Committee on Finance, Preliminary Budget Hearing – Finance, March 2026

Chair Linda Lee (00:06:29)

Good morning, everyone. I hope you're all super excited to talk numbers and budget. Woo! Yes. So I am the chair of the Committee on Finance, and welcome to the fiscal year 2027 preliminary budget hearings. And we're so happy to kick it off with IBO, who's going to be starting off after we give our opening statements. So we have a full agenda today as we kick off the budget season, and we will hear from IBO, the comptroller, and Department of Finance today. At this time, I'd like to introduce my colleagues who are present this morning. Of course, we have our speaker, Speaker Menin, our Deputy Speaker Williams, Majority Leader Abreu, Majority Whip Hanks, Councilmembers Narcisse, Councilmember Wong, Councilmember Murano, Councilmember Hudson, Councilmember Aldabal, Councilmember Maloney, and we've also been joined by our public advocate as well. And I think I have— did I cover everyone? I think I did. Okay, perfect. I would also like to extend my sincere gratitude to the dedicated staff of the City Council Finance Division for their tireless efforts, and I mean tireless, in preparing for today's hearing. And this work doesn't happen on its own, and I want to acknowledge the amazing team of dedicated professionals who make it all possible. Finance Director Richard Lee, give a little wave. Managing Director Jonathan Rosenberg, Deputy Directors Emre, Emre, and sorry, Edhev, Elizabeth Hoffman, Chima Obi-Chere, Paul Simone, and Isha Wright. Our Chief Economist Dilara Dimnakou, Assistant Directors Alia Ali, Julia Jaramas, Florentine Cabore, Daniel Krupp, James Reyes, Jack Storey, Paul Sturm, and Andrew Wilbur. Our Finance Counsel Nicholas Connel, my committee counsel, Brian Sarfo, my senior advisor, Athena Say, and many finance analysts, economists, and support staff who have worked behind the scenes to bring everything together. We are here today to examine the mayor's proposed $127 billion preliminary plan for fiscal year 2027, which, while balanced as per the charter's requirements, it includes proposals from some extremely concerning actions. And before I go any further, I'd like to invite our leader, Speaker Julie Menin, to share her opening remarks.

Good morning, and thank you so much, Chair Lee. It's a pleasure to welcome everyone to the first preliminary budget hearing of the fiscal year 2027 budget cycle. Today marks the beginning of one of the council's most important responsibilities: carefully examining the mayor's proposed $127 billion fiscal 2027 preliminary budget, ensuring that it meets the needs of New Yorkers, and safeguarding the city's fiscal future. The fiscal 2027 preliminary budget is $5.4 billion higher than what was projected in the November financial plan. That difference is largely driven by steps to address chronic underbudgeting that the council and many other fiscal monitors had long called out. While we appreciate these first steps towards a more honest budgeting practice, Elements of the administration's approach to balance the budget with these costs raise serious questions that warrant close scrutiny by this council. Just yesterday, the analysis we released on the remainder of fiscal year 2026 and fiscal year 2027 estimates $386 million more in tax revenue than was projected by OMB, reflecting a stronger long-term outlook for the city's finances. Our role over the coming weeks is not only to look carefully at the numbers, but to ask the hard questions, and also to work collaboratively to ensure that the final budget reflects both fiscal responsibility and the priorities of our city. Our priorities are focused on making New York affordable for the families who live here, stay here, and want to thrive here. And that means investing in the services that they rely on each and every single day. It means making child care universal and strengthening opportunities for higher education. It means upgrading parks with modern facilities and providing libraries with book-lined shelves and flexible hours, not cutting funding for libraries or for our cultural institutions. And it means supporting our small businesses, building affordable housing that people can truly afford, and protecting the public safety of every resident across the five boroughs. These are foundational investments that help develop healthier, safer, and more prosperous communities. Communities where New Yorkers can start families, start businesses, and stay in and for generations. We also recognize that the city may face economic headwinds, including the threat of draconian federal cuts that could affect funding streams that we rely on. In a moment like this, the answer cannot be to pull back from investments that we know help New Yorkers survive and succeed. At the same time, the Council is clear that while New Yorkers are already grappling with a severe affordability crisis significant property tax increase should not be on the table. That is non-negotiable. Before placing additional burdens on small property owners and small businesses, we must fully examine other opportunities for both revenue and savings. We cannot allow precious public resources to be squandered, and we will look for savings in every project and program to eliminate spending that is wasteful are unnecessary. Ultimately, our goal is straightforward. We plan to deliver a balanced budget that protects essential services, eases the affordability crisis facing New Yorkers, and reflects a shared commitment to fiscal discipline. We look forward to working collaboratively with the administration throughout this process so that the city remains financially strong while continuing to invest in the people and communities we serve. Thank you, and I look forward to today's discussion and testimony from IBO.

Thank you, Speaker. In February, the mayor released this preliminary plan, giving us our first look at balanced fiscal year budget 2027. The preliminary plan serves as the initial blueprint for how the administration intends to safeguard and strengthen the fiscal future of New York City, not only for this fiscal year but for years to come. And it is important that we get this right. A key focal point of the mayor's budget proposal was the fact that his administration inherited an under- reported budget deficit from his predecessor. At that time, the speaker, my colleagues, and I acknowledged the administration's efforts to address the chronic underbudgeting, but also raised concerns about the proposal to draw down billions from our limited reserves and raise the overall property tax rate by nearly 10%, the largest increase in over 20 years. So today we are here on behalf of the 8.5 million New Yorkers who are feeling the fiscal impact of higher prices, continued rising costs, federal funding reductions, and too little relief to address these challenges. While we appreciate that the proposed budget has made one step forward to address the chronic underbudgeting for critical safety net programs, it unfortunately takes one step back towards— backwards by drawing down our reserves, leaving those with very same programs more exposed if we are hit by a recession or other economic shock. It takes another step backwards by proposing a nearly 10% increase on the property tax rate. We again find ourselves confronted with a budget dance, but this time with a different kind of music. While we appreciate the steps to address the chronic under-budgeting, the council has made it very clear that even in the face of this deficit, raising property taxes or relying on the city's rainy day reserves is not a viable solution. What is a viable solution is to continue the work of right-sizing the budget to meet actual costs and finding efficiencies in how the city delivers these critical services. In this vein, the mayor has directed agencies to identify savings in order to help reduce the deficit. This is a good step forward, though we think the administration can and should go further in ensuring the city's operations are as efficient as possible. We believe there are more accruals and efficiencies available to balance the budget before resorting to raiding our savings and raising the property taxes. And while looking to Albany for help is worthwhile, we must do more to find immediate solutions within our control to address these shortfalls. Underbudgeting is not a new phenomenon, and year after year we have figured out a way to resolve such shortfalls without taking drastic actions. While we appreciate the more realistic spending figures shared by the administration, we are not convinced that the proposed actions to balance the budget are necessary. Faced with these budgetary challenges, the preliminary budget makes an effort to address some of the many needs that New Yorkers continue to face amid the rising cost of living in our city. For instance, the preliminary budget makes further commitments to expanding childcare and early childhood programs advancing the universal child care agenda championed by the council to help working families remain in the workforce while easing affordability pressures. It also continues to safeguard and strengthen the city's social safety net programs, reinforcing longstanding council budget commitments and initiatives. And it also begins exploring avenues for implementing a more progressive revenue structure while also identifying savings across city agencies to promote more efficient spending. However, despite these proposals, the budget still falls short of ensuring that New York City remains fiscally stable, not only this year but in the years ahead. Specifically, the budget plan does not adequately account for how the city will be building reserves in the event of further federal funding cuts or potential revenue declines. It does not present clear proposals to ensure that any efforts to generate additional revenue fairly address geographic equity and exemptions. And that the burden of filling these fiscal gaps does not fall solely on everyday working New Yorkers. And as we know, we are not here simply to debate the numbers on a spreadsheet. We are here to champion the needs of New Yorkers and ensure that this administration is held accountable for its budget decisions and for the implications those decisions have for our city today and tomorrow. And as a city, we must be more disciplined in how we spend and manage resources. But in doing so, we must ensure that these actions do not come at the expense of working families. We must also eliminate wasteful or mismanaged spending wherever it exists. And this includes bringing greater oversight into agencies' overtime budgets, establishing a reliable system to ensure the timely collection of fines and fees owed to the city, continuing to reform the city's deeply flawed procurement process— I can attest to that— which has too often resulted in unnecessary overspending. Despite the challenging outlook for the city's budget and broader economy, we remain confident that through collaboration with this administration, we can ensure that New York City is prepared for both the best and the worst of what lies ahead. And our responsibility is to develop a budget that is realistic, fair, and that protects the safety and economic stability of our city. That is why the City Council will continue prioritizing the needs of all New Yorkers And we will remain committed to funding early childhood education, effective public safety measures, and investments that make life more affordable. We will continue to work with the administration to ensure transparency, particularly in how federal funding, city reserves, and projected deficits are accounted for. And we will make it clear that balancing the budget cannot come at the expense of our children, seniors, working-class families, or the essential services they rely on. Our goal remains unchanged. There is work to be done, and delivering a budget that is both transparent and honest will allow us to protect essential services, confront the affordability crisis, and uphold the city government's responsibility as stewards of fiscal accountability for the city of New York. So before we hear from IBO, I wanted to hand it over to our New York City Public Advocate, Jumaane Williams, for his opening remarks. For his opening remarks.

Public Advocate Jumaane Williams (00:18:49)

Thank you so much, Madam Chair. Good morning. As mentioned, my name is Jumaane Williams, Public Advocate of the City of New York. I want to thank Speaker Menin, Chair Lee, and the members of the Committee on Finance for holding this important preliminary hearing— budget hearing. New York City is once again at a crossroads. While everyday New Yorkers struggle to keep up with the skyrocketing costs of staying in their homes, paying their utility bills, and putting food on the table, previous administration has left the city budget with a serious deficit. As an independent representative of the people of the City of New York, it is my responsibility to ensure the budget gap is not filled by making the lives of everyday New Yorkers even more difficult. In the preliminary budget released last month, the mayor laid out a few paths forward for filling the city's budget gap. My preferred method, and I believe his, is raising corporate taxes to the same levels as New Jersey and implementing a modest 2% income tax on those New Yorkers who make over $1 million every year. Thankfully, the state legislatures included the corporate tax increase in their recently released budget proposals, but there is still more work to be done on taxing multimillionaires in New York City. This group represents less than 1% of the New York State residents, but they take home about 30% of total income. In Manhattan, the top 1% take home over 50% of all income. That number does not take into account the multimillionaire New Yorkers are set to receive a cumulative $12 billion tax cut from the federal government.

Speaker D (00:20:09)

Even once tax increases are implemented, the richest New Yorkers will still be paying less in taxes than they did last year.

Public Advocate Jumaane Williams (00:20:15)

It is perfectly reasonable to ask New Yorkers whose fortunes have grown because of all our city has to offer to in turn pay their fair share to keep the city running. The mayor's path of last resort and some other options floated in the zeitgeist would place the burden of the budget gap on New Yorkers who are already struggling. Increasing property taxes would disproportionately harm Black and brown New Yorkers for whom homeownership has been their primary path to the middle class. I'm very heartened to hear under the leadership of Speaker Menin and Chair Lee that the council has found $1.7 billion in additional funding and savings that will prevent us from having to tap the city's rainy day fund. While we absolutely should look for additional areas in the budget for savings and efficiencies, I doubt the multibillion-dollar budget gap can be filled through savings alone, and this budget gap seems to be growing in the next few years. After the previous administration's years of forced austerity, We must try our best not to cut any vital services on which low- and middle-income New Yorkers rely. There are other options for raising revenue to close the city's budget gap that should be on the table as well. The city is currently owed billions in uncollected fines from lawbreaking landlords and corporations.

Speaker D (00:21:19)

I'm also heartened to see that the preliminary budget includes increases to law department staffing, additional investment in collections and enforcement capacities across our consumer protections, housing, and finance agencies.

Public Advocate Jumaane Williams (00:21:31)

Can result in major returns and disincentivize future lawbreaking. In addition to raising the New York City corporate millionaire's tax, the state could also help the city close its budget gap by raising the capital gains tax or implementing a peer-to-peer tax. Unfortunately, these tax options require state action, and Governor Hochul has decided that it is, my opinion, more important to protect multimillionaires and billionaires than it is to protect average, hardworking New Yorkers. So I urge the governor to reconsider, and I urge my peers to support the same. I very much look forward to hearing testimony from the IBO, Department of Finance, Comptroller Levine. I'm confident that by working together, we can ensure the city's adopted budget begins implementing an affordability agenda and is balanced without hurting everyday New Yorkers. Looking forward to working with the council on responsible budgeting to find the most efficiencies we can and again make sure that we pass this budget without passing on harm to New Yorkers.

Speaker D (00:22:22)

Thank you.

Chair Linda Lee (00:22:24)

Thank you so much, Public Advocate. And we will now hear testimony from representatives from the Independent Budget Office, from Louisa Chaffee, Director Independent— or from IBO, Sarah Parker, Senior Research and Strategy Officer, Sarita Subramanian, Senior Research and Strategy Officer. And at this time, I will turn it over to Committee Counsel to swear in our witnesses.

Speaker F (00:22:45)

Good morning.

Committee Counsel (00:22:46)

Do you affirm to tell the truth, the whole truth, and nothing but the truth before this committee, and to respond honestly to council member questions?

Speaker D (00:22:56)

Ms. Chaffee.

Louisa Chaffee - IBO Director (00:22:56)

Yes.

Speaker D (00:22:58)

You may begin.

Louisa Chaffee - IBO Director (00:23:05)

