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The four-year city fiscal outlook

The next four years are likely to be a bigger test of Mayor Bill de Blasio’s leadership than his first four years. While he has accomplished a lot since taking office in 2014 – from instituting universal pre-kindergarten to settling the municipal labor contracts to breathing new life into the effort to stem homelessness – the city faces similarly daunting challenges in several areas and the economic context might not be as favorable.

There is little question that New York City’s economy has performed better in the current decade than it has at any time since the mid-1980s. Sustained job growth since the Great Recession has lifted the city’s total employment level to 600,000 above previous highs, and unemployment has declined to levels not seen in nearly 50 years.

The strong local economy has translated into robust tax collections, rising by over 4.5 percent annually under de Blasio. That’s an increment of $2.2 billion in budget capacity each year. That kind of revenue growth helped make possible the labor settlements, as well as increased funding for homeless, youth and senior services, more police officers on the beat, expanded affordable housing investments, and setting aside substantial budget reserves in the event of an economic slowdown or cataclysmic federal budget cuts.

Mayors don’t have a lot of control over the ups and downs of the economy, but they can try to influence how broadly the fruits of growth are shared, and not just through tax policy. Mayors Giuliani and Bloomberg also governed at times when the broader economy boomed, but they never sought to channel gains to the less well-heeled.

Mayor de Blasio has forcefully advocated raising minimum wages, including by significantly raising the wages of low-wage nonprofit workers employed under city-funded human services contracts. New York City inflation-adjusted median wages rose by 8.4 percent and real median family income by 9.5 percent from 2013 to 2016, the best gains since the 1980s. And for the first time in many years, wage gains have occurred across the board among New York City workers.


De Blasio also sought, together with the City Council, to provide more benefits and protections for vulnerable workers, including paid sick days, fair scheduling practices in retail and fast food, and safeguards against wage theft.

Great challenges certainly remain, among them striking a better balance between building more affordable housing and addressing well-founded community concerns about gentrification. Establishing universal pre-kindergarten was a watershed achievement, but unfinished business remains in achieving compensation parity for universal pre-kindergarten teachers in community-based organizations, and in improving the availability and quality of child care for infants and toddlers.

Governor Andrew Cuomo undeniably is a mercurial partner, but to advance the interests of New Yorkers when it comes to mass transit or CUNY, Mayor de Blasio has no choice but to work harder at coming to terms with the state’s chief executive. Too much is at stake to shy away from complete engagement.

Separate from the existential threat to the city’s public hospital system posed by Washington, the mayor needs to work on better diagnosing the problems faced by New York City Health and Hospitals (NYCHH). City Hall needs to factor in changes made by the private hospitals that have allowed them to prosper while shifting more responsibilities to the public system, and come to grips with the fact that just because NYCHH absorbs more costs doesn’t mean it has higher costs. The city should explore whether the major private hospital networks should provide something like Payment in Lieu of Taxes (PILOT) payments to the city to help shoulder some of the cost of the safety-net health care services provided by NYCHH.

If Albany would cooperate – and right now it’s hard to be optimistic about that – the mayor should focus on making the city’s property tax structure less regressive in his second term. Through a combination of eliminating the assessment caps, gradually moving toward more uniform effective property tax rates on all rental and owner-occupied housing units and a circuit breaker tied to the income tax to limit property tax burdens for low- and moderate-income households, the city could make the residential property tax system a lot more equitable and less regressive. The governor and the legislature should commit to deferring to the city on NYC property tax reform, and stay completely out of the fray.


The biggest challenges facing the city emanate from Washington. The heightened uncertainty related to the Trump-Republican tax- and budget-cut proposals necessitates continued cautious city budgeting. Washington’s desperate actions to please wealthy donors could jeopardize a range of health care, housing, education, nutrition and other programs critical to the well-being of New York City’s children and low-income communities and to the city’s broader quality of life.

The mayor must grapple with threats from the Trump administration but also regulatory action.

Mayor de Blasio may now be term-limited, but the challenges he must confront in his second act are seemingly unbounded.

James A. Parrott is the director of economic and fiscal policy at the Center for New York City Affairs at The New School.