a kiss to the audience after giving the State of the City address at LaGuardia Community College in the Queens borough of New York, Monday, Feb. 10, 2014. De Blasio, delivering one of the most important speeches of his young administration, outlined his vision for New York and offered a glimpse into his signature goal of fighting the city's widening income inequality gap. (AP Photo/Mark Lennihan)

New York Mayor Bill de Blasio blows a kiss to the audience after giving the State of the City address at LaGuardia Community College in the Queens borough of New York, Monday, Feb. 10, 2014. De Blasio, delivering one of the most important speeches of his young administration, outlined his vision for New York and offered a glimpse into his signature goal of fighting the city’s widening income inequality gap. (AP Photo/Mark Lennihan)

A version of this story also appears in the The New York World.

Following City Hall custom, today’s budget address by Mayor Bill de Blasio follows a State of the City speech packed with big proposals for New York City, many focused on reducing economic inequality. But only some of the ambitious ideas floated by the mayor will have an impact on the preliminary budget to be proposed by the mayor (later today). And only small slice of the more than $72 billion at stake is up for grabs in negotiations between the mayor and City Council, which will lead to a final budget by the end of June; in past years, less than 1 percent.

Which of de Blasio’s big promises are likely to be major cost items in the new city budget? Not as many as you might think.

 

LABOR CONTRACTS

It’s nobody’s campaign promise, but hundreds of thousands of city workers are currently working under expired municipal labor contracts, and have been for years, and they are looking to de Blasio to reach new agreements with several years’ worth of retroactive pay raises.

Estimates of the cost range widely, from between $4.5 billion and $7.8 billion, depending on the assumptions underlying the projections. A likely surplus—anticipated by the city’s Independent Budget Office at $2.4 billion for fiscal year 2014, which ends in June, and $1.9 billion for 2015—will help absorb some but not all of those costs.

Likely impact: $$$$

 

UNIVERSAL PRE-K

Mayor de Blasio projects that his plan for universal pre-K will cost $340 million annually—and is demanding a new tax on the wealthy to pay for it. The passage of that surcharge in Albany is uncertain—and so is de Blasio’s Plan B if a tax does not go through. Gov. Cuomo has offered some state funding as an alternative, but that route would require the city to use existing revenues to fill the gap.

Likely impact: $$$

 

WORKFORCE TRAINING

In the State of the City, de Blasio promised to boost science and tech industry jobs and invest in the City University of New York. He wants to fund more training programs to build skilled workers in New York, and provide higher-wage jobs for employees working on city-subsidized projects.

New York City already spends about a half billion dollars annually on worker-training efforts, according to the city’s Office of Human Capital Development. More than half of that money comes from federal initiatives such as the Workforce Investment Act and Temporary Assistance for Needy Families.

Meanwhile, the new promises on workers’ wages affect private employers, not the public treasury.

Likely impact: $$

 

AFFORDABLE HOUSING

During his speech on Monday, the mayor reiterated his commitment to build or preserve close to 200,000 units of affordable housing. Beyond existing federal and city dollars already in the city budget, the main tool the mayor has discussed is a requirement for new development to include affordable housing, a strategy known as “inclusionary zoning.”

“We want to work with the real estate industry to build,” de Blasio said. “But the people’s interests will be accounted for in every real estate deal made with the city.”

What he means is that real estate developers will absorb much of the cost of new affordable housing development, in exchange for zoning changes they seek to allow for bigger and more lucrative development. The mayor’s campaign website predicts the city will see 50,000 new affordable apartments in ten years if existing affordable housing incentives for developers are converted into hard-and-fast obligations.

So far, the message from the industry has been a hopeful one. Steven Spinola, president of the Real Estate Board of New York, a trade group, said his organization thinks most city residents support the mayor’s agenda. “We look forward to working with the Mayor and the Council on the details of how to best implement programs to build housing and create jobs for all New Yorkers,” Spinola said in an emailed statement.

De Blasio said that his administration will release a plan by May 1 detailing how it intends to reach its goals on affordable housing.

Likely impact: $$

 

SANDY REBUILDING

The mayor said his administration will release a plan in the next few weeks to aid the recovery of those still struggling from the effects of Hurricane Sandy. Rebuilding efforts are primarily being paid for by the U.S. Department of Housing and Urban Development, which so far has delivered $3.2 billion dollars to aid in New York City’s recovery. But federal aid still falls far short of needs, particularly at the New York City Housing Authority, which suffered an estimated $1.8 billion in damage and is already running at a large deficit. The Housing Authority, however, is not part of the budget being proposed today.

Likely impact: $

 

SNOW CLEARANCE

It’s been a particularly brutal winter for New York City, a dozen snowstorms and counting. Yet thanks to a special safety valve, the city budget is insulated from the financial impact of all that overtime for Sanitation workers and the tons of fuel and salt their plows consume. The city’s snow clearing budget is actually decided by the average spending on for the previous five years in the city, notes the Independent Budget Office. In the year ending June 2013, the Department of Sanitation budgeted $19 million more than it needed budgeted for snow clearing. The year before that, it had $13 million left over. This year, if snow clearing goes over budget, the funds will simply be reallocated from another part of the budget.

Likely impact: $

 

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