Good morning. Good morning, Speaker Menin, Public Advocate Williams, Deputy Speaker Williams, Finance Committee Chair Lee, and members of the committee. I'm Louisa Chaffee, Director of the Independent Budget Office. I'm joined today by my colleague Sarah Parker and Sarita Subramanian. IBO's senior research and strategy officers. We appreciate the opportunity to testify today on the Mondame administration's first preliminary budget. We appreciate going first, and we also appreciate the new chairs. This testimony will address 3 topics. 1, IBO's estimates of the city's revenues, expenditures, and gaps. 2, ideas on ways to begin to close the gap with additional revenues, operational efficiencies, and additional state state funds to address unfunded mandates; and 3, IBO's framing of potential lines of inquiry for the administration. Estimated revenues, expenditures, and gaps. The Mondame administration's first budget is noteworthy because it reverses years of under-budgeting practices by prior administrations, as you all have acknowledged. IBO applauds the administration's move to acknowledge the true cost of programs and services. The administration's budget is grounded in two optimistic revenue assumptions. First, it assumes that very robust growth will propel personal income taxes and business income taxes to greater heights. Second, while the administration does not include new personal income tax revenues that would require state approval, it does include a new property tax revenue proposal that can only materialize if this council approves such a change. Given these two assumptions, the administration's forecast exceeds IBO's by almost every major tax category throughout the financial plan period. The City's personal income tax collections have been bolstered in recent years by high earnings in key sectors and increased capital gains amid strong Wall Street performance. This trend continues, as shown by the very large bonuses issued in the financial sector at the end of calendar year 2025. IBO's PIT forecast is moderately lower than the administration's. Mayor Mondame has proposed a 2 percentage point increase to the rate for individuals with incomes over $1 million. Last year's federal One Big Beautiful Bill Act, O-Triple-B-A, made permanent a set of significant tax breaks for the highest earners. Tax breaks granted during the first Trump administration that would have expired, but that were made permanent by OBB A, significantly lowering the tax burdens on New York's highest earners. Back when those tax breaks first took effect in 2019, New York State took action to recover for the state some of the funds high-income taxpayers were no longer paying federally. This points to a key distinction in how income taxes are structured at the city and state level. As detailed in IBO's February 10th personal income tax report, the city has 4 tax brackets. New York City applies an identical tax rate of 3.876 to the New Yorker who, or whose adjusted gross income is $60,000, as it does to the New Yorker who earns over $5 billion. Which was the highest income, and '23, which is the most recently reported year. So in contrast, the state's personal income tax imposes higher and more progressive increasing rates across 9 brackets. The state's tax rate for income of $60,000 is approximately 5.5%, while the highest bracket, $25 million, it climbs to 10.9%. The administration's outlook for corporate tax collections is also rosy. It is boosted by Governor Hochul's call for New York State to decouple from certain federal tax code provisions that were also enacted as part of OBBAA. But after 2 years, the administration projects that corporate tax revenue will drop substantially below recent levels. IBO projects somewhat lower corporate tax growth collections through this fiscal year and next, but continued growth throughout the financial plan period. Mayor N'Damme has proposed increasing the average property tax rate from 12.283% to 13.450%, which is a 9.5% increase, and to explain this, we have published a report. Um, which describes the structure of property tax rate-setting system. Reflecting strength in the tentative roll for 2027, IBO forecasts higher property tax revenue of $3.69 billion in '27, increasing to over $41 billion in '23. In general, IBO's economic outlook is consistent with the Mondami administration and the broader macroeconomic consensus. The national economy has generally held up. However, there are conflicting signals for future performance, such as the strength of Wall Street and consumer behavior, extremely weak job growth, and continued threats to the global economic order, tariff chaos, and the war in Iran. We want to flag the rainy day funds, which are planned to be used for '26 and replaced in '28. So the administration, as you have noted, is using $980 million from the rainy day fund to balance '26 and intends to replace those funds in '28. This points up the need for clear rules on use of this fund, rules that are at the discretion of the council and the administration to set. IBO applauds the administration's decision to reduce the allocation to the retiree health benefit Benefits Trust, now $229 million lower than in the November plan. This fund has often been used by past mayors to set aside excess funds and avoid much of the scrutiny normally afforded by the public budgeting process. So IBO estimates substantial gaps for next year and beyond. IBRO projects that if spending stays constant, total revenues will grow by an annual average of 2% a year from through '30, and that partially as a result of the administration's laudable corrections to previous underbudgeting, expenditures will increase on average 4.5% a year. Thus, IBO projects gaps of $535 million in the current year and almost $6 billion in fiscal year '27. These forecasts cannot yet factor in the impact of tariffs or war or cuts to federal aid, or the next round of collective bargaining, all of which contribute to uncertainty in 2027 and beyond. How to control the gap. So there are several categories of expenses— several categories of expenses are continuing to drive the scale of total expenditures and are areas that have experienced substantial growth in recent years. First to note is CityFEPs, which is already the second largest rental assistance program in the nation. Second only to Section 8. Spending has grown from under $300 million in '21 to almost $1.3 billion in '2.5, with an assumption in the preliminary budget that it will rise to almost $3.5 billion in 2030. It is doubtful that there is sufficient housing supply in New York City to absorb that level of spending. IBO has concerns about the steeply increasing level, but recognizes that the council and the administration are working to establish a sound budget footing for this important program. Next, uniformed overtime. Spending on uniformed services overtime in police, fire, corrections, sanitation has been chronically under-budgeted in the past, with NYPD spending the largest driver of total costs. NYPD spending in this area has trended downward under the leadership of Commissioner Tisch. In the November plan, NYPD was on pace to spend $971 million less than the billion of last year, and this pace has slowed to $894 million. The Mondame administration has also realistically budgeted both NYPD and Fire Department personnel spending for future years, which is a stark departure from budgeting practices of past administrations. At the Department of Corrections, spending on uniformed overtime has trended steadily upwards over the past few years and is on pace to be as high as it has ever been at $330 million for 2026. The administration did not add money to DOC's budget in 2027, citing uncertainty around the ongoing situation with the court-ordered federal remediation manager. IBO correspondingly projects that DOC will require more money in its budget next year. The Department of Sanitation has also experienced an increasing trend in uniformed overtime expenditures, from $140 million in 2024 to $178 million in 2025. And expenditures are unusually high this year due to the two major snowstorms., next I'd like to flag due process cases. Spending on these cases, which are filed by public and non-public students seeking special education services outside of the public school system, has grown from $807 million in 2021 to $1.2 billion in 2025. The preliminary budget adds additional funds for the program's budget for a total of $1.2 $1.6 billion in 2027 and beyond. There are two areas driving this increase in spending: tuition payment for private schools and spending on educational services for non-public school students. Between 2021 and 2025, spending on non-public school students who are entitled to services under 2000 amendment to the state law grew by 91%. Those state-eligible cases accounted for 59% of all due process cases settled between August of '21 and February of '26 and account for 29% of total payments for that period of time. Large growth in due process cases is but one example of unfunded state mandates New York State imposes on New York City. New York is also being required to bring class sizes into compliance by September 28th or risk losing a large portion of state education aid. In December of '25, IBO estimated that the New York City Public Schools needed to budget almost 7,000 additional teachers, and the administration added $3.6 billion in 2027 through 2030 to meet this mandate, but only 228 $8 million of that would come from state aid. As the mayor cited in his presentation of the preliminary budget, the city contributes almost 55% of the total revenue collected by the state, but only receives less than 41% of state funding. As described earlier, the state increased its personal income tax collection from the wealthiest earners in the state, most of whom reside in New York City, when it needed new revenue., but this funding has not been directed back to the city, even to assist with areas where the state is requiring services the city must struggle to fund. Another area where the state has imposed significant and disproportionate costs on the city is that of the Metropolitan Transit Authority's paratransit services. The city is required by state law to reimburse the MTA for Access-A-Ride. Before 2024, The city was only required to reimburse 50% of paratransit operating costs after fares and dedicated taxes. Starting in 2024, state law increased that to 80% through at least 2027, and it is currently predicted to be permanent. Similarly, for foster care, the city paid about 30% of costs prior to '17 and 60% in 2027. While the state shares declined from 54% to 26%, the balance being covered by the federal government. So this again shifts more costs onto New York City. The preliminary budget projects that the city will spend $523 million, or 60% of foster care costs, in 2027, and that will continue to rise. Closing the gap So we like to think about operational efficiencies. The administration is working to find savings through operational efficiencies. The newly appointed chief savings officers at every mayoral agency are tasked with responsibility to identify 1.5% in savings for '26 and 2.5% in savings for '27 and beyond. The plans are due in March of '26. We look forward to seeing those plans. The preliminary budget reflects the hiring of 50 new auditors at the New York City Department of Finance, which IBO has long estimated could generate $165 million annually. Similarly, it reflects the addition of 200 lawyers and 100 support staff at the Law Department, as the Advocate— Public Advocate cited, also with the goals of generating savings. There are many other areas such as supplies and materials where it is likely that savings could be generated, and IBO looks forward to learning more about these. Generating revenues to close the gap. IBO has published on additional ideas to raise revenues, both by eliminating or reducing existing tax breaks and by increasing various other specialized taxes. These ideas, which would all require New York State legislation to change, include the elimination of various tax abatements and exemptions either immediately or over time. These include the Industrial and Commercial Abatement Program, ICAP, the Relocation and Employment Assistance Program, REAP, the Relocation Assistance Credit for Employees Program, RACE, and the property tax exemption, the permanent property tax exemption currently enjoyed by Madison Square Garden. IBO has estimated the impact of various other potential tax changes, and we encourage you to look at our website, and we'd be happy to come speak to you more about them. The city may also choose to reassess and structure for fees and fines. These ideas are not sufficient to close the current estimated gaps, but they would contribute to addressing the issues longer term. Lastly, there are questions that the IBO would appreciate the administration being able to further explain, and given the unusual timing of this testimony, I'm going to talk about those too. We are very curious as to why the administration remains as optimistic about the national and local economy in light of events such as the Supreme Court decision on tariffs, and the war in Iran. Why does the administration project such an optimistic outlook for corporate taxes and then a precipitous fall-off in later years? How is the administration factoring into its budget planning the impact of a wide array of federal changes that are already impacting New Yorkers and will continue to grow in significance? These include addressing hunger for New Yorkers no longer eligible for SNAP, the loss of the essential health plan coverage for hundreds of thousands of New Yorkers, potentially plummeting vaccine rates, caps on student loans, severe declines in the number of foreign students coming into New York City, increased work requirements for public benefits, and federal cutbacks in climate and infrastructure resilience. An extremely grim and serious list. This administration appears to be reinvesting in environmental programs such as composting,, but it's unclear why the administration continues to project the cost of waste export and organics processing lower than IBO's estimates. How do child care vouchers factor into the mayor's plans to expand free or reduced child care for children ages birth through 6? Given the governor's additional funding on top of the supplemental base— excuse me, supplemental funding on top of the base, What level of voucher usage is anticipated going forward? And what are the plans for the large waitlist? What's the plan to adjust pay parity for community-based organizations under contract with New York City where employees are often paid significantly less than their exact city counterparts? We've got more questions. What's this administration's approach to dealing with vacancies and hirings? Currently, the labor reserve has been budgeted funding for 1.5 annual raises for collective bargaining agreements, which is about half of the increases negotiated by the Adams administration. Does the Mondame administration anticipate increasing the labor reserve for the next round? What's the basis for the savings assumption that support the budgeted lower cost for health insurance through the New York City Employee Preferred Provider Organization? The NYCE PPO. So, in conclusion, I would like to again thank you for this opportunity to testify, and we'd like to commend the administration for its commitment to clarity, honesty, and transparency at the outset of the 2027 budget process. This council will now navigate the very challenging budget environment, even as issues mount every day with weakening job growth and chaos in the global economy. IBO looks forward to continuing to work with you in the months ahead, and we are available to address any questions you may have.

Chair Linda Lee (00:42:09)

Thank you. Thank you so much, and I'll turn it over to the Speaker to ask her questions.

Committee Counsel (00:42:13)

Great.

Chair Linda Lee (00:42:13)

Thank you so much for your testimony today. So in order to present a balanced budget for fiscal 2027, the prelim plan includes the proposed across-the-board increase to the city's property tax rates. The mayor estimates that this increase would provide an estimated $3.7 billion in additional revenue in each year of the financial plan. Do you believe that a property tax increase is necessary?

Louisa Chaffee - IBO Director (00:42:39)

Thank you for the question, Speaker Menin. IBO does not share opinions, but we would like to point you to our property tax report that we issued just yesterday, where we flag a number of concerns in the rate setting, one of which is the equity issue, where data demonstrates that impacts of property tax are felt most extreme by renters, and renters traditionally are at the lower end of the income level.

Chair Linda Lee (00:43:08)

And what alternatives would you recommend in place of a property tax increase?

Louisa Chaffee - IBO Director (00:43:14)

Well, there are a few tools: more revenues, less expenditures. But I think as our testimony really clearly laid out, there are a number of of very large areas where the state is imposing unfunded state mandates on the city, and the state, with their reserves and general financial position, could fund the requirements they are making of New York City. There are a number of examples in the Department of Education, most obviously the class— the teacher requirements and the due process cases. And we also flagged the MTA paratransit— but we believe that there are opportunities. And lastly, we believe that there are— this is an ideal opportunity for this administration to take the time to carefully analyze how operations function. We know that you have led thought into the procurement process reforms and other areas of how government functions day to day. A review is not simple and is not fast, that generally either generates the same level of function with fewer dollars or more ability to function with the same dollars, both of which help the city's budget.

Chair Linda Lee (00:44:27)

You mentioned in your testimony that there should be a hard look, which is something I agree with, on tax breaks that are happening at the state level. Have you looked at tax breaks for educational institutions and for healthcare institutions?

Louisa Chaffee - IBO Director (00:44:44)

No, but we would welcome the opportunity if you were asking us.

Chair Linda Lee (00:44:49)

Okay, just interested in that. Are there any additional revenues available that your office believes the city should be collecting?

Louisa Chaffee - IBO Director (00:45:03)

Hello, I'm Sarah Parker. As Louisa mentioned in our testimony, IBO has done thorough reviews of several tax expenditure programs. So these are places where tax breaks are given to specific companies or properties that meet criteria dictated in the law. Generally, they are as of right, which means anyone who meets the specifications gets the tax benefit. That also means that they have no cost control on them, and over time there's a lot of fluctuation year to year on on who applies and is using these programs. So that is one place that we have flagged, and we'd be happy to talk about those reports with any of you.

Chair Linda Lee (00:45:43)

Okay, and going back to my question about tax breaks, I mean, I just have a couple follow-ups on that. So certain educational institutions like Columbia University are receiving a very significant tax break.

Louisa Chaffee - IBO Director (00:45:54)

Do you agree with that? As nonprofit institutions, they are under state rules, not obligated to pay property taxes. And the same with healthcare hospital facilities. We do look at what other jurisdictions do. And in Boston or Cambridge, Massachusetts, for example, Harvard makes pilots that are smaller than what it would pay in property taxes, but they do make pilots. Brown University makes pilots to, I believe it's the state of Rhode Island. And so there are examples of payments in lieu of taxes being made. That is not something that we've explored here in New York City.

Chair Linda Lee (00:46:35)

Are there any ideas in that regard that would not require state legislation to make a fix to this?

Louisa Chaffee - IBO Director (00:46:44)

As you well know, most tax rules are set in state law, with the exception of setting the property tax rate.

Chair Linda Lee (00:46:52)

Okay. In terms of the drawdown of reserve funds, so And I know you went over some of this in the testimony, but I've got a number of questions on this. Prelim plan includes the utilization of over $1.2 billion from long-term reserve funds, $980 million from the rainy day fund, as you talked about in your testimony, $229 million from the retiree health benefit trust to assist in balancing the budget. It also brings down the in-year reserves for the upcoming budget to just $100 million or less than 1% of the city's budget. This budgetary action has only been utilized recently during periods of severe economic shock. When do you feel it is appropriate to utilize the assets of the city's rainy day fund?

Louisa Chaffee - IBO Director (00:47:43)

We very much believe that rules should be set, but that we believe it's not the IBO's role to prognosticate on what those rules should be. But our understanding of the legislative basis is that the state sets the framework, but it is between the council and the administration to negotiate what goes in and what comes out and when. And so we would be happy to offer any kind of support should you choose to advance that attempt at setting rules.

Chair Linda Lee (00:48:15)

Okay, and what is your opinion in regard to the mayor's proposal to draw down both long-term and in-year reserve funds in general?

Louisa Chaffee - IBO Director (00:48:24)

The budget needs to be balanced, and we've flagged our concerns about both the lack of rules and the general actions of the intention to repay.

Chair Linda Lee (00:48:34)

And just so we can get your sense on this, what is IBO's opinion on the appropriate level of reserves for the city to have?

Louisa Chaffee - IBO Director (00:48:46)

IBO is agnostic on the appropriate level, but we believe it should be linked to the overall size of the budget, and we also believe that there should be consideration of the state of the economy and other threats in the general environment.

Chair Linda Lee (00:49:03)

Okay, moving on to CityFEPs. So since the inception of the program, the baseline budget for CityFEPs has been considerably lower than actual spending. Historically, funding for CityFEPs has been added during the fiscal year to meet the actual demand. The council has long pushed the administration to more accurately budget for this program, which we know IBO has advanced that argument as well. In the prelim plan, funding for CityFEPs was increased to match HRAs' projected actual expenditures for the program. These increases brought the CityFEPs budget to $1.78 billion in fiscal 2026, $2.21 billion in fiscal 2027, $2.64 billion in fiscal 2028, and $3.04 billion in fiscal 2029. So how does the funding added in the prelim plan align with IBO's analysis and spending projections for CityFAPS for fiscal 2026 and in the out years?

Public Advocate Jumaane Williams (00:50:05)

Serena? Yes, as you noted, we also looked at the large amounts that were added. For the CityFAPS program. In the past, how IBO has looked at this program is to basically looking at the floor, right? So thinking about the level that was spent last year and the assumption that we needed at least that level to proceed for the current and future years. And now with these additional funds, IBO is wondering whether the supply side can really meet the demand. I think there's no doubt with the affordability crisis, the impending federal cuts that are coming, that there will be demand for, you know, these— this rental assistance. But I think because of the increase in rents, so not just— obviously with rent-stabilized units, that's different than market-rate units. But IBO has looked at rent increases and sort of projected what that might mean, as well as the supply of housing. And we're really wondering if both the supply and the increases in rent will be able to be met based on the assumptions. So the— from our understanding, the assumptions are that the program will grow, although the Growth is expected to slow, but that still leads to, as you mentioned, really large expenditures by 2030 that we're not sure if the supply side can and can—

Chair Linda Lee (00:51:43)

has room for that. Okay, we've got a lot more questions, but in the interest of time, I'm going to pass it over to Chair Lee first. Thank you. Okay, great. And before I start, I just wanted to also recognize we've been joined by Councilmember Justin Sanchez, Councilmember Brewer, Councilmember Aviles, Councilmember Mealy, Councilmember Marte, and on Zoom we have Councilmembers Gennaro and Feliz. So really quickly, for under-budgeting, you know, I think the mayor's, you know, release of the preliminary plan, as you mentioned, is getting more to being truthful in terms of what the actual budgeting is. And sort of trying to address ending the under-budgeting in many areas. It includes an additional $7.54 billion to right-size the budget to a more realistic cost estimate, and that includes cash assistance, city FEPs, rental assistance, shelter costs, DHS. So do you believe the updated cost estimates for these areas included in the preliminary plan are more realistic or are realistic?

Louisa Chaffee - IBO Director (00:52:50)

More realistic? Yes, in general we believe they're more realistic. There are fluctuations in certain areas. So for example, we flagged Department of Corrections, and we have some concerns about the judgments and claims. But it feels that given as a whole, the administration's commitment aligns with the mayor's indication of being accurate and honest in the expenditures.

Public Advocate Jumaane Williams (00:53:15)

I would just add to that that as a result, a lot of these areas that you mentioned, so cash assistance, CityFHEPS, are not areas that we have readjusted based on our estimates, which we have historically. But, you know, I think there is a question about are they the appropriate levels. I think particularly for CityFHEPS, that's something we're not sure about. We don't have enough data. Data to understand, you know, what type of apartments, for example, are used with those vouchers. You know, the number of bedrooms, bathrooms, if they're rent stabilized or market rate. So I think having more data from that side of things would help us better project what the supply side might look like.

Chair Linda Lee (00:54:00)

And to your point, as you mentioned earlier, it could be that the supply is, you know, not as high on obviously, is the demand, which is going to— which you're probably going to see. Much of the additional spending included in the prelim plan is driving— that is driving the rationale for a need to raise the property tax and draw down reserves. Is the mayor seeking to present a more accurate estimate of the existing costs? So I think everyone seems to agree that this under-budgeting has been occurring for several years, and your office and the council have called out the practice. And city's budgeting process requires that while costs may be underestimated during the year, they must be accurately reflected by the time the fiscal year comes to a close. So even during years when expenses have been under-budgeted, the city was still able to cover the under-budgeted costs without having to make large withdrawals from the reserves or initiate large tax increases. So what do you believe? I know the opinions are, you were saying, try not to give the opinions, but In your best ability to answer, what do you believe is inherently different this year where correctly recognizing the actual costs of these items would necessitate such drastic steps that were not required in prior years?

Louisa Chaffee - IBO Director (00:55:12)

The preliminary budget accurately reflects the city's expenditures.

Chair Linda Lee (00:55:22)

Okay. Right.

Public Advocate Jumaane Williams (00:55:23)

Okay.

Chair Linda Lee (00:55:23)

So I'll ask a follow-up later. Sorry, that was a really short answer. No, no, no, no, no. That's good. And could this be an indication that the mayor still can go further in right-sizing the budget to reflect the actual need, this time on the side of reducing the over-budgeted areas?

Louisa Chaffee - IBO Director (00:55:43)

We look forward to seeing the chief savings officer plan. We recognize it's the beginning of the cycle. We look forward to understanding what the state puts forward in its adopted budget, and we would expect that there would be further movement in the executive budget.

Chair Linda Lee (00:56:00)

Further shuffling. Yep. In terms of personnel accruals, so currently we estimate that the city has approximately 14,000 vacant budgeted full-time positions. And while this total is lower than in previous years, mainly because of recent vacancy reduction efforts, which is great, it is still relatively high. So how How much savings do you believe the city has accrued this year to date, including fringe costs, based on the underspending resulting from the high number of vacancies?

Public Advocate Jumaane Williams (00:56:35)

Yes, thank you. So IBO, and we do note the same as what you just shared, which is that we estimate less savings than we have, you know, even 1 year or 2 years ago. About $200 million for this year, largely, and we also see the same, roughly the same difference, $307,000 in budgeted headcount and $292,000 in active headcount, yielding about 15,000 vacancies.

