New York City mayor seeks bigger reserves on Washington uncertainty

[January 25, 2017]  By Hilary Russ

NEW YORK (Reuters) - New York City Mayor Bill de Blasio on Tuesday said his next budget would hold a record amount of money in reserve and seek at least $1 billion of savings citywide to compensate for "a huge amount of uncertainty" emanating from Washington.

The mayor said he wanted to set aside $250 million per year into a Capital Stabilization Reserve fund for the next four years to offset possible federal funding cuts under Republican President Donald Trump and the Republican-controlled Congress.

Presenting a preliminary $84.7 billion budget for fiscal 2018, which begins July 1, de Blasio said he also wants to continue putting $1 billion into the general reserve fund every year for the next four years. The plan also calls for bumping up a retiree health benefits fund to $4 billion.

The $1.1 billion of savings would come through reduced debt service costs and asking all city agencies to lower expenditures.

But officials still do not have the details they need about possible changes from Washington to plan more precisely, de Blasio said.

"There are not Trump-specific things in here," said de Blasio, who is up for re-election in November. "He himself has changed his mind on a bunch of stuff."

Five areas of funding that could shrink under the new Trump administration include Medicaid, police, education, affordable housing and environmental protection, the mayor said.

Trump has also threatened to punish so-called "sanctuary cities," or those that refuse to cooperate with federal efforts to deport undocumented immigrants.

"My office conducted an analysis outlining potential federal cuts, and I’m concerned many critical areas could be affected," New York City Comptroller Scott Stringer said in a statement in response to the budget proposal. "Our social safety net could be fundamentally changed by backwards policies from Washington."

New York City Mayor Bill de Blasio presents the Fiscal Year 2018 Preliminary Budget at New York City Hall in New York, U.S., January 24, 2017. REUTERS/Sam Hodgson/The New York Times/Pool

At risk for New York City is approximately $7.2 billion of federal funding, or nearly 9 percent of city operations money, not including Superstorm Sandy recovery funds, Stringer has said.

Last year, the mayor reached a budget deal well ahead of deadline with the city council on an $82 billion spending plan for this fiscal year, which was modified in November to $83.5 billion.

De Blasio also proposed spending $571 million to repair city bridges, $1 billion to replace 729 roofs at public housing buildings, part of an $89.6 billion, 10-year capital plan that includes federal funding.

City tax revenue growth this year is expected to be just 2.4 percent, officials said, in line with December estimates from the city's Independent Budget Office (IBO).

But while the IBO believes that tax revenue could grow by 5.4 percent in fiscal 2018, the city on Tuesday projected growth of just 3.9 percent.

(Reporting by Hilary Russ; Editing by Daniel Bases and Cynthia Osterman)

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