Sequester Comes to NYC

Last week, the Sequester began. Now, We look at the impact on New York.

What Is the Sequester?

The federal government has implemented across-the-board spending cuts totaling $85 billion in 2013 and $109.3 billion a year from 2014-2021.

The 2013 sequester includes these items.

• $42.7 billion in defense cuts (a 7.9 percent cut).
• $28.7 billion in domestic discretionary cuts (a 5.3 percent cut).
• $9.9 billion in Medicare cuts (a 2 percent cut).
• $4 billion in other mandatory cuts (a 5.8 percent cut to nondefense programs, and a 7.8 percent cut to mandatory defense programs).

Here are examples of specific program cuts in 2013.

Aircraft purchases by the Air Force and Navy are cut by $3.5 billion.

Military operations across the services are cut by about $13.5 billion.

Military research is cut by $6.3 billion.

The National Institutes of Health get cut by $1.6 billion.

The Centers for Disease Control and Prevention are cut by about $323 million.

Border security is cut by about $581 million.

Immigration enforcement is cut by about $323 million.

Airport security is cut by about $323 million.

Head Start gets cut by $406 million, kicking 70,000 kids out of the program.

FEMA’s disaster relief budget is cut by $375 million.

Public housing support is cut by about $1.94 billion.

The FDA is cut by $206 million.

NASA gets cut by $970 million.

Special education is cut by $840 million.

The Energy Department’s program for securing our nukes is cut by $650 million.

The National Science Foundation gets cut by about $388 million.

The FBI gets cut by $480 million.

The federal prison system gets cut by $355 million.

State Department diplomatic functions are cut by $650 million.

Global health programs are cut by $433 million; the Millenium Challenge Corp. sees a $46 million cut, and USAID a cut of about $291 million.

The Nuclear Regulatory Commission is cut by $55 million.

The SEC is cut by $75.6 million.

The United States Holocaust Memorial Museum is cut by $2.6 million.

The Library of Congress is cut by $31 million.

The Patent and Trademark office is cut by $156 million.

 New York Impact

The impact on New York State is not insignificant, and some parts of the budget will face meaningful challenges. As Governor Cuomo has stated, however:

"Financially it will not be as impactful on the state government as it would be on individuals because it’s more assistance that goes to individuals"

Education cuts
The sequester would cut $42.7 million from primary and secondary education in New York. About 590 teachers and aides would lose their jobs and 120 schools would lose funding. Special education would also lose $36.3 million, according to White House numbers. Special education would also lose $36.3 million.

Meals for senior citizens
Government-provided meals for senior citizens would see $1,447,000 in cuts in New York.

Job cuts
Up to 100,000 workers in the state could lose their jobs due to the sequester, a study from George Mason University estimated.

Public housing cuts
The New York City Housing Authority reported that sequestration could lead to a 9 percent loss of funding and a $110 deficit, reducing services by 20 percent.

NYC Budget Cuts Damage Our Children

Our guest writer this week is Richard Buery, Jr., President and CEO of The Children's Aid Society.

On Thursday, Mayor Bloomberg announced his $68.7 billion budget proposal, and for the fifth straight year, his budget slashes early childhood and after school programs.   

Nonsensical Cuts

 

With Wall Street tax revenues lower than predicted and our city still recovering from the economic downtown, I understand that the city has difficult choices to make.  But decimating these critical programs for children is just the wrong choice to make.

From his Young Men's Initiative to improve outcomes for young people of color, to his plans to serve juveniles in supportive programs here in New York City rather than upstate juvenile jails, to the groundbreaking poverty-fighting initiatives of his Center for Economic Opportunity, the Mayor has demonstrated his sincere commitment to the poor and working-class children of New York City.   And while I haven't agreed with every element of his education reform policies, he has bravely asked to be judged as the "education mayor."   Our expectations of what a public education system can and should be expected to deliver for poor children have been changed forever.

That is why the mayor's proposed cuts to early childhood education and after-school programs make absolutely no sense.  We all understand how important it is to keep kids engaged and on track beginning at a very early age.  Every $1 spent on high-quality early childhood programs for a disadvantaged child creates up to$9 in future benefits -- in new taxes collected and more productive workers, and fewer dollars spent on publicly subsidized health care, prisons and the like.  A great early childhood program prepares students for school - any kindergarten teacher can tell you about the importance of these resources.

