Ballot Question #4: City Budget

This proposal would amend the City Charter to:

Allow the City to use a revenue stabilization fund, or “rainy day fund,” to save money for use in future years, such as to address unexpected financial hardships. Changes to State law will also be needed for this rainy day fund to be usable;

Set minimum budgets for the Public Advocate and Borough Presidents. The budget for each office would be at least as high as its Fiscal Year 2020 budget adjusted annually by the lesser of the inflation rate or the percentage change in the City’s total expense budget (excluding certain components), unless the Mayor determines that a lower budget is fiscally necessary;

Require the Mayor to submit a non-property tax revenue estimate to the City Council by April 26 (instead of June 5). The Mayor may submit an updated estimate after that date, but must explain why the updated estimate was fiscally necessary if the update is submitted after May 25; and

Require that, when the Mayor makes changes to the City’s financial plan that would require a budget modification to implement, the proposed budget modification shall be submitted to the Council within 30 days.

Shall this proposal be adopted?

The Way Things Are Now

Revenue Stabilization Fund (also referred to as a “Rainy Day” Fund). A “rainy day” fund is a pool of money set aside in one year’s budget to be used in the event of an economic downturn or crisis in a future year. Currently both city and state law require New York City to balance its budget each year, meaning that each year’s spending cannot be more than its income and the city can’t use a rainy day fund to balance the budget when revenue decreases. Although the City has some money set aside in reserves, at times it also pays some current expenses by making reduced deposits into the Retiree Health Benefits Trust (money put aside to pay for municipal employees’ retirement health benefits).

Protected Budgets for the Public Advocate and Borough Presidents. The budgets of the public advocate and the borough presidents are determined by the mayor and the City Council through the standard budget negotiation process, and these budgets may go up or down from year to year.

Revenue Estimate. Before the start of the fiscal year on July 1, the City Council is legally required to make sure the city’s budget is balanced, meaning that the city’s planned spending will not exceed the funds it expects to take in for the year. Each year, the mayor is required to prepare an estimate of the city’s sources of funding other than property taxes, such as income taxes, sales taxes, and state and federal aid, and deliver it to the Council by June 5. When the budget is adopted, the Council uses this estimate to set the property tax rate and balance the budget. In practice, the mayor delivers the estimate much closer to the time the budget is adopted, giving the City Council little time to consider the impact of the city’s funding needs on the city’s property tax rate.

Budget Modification Timing. In addition to preparing the city budget, the mayor is required to prepare and publish a financial plan with details about spending and revenue. The mayor is required to review and publish updates to the financial plan at least four times a year. If the city’s revenue or expenses have gone up or down, or the mayor wants to spend money on new programs, the mayor can modify the city’s adopted budget. To do so, the mayor must either seek the Council’s approval or give the Council an opportunity to disapprove—but the Charter does not specify when the mayor has to notify the Council, which means it can happen long after the changes have already gone into effect.

If Ballot Question #4 Passes

Revenue Stabilization Fund (also referred to as a “Rainy Day” Fund). The Charter would allow the city to set up a rainy day fund as long as it is used in compliance with state law. The State Legislature would need to amend the State Financial Emergency Act to allow rainy day fund withdrawals by New York City.

Protected Budgets for the Public Advocate and Borough Presidents. The budgets for the public advocate and borough presidents will, at minimum, increase along with the city’s expense budget or the rate of inflation, whichever is less. The mayor could reduce these budgets beyond this minimum only if he or she provides a written explanation showing that the cuts were necessary and part of an overall plan to reduce the city budget.

Revenue Estimate. The mayor will be required to submit the non-property tax revenue estimate to the Council no later than April 26, at the same time as the executive budget, so the Council has time to do their work to ensure a balanced budget. The mayor will be allowed to revise the revenue estimate until May 25 (11 days before the deadline for adopting a balanced budget). After May 25, the mayor will only be able to revise the estimate by providing a written explanation showing why it is fiscally necessary to change it.

Budget Modification Timing. The Mayor will be required to notify the City Council about any necessary budget change within 30 days of the publication of the updated financial plan.

Statements Supporting Proposal

James W. Caras, Attorney

Vote yes on Question 4 to lay the groundwork for greater fiscal stability, shield aspects of the budget from politics and improve budgeting by ensuring timely revenue estimates and budget revisions.
City and State law prevent the City from saving money in good times to spend in lean times. This proposal would ensure that when the State law terminates, the City can begin putting money away. In this way, during a recession or emergency, the City can stabilize its finances using savings rather than by raising taxes or cutting essential services -- which can worsen an economic downturn.
The proposal would also insulate Borough Presidents and the Public Advocate, counterweights to the Mayor, from budget cuts. In the past, independent officials who have disagreed with mayors have faced proposed budget cuts. Cuts could be made in times of fiscal necessity.
Finally, under current law the Council virtually finalizes a budget before it sees the final estimate from the Mayor of the upcoming year's tax revenues. This proposal will require an earlier revenue estimate. It will also require more timely submission of budget changes so budgets aren't "cleaned up" at the end of the year.

