Bloomberg presents his valedictory budget, question marks included

Bloomberg on Tuesday in City Hall. (via NYC.gov)
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“We’ve gone through Sandy, we’ve gone through Irene, we’ve gone through a mortgage crisis and yet with all of those things, the city’s budget is still in balance,” said Mayor Michael Bloomberg this afternoon during his valedictory preliminary budget as mayor of New York City.

The $70.1 billion plan for fiscal year 2014, which begins July 1, will be balanced as required by law and contains no layoffs, but it does call for the closure of 20 firehouses and is, more broadly, contingent upon a number of unknowns: the fate of the mayor's borough taxi plan, now in the hands of the state's highest court; the city's ability to reach a deal on teacher evaluations before a new, state-imposed February deadline; the outcome of ongoing Medicaid negotiations; the uncertainty surrounding hurricane recovery efforts.

More than a year ago, the state approved Bloomberg's borough taxi plan, which would create a new breed of taxis for the outer boroughs, and, separately, allow the city to sell 2,000 new regular yellow-taxi medallions, which the city believed would bring in more than $1 billion.

That plan, passed with great fanfare, has since run into the staunch opposition of the yellow taxi industry and their high-powered lawyers.

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The Court of Appeals is expected to hear a challenge to the borough taxi law this spring and only after the court deliberates and issues a decision, will the city know whether it's going to get any of that medallion revenue.

In the meantime, the city has reduced its revenue expections for medallion sales in the 2014 fiscal year from $790 million to $600 million.

"That's just to be conservative," said the mayor. "I hope I'm wrong."

The mayor explained the reduction in revenue estimates like this: "The later you start selling medallions, the more difficult it is to get the number out in that period of time. ... It’s an educated guess.”

Nor, for that matter, is the city clear on where it stands regarding education aid.

Unlike nearly every other school district in New York, the city failed to reach an agreement with its teachers union on a new evaluation system by the initial January 17 deadline.

It now faces a new one in February.

At risk is $724 million in state funding over the next two years, and possibly, another $1 billion on top of that.

Should there be no teacher evaluation deal by the second deadline, the mayor predicts the city will have to get rid of up to 1,800 teachers by attrition, not to mention lots of extracurricular activities, afterschool programs, and school supplies.

Whatever pain the city might suffer "is more than worth it" in pursuit of a good evaluation deal, said the mayor.

There was also some more generalized carping about the state's shrinking contributions to city education.

In 2002, when the mayor took office, the city and state split non-federally funded education costs. Now the state only funds 39 percent.

"We send an enormous amount of money up to Albany, and we're not by any means getting our fair share," said the mayor.

Another big question is Medicaid funding.

As the Wall Street Journal recently reported, the state and federal government are in the midst of negotiations that will reduce the federal government's Medicaid contributions to New York State, and, by extension, to New York City.

The mayor said that “would hurt our budget” and require that the city "struggle to make sure we maintain services for those that need it."

And yet another risk: hurricane recovery.

The mayor said the city, which has thus far spent $4.5 billion to clean up after Hurricane Sandy, will be made whole by the federal government.

He didn't outline any further risks.

A recent Independent Budget Office report, however, did: "The Mayor’s budget plan also effectively assumes that all of the costs associated with cleanup and recovery following Hurricane Sandy will be covered by state and federal aid. That may prove to be a risky assumption...the $60 billion now being requested by President Obama for Congressional approval is less than the initial estimates of need presented by New York and other affected states. The possibility that the city will indeed have to shoulder some of the cleanup and recovery costs—as well as expenditures to mitigate devastation from future storms—remains very real." 

In other budget-related news, the city's economy is slowly improving, according to the mayor, but it's not exactly going gangbusters.

Of particular concern to him is Wall Street.

"Wall Street profit growth, as you can see, way down, way up, way down," he said. "It is very worrisome to us what's happening with New York City as a financial center."

Last month, the Independent Budget Office also noted Wall Street's slack performance.

“Wall Street remains the city’s most lucrative sector for firms and their employees but is playing a considerably smaller role in city economic growth post-financial crisis than it has in the past several decades," the report read.

Helping the city compensate for Wall Street's torpor: economic activity related to education, health care, professional and business services, leisure and hospitality and construction, which is being boosted by hurricane-related spending.