Feb. 13 (Bloomberg) -- New York Mayor Bill de Blasio’s first budget calls for increasing education spending while setting aside money for retiree health care.
The $73.7 billion preliminary plan, released yesterday, benefited from a surplus of $1.8 billion from unanticipated tax revenue and unspent expenses. It includes funds for expanded paid sick leave, identification cards for undocumented workers, and an inspector general for the police department.
“This budget must reflect a progressive agenda,” de Blasio said at a news conference. “The centerpiece of our budget is education.”
New York City, the most populous in the U.S., has a budget bigger than every U.S. state apart from California, New York and Texas. De Blasio, 52, the first Democrat to run the municipality in 20 years, won election in a landslide by pledging to reduce the gap between rich and poor. He has said he has a mandate after achieving the biggest margin for a nonincumbent in history.
Months of fiscal negotiations with the city council are ahead. A revised spending plan, called the executive budget, must be approved by members before the July 1 start of the 2015 fiscal year. State law requires that the city balance its budget, with no deficit financing permitted.
De Blasio’s plan called for raising taxes on New Yorkers making more than $500,000 annually to pay for early childhood education, building 200,000 units of affordable housing over 10 years and cutting a $6 billion backlog of capital projects at the public housing authority even as U.S. aid declines.
Settling expired labor contracts and negotiating new ones with 300,000 public workers may cost $6.3 billion, the Independent Budget Office, a nonpartisan monitor funded by the city, said in December. De Blasio, who disputed the office’s projections, didn’t budget money to settle the contracts.
“To get to a resolution on these negotiations, we’re going to need to find substantial cost savings,” de Blasio said. “So that will be the x-factor you can’t see because it hasn’t been negotiated.”
The spending plan, for the year beginning July 1, includes $530 million from a 0.5 percentage point income-tax increase to pay for pre-kindergarten education. The tax, which state lawmakers must approve, is opposed by Governor Andrew Cuomo, a Democrat, and State Senate co-leader Dean Skelos, a Republican.
While de Blasio has enough surplus to pay for his signature program, his budget counts on an income-tax increase that needs approval by state lawmakers. Both governor Andrew Cuomo, a Democrat, and Skelos oppose the levy.
Cuomo yesterday said the state will give New York City money to provide universal pre-kindergarten, including classes for more than 50,000 4-year-olds by September, without raising taxes on the rich.
Cuomo said at a press briefing in Albany that the levy de Blasio is pushing wouldn’t be fair, because other jurisdictions don’t have so many millionaires to tap. Cuomo has already put forward a plan that would phase in statewide early childhood education classes without raising taxes.
“I’m ready, as fast he’s ready to move,” Cuomo said. “I will go drive down and deliver the check personally to New York City and help open the first pre-K site.”
De Blasio proposed setting aside $1 billion for a trust fund set up by former Mayor Michael Bloomberg and the city council to pay for retiree health costs. The fund, which was used by the previous administration to help close budget deficits, could help pay for settling contracts with the municipal unions, said Ronnie Lowenstein, executive director of the Independent Budget Office.
“I would argue the trust fund is a two-fer,” Lowenstein said. “It could be used to be working on remarkable liability for health insurance or can be drawn down to help sustain the city in a time of need.”
The former mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.
De Blasio, who criticized the state for not complying with a court-ordered increase in funding for city schools, is seeking to boost spending on the Department of Education by about $1.2 billion, bringing total state and city funding to $25.3 billion. He added $10 million to the budget of the City University of New York.
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