Quality after-school and summer programs are similarly critical for children's development.  A study by Fight Crime:Invest in Kids New York found that the majority of juvenile crime occurs between the hours of 3 p.m. and 6 p.m.  Children who are consistently involved in stimulating, educational activities grow up to be smart, safe and productive members of society. They are more likely to go to college, get jobs, support their families and less likely to end up on the streets, involved in gangs or in prison. After-school programs not only help children succeed in school, but they also keep them off of the streets.

Once upon a time, the Mayor understood this.  He has said, "Teaching doesn't stop when the last school bell rings." He created the city's Out-of-School Time initiative, a nationally recognized effort to bring high-quality after-school and summer programs to kids, declaring that what happens after school is as important as what happens during the school day.

Impact of the Cuts

The combined effects of the mayor's proposed budget and structural changes to both the early childhood and after-school systems will eliminate programs for an additional 47,000 children. This is the latest in a series of reductions. Come September, a total of 90,000 kids will have lost their early childhood or after-school programs since 2009 -- a 2/3 reduction. Every city agency has faced cuts, but I am not aware of any other program that has been forced to absorb cuts at that scale.  The city recently announced the winners of the newest round of Out-of-School Time contracts, and nearly half of programs city wide will be closing their doors.

In Central Harlem, only 5.7% of eligible families will have access to early childhood education.

And the impact goes beyond education and safety -- it's an economic tragedy as well.  For the working parents we serve, these programs are a life line to the workforce.  Consider Lilibet.  For her, raising two sons alone, working full-time and living paycheck to paycheck, The Children's Aid Society's after school programs mean the difference between going to work and supporting her family or staying home and relying on public benefits. How could it possibly benefit us as a city to drive her, and thousands like her, from the workforce?

As the New York Times said in a recent editorial, "Mr. Bloomberg and the Council need to do a lot more for the city’s neediest children." We cannot balance our budgets on the backs of these, our neediest New Yorkers.

The cuts will be particularly devastating to low-income children and their families. One in three children in New York, and two in three public school children, live in poverty.  These have been difficult years for those New Yorkers at the bottom of the economic ladder.  We have already cut their services to the bone, and our waiting lists are the longest they have ever been.  Further reductions will devastate the very children who the mayor has championed in both his philanthropy and public service.

When he was asked about these cuts, the Mayor responded "We can't do everything we want in the size and frequency that you would like, but the objective is to try to balance and make choices and we will try to do that and do it responsibly like we've been doing for 10 years." 

He is absolutely right.  A budget is, at the end of the day, a series of choices.  It tells you what is critical and what is expendable.  It tells you who matters and who does not.

The Mayor's budget says that needy children and working families don't matter.  Several of my colleagues in the fields of early childhood and afterschool have launched the Campaign for Children to remind him otherwise.  I urge you to join us -- our children need all the support they can get.  

New York State Budget Passed On-Time

Though some may complain that the New York State budget process is controlled by three people, the process produced an on-schedule and responsible budget for the second year in a row.

First Early Passage Since 1983

The budget was passed a day early, and that hasn't happened since 1983.
The euphoria over the passage was met by some dissent.

“It is a not a good bill and it is not a bill I can vote for,” said Sen. Liz Krueger (D-Manhattan), during the debate over the Aid to Localities portion of the budget. Krueger argued the bill did not go far enough to aid struggling communities.
Senate Democrats have also tried -- and failed -- tried to attach several hostile amendments to the spending bills. Among the banished amendments were measures to create a statewide health insurance exchange, approved the state version of the Dream Act, and boost school aid for struggling school districts.

But, the budget and the process that brought it to early passage have many positive elements and is deservedly winning praise from both parties.

