Tomorrow Mayor Bill de Blasio will present the New York City Executive Budget for Fiscal Year 2017.  Here are eight questions New Yorkers should ask about the plan:

1. How much new revenue will be available?

   Growth in employment and property values has continued steadily, reaching all-time highs; however, there are signs of a softening economy. Major Wall Street firms are restructuring, bonuses are flat, and the luxury real estate market is cooling. In January the preliminary budget increased projected revenues for fiscal years 2016 and 2017 to totals of $81.7 billion and $82.1 billion, respectively.  The City Council and fiscal monitors expect more resources will be available.

2. How much new spending will there be, and for what?

   New revenues make added spending possible. The de Blasio administration already has announced several new initiatives since the preliminary budget, including a merger of the Department of Homeless Services and Human Resources Administration, increased emergency medical response tours, new sustainability initiatives, and a plan to combat the Zika virus.  Other priorities including combating homelessness, expanding advanced placement courses and gifted and talented programs, establishing a comprehensive mental health system, and reforming Rikers Island may also require additional investments.  In addition, the budget may incorporate some City Council priorities, which total $790 million.¹

3. How will the budget treat NYC Health + Hospitals?

   New York City Health + Hospitals (H+H) is under continued fiscal pressures that appear to be increasing; it is reportedly poised to run out of cash.² The January budget included $337 million in one-time support for H+H, which was coupled with the requirement that H+H work with consultants to formulate a credible turnaround plan. That plan should accompany the Executive Budget and may require additional City support.

4. Will the overtime cap be broken?

   Overtime costs, particularly in the Police Department, have increased dramatically in the past decade, reaching a record $1.4 billion for all agencies in fiscal year 2015.  In the current fiscal year, the City Council and the Mayor agreed to increase the size of the police force in return for limiting overtime expenditures; however, the City Comptroller finds that as of March, overtime costs exceed targets with the potential for expenses to surpass the city’s forecast by $136 million in fiscal 2016 and $221 million in fiscal 2017.³

5. Will reserves grow?

   Budget reserves should grow steadily during good economic times. The January financial plan included $1.5 billion in reserves in fiscal year 2017: $1 billion in the general reserve and $500 million in the capital stabilization reserve. In addition, the Retiree Health Benefits Trust, which previously was tapped to provide budget relief, contains around $3.1 billion; however, temptation to raid this trust should be resisted.

6. What is the size and nature of the Citywide Savings Plan?

   The January budget included a five-year Citywide Savings Plan (CSP) of $1.85 billion for fiscal years 2016 to 2020 – about 0.6 percent of city-funded spending.  The CSP was small relative to the size of the budget and savings programs of past years and insufficient to meaningfully offset the cost of new initiatives or to boost reserves. Furthermore, it relied mostly on debt service savings from refinancings and included few efforts to improve efficiency.

   Members of the City Council have asked the administration to increase the size of the savings plan by setting savings targets of 5 percent for all agencies. In February agency commissioners were asked to identify additional savings, focusing on efficiency measures that were sufficient to offset the cost of any new needs, but no targets were set. The new budget will reveal how effective the new process has been in identifying meaningful efficiency gains.

7. What is the impact of the State Budget?

   The Governor’s Executive Budget for Fiscal Year 2016-2017 contained several proposals to shift costs to New York City, notably by restoring growth in the local share of the Medicaid program and increasing City support of the City University of New York. The State’s Enacted Budget did not adopt these proposals, but it does withhold $600 million in City sales tax revenue, $200 million annually, related to a debt refinancing for the Sales Tax Asset Receivable Corporation. Offsetting this loss is a 5.7 percent increase in school aid; about $160 million of this increase was not included in the city’s budget previously.

8. Will the capital commitment plan grow to accommodate new commitments and needs?

   The January capital commitment plan totaled $47.3 billion, but did not reflect the City’s increased commitment for the Metropolitan Transportation Authority’s capital plan, acceleration of work on the third water tunnel, or the Council’s amendments to the Mayor’s housing program. In addition, the New York City Housing Authority has extensive capital needs, and the Mayor may increase its capital allocation.   Expanding the city’s capital plan will increase its outstanding debt.