Louisa Chaffee - IBO Director (00:57:11)

Okay, great.

Chair Linda Lee (00:57:12)

And just to be totally clear, we're, I just, because I think there was maybe some confusion or I heard some confusion about the fact that, oh, are you guys saying we should eliminate? No, no, no, we're not saying we're touching the line items or the number of positions. We're just simply saying how much in savings can we find for positions that were not hired. So I just wanted to make note of that. And in IBO's review of the city's financial plan, it includes estimates for revenue and expenses. And I understand that for fiscal year 2027, IBO's revenues are lower than 1Bs. Additionally, IBO estimates larger budget gaps in the out years of the plan. Can you just walk through some of the differences in the underlying assumptions?

Louisa Chaffee - IBO Director (00:58:00)

Sarah.

Chair Linda Lee (00:58:00)

Yes.

Louisa Chaffee - IBO Director (00:58:00)

Overall, IBO is more cautious on tax revenue than what the Mamdani administration is presenting, given our overall concerns with the economy.

Chair Linda Lee (00:58:11)

Okay, your answers are so efficient. And what are the main contributors to IBO's estimated $6 billion gap in 2027 and then $11 billion in 2028, '29, and '30?

Louisa Chaffee - IBO Director (00:58:26)

The main contributor is on the revenue side, and that is because we do not assume in our estimates the property tax proposal because it is not enacted.

Louisa Chaffee - IBO Director (00:58:36)

Okay, great.

Public Advocate Jumaane Williams (00:58:37)

I will note we do have some expenditure items. They're not at the level that they have been in the past, but a couple of areas that Louisa highlighted in testimony are in sanitation in particular, these areas that have been historically under-budgeted and were not, you know, right-sized as other areas, which is waste export costs and organics and compost collection.

Chair Linda Lee (00:59:02)

So I just wanted to highlight those. Okay, thank you. And then finally, just my last question on the economic, uh, the employment growth in the city. So payroll employment has been slowing dramatically, and as of December 2025, year over year, job growth was only 30,100. This compared with 2024 annual job growth of 121,700. In addition, out of the of 30,100 jobs added, 53,000 were in the low-paying home healthcare and social assistance sectors. That means excluding those two subsectors, total employment declined by 22,900 year over year. And major sectors such as finance, business services, leisure, hospital, and construction have all experienced job loss. So how would you assess the employment situation in the city?

Louisa Chaffee - IBO Director (00:59:54)

Well, apart from the obvious, it's pretty grim.

Louisa Chaffee - IBO Director (01:00:01)

When IBO talks about employment, we are looking at jobs being added in that year, and we look at it across different sector types. So as you noted, one of the areas where we have seen the small amounts of growth in jobs over recent years has been in the home health and social services sector.. And those traditionally are low-paying home health aid jobs. We expect with the benchmarking that's going to be happening this month that that's going to improve the jobs estimate numbers for last calendar year, calendar year 2025. But where our employment is right now is a very tepid state of, state of things. We are not adding jobs like we have been in past years. IBO is estimating slightly more than 44,000 jobs jobs will be added next year. But again, this job growth has been relatively quite stagnant. It is really the high incomes seen in the financial sector in particular and capital gains that are what are driving personal income revenues. Underlying everything with the jobs and employment forecast that IBO has, we still have the same federal risks that were here last year. The tariff questions Are there tariffs? Are there not tariffs? Are they going to be refunded? Are new ones going to be imposed? Added to this layer, we also have this geopolitical conflict that is new, and so that's underlying everything here.

Chair Linda Lee (01:01:26)

Okay, thank you for that.

Louisa Chaffee - IBO Director (01:01:26)

And what do you think some of the biggest challenges and barriers are for the growth? I think one of the things for both businesses and employers is this level of uncertainty. Without knowing what the future holds, businesses are being very reluctant to add new positions because they don't want to then have to do layoffs and job cuts if a recession materializes. Similarly, employees are staying in positions even if it's not the best fit for them because it is a pretty terrible job market for people searching for jobs. And so we are in this sort of deadlock position of of low hire, low fire. And so there's both lost growth opportunity for businesses that should be expanding but are hesitant to, and also employees finding better matches in terms of their skill set and employment and wages.

Chair Linda Lee (01:02:19)

And also, as we've seen nationally, costs for employers are also significantly increasing, whether it's the insurances that they have to gain. And so those are all things that are factoring, I think, into So just one really quick follow-up question on the PS accruals. Is the $200 million estimate for PS accruals this year based on subset of 14,000 vacancies?

Public Advocate Jumaane Williams (01:02:46)

Yes, from my understanding, I think a large portion of those accruals are for Department of Education and CUNY and pedagogical staff.

Chair Linda Lee (01:02:54)

So those are included in that. Okay. And at that rate, the average cost per vacancy is under $20,000. So could you walk us through your calculations a little bit more for that?

Public Advocate Jumaane Williams (01:03:08)

Sorry. So I noted the $200 million in civilian. I neglected to add— sorry, the $358 million for the pedagogical positions that I mentioned.

Chair Linda Lee (01:03:19)

So the total is $681 million. $681 million.

Louisa Chaffee - IBO Director (01:03:25)

Okay.

Chair Linda Lee (01:03:25)

I apologize.

Speaker F (01:03:26)

Okay.

Chair Linda Lee (01:03:26)

Thank you so much for that clarification.

Louisa Chaffee - IBO Director (01:03:28)

Okay.

Chair Linda Lee (01:03:28)

I'm going to pass it along to my colleagues to ask questions, and we're giving you guys 5 minutes. If we hit the 5-minute mark, we could always put you guys back on for round 2 questions. And so I am going to— oh, I'm going to start with our Deputy Speaker Williams.

Public Advocate Jumaane Williams (01:03:48)

Hi. The first question I have is, do you see any process or fiscal differences between the Mamdani administration's cost savings exercise versus the PEG exercise of the Adams administration? Like, do you see any differences in terms of like the process or based off of your analysis on the request?

Louisa Chaffee - IBO Director (01:04:10)

Well, it's still early days because the results, the reports aren't due until we believe March 20th. But I would say that the first clear difference is that the Adams administration issued a 3-round peg letter at a time when the revenues were such that they were not needed, and the Mondame administration is not doing a program to eliminate the gap, a peg, but rather encouraging or requiring careful analysis of operations to identify savings, so they're not taking the we're going to cut cut perspective, but rather we're going to run this more efficiently perspective.

Public Advocate Jumaane Williams (01:04:48)

We look forward to seeing the reports.

Chair Linda Lee (01:04:51)

Okay.

Public Advocate Jumaane Williams (01:04:51)

But he is asking the agencies to make a percentage cut, which is similar, even though the percentage is less.

Louisa Chaffee - IBO Director (01:05:00)

There is a request to figure out how to adjust expenditures, but we believe— well, we're interested in seeing the reports, as I am sure you are, too.

Public Advocate Jumaane Williams (01:05:11)

Yes. Okay. Thank you. You mentioned class sizes, and I know you've done a ton of things around analyzing rollout to class size and estimating the amount of remaining costs to hiring teachers to reach 100% compliance. So $600 million was added for fiscal 2027 in the preliminary plan to hire roughly 6,000 teachers. Given enrollment decreases since 2023 and 2024, does IBO believe this this funding should bring New York City public schools close to compliance? Yes, that's a good question. So IBO has updated its class size analysis. We did— we've done 2 so far. So as new data come in, and we recognize that our data are on a lag, and so we do plan to update that analysis going forward. We do note that the money that was added was a bit over our previous re-estimate of those costs, but we do also assume an entry-level salary for teachers. And so one thing that we're going to be looking into, especially this year, which was the first year where they added a substantial number of teachers, is to look at what the salary level of those teachers actually was. And so if we need to adjust our assumption, we will be doing that analysis. Okay, I have 2 minutes. Okay, so just a few questions on unpaid fines and fees and then a question on budgeting for equity, you know, my favorite topic. So the People's Budget folks have a new campaign, which I think is great, And I know you all released a report on this. And so do you know— I know the report came out in 2023, but do you have any updates on how much the city has in uncollected fines and how much in landlord fines in particular? I know it was like $150 million in 2023 for unpaid lienable property charges and $940 million in unpaid penalties, but I don't know if you have a breakdown of the landlord fines versus the uncollected fines, like any recent numbers.

Louisa Chaffee - IBO Director (01:07:31)

IBO has not updated its numbers since we last looked into this. I will say that with the most recent lien sale, that is a way that charges to properties and particularly water bills often do get cleared out. But there is no lien sale this year.

Public Advocate Jumaane Williams (01:07:48)

So this is a really interesting question going forward. Thank you. So in February 2026, IBO's Assistant Director for Budget Review Logan testified before the Committee on Civil and Human Rights regarding budgeting for equity. In his testimony, he stated that when considering the expense budget, IBO typically asks who could be and who is actually being served by a program. In evaluating the preliminary plan, has IBO noticed any budget inequities, and have you seen any budget inequities addressed in the preliminary plan?

Louisa Chaffee - IBO Director (01:08:28)

As we flagged, we were proud to report— publish a report yesterday on property tax, and we do draw your attention to the exciting page considerations because of the equity issues in the potential property tax rate increase. Our full published report will be issued March 24th, and we would intend to share more details then, but as Logan Clark, our colleague, testified at the equity hearing, part of the challenge in understanding equity is the current structure of the budgets units of appropriation, a topic that I will not let go of, makes it very hard to understand the nuances of how different agencies are actually allocating their funding. Thank you.

Public Advocate Jumaane Williams (01:09:20)

I know I've had many conversations with you all on this topic, and I appreciate you trying to figure out how to assess this given the lack of transparency in how we do the budget in New York City, which I hope to continue to work with everybody here to ensure that the administrations actually comply with the charter that state they are supposed to give us more units of appropriation so we can actually make an assessment on whether or not they're spending the money equitably and/or receiving money equitably across the city.

Chair Linda Lee (01:09:49)

So thank you so much. Thank you. Thank you.

Committee Counsel (01:09:53)

And next we'll go to Majority Leader Abreu. Thank you, Chair, and I want to thank you, Louisa, for your presentation and for making yourself available outside of this forum as well. Mayor Mumdani promised on the campaign trail to double the budget of the Department of Consumer Worker Protection. The preliminary plan does not reflect this promise, as the fiscal 2027 budget totals $74.7 million, actually a slight decrease from $75.1 million at fiscal 2026 adoption.

Louisa Chaffee - IBO Director (01:10:24)

Has the IBO ever projected the impact of DCWP spending on restitution for consumers and workers? We have not, but are you asking us to? I would love to see that.

Committee Counsel (01:10:35)

Well, we'll take that as a question. Thank you. And I'm assuming the answer is going to be the same for the next question. Has the IBO conducted any studies on the effects of increased wages on deliveryistas and the broader city economy?

Louisa Chaffee - IBO Director (01:10:46)

We have not studied that, but again, we find it a very interesting question.

Public Advocate Jumaane Williams (01:10:50)

Great.

Committee Counsel (01:10:51)

I think this is an area where there's increasing, you know, regulation, and of course, this will be important to us to understand what the cost is going to be to the city, and whether or not the commitment set out by the administration on implementing this is something that we can see through. Regarding BHERD, in November 2025, the Adams administration released a plan to transition BHERD to be fully funded and operated by H&H, removing FDNY program from the— removing FDNY from the program. FDNY EMTs previously assigned to BHERD will be reassigned and the BE-HERD teams will now consist of a social worker, RN, and ambulance driver. The financial plan includes $45 million in fiscal '26 for BE-HERD. In January 2026, IBO released a report identifying areas for improvement within BE-HERD. BE-HERD response times have been rising steadily since the start of the program in 2021. The median BE-HERD response time has risen from 12 minutes in Q4 of fiscal '21 to roughly 21 minutes in Q3 of fiscal 2025. 5. How does IBO anticipate BeeHerd's response times changing under the new model?

Public Advocate Jumaane Williams (01:12:02)

Sabrina? Yes, as you noted, our colleague Cassandra Stewart also testified at a hearing last week. And I think one other aspect of our report that's really critical to point out is the way that the pilot has been scaled up. And so if you think about the initial start of the pilot was 3 precincts and 2 teams, and if you were to assume that level of staffing for the number of precincts that are now currently in the program, we estimate that could be up to 20 teams, and currently it's at 9. So I think in order for— it's not just about the transition of where the program is operating from, but also the appropriate staffing level. I will also note that response times to emergency calls, or non-beheard emergency calls, are also on the rise. And so I think there are larger questions about the system as a whole and call processing times for emergency calls.

Committee Counsel (01:13:06)

Do you see response times improving or not improving?

Public Advocate Jumaane Williams (01:13:10)

I think, again, I think it depends on the level of— if the level of staffing remains the same, then we think there could still be challenges because it's not just about the response time, but also these teams are spending longer time on scene. And so there's less availability for a new team if a call comes in.

Committee Counsel (01:13:31)

In the first 3 quarters of fiscal 2025, only 38.5% of emotional disturbed person or EDP calls deemed eligible for a BHER response were actually assigned to a BHER team. The metric was worse in fiscal 2025 than it was in any other year of the Be Heard pilot. How does the— how does IBO anticipate this metric changing under the new model?

Public Advocate Jumaane Williams (01:13:53)

Yeah, again, I do think that over that time frame, the pilot area did expand. And so we do think that taking a really critical look at the call volumes by precinct is really important. We actually have a companion report that that does look at that. So I think there really needs to be a geographical analysis of what the appropriate staffing level is.

Committee Counsel (01:14:19)

And my last question is, has IBO assessed long-term capital savings due to PAC conversions regarding NYCHA PAC conversions?

Louisa Chaffee - IBO Director (01:14:31)

IBO has written and looked at what the status of NYCHA's fiscal position is and how it it plans to utilize PACT RAD conversions and also the NYCHA trust that was created. In terms of its capital needs, NYCHA's capital needs are very well documented, and the federal government has not met its historic promise that it would cover capital expenses for housing units that are substantially below market, and so how those two relate are are really central questions. I'd be happy to talk with you and your staff further on this topic.

Chair Linda Lee (01:15:08)

Thank you, Chair. Thank you. Um, and we are running a little behind schedule, so if you guys could make sure to stick to 5 minutes, which you guys are doing a great job at, so I appreciate that. Um, and next we're going to have questions from Majority Whip Hanks, followed by Councilmember Hudson, and then Councilmember Narcisse.

Public Advocate Jumaane Williams (01:15:24)

Thank you so much. Good afternoon. Thank you so much for your testimony. Um, I just needed a little bit clarity in parts of your testimony. The speaker asked you a question about property tax, is the property tax needed, and as part of your response, you said that the property tax system currently affects renters, I think as part of your— correct me if I'm wrong. Can you explain a little bit about how the current property tax system is is affecting renters, low-income renters.

Louisa Chaffee - IBO Director (01:16:01)

I think that's what— Yeah, so what I was flagging were equity concerns in should the property tax be raised, and that any property tax increase is borne by obviously property tax owners, but that also renters bear property tax increases as landlords traditionally pass those on to renters. And renters have far fewer means to dispute that increase in comparison to other classes. But this is a very in-depth, complicated process, and we encourage you to read our report.

Public Advocate Jumaane Williams (01:16:38)

It's really exciting.

Speaker F (01:16:39)

100%.

Public Advocate Jumaane Williams (01:16:39)

But, you know, for the purpose of this hearing, we also want the public to understand that any property tax increase— let's just assume, which it is not, that the current property tax is fair across all boroughs. Being from Staten Island, we pay a higher property tax than they do in, let's say, Park Slope, Brooklyn. And so when you're talking about that pass-through, it's always going to be the end user that deals or has to deal with the consequences of any type of raising of anything. So what we'd like to know is that— is the administration going to be doing more of those— digging into more of those inequities, first and foremost, borough-wide—

Chair Linda Lee (01:17:26)

excuse me, city-wide?

Public Advocate Jumaane Williams (01:17:27)

And, you know, is this analysis going to really reflect the true unfair practices that the property tax system currently has when it comes to how each borough is treated?

Louisa Chaffee - IBO Director (01:17:40)

So thank you for your questions. And to be super precise, the IBO's report is on property tax rate setting, which is part of the larger property tax system, and we were simply trying to explain how the rates work. We appreciate your questions and would be happy to talk with you in depth more, but we were talking about a slice of the overall system.

Public Advocate Jumaane Williams (01:18:07)

Thank you. One more question. Part of your testimony, we said— so New York City spends spends more than anyone in, in education per student. So you're saying that some of the, uh, these due process cases are, are the reasons for, um, close— like one of the things that we can close the gap? Um, spending on these cases, which are filed by public and non-public students seeking special education services outside of the public school system, has grown from $807 million in 2021 to $1.2 billion in 2025.

Louisa Chaffee - IBO Director (01:18:46)

Can we talk about what is, you know, driving this spending and if there could be any, you know, reasons that we can use this as part of the original budget for students? So every student has the right to be educated in New York City, and we were not We are not implying that students do not have that right. What we were looking at is the rapid escalation in costs, and we've been continuing to look very carefully at exactly how the process is set up, who is applying for due process, where are they being educated, and how is that system functioning. And we would appreciate the opportunity to talk more with you, but again, And we want to stress that we're not implying that eliminating the system, we're rather challenging the rapid increase in costs in the system.

Public Advocate Jumaane Williams (01:19:46)

Oh, I appreciate that.

Louisa Chaffee - IBO Director (01:19:48)

My questions were for clarity.

Public Advocate Jumaane Williams (01:19:50)

Yes.

Louisa Chaffee - IBO Director (01:19:50)

Absolutely.

Public Advocate Jumaane Williams (01:19:50)

I'm just for clarity because, again, these are open to the public, and you said a lot of things in here that, for clarification, so that was the reason of my question. Yeah. I just wanted to clarify also that the case cases that we were talking about due to the state law are a portion of these total due process cases. In general, under the federal IDEA Act, students are entitled to file these cases when public schools are not able to provide the services. So we were just talking about the state law that changed the rules under which which nonpublic school students could also avail of due process cases.