Why Are Both Parties Happy

What held together were Cuomo's top priorities including a massive New York Works job-creating program and just about every item in his budget proposal presented two months ago. The Legislature, however, amended nearly all and rejected some.
Silver got an increase in the welfare grant once rejected by Cuomo, reinstatement of early intervention procedures in pre-kindergarten for kids in need, an increase in community college aid, and the right of Medicaid patients to get prescriptions their physicians deem best even if they are more expensive brand-name drugs.
Skelos can claim a long-sought doubling of the DNA database for law enforcement, eliminating the Metropolitan Transportation Authority payroll tax for thousands of small businesses and schools, and keeping open the regional Department of Transportation offices slated to close.
The state's EPIC health care program was expanded to a fill the "donut hole" in Medicare, averting a spike in co-pays for seniors. Silver and Deputy Majority Leader Thomas Libous secured $100 million for upstate road repair to keep pace with downstate on transportation, a critical issue to salve upstate-downstate tensions in the Legislature.

The Future

Cuomo will propose two more budgets before he faces a vote on his re-election. Some worry that those budgets will be geared toward winning votes rather than responsibly preparing our state to thrive over the long term. Interestingly, Cuomo is expected to be a Presidential candidate in 2016. We can guess that Cuomo may begin to campaign for President with his 2013 and 2014 budget proposals. Those same budgets may draw more opposition from Republicans because of Cuomo's electoral goals.

Whether because of the re-election fight looming or because of a planned campaign for President of the United States, Cuomo may find that his two-year streak of on-time, respectable budgets becomes increasingly more difficult to extend.

Cuomo Achieves Bipartisan Tax Deal

New York State Governor Andrew Cuomo successfully pushed through a measure to prevent the expiration of the so-called "millionaire's tax" as he seeks to reduce future budget deficits.

Millionaire's Tax?

In 2009, prior to Governor Cuomo's election to his current post, the New York State Legislature adopted higher taxes on “high earners” ($200,000+) in the form of a temporary surcharge that applied only to high earnings.The net effect of the surcharge was an increase of more than 30% in the highest effective rate for personal income taxes. The tax was due to expire at the end of 2011.

The surcharge was called a "millionaire's tax" despite the fact that more than three-quarters of those paying the tax were earning less than $1 million per year.

Many have argued that the "millionaire's tax" reduces economic growth, penalizes small businesses, and does not create enough tax revenue to make up for the economic burden it imposes.

Others have argued that in an era of huge budget deficits, we need to require the highest earners to pay higher taxes in order to avoid raising taxes on those with modest incomes.

With a $3.5 billion deficit looming for next fiscal year, Cuomo sought (and obtained) an extension of the tax surcharge.

Tax Increase or Tax Reduction

The extension was accompanied by other tax changes, and those changes raise questions about whether we should view the recently adopted tax changes as a tax increase or a tax reduction for high earners as well as for every level of earner in NYC.

Opponents of the tax surcharge see it as a tax increase. The tax surcharge would have expired at the end of 2011, and therefore, its extension is an increase in tax rates for high earners versus what those high earners would have paid without an extension.

Supporters of the surcharge see it as a tax reduction. Because of the changes in the tax rules that accompany the extension of the surcharge, every level of earner who pays New York State personal income tax will experience a reduction in tax liability in 2012 versus what was in place in 2011. 

Cuomo 2016

The tax deal that Cuomo engineered in New York State by achieving virtually unanimous support from the Republicans and Democrats in the State Legislature, Cuomo establishes himself as one of our country's few bi-partisan leaders and links his name to one of very few bi-partisan success stories.

Cuomo contrasted his Albany achievement with the gridlock and failure in Washington DC in his video explaining the tax deal. He now starts to look like a potential top-tier candidate for the Democratic nomination in 2016. If he can win a second landslide in 2014 and maintain his streak of bipartisan successes, Andrew Cuomo will emerge as an obvious contender for the top of the national ticket in 2016.

Cuomo has not proven that he can win the enthusiasm of African Americans, but he has proven that he can lead a large state, earn the support of Republicans and Democrats, and speak directly to the voting public with great effect.

Our Transit Authority Faces Challenges

While most eyes are on the compromise deal in Washington, DC to raise the debt ceiling and cut federal spending, here at home in New York, the MTA is losing its leader, seeking debt it is not sure it can repay, seeking fare increases during a troubled economy, and facing the recent revelation of being over budget and behind schedule on some of its major projects.

New Leader Needed

In July, the MTA Chairman, Jay Walder, announced that he was resigning, effective October 21, 2011. Walder was appointed by then-Governor David Paterson, and while he was viewed as controversial by labor advocates, he developed a reputation as an effective and competent leader.

