N.Y. Comptroller DiNapoli recommends NYC come up with post-coronavirus fiscal plan, pans borrowing
ALBANY — State Comptroller Thomas DiNapoli is urging New York City to come up with a common sense fiscal plan to address economic uncertainty caused by the coronavirus pandemic.
In a report issued Thursday, DiNapoli panned the city’s proposed plan to borrow funds to cover operating costs and called for federal help to assist the Big Apple in its recovery.
“The scope and devastation of the COVID-19 pandemic has created a significant revenue loss for the city while driving up costs to deal with its effects,” DiNapoli said. "Past experience indicates the city would be well-served by developing and considering all options, in order to identify if and when deficit financing is truly needed.
“Washington, for its part, can, and must, help the city weather this colossal economic storm,” he added.
Mayor de Blasio has repeatedly sought additional borrowing approval from state lawmakers, arguing that the move is needed to avoid layoffs and service cuts.
The proposal faced fierce resistance from Gov. Cuomo and some legislators who say de Blasio has not been clear as to how the funds would be spent, or what other steps the city is taking to address the economic challenges facing the five boroughs.
DiNapoli’s report did have some good news, finding that the city is in a much better place fiscally than it was during the last two major fiscal fallouts in the wake of 9/11 and the 2008 recession.
Pre-pandemic budget gaps were under 5%, compared to 10% in the previous two recessions. The report also found that reserve and surplus fund levels going into the pandemic were among the highest on record as a result of “robust economic and revenue growth and the city’s commitment to keeping extra cash on hand following the last downturn.”
DiNapoli warned against borrowing, cutting services or raising taxes too quickly to make up for lost revenue.
“(T)he city must not disturb its delicate economic recovery or allow quality of life to deteriorate,” a release issued with the report states. “The challenge faced in this scenario calls for a cautious approach to leveraging nonrecurring resources and for careful evaluation of the decisions to bring the city to structural balance in a new environment.”
The report notes that borrowing to cover day-to-day operating expenses, as opposed to larger infrastructure needs and projects, “creates a long-term liability to manage short-term needs.”
Mayoral spokeswoman Laura Feyer said the de Blasio administration “continues to take critical steps to ensure a robust recovery for New York City."
She highlighted actions already taken by the city including increasing reserves pre-pandemic, freezing hiring and drumming up $604 million in debt service savings since June 2019.
Feyer also echoed DiNapoli in calling on Washington lawmakers to provide aid to the financially-strapped city amid stalled stimulus talks.
“We need the federal government to step up and provide additional aid, and for the state to allow borrowing, to avoid further cuts to services, save jobs and ensure New York City comes back stronger than ever before,” she said.