Chair Linda Lee (01:20:37)

Thank you. Awesome. Thank you. Also, we've been joined by Councilmembers Nurse, Carr, and Dinowitz.

Public Advocate Jumaane Williams (01:20:44)

And Councilmember Hudson. Thank you so much, Chair, and hello. Good afternoon. As referenced in your testimony and also in this most recent line of questioning, yesterday you released a helpful explainer laying out about how New York City sets property taxes. You note that while the state sets property values for tax purposes, the city sets the rates, which are subject to state-imposed caps and oversight. One issue many of us are looking to address is the overtaxation of cooperative buildings to ensure middle income, and in my district specifically, Black and brown households are not priced out of their homes. Can you please confirm that the state, under New York Real Property Tax Law Section 1802, Group together all residential buildings with 4 or more units, including co-ops and condos, into one property tax cap?

Louisa Chaffee - IBO Director (01:21:34)

New York State defines 4 property tax classes. Class 1 being residential properties with 1 to 3 units, small residential properties, and Class 2 being residential properties with 4 or more units. So that includes includes both cooperatives, condominiums, and rental buildings.

Public Advocate Jumaane Williams (01:21:54)

Thank you. And if the city council wanted to set the tax class share lower for different types of Class 2 properties, do you believe the council has the authority to do so, or must it maintain uniform class shares for all Class 2 properties?

Louisa Chaffee - IBO Director (01:22:09)

I'm going to start by saying I'm not a lawyer.

Chair Linda Lee (01:22:14)

Fair.

Louisa Chaffee - IBO Director (01:22:15)

Me neither. New York State sets a cap on how much each share can grow compared to the year before, or shrink, by 5%, and council has the authority, is enabled to set the share less than 5% if it wishes, and has in the past. So that is— there is a cap at the state level, but then there's also discussion at city council level.

Public Advocate Jumaane Williams (01:22:39)

Thank you. And based on your analysis of the property tax system, what do you believe is the reason co-op shareholders are voicing concern regarding high property taxes?

Louisa Chaffee - IBO Director (01:22:55)

There are so many questions and issues with our property tax system, both on how we value properties for taxable purposes and the differences between market values and taxable values. There are also many choices made on how the total tax levy is allocated across the 4 types of property classes, and all of that leads to eventually boiling down to the property tax bill that a building or a household is getting. And for co-ops, I think there's certainly a lot of discussion on how to predict what is going to happen to bills year to year. And for residents who are living on fixed incomes, homes or who bought when values were much lower than what they are now, they're facing changes and how to have maintenance changed to reflect those charges.

Public Advocate Jumaane Williams (01:23:45)

Thank you. I appreciate that answer. And then I'd like to also briefly talk about the administration's proposal to potentially raise property taxes to 13.45%, which would be, as you mentioned, a 9.5% increase. What types of Class 2 properties would be impacted with the greatest of this tax increase under this proposal?

Louisa Chaffee - IBO Director (01:24:09)

So Class 2 and Class 4 properties, Class 2 being large residential buildings and Class 4 being commercial and industrial buildings, are responsible for about 80% of the total property tax levy. Within Class 2, as I mentioned, we have rental buildings and we have cooperatives and condominiums This— there is under state law a partial tax abatement for co-ops and condos in an effort to try and make them taxed more similar to how 1 to 3 family houses are taxed. And so even within Class 2, there is differences on how this tax increase would fall, Class 2 being one of the largest generators of property taxes.

Chair Linda Lee (01:24:55)

And then, do you know the demographics of these homeowners? That's a great question, and we can look into it. Okay, thank you so much. Appreciate your time. Thank you, Chair. Thank you. Um, okay, so next we have Councilmember Narcisse, followed by Councilmember Marte.

Public Advocate Jumaane Williams (01:25:12)

Thank you, Chair. I'm going to follow up with the taxes because I have one of the highest foreclosure and different things going in our city.

Speaker F (01:25:20)

And we have to be mindful because it's the most vulnerable New Yorkers that are going to be affected the most.

Public Advocate Jumaane Williams (01:25:28)

So to follow up, we are in the middle of a housing affordability crisis. From IBO's perspective, how might increasing property taxes affect the economics of building rental housing in New York City?

Louisa Chaffee - IBO Director (01:25:50)

It is clear that raising property taxes adds to the cost of operating and maintaining a building year over year. This would hit every type of property in New York City. As I mentioned, particularly it would hit Class 2 and Class 4 properties because they are responsible for generating a larger dollar amount of property taxes. I say 80%. 80%, roughly 80% between those two in 2025.

Speaker F (01:26:16)

So last year.

Public Advocate Jumaane Williams (01:26:17)

So from your perspective, is that a reasonable thing to do since we're in a crisis right now?

Louisa Chaffee - IBO Director (01:26:24)

People out there cannot even have space. So IBO is agnostic on opinions, but we did in our testimony highlight the challenges and also tried to identify other mechanisms mechanisms that we believe are available to address the overall necessity of presenting a balanced budget.

Chair Linda Lee (01:26:44)

Thank you.

Public Advocate Jumaane Williams (01:26:45)

Now I'm going to switch to medicine since I'm a nurse. On January 5th, 2026, the U.S. Department of Health and Human Services issues a memo implementing significant changes to the federal government recommended PIDS, which is our kid pediatric vaccination schedule. The Federal Vaccine for Children program covers the cost of, I mean, recommended vaccines for the children who are uninsured, underinsured, Medicaid eligible, or enrolled, and we're talking about the American Indian, Alaskan Native, and the more than 1,000 participating healthcare providers across the city. Because the VFC program only covers vaccines included in the federal schedule. Further changes could shift the cost of certain vaccines from the federal funding to the state, the city, and potentially families. In March 2026, IBO released a report outlining the potential impact of the federal vaccine funding and the policy changing— changes on New York City. The fiscal 2027 preliminary plan includes $182.3 million for DOHMH disease prevention and treatment program area. How much of this funding support childhood vaccination programs, and does IBO anticipate needing to increase funding if federal vaccine coverage changes? Yes, thank you. We do also note in our report that Although the federal guidance changed, the New York State Department of Education, as well as the governor, has stated that New York State requirements will not change. And so that is something that we're really closely tracking to see if there is a decline in the funding for the vaccine program, because 60% of New York City students are eligible to receive. And over 1,000 providers participate in that program. So we do also note that the vaccine changes that were— the recommendations that were changed are those that have had higher cases in the past recent years, particularly RSV for very vulnerable young babies is potentially fatal. So that's something that we plan to keep tracking, the infection rates, to kind of see what might be some of the impacts of these changes. Yeah, because the dangerous part of it, some folks don't even want to vaccinate their kids. Well, and those trends were already beginning prior to this. Yeah. And the conversation about not vaccinating is scary and it's very unstable right now anyway. In the first quarter of fiscal 2026, 63.5% percent of children ages from 24 to 35 months were up to date on immunization, a slight decline, like we were just talking, from the same period on fiscal 2025 and below the 70% target. How does IBO anticipate vaccine schedule complementation rate changes if federal recommendation continues? Because we're talking about the big beautiful ugly bills, and then when it goes deeper with the cuts, But that's the concern that I have. Yes, and that's something that we are also very closely tracking. We do note that the New York City Department of Health has joined into a group of other states to, you know, sort of— but I do think, we do think that this federal change is going to really play out differently in different states depending on the decisions of state leaders. And that's a real risk in terms of who is coming into New York State, you know, and not knowing their prior vaccination status. And so I think this is something that we will be closely tracking going forward. It's hard to tell what might happen right now.

Chair Linda Lee (01:31:08)

Thank you. Thank you, Chair. Thank you. Okay. Next we have Councilmember Marte followed by Councilmember Brewer.

Committee Counsel (01:31:15)

Thank you, Chair. Last year, Mayor Adams stopped the plan to put municipal retirees on Medicare Advantage. In the past, the IBO has testified that this Medicare Advantage plan was misguided and would not actually save the city $600 million, as proponents of this plan said it would. Does IBO still maintain this position, and does IBO believe that the cost of municipal retirees' traditional Medicare warrants privatization as a cost-saving measure?

Louisa Chaffee - IBO Director (01:31:52)

Ibo has been carefully tracking what is happening with the Health Insurance Stabilization Fund, and we have been particularly noting that the trend has been to withdraw money from it. One of the proposed savings, as you noted, was to switch retirees who are eligible for Medicare over to Medicare Advantage. That did not happen. And so IBO is very much looking forward to learning from the administration what the plan is for the Health Insurance Fund— Health Insurance Stabilization Fund going forward. And we would like to note that in this budget, the Mondani administration put notable amounts of funding in to cover the health insurance differential between between the city's HIP and now the NICE PPO plans, which is recognizing with taxpayer dollars in this budget that the Health Insurance Stabilization Fund is out of money. And that is something the city controller noted at a report at the very end of 2025 last year.

Committee Counsel (01:32:56)

Thank you for that. Switching over to Tanaycha. Recently, the Trump administration has proposed capping rental assistance for able-bodied adults to 2 years. NYCHA's resident data book from January 2025 indicates that an average tenancy of 27.2 years in Section 9. How devastating would it be if we switched to the Trump administration proposal of allowing 2-year limits for able-bodied adults and Do you have any analysis on the rise of homelessness with the cost associated with that as well?

Louisa Chaffee - IBO Director (01:33:31)

This is a great question, and I want to point to— IBO wrote about federal changes being proposed and how they relate to public housing and how they would impact New York City as part of our Federal Changes, Local Impact series. And in that report, IBO noted that the 2-year cap being proposed would increase apartment turnover at a time when both Section 9 and Section 8 have extensive waitlists. So more households would be able to access affordable housing, but the 2-year cap would destabilize housing for many low-income tenants citywide with little prospect that such households could find affordable housing elsewhere.

Committee Counsel (01:34:12)

Thank you for that response.

Speaker F (01:34:14)

Follow-up question on NYCHA.

Committee Counsel (01:34:16)

Recently there was a investigative report that came out that said there were 6,700 units that are vacant in the NYCHA system. Has IBO done any analysis of how much it would cost to fix those units and how much money the city can save in future years if we're able to transition people from homeless shelters into these vacant apartments?

Louisa Chaffee - IBO Director (01:34:41)

That is something we look forward to working with our partners at NYCHA to get more information on the conditions of those apartments apartments and their process for turning apartments around for new renters.

Speaker F (01:34:52)

Thank you.

Chair Linda Lee (01:34:52)

That's, uh, that's all the questions I had. Okay, great. Um, next we have Councilmember Brewer followed by Councilmember Carr. Thank you. Oh, and sorry, just want to recognize we've also been joined by Councilmember Brooks Powers and Councilmember Ressler.

Speaker F (01:35:05)

Thank you very much. Um, I appreciate the work that you did when I requested about what are the fines and fees that are uncollected. The question I have is, I know you mentioned that there's a hiring of Department of Finance in your testimony, so I'm wondering, do you think— I think you had a number as to what it might collect. It certainly wasn't the $2 billion. So my question is, do you think that is going to even collect what you suggested? Do they need more? What would be the answer, if there is one, to collecting more of these fines and fees, etc.?

Louisa Chaffee - IBO Director (01:35:36)

So IBO created that estimate by looking at what auditors generally are able to collect in particularly the corporate business tax. That's what the auditors are generally looking at. And so that's how we generated that estimate.

Speaker F (01:35:52)

Okay. Second question is, you talked about the, under the issue of Carter and Connell and the whole, Connor and the whole issue of more costs going towards private schools paying for young people who have IEPs. Is there a way of looking at if the Department of Education is to provide those kinds of schools, then we would not have this huge amount for Cotter and Connors? That's something that you can look at or you have looked at.

Louisa Chaffee - IBO Director (01:36:22)

There's a real delta there. So we are continuing to work with our partners at the Department of Education to completely understand this rapidly increasing increasing area and to balance the legal requirements of students for a fair education with the process surrounding it to understand how the costs are being driven.

Speaker F (01:36:45)

Would that be a study to figure out what it would cost to build X schools versus what is being paid? Obviously some students will always be part of the private school system.

Public Advocate Jumaane Williams (01:36:56)

Yes.

Speaker F (01:36:56)

But it seems to me within that there's a delta there that could in fact help with these costs?

Louisa Chaffee - IBO Director (01:37:01)

Is that something that you could look at? We are in the process of pulling together as much information as we can, and yes, it will result in a study.

Speaker F (01:37:10)

Okay. And then the pilot for Columbia, NYU, and others, do you have some sense of what it could bring in? Obviously, you can look at Harvard, you can look at Brown, you can look at Yale. They're all doing it. And is there some number that you might suggest for that?

Louisa Chaffee - IBO Director (01:37:26)

So So higher education and medical institutions forego about $1.5 billion in property taxes. $1.5, OK. I also would like to note, though, that there is, with immigration restrictions on foreign students, changes to federal student loans, and also a lot of federal changes on how health care is funded, these are institutions that also have many financial questions themselves and are major employers.

Speaker F (01:37:52)

For New York City.

Louisa Chaffee - IBO Director (01:37:52)

Okay, so we want to be careful.

Speaker F (01:37:54)

It's a balance. We want to be careful what we're asking for. Of course. Okay. In terms of EDC, that's always an agency that seems to have a lot of money, but we never know how much. January '24, you did a report estimating from 2019 to 2024, they had an annual net revenue of $154 million from city-owned assets, but they only remitted $38 million per year over the previous 3 years, you recommended that EDC remit additional income resulting in an additional $25 million. Has IBO conducted a follow-up analysis, and have you assessed how this additional revenue might impact EDC operations and if it's really viable?

Louisa Chaffee - IBO Director (01:38:35)

Like I said, we never know what EDC has. We have not, and we would welcome the authority to have better insight into EDC because it is not mayoral agency. I know we have no additional rights for requesting data, but we feel that it would be in taxpayers' interest to understand the details of what's occurring.

Speaker F (01:38:57)

What kind of— where would that authority come from?

Louisa Chaffee - IBO Director (01:39:01)

City, state, or EDC board? Probably a combination of the first and third.

Speaker F (01:39:06)

Okay, we will work on that. And then just finally, you also talked about corporate taxes. And you mentioned that the big ugly bill, you called it something else, a big beautiful bill, that there was obviously, we all know, the nice gift to some of our corporations from that big ugly bill. So my question is, is there again a delta between what could in fact, because there is a big concern about too much taxing means people leave the city, blah blah blah, but it seems to me that there is an opportunity to what I would call redo what the big ugly bill did without doing additional taxes. So you would just basically be undoing what the Trump administration has done, or am I wrong in what I'm saying?

Louisa Chaffee - IBO Director (01:39:55)

No, thank you for your question. We also agree that with the change in tax legislation on a federal level, there is an opportunity on the state and thus for the locality to shift. We think the precedent was set by the state in 2019 when they shifted tax brackets. As the feds were reducing, the state increased. And I'm going to hand it to Sarah for some more details.

Louisa Chaffee - IBO Director (01:40:21)

One of the major changes in the one big beautiful bill was to decouple— was to have depreciation on an accelerated schedule. Federal, and the governor's executive budget has proposed to decouple New York State from that. So that would be a major change for businesses where the break is on the federal side but would not be granted on the state.

Speaker F (01:40:42)

Because that's a better message. Like, we're basically stating undo Trump as opposed to saying more taxes. We're basically saying get us back to where we were, which is a much better message.

Chair Linda Lee (01:40:53)

So thank you very much. Thank you.

Committee Counsel (01:40:55)

Next we have Councilmember Carr followed by Councilmember Wong. Thank you, Chair.

Speaker F (01:40:59)

Director, always a pleasure to see you. My question is on NYPD headcount.

Committee Counsel (01:41:05)

The headcount for the NYPD has not reached its budgeted headcount of 35,000 for the last 5 consecutive years— 35,000 for the last 5 consecutive years.

Speaker F (01:41:13)

And I believe as of adoption back last June, we were hovering around 33,000-plus.

Committee Counsel (01:41:20)

There's an extremely high attrition rate in the NYPD ranks, losing about 250 to 300 officers per month. Month, and then you have recruiting challenges.

Speaker F (01:41:27)

And now the mayor wants to cut that headcount further, terminating the phase-in of 5,000 new officers. I'm not sure if that's what you were referring to in your testimony as more realistic budgeting. But it would save only $17.8 million, which is not much in the grand scheme of things for this coming year.

Committee Counsel (01:41:44)

And so I know the number always goes up in the out years, but we're concerned traditionally in this body with the high cost of NYPD over time, and that's on pace for this fiscal year to be about $900 million. So my question is, how does continuing to erode the headcount at the NYPD impact overtime costs?

Louisa Chaffee - IBO Director (01:42:01)

Are we not being pennywise, pound-foolish here? So thank you for your question. Lovely to see you too. I am going to say what I've said repeatedly, namely, we've done a study on this because we were very interested in the headcount, and we would be happy to share share it with you again, but we looked carefully at years within the service and where overtime increased and decreased. And what we saw was an increase between years '17 and '20 in overtime. What we— what I highlighted in my testimony was that the trajectory for years of overtime not decreasing, that curve has been bent by the current commissioner. And while the decreases are not enormous, it is of note that the decrease in—

Committee Counsel (01:42:49)

that over time is decreasing. I think that, you know, the previous year— understood.

Speaker F (01:42:53)

And I think that, you know, what's driving my questioning is, you know, our borough has one of the lowest NYPD headcounts in Staten Island in decades, and that's compared to a population of about 150,000 at that time compared to almost half a million now. And so I think that there's a growing need, and to have a lower headcount overall serving a much, much larger population is is disturbing.

Committee Counsel (01:43:15)

But I'll move on to the tax question I have.

Speaker D (01:43:18)

It's—

Committee Counsel (01:43:18)

I think a critical part of any budget inquiry should be analysis of the long-term impacts of raising taxes. And I saw the Citizen Budget Commission report that said while the number of high earners, millionaires in New York City, has grown, it's lagged behind the nation's growth. So our share of the nation's millionaires plummeted 31% between 2010 and 2022, according to this study, while it grew in states like Texas and Florida, and it has to be in due to large part the fact that New York City has the highest combined tax rate in the nation. CBC further found that New York's shares stayed at 2010 levels, the state and the city would have collected— excuse me, the tax rate stayed at 2010 levels, the state and city would have collected more than $13 billion in additional personal income tax revenue for 2022. Has the IBO made any similar analyses of the potential downstream and long-term impacts of the mayor's proposal to raise income, corporate, and property taxes?