Walder is resigning to take a role leading a company that operates rail systems in Hong Kong, Beijing, Shanghai, Guangdong, London, Stockholm, and Melbourne. Though he was a very highly paid public official with a long-term contract, the private sector offered him superior compensation and, presumably, a superior opportunity to build a record of success. There is not necessarily a villain in the Walder departure. New York State attempted to solidify its relationship with Walder through the structure of his contract, and Walder can hardly be faulted for taking a dream job as the head of a global leader in his field. Though there may be no villain, the private sector's gain is the public sector's loss.

Financial Challenges

The MTA has experienced budget challenges in recent years and chose last week to seek to borrow nearly 7 billion dollars for key projects, despite the warnings from the MTA's own finance committee chair that the additional debt may represent a "ticking time bomb." To achieve only the "fragile stability" that Jay Walder says is represented by the borrowing and by additional fare increases sought by the MTA, the MTA will be forced to also seek wage freezes from MTA workers. The MTA will be challenges at every turn.

Behind Schedule and Over Budget

In addition to wasting $26 million through poor management of its recent track work, the MTA is billions of dollars over budget and many years behind schedule on its most high profile projects.

As NY1 stated in December 2010:

A new report finds the cash-strapped Metropolitan Transportation Authority is going way over budget on its major construction projects. The MTA inspector general says the Long Island Rail Road extension to Grand Central, the Second Avenue subway, and the Fulton Transit Hub are a combined $1.93 billion over budget. The report finds the projects are also up to five years behind schedule. In fact, the report finds the railroad link may not be finished until 2018. The first leg of the Second Avenue subway is expected to be completed in 2017. The inspector general blames a lack of oversight and squabbles between managers and consultants hired by the agency for the delays.

Perhaps the arrival of a new chair of the MTA is an opportunity to fix the fiscal problems and the management problems that have plagued the MTA. The status quo is not an acceptable standard.

Republican Donors Support Marriage Equality in NYS while Bloomberg is Embarrassed by His Budget

Last week, we learned that major Republican donors were adding their dollars and their voices to the fight for marriage equality in our state, and we learned that Mayor Bloomberg's budget proposal included an embarrassing $1 billion in spending on education consultants while firing 4,100 teachers.

Republican Donors Join the Fight for Marriage Equality

In a pleasant and encouraging development, major Republican donors are funding the efforts to end our state's discrimination against same-sex couples and bring marriage equality to New York State.

A week ago, we highlighted Governor Cuomo's determination to lead a coordinated initiative to bring marriage equality to New York. Having Republican donors as supporters of the initiative is a major step forward, and it may represent the key ingredient of success for marriage equality this year.

In our state, the Senate is controlled by the Republican Party. A marriage equality law will need to receive meaningful Republican support to pass (some Democrats do not support marriage equality, thereby making the support of Republicans even more necessary). Republican donors are likely to have influence over the Republican controlled Senate, and the rest of us should applaud their willingness to jump into this initiative after the failure of the push for marriage equality in 2009.

Mayor Bloomberg and other supporters of Republican elected officials around our state now represent two-thirds of the funding of the initiative driving the push for marriage equality. Without them, the Governor would lack both the resources and the political influence that will likely be necessary to win this fight.

Let us hope that these Republicans remain the right side of this issues, and perhaps we can pray that Bloomberg and the other Republicans will take the satisfaction of fighting for human rights for same sex couples and push New York City to end its law enforcement terrorism against people of color as well as its exclusion of people of color from the Fire Department of New York.

Bloomberg's Embarrassing Education Budget

Mayor Bloomberg's budget includes $1 billion for consultants while eliminating more than 4,000 teachers. Manhattan Borough President and other supporters of public education have criticized the imbalance, and the Bloomberg administration has dismissed the criticism. After the Cathie Black debacle, the Mayor continues to give his opponents ammunition with which to attack him as lacking a commitment to improving the education of children in New York City.

Bloomberg Voters' Remorse

Mayor Bloomberg's popularity is declining, according to published polls. The decline seems long overdue, given his administration's fiscal failures, snow clearance failures, repeated demonstrations of enormous incompetence, and shocking race-based policing approach.

