City Council Examines De Blasio’s $92.3B Preliminary Budget
The New York City Council recently began its examination of Mayor Bill de Blasio’s preliminary budget for the 2022 fiscal year, which begins July 1. At $92.3 billion, it’s almost $3 billion less than this year’s budget. The mayor’s preliminary budget came out at a time of great uncertainty brought on by the pandemic. According to the Mayor’s Office, the pandemic has brought $5.9 billion of unexpected costs as unemployment skyrocketed to 20 percent and remains at over 12.1 percent.
Property Tax Revenue Down 4.3%
One of the most notable developments in the preliminary budget was the drop in property tax revenues. According to the mayor, there’s a $1.5 billion tax revenue decline due to the pandemic, driven by a $2.5 billion drop in property tax revenue that the city initially expected but which won’t come in.
For the first time in 25 years, property tax revenues for the coming year will decline. The economic shutdown has negatively affected property values and anticipated property tax revenues will decline 4.3 percent for the coming year.
In his presentation of the preliminary budget, the mayor said the city is keeping its commitment to not raise property tax rates, because “state law causes property assessments to go up even in the middle of a crisis.” The mayor said that the city will provide a rebate to homeowners who own and live in a one- to three-family home with a market value of less than $500,000.
Although there was a decline in property tax revenue, de Blasio noted in presenting the budget that the loss experienced by the city is partially offset by an increase from income taxes, since, as he noted, “the rich got richer” during the pandemic.
It’s also important to note that the city expects to receive, as a one-time federal stimulus aid, as much as $5.6 billion through the $1.9 trillion American Rescue Plan Act. In addition, higher FEMA reimbursements rates recently announced for costs related to the COVID-19 vaccine mission will yield $202 million in federal funding to the city.
More Housing Funds, Cuts to HPD Programs
With the mayor’s preliminary budget, the NYC Department of Housing Preservation and Development (HPD) would see its capital funding restored with a slight increase compared to last year at $1.45 billion. But initiatives such as the pilot program to legalize basement apartments and funding for new supportive housing would face pandemic-related cuts.
When asked if HPD would be restoring the budget for the pilot basement apartment program during a capital budget hearing by City Council’s committees on housing and building, HPD Commissioner Louise Carroll said the program, which aimed to test ways to legalize basement apartments as a pathway for creating new, sanctioned housing units for tenants, needed to be reexamined. The program was intended to assist homeowners in legalizing basement apartments by providing them with technical assistance and low-interest financing, helping them select an architect and contractor, and assisting them in temporarily relocating tenants.
Initially the program, which launched last year, was slated to receive $12 million for operational costs during a three-year period. A $1.09 million budget cut last year left the program with only $91,580 for operations. Carroll testified the conversions pose significant challenges such as a height requirement imposed by the Fire Department. “In some homes, [they] would need to dig down into the foundation, to dig deeper in order to create that height. And a lot of people dropped out from eligibility for that reason.”
According to HPD, the pilot program received 8,000 applications; out of those, 100 applicants were assessed for eligibility, and of those, only nine were considered eligible and have been funded.
- March-April: The City Council analyzes the mayor’s preliminary budget and holds a series of public hearings to identify specific concerns through conversations with residents, advocates, and city agencies.
- Mid-April: The Council formally responds to the mayor’s preliminary budget.
- Late April: The mayor releases the Executive Budget, an updated proposed budget based on the Council’s response.
- May: The Council analyzes this budget and conducts a second round of targeted hearings.
- May and June: The City Council and the mayor negotiate adjustments to the Executive Budget, resulting in an agreement known as the Adopted Budget.
- July 1: The Adopted Budget must be in place by July 1, the beginning of the next fiscal year.