Louisa Chaffee - IBO Director (01:44:13)

So thank you for your question. I'm going to answer the first part on the PD specifically to Staten Island, and I'm going to say that that is also, from our perspective, an equity issue, and that we would very much appreciate the ability to understand, for example, size of precincts in relation to geography. And with the PD's current single unit of appropriation, across the entire city, we can't do the analysis that you understand from your lived experience. And now I'm going to hand it to Sarah to talk about our personal income tax analysis for 2023 and our understanding of the high end of New York City filers.

Louisa Chaffee - IBO Director (01:44:56)

To help address your question, yes, Texas and Florida have been adding more millionaires than New York City, but But to just be clear, New York City already had a lot of millionaires and they're still here. And the ones that have left were replaced by new wealthy households. In general, one always must balance how to decide how much revenue to generate out of a particular tax, and then also to think about who it's going to impact and what their decision-making will be. There has been a lot of rhetoric around whether the highest earners in New York City will leave New York City as a result of any personal income tax changes. And this is something we did not see that when there was a cap on salt deductions that happened out of the last Trump tax bills. And I think in general, it's important to keep the perspective that there are many reasons why people want to live in New York City besides just how we structure our tax rates. That is one piece of an equation and certainly a household financial question, but also where people own their homes and where they send their children to schools.

Committee Counsel (01:46:00)

So you're disputing the CBC analysis? You don't agree with what their figures say with respect to the personal income tax loss compared to what we would have had if we had a different tax burden or structure?

Louisa Chaffee - IBO Director (01:46:10)

I think we are trying to answer the question in two different ways.

Committee Counsel (01:46:14)

All right, well, my time is up, so I'll yield it back to the chair, but thank you for your answers to the earlier parts of my questions.

Chair Linda Lee (01:46:22)

Thank you. Thank you. I know I'm biased, but I'm personally here for the food in Queens, which is amazing, because of our amazing immigrant community. So I'll just put that out there. So we have Councilmember Wong followed by Councilmember Murano.

Speaker D (01:46:36)

Okay, thank you, Chair. I'm disappointed that the OMB chose to break from the normal course of preliminary budget hearings by testifying at the end. Instead of in the beginning. As the agency that primarily guides the mayor's budget process, the OMB director should have been the first out of the gate during the March preliminary hearing so that the council and the public could fully understand the administration's priorities. Given that, now, before I get into my questions, But for IBO, I want to take a moment to talk about what my constituents are seeing and feeling right now. Families in Mass Beth, Middle Village, Glendale, Ridgewood, Rego Park, and Elmhurst already feel like they are being taxed from every direction. They are paying more property taxes, income taxes, sales taxes, tolls, congestion pricing, and a growing list of penalties, fines, and fees. Now they're hearing about proposed property tax increase that could bring in roughly $3.7 billion a year, while at the same time there are discussions about bringing municipal parking meters into residential blocks. On top of that, homeowners are now being told that they must purchase city-mandated garbage cans. Along with other costs, and continue to be pushed into them as unfunded mandates. At some point, enough is enough. The solution to our fiscal challenges cannot always be to tax more or charge more. Government has a responsibility to live within its means, prioritize core services, and ensure taxpayer dollars are being spent wisely. My constituents should not feel like they are the city's ATM every time the budget gets tight. Now, a few questions. Considering— well, regarding projections, conflicting projections, we have heard different numbers about the size of the budget gap from different sources, from the comptroller's independent analysis and from you.

Louisa Chaffee - IBO Director (01:49:02)

What projections should this council actually rely on? Thank you. I would like to say that we are trying our best, and I regret we're not OMB. But that said, we use different mechanisms to forecast and project, and there are a variety of entities that forecast and project— City Council Finance, Office of Management and Budget, and the controller. And we are all looking at approximately the same areas. We're just making judgments as to what we think will actually occur. And so we tried to discuss some of the judgments we have. For example, we are concerned about the overall state of the— the instability of the overall economy and how it manifests in New York City. And that's one of the reasons why we have a different perspective on revenues than the administration. We've also discussed with our peers in the Controller's Office different judgments as to what certain programs might cost, but we're all looking at approximately the same areas.

Speaker D (01:50:10)

Okay, thank you. And my next question: when you look at the city's spending trajectory over the next several years, do you believe spending growth is occurring at a sustainable pace, or should the city be exercising more restraint?

Louisa Chaffee - IBO Director (01:50:26)

We are agnostic on opinions. We believe there needs to be a balance, and we believe that the administration should be applauded for being accurate on what the expenditures are and that the revenues need to meet the expenditures.

Speaker D (01:50:39)

Okay. I have 1 minute left. I serve in a school board, and I've seen schools that under-enroll. And it's my understanding there's a lot of schools out there. I'll tell you the number in a minute that's been below, way below enrollment. In fact, there are below 150 kids in these schools that I've been examining. Now, before COVID usually the mayor or chancellor will come in, hey, we've got to combine these under-enrolled schools. But that hasn't happened since COVID Is this something you have looked at? Because according to what I looked at, there are over 113 of them. Them, and combining them makes sense and would save a lot of money because education is 40% of our budget.

Public Advocate Jumaane Williams (01:51:23)

Can you talk about that? Yes, and this is something that we have been tracking very closely at the funding— on the funding level as well, because one thing we noted was that there is no funding to hold schools harmless for these, so that's something that has been funded every year since COVID began and when enrollment started declining. So that's something that we noted is not in the budget. Now, that could mean that they already have the funds budgeted to support that, but that's something that we haven't heard yet. And so it's possible that— and other chancellors have proposed combining schools, and so that's definitely something I think that could be on the table and something that we might see.

Chair Linda Lee (01:52:14)

Okay, thank you. Okay, great. So next we have Councilmember Murano, followed by Councilmember Muley.

Speaker D (01:52:20)

Thank you for your testimony, and thank you for the very economical answers you've given to some very tricky questions. Your testimony notes that recent personal income tax growth is heavily driven by Wall Street bonus— and capital gains. If those are responsible for a significant share of revenue growth, are we effectively balancing the city budget on the fortunes of one industry?

Louisa Chaffee - IBO Director (01:52:51)

The finance sector and other high-wage sectors are very much driving our personal income tax revenue.

Committee Counsel (01:52:57)

I will say that is not a new pattern for New in New York City.

Speaker D (01:53:00)

[Speaker] So if the financial sector has a downturn, what percentage of the city's revenue growth could disappear?

Louisa Chaffee - IBO Director (01:53:06)

[Speaker] It's hard to know the timing and size of that downturn, but certainly personal income tax revenue is driven by capital gains. So if Wall Street has a booming year and people decide to realize those capital gains, that shows up in the personal income tax. And how bonuses are taxed, are given out by companies. Those are all risks. There's also a lot of change happening in this sector, particularly with AI becoming a major part of this conversation.

Speaker D (01:53:37)

You mentioned that complying with the state's class size mandate could require nearly 7,000 new teachers and billions in additional spending. From a fiscal perspective, understanding your agnosticism on opinions, is New York City increasingly becoming a pass-through government that pays for policies that are decided in Albany?

Louisa Chaffee - IBO Director (01:54:05)

The state law requiring teacher size to change was not funded by Albany.

Speaker D (01:54:09)

So what percentage of the city's long-term spending growth is now driven by state mandates rather than local policy choices that we've made?

Louisa Chaffee - IBO Director (01:54:20)

That's a really interesting question. Thank you.

Speaker D (01:54:22)

We would look forward to answering that. The Speaker had asked you about the rainy day fund. The administration is using, under their plan, nearly $1 billion from the rainy day fund to balance the budget and promising to replenish it later. If the economy weakens before that happens, are we essentially spending our emergency reserves before the emergency arrives?

Louisa Chaffee - IBO Director (01:54:51)

The emergency is not defined. So we— that's why we talk about rules on a regular basis. We really recommend the definition of what is an emergency and what require— you know, the details of what pays in, what pays out.

Speaker D (01:55:08)

You note that City FEPP spending could grow from under $300 million in 2021 to about $3.5 $5 billion by 2030. Has IBO evaluated whether the outcomes, like reductions in homelessness, are growing at anything close to the same rate as the spending?

Public Advocate Jumaane Williams (01:55:28)

We do note that that is the largest mechanism for exits from shelter. And so I think one thing that we often struggle with is, you know, what is the counterfactual? And that's a really hard question and not one that, you know, we are able to find. So we do note that most of the rental assistance vouchers are going to those that— the vast majority are going to those that are exiting shelter.

Speaker D (01:55:57)

So what I'm trying to understand is if spending increases tenfold but the problem doesn't shrink proportionally, what does that tell us about the sustainability of the program?

Public Advocate Jumaane Williams (01:56:07)

Yeah, I think that's a really good question. And I think that it's exacerbated by the pandemic and a lot of the struggles that people have faced since the pandemic, as well as, you know, some of the challenges on access to other benefits that are now also at risk. And so that putting increased pressure with not being eligible for SNAP or cash assistance leaving even fewer resources for, you know, paying rent. And so I think that the challenge is that there's a larger need for housing assistance, and I think the key piece is, you know, to see what happens with new housing that is planned through City of Yes, whether and what rent those units are going to be available for.—

Speaker D (01:56:58)

because that's the other key. [Speaker:MICHAEL STOLER] Finally, Councilmember Hanks asked you about attempts at property tax reform. This is something the mayor's talked about. The Mark Shaw Commission dealt with this extensively. Former chair of this committee, Brandon, dealt with it, as did a lot of folks across the aisle. Has the IBO done any analysis if we were to more equitably distribute property taxes with Albany's help, whether that would be something that would likely be revenue neutral?

Louisa Chaffee - IBO Director (01:57:25)

Or would it lead to an increase or decrease in revenue? IBO over the years has been a part of these conversations and has written extensively on all aspects and many areas of the property tax system. I think one of the fundamental questions is if changes are made to increase equity within and across the different property class shares, is it arranged in a revenue-neutral way, which would mean some people are, quote, winners and some people are, quote, losers, or is it just changes that are phased in to be generating increased revenue? And those are, those are questions for council here in the city and also with the state to, to make decisions on.

Chair Linda Lee (01:58:24)

Okay, sorry. Um, okay, so next we have— sorry, thank you— Councilmember Mealy, and then followed by Councilmember Justin Sanchez. Oh, okay, perfect. Okay, so Councilmember Justin Sanchez, you are up, followed by Councilmember Aviles.

Speaker D (01:58:38)

Uh, thank you so much for being here.

Committee Counsel (01:58:41)

Uh, quickly, um, we briefly spoke about some of the major events that are happening, such as the World Cup. I am curious because I didn't see any increased budget allocation in terms of sanitation to help account for this increased tourism. So I wanted to know, for events such as this in the past, and as we're celebrating the 250th anniversary of America and all the other, uh, great fun things that this summer will bring, Are there any major events like this that have had these kind of budget allocations for some of these agencies in the past? And then are there any understanding of how other American cities have dealt with events of this scale in their budgeting to prepare, or do we know that yet?

Louisa Chaffee - IBO Director (01:59:37)

Sarah. So one of the things that we're very much thinking about is there's both security questions, so police and overall presence on our streets as we have an influx of people for the World Cup, transportation costs. I know the city is working very hard to identify how to get people from New York City to the Meadowlands for these games in an efficient manner with its partners with New Jersey Transit and the MTA. There's always questions about the size and scale of that, and I think this is something we would look particularly to be in the executive budget to acknowledge those. In terms of the city, the city is also trying to think about what it gets out of having the World Cup in our backyard, which is very exciting. You have hotels and entertainment. If people come to New York specifically for these games, Hotel prices are going to be very high. That's good for the hotel industry and hotel taxes, but it also means it might scare away some other tourists. If hotel prices are high, they might go visit a different American city.

Committee Counsel (02:00:40)

And so that's, that's something that we're all thinking about in terms of the World Cup. Also, are there any other potential shortfalls outside of the World Cup or, you know, the 250th anniversary coming up that we might not be paying attention to that we should be looking at as we go over this upcoming year's budget?

Louisa Chaffee - IBO Director (02:00:59)

I think we're really hopeful that our snowstorms are past us, because those were previously in costs that were not reflected in the budget.

Committee Counsel (02:01:10)

And thank you. And quickly turning to revenue generation, cities such as Miami, Albany have residential parking permits. That for its residents, that while generating revenue, also open up parking spots for actual residents. I'm curious if there are any studies or things that you have seen to see how this could potentially help be a revenue generator in the City of New York.

Louisa Chaffee - IBO Director (02:01:38)

Yes, so we have looked at parking permits, and Sarah will give some details.

Louisa Chaffee - IBO Director (02:01:46)

Generally, one is approaching— we've looked at what other cities do, and generally one approaches parking permits as trying to allow the free curb space to go to people who live in the neighborhood. One of the challenges is if you're setting a fee, it's supposed to match the cost to administer the program. So in terms of revenue generation, there's questions on— you want to have a permit, but you don't want it actually to be a way of just creating money, then it looks like a tax. There's also just a lot of decisions that need to be made if the city were to pursue this, along the lines of what, what visitors do and how you address commercial corridors where people might want to park and then be able to shop. Thank you so much, I really appreciate it.

Chair Linda Lee (02:02:32)

Happy to talk about that topic. Okay, Councilmember Aviles. Thank you. Thank you, Chair, and deeply appreciate your responses and how concise and clear you have been throughout this process. So, so thank you for that.

Louisa Chaffee - IBO Director (02:02:50)

I wanted to follow up a little bit on the NYCHA piece, particularly in terms of the potential consolidation of Section 8 and Section 9. Can you talk to us a little bit about, you know, what you see as the potential impacts to NYCHA if that were to happen? This was also something we covered in our Federal Changes, Local Impacts report on NYCHA from this past fall. So the federal government has proposed an arrangement that would create a state rental assistance block grant, and it would be a single block grant for addressing housing programs that it currently operates as separate programs. This would allow greater state discretion on how to designate and allocate funding, but the amount that it was proposing would be a lower amount of funding than New York City currently gets for these distinct programs from HUD. Particularly for NYCHA, this would mean a smaller overall funding pool and would also require the state and the city to make difficult choices on how to allocate housing funding if it has a smaller overall dollar amount across various programs. Do you have a sense of what the reduction would look like in actual terms? So far, this has been more of an idea floated and less of a policy proposal.

Chair Linda Lee (02:04:13)

Got it. Thank you. So in terms of on the RADPACT side, first of all, definitely want to underscore our interest interested in— you're looking at the question around vacant units in NYCHA and how we can— the process to getting units back online, the cost. It has been an absolute pain point for this city as we are in the middle of a housing crisis. To know that there are 6,000 potential-plus units sitting empty is, you know, mind-blowing. So look forward to your work on that. But in terms of RAD impact conversions in particular. Do we know what portion of the potential $38 billion in capital funds that would be attainable through conversions would be attributed to PACT conversions and what might be contributed to the trust?

Louisa Chaffee - IBO Director (02:05:12)

I can speak to my understanding. I think NYCHA would be more more specific, able to give more specifics? Probably not. My understanding is that the capital budget funding for these conversions is a larger pot of money, and then as specific developments vote to go, tenants get to vote whether they want to go through a RAD Pact conversion or through the NYCHA Trust Program or remain Section 9. That's a whole process. Process in and of itself that IBO has written on. But as projects select into one option or another, then funding out of the capital budget is allocated for those projects.

Chair Linda Lee (02:05:52)

Has NYCHA reported to you at all— have you looked at where the trust is currently and if there has been any progress in developing that model and moving units through that?

Louisa Chaffee - IBO Director (02:06:04)

I think we need to talk to our partners at NYCHA.

Chair Linda Lee (02:06:07)

We'd love a look at that as well as another as another option. So in terms of if given the current state of affairs, is your sense that— well, actually, I'll retract that question.

Louisa Chaffee - IBO Director (02:06:29)

In terms of could you talk to us a little bit about CityFEPs?

Chair Linda Lee (02:06:37)

Obviously, we've seen the program increase exponentially And yet we are sitting here with a housing crisis, and we obviously have pumped in a huge amount of money into a shelter system that is seemingly more expensive, both in the short and long term, than using very effective housing vouchers.

Louisa Chaffee - IBO Director (02:06:58)

Can—

Chair Linda Lee (02:06:58)

have you looked at ways potentially some of those costs could be decreased, or if there are drivers that that we could look at more intently on how to make sure this program gets support it needs?

Public Advocate Jumaane Williams (02:07:13)

[Speaker] Yeah. So as I mentioned, I think there could be a lot better reporting on the share of CityFHEPS apartments that are rent stabilized, you know, and in terms of the current cases and also new vouchers that are given. And also looking at some more data on the dimensions of apartments, so the bedroom size, household size, you know, and that would give us some sense of also the level of rent, and I think rent— the increases in rent are a key driver to the costs that are being projected in addition to the rate of attrition for voucher holders, and that's also something that we don't have information on. So I think some more information on these areas could help us better understand what is happening on the supply side.

Chair Linda Lee (02:08:13)

Great, thank you. And next we have Councilmember Mili. You are going to make a statement, right?

Speaker F (02:08:18)

And then followed by Councilmember Brooks-Powers.

Public Advocate Jumaane Williams (02:08:20)

Thank you. I just want to commend you, Director Mr.

Speaker F (02:08:23)

Director, you're the first of my knowledge that at least gave us a blueprint of what to do.

Public Advocate Jumaane Williams (02:08:31)

You want us to ask OMB and the city agencies within a week about revenues. Why does administration remain as optimistic about the national and local economy in light of such events such as the Supreme Court on tariffs and the war in Iraq?

Speaker F (02:08:49)

Irene, I'm glad that you've given us these questions to ask them, even though they should have been here earlier before you. But I just want to thank you for putting these questions out there, letting us know what we need to ask them just as well.

