By Gothamist |

De Blasio's Preliminary Budget Calls For A Belt-Tightening 'PEG': Gothamist

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Mayor Bill de Blasio laid out a $92.2 billion preliminary budget on Thursday including $3 billion in new spending since the budget was adopted in June—an increase of roughly four percent.

The bulk of the new spending this year comes from the city’s labor agreements and education costs related to the expansion of the early childhood education program known as 3K, mandatory charter school costs, and special education.

But the mayor also signaled that the city is beginning to tighten its belt citing a looming economic downturn and growing budget risks from state and federal government. The pace of tax revenue has slowed compared to last year. The City now projects that Personal Income Tax revenue will be $935 million less than last year.

For the first time in his administration, de Blasio announced a $750 million savings program known as a PEG (“program to eliminate the gap”). All city agencies will be required to cut a set dollar amount from their budgets (as opposed to an across the board percentage as done under the Bloomberg administration). The savings must be achieved by April in time for the Executive Budget.

De Blasio said “frontline” services will not be harmed by the PEG but he stressed every agency—even the NYPD—will make cuts.

“There’s no such thing as an agency that can’t find efficiencies if we’re in a situation that demands them,” de Blasio said.

That PEG program will rely on several tools including an expanded hiring freeze. The city will focus on both attrition while also not filling certain vacant positions. The mayor stressed he had no plans for large-scale layoffs but certain agencies may make personnel decisions.

As an example, he pointed to an audit of Department of Education consultant contracts that led to $23 million in savings. “That could be an area where more is found,” de Blasio added.

New spending highlights were largely associated with programs the mayor announced earlier this year. The city is budgeting $106 million for the Fair Fares program that grants half-priced MetroCards to poor New Yorkers, the same amount that was included when the final FY 2019 budget was adopted in June. The first update on enrollment figures is slated for later this month, the mayor said.

The city is investing $25 million to expand 3-K early childhood education to two new districts in the Bronx and Brooklyn. It’s also allocating $25 million to the ramp up of the NYC Care program aimed at providing healthcare access to all New Yorkers. The program will ramp up to $100 million in FY 2022. There’s $2.7 million to increase bus speeds by synchronizing lights at 300 new intersections.

Budget watchdogs applauded the PEG program, but said the city needed to do more.

“The budget we heard today builds spending instead of bolstering the reserves that are necessary for a rainy day,” said Andrew Rein, head of the Citizens Budget Commission.

The city points to $5.75 billion in its reserve funds but the largest share of that money, $4.5 billion, is part of the Retiree Health Benefits Trust Fund that is supposed to be used to pay the healthcare benefits of future city retirees.

The City Council will now hold hearings with each agency before submitting its own response to the preliminary budget. Speaker Corey Johnson said what’s clear is the budget dance—where the Mayor and the Council haggle over which budget cuts are real and which are just posturing—is alive and well.

“The dance continues,” Johnson said. “People can say that it’s over. It’s not over, which is why we want to make sure our priorities are protected as we go through this process.”

Brigid Bergin is the City Hall and politics reporter for WNYC. You can follow her on Twitter at @brigidbergin.