To Save New York City, We Need to Follow the Money

To Save New York City, We Need to Follow the Money

To Save New York City, We Need to Follow the Money

While the City may be stuck with an austerity budget, Wall Street thrives. It’s time for the financial industry to pay its share.


Amid a backdrop of unemployment numbers not seen since the Depression, New York City Mayor Bill de Blasio and the City Council are now negotiating the City’s budget for the fiscal year starting July 1.

In the proposal he released last month, the mayor seeks to balance the budget by cutting nearly $3 billion in spending and using up $4 billion in reserves. More recent revenue projections show an even sharper decline than the one he was working with: The Independent Budget Office now expects that New York could see a revenue shortfall of $9.7 billion.

While some of the mayor’s proposed cuts are common sense (no need to fund NYPD overtime for canceled summer parades), it would be a mistake to follow through on some of the others. For example, de Blasio’s plan would decimate the Summer Youth Employment Program and summer youth education programs, as well as making cuts to job training—which are just the programs we will need for our recovery.

New York City is going to need additional measures to balance the budget. But the mayor’s current proposal aggravates the inequities accentuated by Covid-19. And while the City must use some reserves, he’s left it without enough to cover the forecast revenue decline.

Instead of pursuing this path, I believe we should open a discussion around three proposals: to activate a financial transactions tax already on the books; broaden the sales tax to include many professional services currently exempt from it; and establish a New Deal–style Works Progress Administration in New York City, with a focus on training for and promoting tech-enabled jobs as well as infrastructure.

Budget negotiation is a process that I’m very familiar with. As a City Council member, I’ve served since 2014 on the council’s Budget Negotiating Team—which has added hundreds of millions of dollars to the city’s reserves every year. Previously, I spent seven years in the City’s Office of Management and Budget, helping to oversee health care spending.

I know that we look to facts and data to help measure and understand what’s happening to us, and to point toward a way out. New York had a balanced budget going into this crisis—meaning that unlike the fiscal crisis of the 1970s, when the City was spending more than it was taking in, this is not the City’s own doing. Our current budget woes are rooted in elements that are not within our control: an unprecedented decline in revenue, and enormous Covid-19 spending. For these reasons, we must look to mechanisms to generate additional revenue.

What we should not be doing is considering delays or cuts to social services. Covid-19 has exposed the exceptional vulnerability of the many New Yorkers living just one accident, illness, or job loss away from economic tailspin. Before this spring, this condition smoldered in some New York communities and burned in others. Covid-19 ignited a firestorm, but it still touches communities unequally. Among the most affected are immigrants, both documented and not; the elderly who are in no position to work—if work existed—or find a new career; the young, cut off from beginning their careers; and especially communities of color, including many people whose work has been deemed essential, although their welfare has not. Collectively, these communities make up a substantial majority of New York’s population.

Remarkably, the stock market is slightly up compared to a year ago; The New York Times reported that April was Wall Street’s best month since 1987. Both financial markets and owners of financial assets have benefited from extraordinary intervention at the federal level during this crisis, atop a decade of monetary and tax policies that formed a safety net for financial markets. It seems logical, then, to turn to these sectors and their participants to help support a broader financial safety net for all New Yorkers.

Democratic presidential candidates from Bernie Sanders to Andrew Yang and Michael Bloomberg proposed detailed versions of a financial transactions tax during their 2020 campaigns. There is already a stock transfer tax on the books in New York state, but there’s also a 100 percent rebate that those who are subject to this tax can easily obtain. A good start would be to collect a small percentage of this tax (Bloomberg and Yang proposed 0.1 percent; Sanders, 0.5 percent) and expand it to cover bonds and derivatives, as proposed in Sanders and Bloomberg’s plans.

Not only that, but many of the professional services businesses that are currently exempt from the New York state sales tax—including law and accounting firms that, for example, advise on corporate mergers—derive meaningful revenue from the government-underwritten prosperity of the financial sector. If financial transactions are going to be taxed, it follows that professional services should also be subject to a sales tax.

The goods and services provided by essential workers, who toil at heightened risk of Covid-19, are subject to a sales tax. There is no reason the products of the professional services sector, provided at a safe remove from the front lines, should skate around making a contribution to the safety net.

Lastly, in the emerging “new normal,” many of us will conduct our work and economic lives in a much more distanced, tech-enabled way. Even before Covid-19, New York’s economic disparities were yawning; now, the gap between rich and poor is much wider than it was just three months ago. The gap in technology access and training means that our most vulnerable and newly unemployed communities could be left even further behind, forming a permanent underclass.

The juxtaposition of New Gilded Age wealth with Depression-level unemployment is simply inconsistent with a democratic society. These conditions drive the urgency to establish a Works Progress Administration for New York City. In addition to jobs in infrastructure, it should focus on providing universal tech literacy, universal basic access to technology, and support for producers of tech-enabled jobs.

As a local elected official, I’m highly aware that the authority to advance these New York City–centered initiatives resides mostly at the state level, particularly regarding taxes. Here I draw on the logic advanced by Governor Andrew Cuomo, who, in his briefings, emphasizes paving a way to the future, rather than a return to normal.

It is crucial that the governor consider, with all appropriate urgency, these and similar proposals in Albany. Covid-19 has been a horror. Let’s respond not just by beating back the virus itself but also by addressing the economic illnesses it has exposed—with remedies that New York City residents urgently need.

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