Louisa Chaffee - IBO Director (02:09:06)

So thank you, and thank you, Chair. Thank you. As I said, they're questions that we're curious about.

Chair Linda Lee (02:09:13)

So thank you for hosting us.

Louisa Chaffee - IBO Director (02:09:16)

Great.

Public Advocate Jumaane Williams (02:09:16)

And then Councilmember Brooks Powers. Thank you, Chair, and thank you for your testimony today. It's great to see you. I just only had one question, which is what is IBO's perspective on the city's preliminary budget, and have you identified any specific areas for efficiency or cost savings to address the fiscal deficit? And I know the council issued a statement about a day or so ago in terms where there could be some potential resources to plug that hole, but I'm curious from your perspective what that looks like.

Louisa Chaffee - IBO Director (02:09:52)

Thank you for your question. We do have a series of research thinkings on called what-ifs, which used to be called budget options, about thinking about how government could do services differently, many of them being either increased outcomes or decreased costs. One area that we flagged this year were the cost of supplies, where we think that if a cap were put on what the city may spend on supplies right now, a cap of 90% of the current allocated amounts, about $200 million could be saved simply by that action. So there are areas within the budget where we think there wouldn't be necessarily major changes in how agencies function. Supplies are unusual because if you look at the spending rate, there tends to be a large spend at the end of the fiscal year, which from agency operations is something— is sometimes the perspective of there's additional money, and so they save— they wait until the last quarter and then surge. Perhaps those items aren't as necessary as those purchased regularly throughout the year.

Public Advocate Jumaane Williams (02:11:04)

That's why we're considering the cap.

Chair Linda Lee (02:11:06)

Thank you for that. Thank you, Chair. Great, thank you. Um, and I think with that we're actually done with this portion of the testimony. So thank you so much for coming in and being with us. Thank you. And next we're going to— oh, and next we are going to move into our comptroller. Oh, I'm sorry, Sorry, I forgot. There is one more question. Just really clarifying on the 681 that you guys had mentioned, does that include fringe costs for the vacancy question that we had? No, it doesn't. Okay, perfect. That was one clarification I just wanted to ask. Okay. And the estimates of PS accruals in FY26 is about Oh, wait.

Speaker F (02:11:59)

Yeah, yeah.

Chair Linda Lee (02:12:00)

Okay, perfect. Thank you.

Public Advocate Jumaane Williams (02:12:01)

Okay.

Chair Linda Lee (02:12:01)

You can ask. Okay. So I can ask. Okay. Sorry. And the estimates of the PS accruals in FY26 is about $680 million, and the financial plan includes a placeholder for agency savings of $710 million in that same year. And it sounds like the agencies can make almost full savings number just by accounting for accruals and not actually taking any affirmative steps to finding savings.

Public Advocate Jumaane Williams (02:12:28)

And would you agree with that assessment? I think I would— I'm not entirely sure. I think we want to wait and see what comes out of the CSO reports.

Chair Linda Lee (02:12:38)

And yeah, I'd have to take a look at that. Okay. Thank you. And now we can actually go into the next section, which is with our Comptroller, who I know is here. Thank you. Thank you, everyone. Okay. First of all, we want to welcome our Comptroller, Mark Levine, and his team who are here. And I know the members have a number of different questions. I am going to turn it over to Chair Lee. I'm going to be in and out. I do have questions that I'm going to be asking, but I'm going to first turn it over to Chair Lee. Okay. Hello, Comptroller Levine. Hello, Chair Lee.

Speaker D (02:13:58)

I know, saying it very fast.

Chair Linda Lee (02:14:06)

And hello, Speaker Menin. Okay, so we're going to quickly swear you in and then you can go ahead right into your testimony.

Speaker F (02:14:11)

Good afternoon.

Committee Counsel (02:14:12)

Do you affirm to tell the truth, the whole truth, and nothing but the truth before this committee and to respond honestly to council member questions? Comptroller Levine? Yes, I do.

Louisa Chaffee - IBO Director (02:14:25)

Deputy Comptroller Brindisi?

Speaker D (02:14:26)

And Deputy Comptroller Olson?

Speaker F (02:14:33)

I do.

Speaker D (02:14:33)

You may begin.

Speaker F (02:14:34)

Ready?

Speaker D (02:14:34)

Okay. It's a very different perspective from here. I like it. Well, good afternoon again, council members, Chair Lee, Speaker Menin, members of the Finance Committee. Thank you for this opportunity to testify on the mayor's preliminary budget and financial plan. I'm pleased to be joined I'm joined today by Executive Deputy Comptroller for Budget and Finance Francesco Brindisi, and Deputy Comptroller for Budget Krista Olson. Councilmembers, I had the pleasure of sitting where you are for 8 years, and of following the budget closely for the 4 years since. And I can tell you that in all that time, I, and we, have never seen a fiscal challenge as big as the one we face now. We know that in part because Mayor Mondani and his administration have provided the most honest and transparent accounting of the budget we have seen in years.

Chair Linda Lee (02:15:28)

The mayor's budget proposal accurately acknowledges billions in costs that in years past were routinely under-budgeted. Oh, wait, sorry. One quick question. No, sorry, I didn't mean to interrupt. Do you have copies of the— Yeah. Okay.

Speaker D (02:15:41)

Sorry.

Chair Linda Lee (02:15:41)

I don't know.

Speaker D (02:15:49)

Sorry, it's just a logistics question.

Committee Counsel (02:15:56)

I think we do, but—

Speaker F (02:15:58)

Yeah, Chris.

Speaker D (02:15:58)

I love it. From a place of love. Okay.

Chair Linda Lee (02:16:02)

We had budget cuts in the comptroller's office. Yes, I know. Steve, you said—

Speaker D (02:16:08)

Savings already. Yes. Thank you. Sorry. That's $12 off our budget gap right there. Thank you.

Chair Linda Lee (02:16:17)

No problem. No problem.

Speaker D (02:16:20)

Can I continue? Yes. I'm so sorry. Thanks to the mayor's transparency, we have the clearest view yet of where New York City stands fiscally. And here's what we see. New York City is quite simply meaning spending more than it takes in. So now we're confronted with a choice. Do we begin addressing this imbalance now and put the city on a stronger, more sustainable fiscal path? Or do we kick the can into next year and leave ourselves vulnerable at a moment of deep economic uncertainty? I want to take a moment to address a simple question. If the economy is strong, why is our budget so out of whack? New York City's economy grew by a healthy pace last year, with real wage income rising by nearly 3%. Wall Street bonuses are higher this season than any year in history. And every major source of city tax revenue, apart from corporate taxes, is rising—personal income tax, real property taxes, and sales taxes. Unfortunately, our expenses are growing even faster. Which we now see clearly thanks to the mayor's transparency. For example, rental assistance costs—mainly our housing voucher program, CitiFEPs, an essential lifeline for tens of thousands of families—has been growing at 4% per month and is projected by my office to reach $2.6 billion next year. For perspective, this is larger than the entire annual expense budget of HPD. The cost of special education due process claims, also known as Carter cases, is expected to reach $1.5 billion next year, tripling since fiscal year 2019. Our education budget overall now totals $36.9 billion, up 31.5% since 2020, even as school enrollment has fallen by 100,000 students during that time. These are just a few examples of rapidly growing expenses. Because the mayor's preliminary budget now reflects these costs, it projects total spending of $127 billion in the coming fiscal year, an increase of $5.5 billion over last year. To balance the budget, despite the rapid growth in expenses, the administration relies on a variety of measures, including 4 that I want to highlight: optimistic revenue projections, drawing down reserves, reduced prepaid expenses, and raising property tax levy close to the constitutional limit. Each of these steps deserves scrutiny because each comes with its own set of fiscal risks. First, the mayor's revenue projection. His plan increases the baseline tax estimate by $4.1 million for FY '27 compared to the November plan. Even the mayor himself has called this projection, quote, "aggressive." In fact, the new revenue estimates my office has released today— you can see it in this book here, also available online— we show revenue coming in at $1.8 billion lower than the mayor's projections for FY '27. 2026 and 2027. How is it that OMB got such a high revenue estimate? They did that by assuming that the bull market that fueled the financial industry in 2024 and 2025 continues in 2026 in what OMB refers to as another, quote, exceptional year. In that scenario, in their scenario, the securities industry would add 8,200 jobs over the next— triple what my office projects— with total financial industry wages growing by nearly twice what my office projects. Then there's the draining of reserves. The mayor's plan takes $2.6 billion from reserves over FY26 and FY27, drawing from the Revenue Stabilization Fund, the city's rainy day fund, the Retirees Health Benefits Trust, as well as the in-budget reserves for next year. These reserves exist to protect the city during economic downturns or against federal cuts and unexpected shocks. Drawing them down now, when revenues are at record level, reduces our ability to respond when the next crisis actually arrives. The mayor's plan also draws down prepaid expenses, a step that has received receives little attention but warrants a closer look. For decades, rolling over prepaid expenses has been an important fiscal tool, allowing the city to carry operating surplus forward to the following year. In FY25, the city carried $3.8 billion in prepaid expenses. But under the mayor's plan, that drops to just $238 million for FY26. $1.2 billion in FY26, a 94% decline. While the mayor's proposal is technically in balance for FY26, when we account for both the reduced operating surplus and the rainy day fund drawdown, the plan indicates that operating expenses this year will actually exceed revenues by $4.5 billion. And then there's the mayor's proposal to raise property taxes. Our current property tax system is profoundly unequal, with the brownstone owner in Park Slope paying a much lower rate than a brownstone owner in East New York, among many other inequities and inconsistencies across the city. Raising property tax rates would simply compound the harm done by an already unfair system, while simultaneously exacerbating our housing affordability crisis. For this reason alone, I strongly oppose raising them. But there's another concern that you might not be aware of. Raising rates 9.5%, as the mayor has proposed, brings us just short of the constitutional limit for our property taxes, which would mean we have little room to maneuver should we face an economic crisis in the future. And just what are the chances of an economic crisis? Ahead for New York City. While both the U.S. and New York City economies showed some resilience in 2025, the recovery has been uneven. Outside the single sector of healthcare, specifically home health aides, New York City's private sector employment actually declined over the past year by 38,000 jobs. And looking ahead, the uncertainty uncertainties are growing. The most immediate risk to the economy now is geopolitical. The recent strikes on Iran and the expanding conflict there have already rattled financial markets and driven up oil prices. If disruptions to energy supply or global shipping intensify, the resulting inflation and market volatility could weaken economic growth. Other risks are emerging as well. Rapid advances in artificial intelligence may become labor-substituting, reducing demand for some of the core occupations that anchor New York City's economy. At the same time, if AI-driven gains in productivity and profitability arrive more slowly or prove more limited than markets currently anticipate, the downside risk to asset prices could be significant. Additional uncertainties include a potential resurgence of inflation, inflation, continued volatility around tariffs, and the prospect of more widespread deportations under Trump's draconian policies. All of these economic risks could challenge the optimistic assumptions built into the mayor's financial plan. And if the economy underperforms these projections, the city will have far less in reserves to absorb the shock. Taken together, the strategies used to balance this budget—aggressive revenue assumptions, driving down reserves, reducing prepaid expenses, and raising the property tax levy close to its limit—shifts fiscal risk into the future. If the economy performs exactly as the mayor has projected, the plan will hold. But if revenues fall short, the city could face sudden budget gaps steps at a time when our reserves and fiscal flexibility have already been reduced. It will take the efforts of every player in local government—all of us—to achieve a budget that avoids these risks. We will need more help from Albany, in the form of more equal funding formulas and, potentially, new revenue streams. We will need to find a way to slow the growth of rapidly rising city expenses. We'll need to find greater efficiencies and savings in every city agency. And given that the current budget plan relies heavily on the assumption that New York City's economy overall, and specifically the financial sector, will continue to thrive here, we must also do more to slow the departure of jobs to Texas and other parts of the nation. None of this will be easy. Every step we need to take will be politically challenging. But the alternative is to pass a budget in June which pushes the risk off into the year ahead, at a moment when both our fiscal outlook and our economic competitiveness face growing uncertainty. Despite the challenges of this moment, I am confident we will get through this. New York City has the most dynamic and diverse economy in America. We have the most talented and creative workforce anywhere in the nation. And we are a global capital of everything from finance to fashion, from technology to the arts. If we do the hard work now to build a smarter and more sustainable budget, I have no doubt that our city will emerge from this moment stronger and more resilient.

Chair Linda Lee (02:26:30)

Thank you. Thank you so much, Comptroller. So I'm just going to dive right into some questions before I pass it along to my colleagues. So just talking about underspending a little bit, on January 28th, the mayor made an unusual announcement that the budget he inherited faced a $12 billion shortfall in key areas largely related to social services. And to make the point, he cited in part analysis from your office calling out the under-budgeting. Then on February 17th, he released his preliminary budget that addressed these shortfalls. And this morning, seeing, as you mentioned, the report showing that the expense budget still underestimates spending needs by $1.4 billion across fiscal years '26 and '27. So can you explain why you still see underspending in the budget? And is it that the administration didn't fully reflect the full underspending need, or have your cost estimates changed?

Speaker D (02:27:20)

If you could give us a sense of that. Look, we have a gap because we have a systemic imbalance between what we spend and what we bring in. And that is the challenge that we are all facing in this budget process. And we put a number on it in January, $12 billion between this fiscal year and next fiscal year. And to the mayor's enormous credit, he embraced it and he presented a preliminary budget that gives a fair accounting of expenses in a way that we haven't seen in years. So he put it in stark terms. And we've had some good news since January. We had the best Wall Street bonus season that we've ever had, and that allowed us to revise our revenue projections up. We also got an already announced additional assistance from the governor of about $1.5 billion, and the mayor has announced a plan to secure some efficiencies, details of which will be announced on May 20th, to the tune of about $1.7 billion. So we've made various measures to shut that— to close that gap down. The rest of it, though, is largely still there, and it's closed by drawing down on prepaid expenses this year, by drawing from our reserves, by adding in a property tax. And I can add some new details in the report we put out today. We've done an updated analysis. What I announced in January is is obviously a little outdated. And we believe that we're coming in with revenue projections that are a little bit less aggressive than the mayor. Again, the mayor's assuming Wall Street keeps booming at the current pace, which could happen, and I hope it happens. But we're being a little more cautious, and that difference there is part of the gap that we see remaining.

Chair Linda Lee (02:29:09)

Okay. And then the reestimates that you gave in your budget analysis, analysis. So as you mentioned, the revenue expenses, there's a $3.6 billion gap for fiscal year '26 and '27, and this gap includes the assumption of the proposed property tax increases, which you just mentioned. Without the increase, the gap would be $7.3 billion, right? It would actually be higher in your estimates. So based on this analysis and the testimony you gave, so does this still mean you believe the property tax—

Speaker D (02:29:41)

the property increase is necessary? Yeah, we wanted to put on the table every challenge we have to overcome. And so we have a little bit more cautious revenue projection, and that I think is about $1.8 billion difference between this and next fiscal year. We actually did identify some expenses we think the mayor is still undercounting. Underbudgeting. This is nothing like the systemic underbudgeting of years past, but in a couple areas I can talk about, there's a little bit, we believe, of underestimating expenses. Like the council, I appreciated your statement of objecting to the drawdown of reserve funds. And then lastly, there is the property tax increase, which we all agree we'd rather avoid. That together leaves us with about $7 billion of work. Work that we have to focus on together to find savings or new revenues to plug those holes.

Chair Linda Lee (02:30:38)

Okay, great. And so how do you propose, sort of digging a little deeper, the city address those additional shortfalls that exist? Is it reserves, other tax increases, service cuts?

Speaker D (02:30:51)

And then what happens in the scenario that the state doesn't approve the additional tax increases? Look, I don't think we should be drawing down reserves at a time when the economy is growing and tax revenue is increasing. The rainy day fund exists for tough times, for a recession or some kind of shock we're not expecting, such as, God forbid, a pandemic or some major shock. None of that applies right now. This isn't a rainy day by any definition. This should not be the source circumstances under which we draw down from the fund. So I join you, Chair Lee, in opposing that. What do we do? We're going to need progress on a lot of fronts. We're going to need help from Albany. We send more money to Albany every year than we get back by far. We're an economic engine for New York State, and we don't get our fair share of a variety of programs that have funding formulas that disadvantage us, and that should be fixed. And I'll give you one example. Aid to Independent Municipalities, known as AIM. We don't get any money. Other municipalities do. If we got what they get on a per capita basis, our analysis shows we'd get $2 billion a year. That's just one example of a way that we're not getting our fair share. We're going to need more help on that. I know we have a lot of friends in Albany fighting for that, and I hope we do. We're going to need to find more efficiencies. The mayor has made a good first step in the plan that he's reporting out on, on March 20th. I think we're going to have to go farther and the next step will be a little bit tougher. But I just don't see that we have a choice right now. And then we're going to have to curb some of the fast-growing expenses. I laid them out. This is the most difficult thing any of us are going to have to take on. Because it touches vital programs, but I think we can do it in smart tactical ways that slow the growth without removing benefits that anyone currently depends on. If we do all that, I think we can get there. It won't be easy. This is a heavy lift, but I'm here today to give the message that we have to do this work over the next 3 months.

Chair Linda Lee (02:32:59)

Definitely, and totally agree. We need to do the work together on this because it takes a village, and you and I were both up in Albany for Tin Cup Day, and we were all advocating for help, especially with AIM, because we did used to receive that funding and are no longer receiving it. So I know that— have you also looked at identifying areas where there might be over-budgeting, where the city may see accruals? So I know typically there have been savings that occur every year, like debt service savings, which averages about $300 million annually.

Speaker D (02:33:31)

And so Just wanting to know if there was any analysis for areas for over-budgeting as well. Yes, of course, we look hard for this, and I think our honest analysis is that they're pretty minimal, that there isn't much to add back in there. The debt savings you referenced, this is a fairly technical topic, and it does depend to some extent on market forces beyond our control and might in some years depend on a refinancing. But it's hard to see how we could justify adding in a significant amount of money to our budget this year based on those kinds of savings. I think in terms of accruals and current vacancies, I'll tell council members we have a wonderful dashboard on the Crown Fellows website where you can see the vacancies for any agency and in total across city government. But not all of them are still budgeted for. And at any rate, we're fairly late in the fiscal year. And there also are some staff lines that are non-salary, like per diem for teachers at DOE. So I don't think there's a massive amount of accrual to recoup here, maybe in the order of a few hundred million. But I think basically on the expense side, that the mayor is pretty close.

