De Blasio has touted the city’s historic level of funding reserves, with $1 billion in the general fund, $4 billion in the city’s retiree health benefits fund and $250 million in capital reserves. | Getty Council members push de Blasio to increase savings to prepare for Trump

The chairs of several City Council committees are calling on Mayor Bill de Blasio’s budget team to beef up its financial contingency plan in order to cushion the city against the potential impact of policy changes from President Donald Trump's administration.

The mayor's $84.67 billion preliminary spending plan was released in late January, a day before the president signed an executive order calling for cuts to federal aid for sanctuary cities. The order hasn't been implemented yet, but it could have an outsize impact in New York City, where roughly 10 percent of the total budget comes from federal aid.


Now some Council members are saying the city must save more to prepare for Trump.

In a letter dated March 3, members Dan Garodnick, Julissa Ferreras, Steven Matteo, David Greenfield, Carlos Menchaca, Helen Rosenthal, Jimmy Van Bramer and Corey Johnson called on the de Blasio administration to go beyond its stated plan to find an extra $500 million in new savings in the mayor’s executive budget proposal.

“With a new presidential administration with different priorities and policies than the previous one, we face more uncertainty with respect to our federal funding than we ever have before," the letter said, specifically citing the sanctuary cities order.

“Though all signatories do not have a uniform view of this policy, we all agree on the fact that New York City gets 10% of our budget from federal funds, which impacts Section 8 recipients, child protective services, and public assistance grants. Both the NYPD and public hospital system could also be extremely vulnerable. While these federal funding battles are played out in the political and judicial arenas, this only underscores the need to control our budget as tightly as possible,” the letter said.

The potential threat from Washington to the city’s budget comes at a time of slowing economic growth, with an expanding city workforce, Garodnick explained.

"In a situation where the budget and the headcount are going way up and federal funds are at risk, and local tax revenues are slipping, this is precisely the moment to identify real agency savings,” Garodnick said in an interview with POLITICO New York.

There are already early indications of the risk of losing federal funding becoming a reality. In a letter dated Feb. 26, the federal housing authority informed the New York City Housing Authority that its federal aid would be steeply cut, the Wall Street Journal reported Monday. The cuts could result in the already financially-strapped agency losing at least $35 million in federal dollars this year, the paper reported.

In their letter, the Council members reiterated a call they made to the de Blasio administration last year, asking the mayor to order agencies to five percent savings and institute a Program to Eliminate the Gap, or “PEG” — a targeted savings program employed by previous mayors, but which de Blasio has so far eschewed. He’s opted instead for a voluntary savings program, which doesn’t force agencies to find ways to cut spending.

In the current environment, the members’ letter said, a PEG could be better policy.

“Beginning in 1982, prior mayoral administrations incorporated gap closing measures into yearly, city wide funding plans, regardless of whether a budget deficit was anticipated for the current year. We urge you to consider returning to the strong precedent set by the previous four administrations by undertaking such an exercise before you present New York City’s Fiscal Year 2018 Executive Budget to the City Council.”

The members also called on City Hall to search for more substantial savings than the kind it has identified, many of which have come from temporary measures or delays in planned hiring or spending.

Too much of the mayor’s citywide savings plans so far have relied on “accruals or re-estimates, or non-recurring savings,” Garodnick said in the interview. “We want to see true agency efficiencies. We have so many vulnerable New Yorkers, we can’t afford to waste a single dollar here. With the addition of the federal vulnerability, we need to get our house in order.”

OMB spokeswoman Freddi Goldstein said the administration has already been "cautious" in its budgeting. "We are maintaining historic levels of reserves, have been saving at each phase of the budget, including a request from the Mayor for an additional $500 million in savings at the Executive Budget, and are being strategic and targeted with our investments," she said.

De Blasio has touted the city’s historic level of funding reserves, with $1 billion in the general fund, $4 billion in the city’s retiree health benefits fund and $250 million in capital reserves.

But the mayor has also cited those reserves as the fail-safe in case Trump cuts federal aid.

The members said those reserves might be high, but they were still less than 10 percent of the city’s operating budget, and are therefore “simply not enough of a cushion to ensure that we are protected against a potential economic downturn.”

“That is particularly concerning since we were already predicting a $3.3 billion deficit in fiscal year 2019, even before the threat of federal funding loss became more concrete,” the letter said.

And while de Blasio has pledged to stand up to the Trump administration, the city should also take care to prepare for the worst, Garodnick said.

“We’ll fight back against any efforts to punish New York for our local policies. At the same time, we need to be smart about our own budget — and ensure that it’s operating at peak efficiency,” he said.