Poor Poll Results

Mayor Bloomberg's popularity is as low as it has been since early in his first term eight years ago. A new poll shows that only 39% of New Yorkers approve of the performance of Mayor Bloomberg, while 51% of Mayor Bloomberg's constituents disapprove of his performance.

Eighty-four percent of New York City respondents to the pollsters stated that the Mayor should identify who is in charge of the city when he is out of town (the Mayor makes regular trips to Bermuda on weekends but does not state publicly where he will be or who is leading our city when he is not available).

With the Mayor's popularity plunging, we are compelled to speculate as to the reasons for the decline.

Racism Exhaustion

Perhaps the people of New York City are exhausted with the intensity and the nakedness of the racially discriminatory policies and behaviors of the Bloomberg Administration. The stop and frisk nightmare continues; the Mayor continues to refuse to adopt a non-racist approach to hiring fire department; and the Mayor continues to employ the least diverse administration in a generation.

After nine years, the basic decency of the people of New York City is offended by the behavior of the Mayor as he pursues indefensible approaches to law enforcement and hiring.

Fiscal Mistakes and Incompetence

Mayor Bloomberg's fiscal mistakes and incompetence are likely a major piece of his lack of support from his constituents.

The Mayor mismanaged the city's expenses and attempted to buy political support by spending tax dollars as well as by making charitable donations from his personal funds. His misuse of taxpayer funds to build his political alliances has left our city with an unhealthy imbalance between revenues and expenses as well as a record of stunning growth in the city's expenses.

The Mayor also allowed more than $80 million to be stolen from a $63 million project, and that $63 million project is now expected to cost nearly $1 billion. For a Mayor who based his campaigns on his strength as a manager, the missing $80 million and the nearly $1 billion of cost overruns on one $63 million project tell the real story of the Mayor's competence.

Snow Clearance

Not only did Mayor Bloomberg fail to prepare the city for the snow storm on December 26, 2010 that crippled the city, his decision to organize the city as if snow does not fall in NYC resulted in more than $115 million of city expenses for snow removal - a new record and nearly twice the previous record, even though this season's snow fall was not the largest snow fall on record.

Though the Mayor has been leading City Hall for more than nine years, he organized the snow removal approach of the city to assume that no major snow storm would hit our city. When his risky bet moved against him, our city suffered enormously and had to reach out to expensive private contractors to do the work of the city.

Polls Represent Perception Rather Reality

While Mayor Bloomberg has earned his low poll numbers, his poll numbers were high when he was not succeeding as a leader. We should not assume that his poll numbers are an accurate reflection of his success or failure. We do know that support for racists policing, fiscal irresponsibility, and incompetent snow removal planning are not acceptable realities for a Mayor in our city. The Mayor should change his approach to leading our city or show true leadership by stepping aside to allow others to fix the mess he's creating.

Our Bankrupt State

Governor Cuomo's budget reflects the horrible reality that New York State is in terrible financial condition, but it is painful for New York City and cuts education and healthcare significantly.

Painful Spending Cuts

With a $10 billion deficit staring him in the face, Governor Cuomo has proposed a budget with enormous spending cuts and almost no tax increases. Governor Cuomo is more responsible than Mayor Bloomberg, who has sought to fill his budget gaps with regressive taxes. But, Cuomo's reliance on budget cuts also has the potential to be highly regressive and to undermine the economic future of our state.

In addition to significant cuts to healthcare and education, Cuomo's budget brings us 10% cuts to each state agency without regard to which agencies currently use our tax payer dollars most effectively and without regard to which agencies' activities serve the most vulnerable populations in our state. Across the board cuts are rarely the best approach to improving a budget's quality, but Governor Cuomo's focus is on reducing our state's deficit. Across the board cuts are an excellent solution to reducing a deficit.

A large portion of New York State spending goes to help pay the bills of municipalities in our state. The cuts will put pressure on many cities and towns in New York State, and New York City will be one of the municipalities facing exacerbated budget problems as a result of our state's need to cut its deficit.

Automatic Government

In the 1988 book Automatic Government, its author Kent Weaver demonstrates the growth at the federal level in indexing government spending to the inflation rate. Because nearly half of the US federal budget is indexed to inflation, it is essentially on auto-pilot. Elected officials who do nothing are essentially voting for indexed programs to represent a larger portion of the budget each year as non-indexed programs face squeezes and cuts as deficit reduction is attempted.