Chair Linda Lee (02:35:02)

Okay. Because that was actually— you perfectly segued into my next question about the accruals, because I know that typically, you know, I think as of now, the current estimate is approximately 14,000 vacancies for full-time positions. I just wanted to know, because also IBO right before us was saying that they're projecting about $681 million, but that's without the fringe costs. So I just wanted to know— I mean, and we're sort of looking at similar numbers and just wanted to know where your office stands in terms of doing the analysis with the vacancies as well as the fringe costs.

Speaker D (02:35:38)

I'm going to say a word on the big picture, and then I'm going to pass it to our Deputy Comptroller for budget. You cited the top line. I think there's also going to be some reasons that will mitigate against that, including the non-salaried staff, as I mentioned, like per diem in the Department of Ed. So I think our net cost is probably more in the $300 million range, but I'm going to pass it to Deputy Comptroller Olson to elucidate us.

Louisa Chaffee - IBO Director (02:36:14)

Hi, yes, and we've done some analyses. A lot depends on how they implement the hiring freeze. We've made some assumptions based on what we know, and we do get to about $300 million. It includes non-healthcare fringe, but we do see it being largely offset by the unsalaried costs, and so we have not included an offset. In addition, because we assume for most of our GAP estimates that they will achieve the savings, we would expect that to be already embedded in their savings calculation. So we are not adding anything on top. And then as the controller mentioned, we see not— we see that some of the authorized headcount is not fully budgeted and have some concerns about fully valuing all of the vacancies that they may reduce.

Chair Linda Lee (02:37:12)

Okay. And sorry, I'm just jumping around a little bit, but going back to the historical underbudgeting, which I agree, I think it's good that the mayor's side is seeking to present a much more accurate estimate of what the city's actual expenses are, so in that sense, It's great. And for the city's budgeting, you know, the process requires that while costs may be underestimated during the year, they must be accurately reflected by the time fiscal year comes to a close. And so even during years when expenses had been underbudgeted, the city was still able to cover the underbudgeted costs without having to dip into the reserves initiate large tax increases. So what do you think is inherently different this year, which I think I know you sort of alluded to, where correctly recognizing the actual cost of these items would necessitate such drastic steps that were not required in previous years?

Speaker D (02:38:11)

It's a very astute question, Madam Chair. How the heck did we get away with this for so long? And I think the answer is two things. One, that we continue to benefit from a very strong economy and a very strong financial sector, that we're on year 16 of a bull run on Wall Street. And so we kept meeting or exceeding our revenue targets. And that was kind of the typical pattern. We'd spend more than we thought, but a little more would come in on revenue. But in the last couple of years, even that wasn't enough. And we started to have to use one-shot measures to make the numbers balance. And I talked about one of the biggest, which I don't think we talk enough about, which is prepaid expenses, which we were able to roll over $6 billion plus in prepaid expenses when we were getting a lot of COVID money in. And that was chipped away till last year. It was $3.8, I think, and that's now collapsing this year. So those one-shot deals, they're called one-shots for a reason. Eventually you run out, and we're pretty close to running out. It is time to be honest about these challenges and to deal with what is pretty clearly now a systemic imbalance.

Chair Linda Lee (02:39:27)

No, I agree. Do you think that this could be an indication that— I mean, obviously, we still have a lot of work to do in right-sizing the budget to reflect the actual need. So, you know, but this time on the side of reducing the over-budgeted areas, what are your thoughts on that piece of it too? On how do we reduce now? Yeah. Well, because this is sort of an indication we're trying to right-size it. Right. So then how— but this time it's on the side of reducing the over-budgeted areas.

Speaker D (02:39:55)

And so I just wanted to get your thoughts on it. Look, this is tough. We're going to have to work on this together. I've identified 3 or 4 very fast-growing programs. I talked about our Department of Ed budget, which has grown steadily year after year at a time when enrollment is dropping. We're down 100,000 since 2020 and probably down 200,000 if you go farther back. We have had a steady increase in these special ed Carter cases, tripled in the last 3 years. It's hitting $1.5 billion. This body has worked well at looking at increases in overtime costs and more. And there are trade-offs in every one of those program areas. And I think we're just going to have to work together now to right-size them, or we wait and then we're in a real crisis. And the people who will pay the cost for that are the most vulnerable in the city.

Speaker F (02:40:55)

And I don't want it to come to that.

Chair Linda Lee (02:41:00)

Yeah. No, I agree. I'm going to go towards asking about receivables and payables because especially this is an area I know that some folks are focused on, especially when we're trying to think through how do we get some of the revenue back into the budget. But the preliminary plan recognizes $500 million in savings by reestimating prior year payables. And these are expenditures we had appropriated for in-year in prior years that the city now believes it will not have to pay. And I think your office is, you know, your office is engaged in the determination of how much can be written off. And so just out of curiosity, you know, can you speak about what role the office plays in making this determination of what to write off? How—

Speaker D (02:41:45)

what's the criteria? How does that happen? Okay, I'm going to pass it to the Executive Deputy Comptroller in a moment. I just want to say a big picture that obviously we want to collect everything we can, right? That's the first thing you do before you raise taxes. You want to collect what's already owed. And the mayor's proposed hiring more tax auditors, which seems to me a pretty prudent strategy to do that. You probably will recoup more than you spend on the salaries. On the other hand, the mayor's announced that he does not intend to go forward with a lien sale., which is the way that we recoup property taxes, money owed to the Department of Finance and for water bills. And look, I understand the policy motivation there because it can often fall on low-income homeowners and people who are struggling in communities of color. But I just want to put that on the table as working against the idea of collecting more. And in general, a lot of what we don't collect is from defunct businesses or entities where it's going to be hard. So I'd caution you on overexuberance on that. But you asked a very good question about our role in making the estimates, and I'm going to pass it to the executive deputy for that.

Speaker F (02:43:10)

Just my favorite topic.

Chair Linda Lee (02:43:12)

I brought a prop, which is our comprehensive financial report.

Speaker F (02:43:14)

Oh, you could really hurt someone with that thing. Anyway, so the Office of the Controller, the Bureau of Accountancy works with agencies throughout the year and especially towards the end of the fiscal year when we close the books on the fiscal year in making sure that they review the appropriateness of all of their payables and receivables. The mayor's office essentially every year puts 4 to $500 million routinely in this net changes in accruals. And then they are not specified. They don't— they're not identified yet. So all of those will be identified at the time of close. There are some details about what is done in our mighty Schedule G-5 for payables, which you can download in a nice tidy spreadsheet so you can see which agencies take down more. And it's, you know, it's a big complicated process that happens towards the end of the fiscal year where both these payables and receivables are looked at, and then we insist that agencies, you know, take down these accruals when it's necessary and warranted, and we work with OMB on that. And what types of payables constitute the majority of some of the reestimates that are in the budget? There is a breakdown by agency, and as I mentioned, Schedule G5, if you go— I know everybody is excited about Schedule G5. It's on page 3,422 of the system. I'm sorry. I don't mean to be facetious. Issues. The last year there was a lot of takedown from the mayor's— from OMB, which are mostly FEMA expenses that were not incurred during COVID There was a substantial write-down in payables from Department of Homeless Services, in part because there was a double counting that we documented in our budget reports in 2023 for the expenses for asylum seekers. And there it was about half a billion. So the mayor's, I think mayorality was about $2 billion in take down and write down and payables. Homeless service was about $700 million and DOE was about half a billion. But I have to say that maybe giving a little bit of color to your To the answer that the Comptroller had, you know, why are we now in this process, in this situation where the prepayment drops from $3.8 billion to, you know, $200 and something million. You know, the last year the administration took very aggressive look at all of these accruals, let me put it this way. And so these accounting changes generated about $2 billion in resources. That were used to close the gap. And so some of those, you know, actions are sort of— have been taken, and they're not available going forward.

Chair Linda Lee (02:46:25)

So that's in part why we're seeing now a more dire situation. Okay. That's helpful to know. And do you have information on which agencies write off a higher share of their receivables?

Speaker F (02:46:36)

Is that broken down?

Chair Linda Lee (02:46:38)

We'd be able to work with your staff to, you know, to work on those, on that reporting. Okay. I'd be curious to see how the agencies fall in those categories. And if you could also, can you provide a breakdown of how much and when the receivables are written off and by source of funds? We'd be happy to work with you on that. Okay. And while writing off prior year payables provides a savings for the city when recognized, writing writing off prior year receivables creates a cost, as costs that previously were assumed to be covered with non-city funds have to be backfilled by city funds. And so, um, is your office also involved with doing this exercise as well? Yeah, it's a, it's the same process. It happens at the same time. Yes. Okay. And can you provide a history of how much in prior year receivables have been written off by fiscal year?

Speaker F (02:47:27)

Do you have— Oh, sure. With that, we'd be happy to give you that. Most— a lot of the— there are ups and downs, and the mayorality for the FEMA grants writes off quite a bit of them, of those receivables. And then social service agencies, ACS and DHS and DSS, they are the, you know, typically the largest contributors to those write-downs.

Chair Linda Lee (02:47:51)

Okay, great.

Speaker F (02:47:52)

And you kind of answered my next question, which are which agencies are the biggest drivers Yeah, that's right.

Chair Linda Lee (02:47:58)

It's a lot of time and money. We'd be happy to work with you. Okay, perfect. Thank you. I'm just going to quickly follow up on the CityFEP's estimates because I think the estimates for CityFEP's costs are higher than what is in the budget and what we're seeing. Can you please walk us through the calculations and assumptions on that?

Speaker D (02:48:18)

Yeah, I'll pass it to you, Crystal, but I think it's pretty close. This is— was the biggest area of underbudgeting under the prior administration by billions of dollars, actually. And I think our gap is fairly limited.

Public Advocate Jumaane Williams (02:48:37)

Krista, do you want to outline? Yeah.

Louisa Chaffee - IBO Director (02:48:40)

Yes.

Public Advocate Jumaane Williams (02:48:41)

So they added a considerable amount in the February plan, and we see this year as being We expect if the growth continues as it has historically that the year will close close to what they have also estimated.

Louisa Chaffee - IBO Director (02:48:57)

However, if we continue that level of growth but slow it down and basically take half of that growth and apply a 1.9% growth, we get a slightly higher estimate and believe that they would need about $300 million more., and then that kind of continues in the out year. We would expect about $300 million more per year just based on what's in the plan and our applied kind of slower growth rate. So $300 million more per year? Um, yes.

Chair Linda Lee (02:49:29)

Okay. Beginning in '27. Okay.

Louisa Chaffee - IBO Director (02:49:29)

Than what they have.

Chair Linda Lee (02:49:30)

Yeah. Then what—

Louisa Chaffee - IBO Director (02:49:31)

oh, I see. Then what they have.

Chair Linda Lee (02:49:34)

Okay. And that's— yeah, that's for the current program. Okay. Thank you for clarifying that. Um, I have a bunch of other questions, but I'm going to actually move to our colleagues to ask questions as well.

Committee Counsel (02:49:45)

So first up, we have Majority Leader Abreu, followed by Majority Whip Hanks.

Speaker D (02:49:51)

Hello, Mr.

Committee Counsel (02:49:51)

Comptroller. Thank you so much. Majority Leader, good to see you. Thank you so much for showing up.

Speaker D (02:49:55)

Are you worried about our bond rating, and what, and what are the rating agencies saying? That is a very important question, Majority Leader. Bond agencies look very closely at how we handle our reserves, and they don't generally like it when you draw down on reserves in good years. And we actually got a report this week from one of the three principal rating agencies, S&P, and it's publicly available. Their language is very similar to ours. I think they have expressed concerns about this structural imbalance. We are awaiting word from the other two agencies, Moody's and Fitch. But I also want to say that we do not expect a downgrade in our actual rating and that we have a bond sale next week that we are optimistic will be successful. So I want to reassure people that we are able to meet our borrowing needs, but we do want to pay attention to what the rating agencies are saying to us. Because it's sort of an early warning. If they begin to ask some tough questions or express concerns, I think that should force us to take all these challenges even more seriously.

Committee Counsel (02:51:11)

The truth is, at least based on the first comments from S&P, we're getting that message already. Thank you. Now I'm going to just pivot to City of Yes. I know it's a topic area of interest to you for sure. Through the City Council's City for All initiative, $5 billion was added for housing and infrastructure investments to complement the rezoning passed in City of Yes for housing opportunity. Included in this was a $1 billion commitment for housing from New York State. However, all of the funds were reappropriated in state fiscal year 2027.

Speaker D (02:51:42)

Is your office monitoring City of Yes commitments and auditing the administration's delivery and ability to spend state funds? I don't know if we have a formal audit underway on that, but I would love to join with you and the council to put that under a magnifying glass. I am also worried that these dollars are fungible and being moved around, and you all negotiated a great deal, and we need to make sure it's spent in the community. So let's work together and we'll put that under scrutiny for you.

Committee Counsel (02:52:09)

Sounds great. And as you know, housing construction and preservation costs are increasing due to aging housing stock and rising costs.

Speaker F (02:52:16)

Do you have a plan?

Committee Counsel (02:52:17)

Are you planning on looking into any of these cost increases in the near term, and is there an estimate on how much housing construction costs will increase across the preliminary plan period?

Speaker D (02:52:30)

I don't know if we built that in or not, but the costs are rising. I got a briefing on a project last week that's $850,000 per unit affordable housing, and we're not going to meet our goals, our ambitious goals, unless we find a way to get those costs under control. City government is part of the problem. It just takes too long and it's too complicated to get approvals from HPD, from DOB, from FDNY. And this is an area that we are going to be aiming our audit tools on to find out what are these delays which are adding time and cost to projects, affordable and market rate. If we don't get this under control, we're not going to meet our housing goals.

Chair Linda Lee (02:53:12)

Thank you so much. I have no further questions.

Public Advocate Jumaane Williams (02:53:18)

Thank you. Great. Majority Whip Hanks. Thank you so much for having me and your testimony, Comptroller Levine. It's really good to see you. Thank you, Majority Whip. So firstly, I want to applaud for your opening statement. I'm really glad I got a copy of it because the things that you're saying here and the path forward and your inclusion, we absolutely— I mean, I do agree with so many of the things you're saying. The New York City budget, New York State's budget, you know, exceeds the state of Florida and has 3 times as many people. Yet people are now calling Florida, or the Sunshine State, you know, New York City's 6th borough. At least they're doing it in Staten Island. And these are for really big reasons. It's the, you know, the tax, the lower tax bracket, better quality of life. And, you know, and I have to ask these questions as my constituents are from Staten Island, outer boroughs. We often feel the brunt of some of the so-called solutions that we're talking about here, like raising property taxes, or whether it's congestion pricing in the MTA. And we have this huge, huge gap. So are we— so my big question is, are we expecting exploring and looking at measurables in agencies and programs that can justify the spending that we're doing? Is the controller's office coming up with a matrix to kind of ensure that we're getting the results from the spending? And I'd just love to hear your feedback on that.

Speaker D (02:54:49)

And it's something that I think the council should be working with the controller in earnest on? Absolutely. Majority Whip, look, I've expressed concerns about the rate of growth of New York City's budget and the fact that we've got to get it lined up with the actual revenue coming in. I am going to defend us vis-à-vis Florida. And yes, we have decided that we want to spend on things like a public hospital system which provides vital care for people in need in New York that Florida doesn't do. We have a right to shelter here. To prevent people from sleeping on the street, which other cities don't offer. We invest a lot in law enforcement and policing, and we also have better public safety numbers than Florida, and certainly better than the big cities in Florida. So we've made a decision to have a strong local government, and we have results that show that that has made New York City a better place. We do still have a fiscal imbalance that we have to address, and I've put that out in the open, and there's going to be some tough decisions we have to make to close that gap, but I know we're up for it.

Public Advocate Jumaane Williams (02:55:56)

Well, I am a New Yorker, true, born and raised, and so the question I asked is because I'm going to take that snippet and I'm going to play it because these are the things that my constituents ask. Often the question is so I can get the answers that it's so— why it's so great to live in the best city in the world. One more question. Yeah. FIFA World Cup tax revenue impact. The preliminary plan includes additional spending for World Cup totaling over $50 million in fiscal 2026-2027 combined for security with additional $19.5 million in marketing expenses. Given these additional costs related to co-hosting the World Cup event, Is it important to understand the local tax revenue impact, the event on the city?

Speaker D (02:56:42)

And has your office kind of done an estimation on the projected tax revenue impact of the World Cup? Yes, we have. And I'm very excited for the World Cup and I'm excited for the economic impact. Again, thank you, Chair Maloney, for highlighting that. But the truth is that the economic impact is spread around the region. So it's not only New York City. And all the economic impact is not dollars into our coffers. So we're estimating about $50 million in incoming additional revenue, which is significant, but it wouldn't quite cover the total expenditures we expect to occur. I think that's okay because there's a lot of economic vitality that this event will bring about and other good reasons to hold it. But on net, again, I think we expect about a $50 million bump up in revenue and costs that maybe are around $70 or $80 million, if I'm in the right range there.

Public Advocate Jumaane Williams (02:57:36)

And you can't put a price tag on being cool.

Chair Linda Lee (02:57:40)

That is true. Thank you so much, Controller. Thank you. Great. Speaker? Hi. Hi, Speaker. Thank you so much for your testimony, and I know that a number of colleagues have asked a series of questions, and I know that they touched on CityFest. FEPs. So I really want to start there. I wanted to get your comments on the City FEP situation and what do you think is the proper number in terms of coverage on City FEPs?