Citizens Budget Commission

New Yorkers should vote “yes” on Ballot Question 4 because it will modify the City Charter to allow New York City to create and use a Rainy Day Fund (RDF). An RDF can help protect New Yorkers from harmful service cuts or tax increases during a recession, when New Yorkers need services more and pocketbooks are strained.
The Charter requires the City to balance its budget under strict accounting rules. While these rules help the City to manage its budget well, the Charter prevents the City from using money saved up from prior years to pay for services during “rainy days.” Question 4 would keep the balanced budget requirement, and allow the City to use funds set aside in an RDF—essentially a savings account—during a recession or severe emergency to protect New Yorkers. Most states and many localities have RDFs because they are important and useful fiscal management tools.
CBC supports Question 4, despite concerns about other changes included in the ballot question that would guarantee minimum budgets for certain agencies, since the substantial benefits of an RDF outweigh these concerns.

Citizens Union

Citizens Union recommends a yes vote on question 4. Question 4 establishes minimum budgets for the Public Advocate and Borough Presidents, and requires earlier submission of revenue estimates by the mayor, two long-standing Citizens Union recommendations. Question 4 also allows the City to create a rainy-day fund, and requires that mayoral changes to the City’s financial plan necessitating a budget modification be submitted to the City Council within 30 days.

Ben Kallos, New York City Council Member

The independence of Public Advocate and Borough Presidents have always been in tension with the Mayor and City Council who set their budgets. In 2009, the Public Advocate saw a budget cut of 40% after opposing the Mayor and Council's self serving extension of term limits. Similarly, Borough Presidents who stood with the community against the Council and the Mayor on controversial rezonings have also seen their budget targeted for cuts. This question would set a minimum budget for these offices with annual increases tied to the growth of the city budget or inflation to free the Public Advocate and Borough Presidents from the looming threat of retaliation by the City Council and Mayor.
For Question 4 on the City Budget for an independent Public Advocate and Borough Presidents, vote YES.

Susan Lerner, Executive Director, Common Cause/NY

Question 4 is meant to protect budgets of certain elected officials from being manipulated or slashed for reasons outside of legitimate budgeting policy. It is crucial that the budgets of elected officials, especially those acting in a watchdog or oversight capacity, are not susceptible to potential political retaliation. Question 4 guarantees budget stability and more importantly, ensures that certain elected officials and agencies have the tools necessary to sufficiently address the City’s most pressing needs.

Elizabeth Mooney, Retired Journalist

I can't believe NYC does not already have a rainy day fund.
Never too late to have one.

New York Immigration Coalition

New York Immigration Coalition Position: Support
These proposals improve the City’s budget process by creating a “Rainy Day Fund” so the City can set aside money in good years that will be available during economic downturns; protecting the budgets of the Public Advocate and the five borough presidents from political interference; and giving the City Council more time to analyze the Mayor’s budget and budget modifications in order to provide effective oversight.

Bella Wang, Board of Directors, League of Women Voters of the City of New York

We recommend a “yes” vote on this ballot item. This ballot item takes a key step toward a Rainy Day fund, which is a good idea for the future fiscal health of the city. It also adds checks and balances on Mayoral power, by giving the public and the City Council more transparency with regard to the city budgeting process.
It also guarantees budgets for the Public Advocate and Borough Presidents, who have been elected by their constituents. If New Yorkers have problems with the Public Advocate office, they should amend the Charter to eliminate it, rather than have it fiscally restrained at the whim of other city officials.

Statements Opposing Proposal

Dorothy LaBarbera, Retired Teacher

Concepts addresses in this ballot proposal, while broadly related, would be better considered separately?

Manhattan Libertarian Party

We ask that you vote no.
The availability of the “rainy day fund” will: (1) disincentivize tax cuts when the city government is collecting more tax revenues than it needs; (2) ease pressure to cut wasteful spending as a response to fiscal burdens; and (3) threaten to establish a slush fund to shore up irresponsible spending programs.
The Public Advocate and Borough Presidents should not be guaranteed budgets. They are extraneous positions created by the 1989 Charter Revision Commission with limited powers and have yet to justify their continued existence. The public is entitled to properly assess the offices’ roles and curtail their budgets as desired (not as fiscally necessary).

Janie Medina, Librarian

There is already a 'slush fund' existing. How much more money do you want to put in reserves and spend for what--who will make the decision to address unexpected financial hardships, the same people who created hardships?