December 13, 2017
Caution Signals on the Road for de Blasio’s Second Term
By James A. Parrott
The next four years are likely to be a bigger test of Mayor Bill de Blasio’s leadership than his first four years were. He has accomplished a lot since taking office in 2014—from instituting universal pre-kindergarten (UPK) to settling a raft of municipal labor contracts covering some 300,000 City workers, to breathing new life, albeit by his own admission belatedly, into the effort to stem homelessness. Now, however, the City faces a range of daunting challenges, at a time when, due to changes brewing in Washington, New York’s financial outlook might not be as favorable as it has been.
There is little question that New York City’s economy has performed better in the current decade than it has at any time since the mid-1980s. Sustained job growth during the recovery from the Great Recession has lifted the city’s total employment level some 600,000 jobs above previous highs, and unemployment has declined to levels not seen in nearly 50 years. New York City inflation-adjusted median wages rose by 8.4 percent and real median family income by 9.5 percent from 2013 to 2016, the best gains since the 1980s. And for the first time in many years, wage gains have occurred across the board among New York City workers. For example, low-wage workers saw 7 percent real wage gains over the past three years, and median wages for black and Latino workers rose by over 10 percent.
The strong local economy has translated into robust tax collections, rising by over 4.5 percent annually during de Blasio’s first term. That’s an increment of $2.2 billion in budget capacity each year. That revenue growth helped make possible the labor settlements, as well as increased funding for homeless, youth, and senior services, more police officers on the beat, expanded affordable housing investments, and setting aside substantial budget reserves in the event of an economic slowdown or cataclysmic Federal budget cuts.
Mayors don’t have a lot of control over the ups and downs of the economy, but they can try to influence how broadly the fruits of growth are shared, and not just through tax policy. While de Blasio’s immediate predecessors, Mayors Rudolph Giuliani and Michael Bloomberg, also experienced boom years during their tenures, they often missed opportunities to channel gains to the less well-heeled.
De Blasio, on the other hand, has forcefully advocated raising minimum wages, including significantly increasing pay for low-wage nonprofit workers employed under City-funded human services contracts. With the City Council, he also sought to provide more benefits and protections for vulnerable workers, including paid sick days, fair scheduling practices in retail and fast food businesses, and safeguards against wage theft.
Great challenges, however, certainly remain in achieving the more fair and equitable city de Blasio’s campaign platforms have promised. Among them: striking a better balance between building more affordable housing and addressing well-founded community concerns about gentrification. The City also needs fresh thinking to counter the continued rise in homelessness, partly fueled by gentrification pressures. And while establishing UPK was a watershed achievement, there’s unfinished business at City Hall in achieving compensation parity for UPK teachers in community-based organizations, and in improving the availability and quality of child care for infants and toddlers.
A successful second term also depends on better relations with the State government. Governor Andrew Cuomo is undeniably a mercurial partner, but to advance the interests of New Yorkers when it comes to mass transit or the City University system, de Blasio has no choice but to work harder at coming to terms with the state’s chief executive. Too much is at stake to shy away from complete engagement.
If Albany would cooperate—and right now it’s hard to be optimistic about that—the mayor should focus during his second term on making the City’s property tax structure less regressive. Through a combination of eliminating assessment caps, gradually moving toward more uniform effective property tax rates on all rental and owner-occupied housing units, and a circuit breaker tied to the income tax to limit property tax burdens for low- and moderate-income households, the City could make the residential property tax system a lot more equitable. The governor and the legislature should commit to deferring to the City on this property tax reform effort.
The mayor also needs a better diagnosis of the problems faced by NYC Health + Hospitals (NYC H+H). That means factoring in changes made by private hospitals that have allowed them to prosper while shifting more responsibilities to the NYC H+H public system. The City should explore whether the major private hospital networks should provide something like “payments in lieu of taxes” (also called PILOTs) to the City to help shoulder some of the cost of the safety net health care services provided by NYC H+H. The existential threat to the public hospitals posed by Washington’s misguided health care policies make this issue especially urgent.
Most of the financial uncertainly for de Blasio’s second term also originates from Washington – specifically from Trump-Republican tax and budget proposals that collectively pose the biggest challenge the mayor faces. Washington’s desperate actions to please wealthy donors could jeopardize a range of health care, housing, education, nutrition, and other programs critical to the well-being of New York City’s children and low-income communities and to the city’s broader quality of life. They also light up a big “caution” signal on New York City’s budgeting dashboard.
And if that weren’t enough, the mayor must grapple with threats posed by President Trump’s executive powers, including ruthless immigration enforcement and actions to deregulate financial, environmental, and labor protections.
Mayor de Blasio may now be term-limited, but the challenges he must confront in his second act are seemingly unbounded.