Mayor Eric Adams is expected to release his first draft budget on Wednesday, outlining where he wants to allocate funds to carry out his policy priorities and keep the city running.
The current budget, that of former mayor Bill de Blasio, is $106 billion, more than the budgets of the states of Alaska, Delaware, Idaho, Iowa, Maine , Montana, Nebraska, New Hampshire and Wyoming combined.
The post marks Adams’ first foray as mayor into negotiating his own budget, a months-long endeavor that primarily involves the New York City Council, culminating with a final budget — and a ceremonial handshake with the chairman of the board – out on July 1. the beginning of the city’s fiscal year.
The objective for both parties is to determine what resources will be allocated to the management and delivery of government programs and services in the five boroughs. The budget reflects a city’s priorities and includes funding for salaries and services as well as after-school programs, housing assistance, violence healing initiatives and more.
Politics, of course, drives much of the talk, and while much of the budget is uncontroversial, a few issues typically dominate disputes between mayor and council.
“I realized the power of using the scholarship to promote good public policy,” said Daniel Dromm, former council member and chair of the council’s finance committee. “The year we had the ‘COVID budget,’ the 2021 budget, one of the things we were most proud of was that we didn’t cut funding to any immigrant organization because we knew that ‘they were the most vulnerable.”
The size of Adams’ budget is unclear, but if his recent statements are any indication, New Yorkers are about to see a lean spending plan. Adams ordered sweeping agency cuts, with possible exceptions for the NYPD given fears of increased crime, and NYC Health + Hospitals and the health department as the pandemic remains pervasive.
So what can New Yorkers expect during the preliminary budget process? Here’s an overview of each step in the first half of the process, using interviews, the New York City Charter, and the Independent Budget Office’s (IBO) guide to the budget process.
When does the budget start and end?
The fiscal year of a New York City budget begins July 1 and ends June 30 of the following year.
What makes up the budget?
The budget is made up of various expected revenue streams generated by fines; corporate, business and real estate taxes; multi-million dollar private grants; and state and federal funds. In some ways, the budget is a forecast; an informed estimate of the actual amounts expected during the year.
These reserves of money become the sources of income that fuel the operating and investment budgets. Expenditure budget funds are split between agencies, with the Education Department receiving about a third of the expenditure budget, according to the IBO. These funds finance salaries, pensions, health insurance, office supplies and service contracts with community groups, among the thousands of positions in the plan.
Funds from the capital budget are earmarked for infrastructure projects. These can be as simple as a new playground to a multi-million dollar sewer project that takes years to complete.
The budget must also, by law, be balanced, which means that the amount of money coming in must cover the city’s expenses.
What happens first?
The mayor usually announces the preliminary budget in January. Think of it as the first draft, which is prepared by the Office of Management and Budget (OMB). Its director is appointed by the mayor and is often responsible for the budget.
In the lead up to the release of the budget, the mayor fulfills several obligations, primarily personal advocacy to the state legislature for the public funding the city needs to operate. The OMB is ordering city agencies to submit their budget breakdowns, outlining the revenue they estimate they will receive in the fiscal year to keep the city going. These projections are added to the preliminary budget, breaking down expenditures and capital projects.
As this is Adams’ first year in office, he was given an extra month to present his preliminary budget to buy him time to settle in, hence his February 16 delivery.
So far, Adams has set out a few priorities, including increasing the earned income tax credit, child care subsidies and increasing bed capacity for the mentally ill. Adams sought to invest $75 million in the Fair Fares program, providing discounted MTA rides to low-income New Yorkers.
The mayor is also responsible for providing an update to the four-year financial plan, outlining all spending forecasts for the next four years. These forecasts outline each agency’s sources of revenue and when new programs will be operational. Every odd year, the mayor must also present his 10-year capital budget plan, outlining the projects and estimated costs for major construction works.
Once the mayor has presented his budget, it is submitted to the five borough presidents, the municipal controller, the planning commission and the council. The OMB publishes the budget on its website for New Yorkers to see.
What role does the NYC Council play?
While the mayor’s office is significantly more powerful than the council, the budget is one of the biggest responsibilities of the city legislature – and provides the council with the opportunity to act as a check on the mayor’s agenda. . Without Council approval, the money cannot flow to the myriad agencies and departments controlled by the mayor.
The Council is responsible for combing through each item in the budget, determining its feasibility, with the help of economists from the agency’s central office. While other city entities play a role in recommending budget allocations, Council plays the most important role as it is responsible for ultimately approving the spending plan.
While this is happening, the City Comptroller, the city’s chief financial watchdog, releases a report outlining the “city’s financial situation,” detailing whether the city has enough money to keep paying for things, according to the city charter. The report also indicates the amount of debt — defined as anything the city owes to outside entities — that will be incurred for any pending capital projects over the next four years.
The Independent Budget Office also steps in, as required by the Charter, by publishing its own analysis of the preliminary budget, determining whether certain programs are adequately funded. It also makes its own forecasts of the amount of tax revenue expected in the coming year.
Borough presidents also submit their budget requests (for example, requests from another library) in which they ultimately receive a small percentage of the capital and expenditure budget. The same process applies to the 59 community councils, although it is rare for these requests to be budgeted directly by the mayor’s office.
Most of this stage, which follows the preliminary budget, involves a series of hearings before the relevant committees that oversee the agencies. For example, if Council is seeking to review and receive input on the City’s Parks Department budget, residents, advocates and heads of City agencies will be invited to provide input. The central office assigns each committee a financial analyst to oversee each agency’s budget, which Dromm says is critical to the process.
“A lot of times the numbers don’t add up in terms of revenue, and it’s a question of what the actual projected revenue is,” Dromm said, noting that city bean counters often have to estimate state numbers. . Looks like. Indeed, while the Council determines how to adjust the budget, the state also tries to determine its own, which makes it difficult for the city to know how much money it will receive. Ideally, the state budget is determined by April 1, which means the city will often have to go back and cobble together its own spending plan before the July 1 deadline.
The municipal comptroller is among the first called to testify “on the state of the city’s economy and finances”. This includes “city financial plan assessments” detailing “revenue and expenditure forecasts.” The Council also shares its share of the budgetary pie, by drawing up its own budget which it must submit to the mayor.
Odd year only: Review of the 10-year capital plan.
New York City is constantly building and changing, and it can be costly. So, to give Council a summary of what’s to come over the next ten years, the Planning Commission offers comments on the plan in the form of testimony. This year, the mayor doesn’t really have to worry about it.
The testimony is submitted to the Board.
What role can I play?
The budget is ultimately serviced and funded by New Yorkers, and any resident can have their say. Suppose you find that there aren’t enough city-sponsored summer job slots in your neighborhood: you can raise those concerns at a Joint Council Hearing between the Youth Services Committee and the Finance Committee.
Residents can register to testify for two minutes, offering their perspective on the issue. These comments will be added to the minutes. Everyone is invited to testify. (And as always, residents can lobby their local council member.)
Are the hearings over? What does the Information Council do?
Usually towards the end of March, the Council prepares its preliminary budget, outlining its priorities and the issues raised during the first committee hearings.
What awaits us?
The second half of the budget process will involve the release of the executive budget, a more detailed list of what the city should spend and receive. This is followed by another round of hearings, followed by the proverbial “Budget Dance” in which the Speaker, Finance Chair, Council Budget Negotiating Team, OMB and Mayor weigh in and resolve any remaining differences.
Over the next few weeks, we’ll be returning to the budget process to cover the second half of this detailed process. Stay tuned!