In New York, the "automatic government" is far more unmanageable in a deficit reduction era. Governor Cuomo revealed as part of his budget address that both healthcare spending and education spending are scheduled to increase by 13% in the next fiscal year if nothing is done by the New York State Legislature to change the auto-pilot trajectory. In an environment where overall spending must be reduced, automatic 13% increases are an unwelcome challenge, and even if those automatic increases are not implemented in the upcoming year, they will return in the following year to ruin a future budget in the absence of major cuts in the rest of the budget. Neither education nor healthcare are services that New York State residents can easily do without, and the size of the cuts may require real sacrifices that are likely to be borne by those with the least resources in our society.

What's Next?

Now, the fight begins. There are no clear heroes and few clear villains in this fight. Budgets cuts will hurt vulnerable people, and some opposition to budget cuts comes from self-interested groups seeking to profit from the state and not to protect vulnerable constituencies. Let us pledge to pay close attention to this budget fight and support efforts to reduce the deficit in ways that do not target poor people and other vulnerable groups. Let us also recognize that the process of getting our house in order will require most of us to sacrifice. We do not have to like it, but we do have to endure it in order to give our state the type of future our children and their children deserve.

Budget Blame Game in NYC

Mayor Bloomberg is cynically suggesting that the New York City budget cuts he is proposing are being forced upon him by decision-making regarding the New York State budget in Albany. In reality, the Mayor is proposing enormous cuts in education to confuse taxpayers into thinking that Albany is setting the Mayor's budget priorities.

Albany Budget Turmoil

There is no question that Albany has not generated confidence in its budget efforts this year. The budget in Albany must be completed by April 1 under New York State Law. But, we are well into May this year, and there is no sign of a state budget.

That unsettling performance has added to an already dire budgetary picture at the local level. With the state facing a huge budget deficit in 2011, and with no clarity on what the 2011 state budget will be, municipalities across New York State are bracing for significant reductions on state funding.

Amongst the problems facing Albany is reduced federal funding. The federal stimulus dollars that President Obama fought to bring to state governments across our country immediately after his inauguration are now running out. In 2011, New York State (like so many states) will have exhausted nearly all of the support provided by the stimulus package passed by Congress in 2009, thereby creating increasing pressure on state budgets that are already strained beyond the breaking point. In 2012, essentially all of the stimulus money will be gone.

Until now, stimulus money spared governors and state lawmakers from making some of the most brutal budget cuts. But with this lifeline running out, officials are looking at making significant cutbacks to public services, particularly schools and health programs. "The stimulus funds have staved off what could have been even deeper cuts," said Todd Haggerty, policy associate at the National Conference of State Legislatures. "You're seeing states now are coming to that point where they will have to make additional cuts or find new sources of revenue for fiscal 2011 and that will continue in fiscal 2012."

Phony Blame for Albany

Despite the national impact of the end of the stimulus money, the Mayor has insisted on blaming Albany for the cuts that NYC will have to make to its own spending. In reality, NYC has choices it must make in the face of reduced revenues, and the Mayor has decided that primary and secondary education should be singled out to suffer in these lean times. Ironically, the Mayor focused his campaign for re-election to a third term, in part, on the assertion that he had been and would be successful in improving the NYC public schools.

Having overturned the New York City Charter in order to allow himself to run for a third term, and having been re-elected by a slim margin despite outspending his opponent by an order of magnitude, the Mayor is now using the prospect of undermining the public education system to shift blame away from himself and to Albany for the budget cuts he chooses to implement. If indeed Albany had the final say in how NYC's budget was designed, changing the New York City Charter in order for the Mayor to seek a third term would seem silly, or worse. But, we went through the trouble of accommodating the Mayor's need to be the Mayor, and, now that he has four more year to rule over his subjects, he should not be permitted to suggest that his budget priorities are set by politicians in Albany.

The budget cuts proposed by the Mayor are the Mayor's choices and reflect his priorities. He has decided that he will not cut any police jobs and that he will concentrate nearly all his cuts in the educational system.

We hope to see the Mayor adopt a more responsible set of budget priorities and a more responsible approach to communicating with the public about the budget choices he is making.