Speaker D (02:58:12)

Yes, so, uh, Speaker, you're well aware of both how important the program is because it's helping now 65,000 families remain in their home and avoid homelessness and you're also aware of how fast it's growing, which is close to 4% a month. And when you compound that, it's really not sustainable. And by the way, that is before we consider what might be negotiated in the court, right? Which we did not account for, nor did the mayor, in our projection. So that, that would be an additional rate of growth, which would be significant. Just to say for a moment, our office did do an analysis, and the original version of the expansion would add at a minimum $6 billion over 5 years, and potentially, because there's a lot of unknowns, on a high end, $20 billion. So what do we do about this? I don't think this is about throwing anyone off their voucher. I think people need that protection. It's just about asking, can we slow the rate of growth? And that could happen through a variety of measures. It could happen by changing some of the parameters. It also could happen by establishing a cap, an expenditure cap essentially, which is how programs generally run. It's unusual for New York City to have essentially what's an entitlement, something like, I don't know, Social Security, right? There's no cap on Social Security. If you qualify, you get it. And but by contrast, Section 8, which is sort of the federal twin to CityFAPS, reaches a cap. And there's a downside to that because people wind up on a waiting list. But without that, well, we have $2.6 billion in costs next year and growing fast. So those are tough. Yeah. Even to say that out loud is tough. I'm not minimizing it, but I know you're thinking seriously about it.

Chair Linda Lee (02:59:59)

I think together we have to come together. Exactly. We're thinking very seriously about this. We know this is a sustainability issue, and so we know we need to address it, and we know we need to address Carter cases.

Speaker D (03:00:11)

Any thoughts on Carter cases? Yes, tripled in the last 3 years, and again, of course, we want to provide the best education for kids with learning challenges. The obvious solution is to have better programming inside the schools. What's happening here is children are diagnosed, or even maybe unable to get a diagnosis, and they have no choice but to go to private schools. That shouldn't be the preferred option. The preferred option should be find a way to meet the needs of those kids inside the schools with better diagnosis and better services. So this is a programming question. I believe we could spend a little more on those services inside the schools and save much more than we would have spent in the privates.

Chair Linda Lee (03:00:54)

The next area I want to go to is a topic that, as you know, I'm very passionate about, is cracking down on no-bid contracts. So during the de Blasio administration, competitive bidding was suspended over 100 times to the tune of $7 billion, and the city overpaid for a lot of PPE. In the Adams administration, with the asylum seeker crisis, competitive bidding was suspended for over 18 months, and you saw numerous no-bid contracts like DocGo for $430 million. $30 million. We've now passed legislation that is now— we passed it a couple weeks ago— that basically cracks down on this long-term use of no-bid contracts during emergencies. Under the legislation, which is my bill, it actually gives you as a controller and the Corp Counsel the authority to go beyond— it basically suspends long-term use of no-bid contract unless unless you and the Corp Counsel agree. So I guess my question is, I really believe we could save billions of dollars by cracking down on the long-term use of no-bid contracts.

Speaker D (03:02:01)

So just wanted to get your thoughts on that subject. Well, yes, you want to be careful that you only apply these expedited rules when there's a real emergency, and that you only apply them for the duration of the actual emergency. That, as you said, it doesn't extend beyond what's reasonable. And you put some time limits on there with some reasonable exceptions that we can apply. I don't think we've made an analysis on exactly how much that would save. It's something we can do. Perhaps the council has already done that, and we'd love to work together with you on that. But sure, as a concept, we want to make sure that we're only applying the emergency contract conducting rules when there's an emergency and only for the duration of the actual crisis.

Chair Linda Lee (03:02:46)

And maybe you talked about this when I stepped out, but in terms of savings in the budget, has your office identified additional savings in the, in the budget that you feel that we should be focused on?

Speaker D (03:02:58)

So we've looked at the fast-growing programs that we've mentioned with vouchers. We've looked at a variety of options in the education budget, which has grown very rapidly, And just to mention one important point, as we've lost enrollment, we now have 200 schools in New York City that have under 200 students. And that ends up adding a lot to the cost because you still have to have one of a variety of professional functions even though you have fewer students. And you can save money by combining schools, which is tough. I keep saying these are all difficult because no one likes their school to be merged, but that is a way we could save significant money, and there's probably other savings inside the school system, which again has grown during a time of falling enrollment. And then while you were in the other meeting, I did comment on the need to probably go further on efficiencies. The mayor's made a first step. He's not calling them pegs, but it's what we used to call pegs.

Chair Linda Lee (03:03:58)

We're probably going to have to go further on that as well. Okay, well, we greatly appreciate your testimony. Thank you, Speaker. Thank you so much for being here today, and I'll turn it back over to our chair. Thank you. Okay, great.

Public Advocate Jumaane Williams (03:04:12)

Um, next we have Deputy Speaker followed by Councilmember Ressler. I'll give my time to, um, Councilmember Narcisse.

Speaker D (03:04:34)

I know she has to go. Thank you.

Public Advocate Jumaane Williams (03:04:34)

Je suis très contente d'être ici. Moi aussi. Allons avec les questions. Pour, pour le hospital, Distress Hospital, the governor announced an additional $1.5 billion in state resources to help New York City balance its budget. Part of the state assistance was the reversal of the Distress Hospital Fund intercept. The state had been intercepting $150 million of the city's tax revenue annually for a fund to help distressed hospitals across the state.

Speaker D (03:05:10)

Do you believe that there are other New York City tax revenue intercepts that the city should advocate to reverse? I want to credit again Governor Hochul, who about a month ago put on the table about $1.5 billion, $1.6 billion of additional funding for the city. And what you referenced was part of that package, and this is good news, but I'm going to refer to Deputy Comptroller Olson to go into more depth on that.

Louisa Chaffee - IBO Director (03:05:41)

In terms of other tax revenue intercepts, the other major sales tax intercept is an online is for online marketplace sales, and to our knowledge, it supports outstanding MTA bonds. The fiscal year '25 amount was $177 million, and it grows about 1% per year statutorily.

Public Advocate Jumaane Williams (03:06:00)

However, because it is pledged to the MTA and supports MTA debt service, it would be complex to reverse. Okay. And one other thing that you said that I'm very grateful to hear, the RENI Rainy Day Fund, supposed to be for rainy days, like epidemic, pandemics, or anything that may happen. And especially nowadays, I think Rainy Day Fund should be kept, you know, close to our heart. Citywide vendors, you know about the nonprofits, right? The procurement and sourcing solutions portal, right, PASSPORT, maintained by the Mayor's Office of Contracts. Services is an electronic platform that manages— you know that, I don't have to go through all that with you. But we have serious problem with that, right?

Speaker D (03:06:52)

Does your office have any recommendation to improve the antiquated Passport system to make it more efficient and user-friendly for the contractors? Plus, plus, plus, plus, plus. Really good question. Look, Passport was itself supposed to be the solution. Upgrade from an older system. But it's the problems that we're dealing with. And there's a lot of frustration with it. We've been meeting with a group of nonprofit leaders on this very topic. I think the smaller nonprofits are especially frustrated with the usability issues. I think the larger nonprofits see Passport really more as the symptom, not the problem, that the problem is we don't pay nonprofits on, and we have a very cumbersome bureaucratic process that Passport perhaps reflects. But look, more broadly speaking, I think we need to upgrade technology, and Passport is no longer state of the art. And the question that we've been grappling with, with our nonprofit leaders, is, is the pain of another platform transition worth it, or can we find ways to improve Passport within the existing system. We're still dialoguing with leaders on that.

Public Advocate Jumaane Williams (03:08:02)

I would love your opinion now or in the future as well, Councilmember. We do need to pay those services, the nonprofit.

Chair Linda Lee (03:08:13)

They are really holding our structure together, but it's cumbersome to get paid.

Public Advocate Jumaane Williams (03:08:17)

It's just so much going on. So I don't know, whatever you have, the brilliant idea you have to get the nonprofit pay in New York City, that would be a great deal. The World Cup, the money that we have here, uh, let me see, it's including additional spending from the preliminary budget, $50 million for 2026 and 2027 combined for security additional, which we need $19.5 million in marketing expenses, giving this additional cost related to co-hosting the World Cup events, it is important to understand the local tax revenue impact of the event on the city.

Speaker D (03:08:56)

Has your office estimated the projected tax revenue impact of the World Cup? Yes, Councilman, I don't know if you were here, we talked about this, I'll just say very briefly, we did estimate that we would recoup an additional $50 million in revenue. That's direct to city government. Of course, there's a lot of economic activity beyond New York City and in the private sector,, and that that doesn't quite cover all our costs, which we put at, I think, about $70 million to $80 million.

Public Advocate Jumaane Williams (03:09:25)

Okay. But it comes close. All right.

Chair Linda Lee (03:09:27)

So thank you. And thank you, Madam Deputy, for giving me time. Thank you. Sorry. And just wanted to add my two cents in about the procurement and Passport, because as you know, I was a user of that for 12-plus years, and it is a pain point. I know it's better than HHS accelerator, and, but again, to the point that you made, it's not the main root cause of the issue. It really is looking into procurement policies and laws that have been in place. And this is actually where I think, just my two cents, AI technology can become, can be of a good opportunity and use to create more jobs as well as increase some of our inefficiencies. And I've seen, we should have an offline conversation but I've been talking to some groups also that have done this in other municipalities across the country.

Speaker D (03:10:13)

So I wonder if there's lessons learned there that we can also figure out from them. I don't know if anyone's nailed this, but we're so unique as such a large municipality, but I would love to work with you.

Chair Linda Lee (03:10:25)

You know this inside and out, for better or for worse. Yes. Okay, awesome.

Speaker F (03:10:32)

Okay, Councilmember Ressler, followed by Councilmember Maloney.

Speaker D (03:10:34)

Brilliant. Thank you very much, Chair Lee, and good to see you, Mr. Comptroller. You know, I'll just begin by noting, I think, that the— one of the challenges we had in the last 4 years, and frankly before, was that there was significant discrepancy on what were the revenue estimates what were the real costs that we're facing as a city. And, you know, you came out of the gate in your first days in office releasing updated assessments that I think were really helpful. And then kind of shockingly, the mayor came out and basically agreed with you. And so that forthright, frank, accurate accounting of the facts allows us all to have an adult conversation about how are we going to actually manage this gap and sustainably fund the vital services that we all are committed to moving forward. So I want to commend you and your team and also commend the mayor and his team for being honest about our financial outlook. I'm, you know, I remember Eric Adams, it felt like he was having a press conference every other week celebrating however many jobs existed in New York New York City. And yet when we look back at 2025, as you noted in your testimony, it was not a good year for our local economy when it comes to jobs. In a previous life, I ran the New York City Employment and Training Coalition, coalition of 200 workforce development organizations, union training funds, community college adult education programs. We need to be training and connecting New Yorkers to high-quality employment opportunities. And yet, with the exception addition of home health aides, essentially healthcare-related positions on the low end, which netted 70,000 additional jobs, 71,000 additional jobs last year. We otherwise, as you noted in your testimony, lost 38,000 jobs. Jobs in construction, jobs in transit, jobs in every sector you can imagine, jobs that we need. Can you help us explain what's going on in the local economy? How concerned are you about this contraction? In employment and what we should be doing about it. Thank you so much, Councilmember, for all those comments. This is a major trend that we are not talking enough about. But if you talk to a young person in their 20s in New York City who's just got out of college, they are well aware that we are essentially in a low-hire, no-hire economy. This is a national problem, I think, for a variety of reasons. Reasons it's hitting New York particularly hard. But just to emphasize, it's even in finance where we lost jobs last year. Outside of the category of home healthcare aides, we had 38,000 jobs lost in New York City. Economists are not entirely sure the reasons. Some overhang from COVID and maybe some overhiring there. There's no doubt that all the harm done by the the president's crazy tariff policy. Also, his draconian immigration policy has an impact on employment and the economy that's underappreciated. And then there's the question of AI impact. And it seems to me that we are probably seeing the earliest signs there, although the data are not quite solid. But if you look at the types of jobs that we're seeing less hiring, it is entry-level white-collar jobs where we understand AI could be changing productivity. I'm worried that this will accelerate and that we as a city are doing virtually nothing to prepare for it. Your background in workforce development, I'm sure the alarms are going off in your head. How do we prepare people for the jobs that will exist if we're seeing a shifting in the landscape? How do we support people who might lose their jobs? All of these remain out there. This is a trend we are not focusing enough. One last point, we do need to be mindful of what we're losing to other parts of the country. It's great that JPMorgan just spent $3 billion to build a tower on Park Avenue. They have more employees in Texas than they have in New York, and we want to make sure that if it's a tough environment nationally, that New York is a winner here and that that we grow, that we don't lose jobs to other parts of the country, that this is a place that companies want to hire and invest and grow.

Committee Counsel (03:15:01)

I think we all have to up our game on that.

Speaker D (03:15:05)

I really appreciate those points. When we're losing jobs in everything from construction to hospitality, from financial services to transportation utilities, we've got a problem. I agree with you. I appreciate it. I was also pleased, in addition to the JPMorgan Tower, American Express just announced a major new tower, which is good news for our economy as well. One more question in my last 12 seconds before Chair Lee kicks me off the stage. Savings. I'm hopeful that we're going to get some more revenue out of our friends in Albany, but in all likelihood it's not going to fill, whether it's the $5 billion gap that the mayor estimates or the $7 billion gap that you estimate. We do need to identify some efficiencies. The mayor's target is 1.5% this year, 2.5% next year, probably not enough. Can you give us any specifics of where you think we have opportunities for consequential savings, areas where there was, you know, misspending or waste in the Adams administration, opportunities where you think we can achieve some greater efficiency? It's very common for candidates to talk about waste, fraud, and abuse when they're running. That's our answer to how we're going to save money. And in the real world, it's a little more elusive. I want to be honest. And the next level of efficiency vacancy savings are going to be harder than what the mayor has put on the table because there's no vacancies that you can book. You're going to be impacting agencies in a more serious way. It's going to be harder, probably unavoidable. I think there is huge potential in upping our technology game here to, to find ways to do more on limited budgets. We largely have a city government with technology that's stuck in the 1990s. There's a shocking amount that's still done with paper and pen. I'm not exaggerating, actual paper and pen processes. I think that accelerating the pace at which we can modernize government will help us. This gets to the procurement question because you can't do that if you have a 3-year timeline. We've also got to solve some of these procurement problems. Before we had Passport, we had Vendex, and nobody wants to go back to that. So I think there are improvements we can make to Passport that are being released in October. Happy to continue the conversation with you all around procurement reform and making sure that we pay the nonprofits the $2.3 billion they are owed today.

Chair Linda Lee (03:17:19)

Thank you very much. Thank you, Councilmember. Great, thank you. And next we have Councilmember Maloney, followed by Councilmember Brewer. Thank you, Comptroller, for being being here and for already showcasing two different languages of your many. I want to thank you for your testimony and reinforce that in a time when affordability is at the top of the conversation, property taxes is not the answer to, to our budget problems, and reinforce that it's not the time to drain down a rainy day fund and use these other financial tools rules that really just pass the buck and push the problem down the pike. And the point on state aid was mentioned prior, that we have unfunded state mandates and also the stat that we contribute 55% and only get 41% back while we're being asked to serve these additional needs are all areas I care about. I wanted to go back to the conversation you were having about about jobs and those changes?

Speaker D (03:18:23)

Are those relative to the national average? Are we seeing differences here in New York City? This is a national trend. We have— we've had a very bad year nationally on job creation.

Speaker F (03:18:39)

I think we are pretty close, but Executive Deputy, would you like to offer any more color on that?

Chair Linda Lee (03:18:45)

The trends that we're seeing in the city are, you know, mirrored in what's happening in the United States as a whole.

Louisa Chaffee - IBO Director (03:18:53)

Yes. Okay.

Chair Linda Lee (03:18:54)

And as you look at revenue streams, we were saying you're overly optimistic in some of the administration's projections.

Speaker D (03:19:03)

Are there any particular industries or revenue streams that are extra concerning? Look, we are very dependent on the financial service sector. And it's a sector that goes up and down. Property tax is pretty stable, and Wall Street can have a great year or a bad year. And so there's a lot riding on what you think will happen to the stock market next year and to earnings next year and to bonuses next year, which just in these few months of bonus season, there's so much riding on it. We had a great bonus season this year. We had the best ever. The mayor assumes that we have a similar year next year, that we continue what has been a very strong '24, 2025 into 2026. And that is entirely possible. And I am rooting for that. But I see a little bit of uncertainty ahead as well. And I talked about this in my opening testimony. I think it's a little more prudent to be cautious on that. And so we came in at a slightly lower revenue projection.

Chair Linda Lee (03:20:03)

And mostly that is due to an assessment of the trajectory of the financial industry. Thank you. And what is the role of the city or what can the city be doing to help ensure that that sector is successful here?

Speaker D (03:20:16)

That, that is— thank you for asking that question, because if we are relying on success in the financial industry to make our budget balance, then we should be asking ourselves, what can we do to help make that happen. I think this is a very big conversation. It has to do in part with the affordability agenda so that company feels that they can locate here and their staff can afford to live here. It has to do with business climate and the amorphous sense that this is a place that people feel they'll be welcomed. We have a balancing act here because we want to fight for workers. And we want to fight for consumers. We have laws that have to be enforced, but we also want to grow the workforce, and we want business to feel they can grow here. So we've got to speak to both sides of that. I'm not sure we're doing that adequately right now, but you made the key point. If our budget relies on a growing Wall Street and a growing financial sector, then we better make sure that it continues to grow in New York City.

Chair Linda Lee (03:21:20)

Thank you. I'm shifting back to CitiFest. FEPs, we heard before about how the projections are to grow up to $2.6 billion.

Speaker D (03:21:29)

What are some of the key drivers that are leading to that increase and the unpredictability? Look, the city council, for very good reasons, changed the rules of the program. For example, you used to have to go to a homeless shelter and wait 90 days before you could apply to city FEPs. That was a barrier.. And the city council, for very good reasons, said, no, get there, start the application process when you get there, because we would rather get you out of the shelter more quickly. That understandably increased the pace of growth in the program, right? You made it easier to apply. There's an expansion that's now tied up in court that would allow people to apply while still in their homes, while they still have a lease. Lease. And there's a good reason for that, because the logic was, I don't want you to become homeless in the first place. How about we solve this problem first? But you can see why that opens it up to a large number of families and individuals, and that it would add a lot to the growth. So that's why I keep saying these are tough decisions, because this is life-changing for families who need it. I just do want to say very quickly on this The solution to housing affordability in New York City is actually building more housing and more affordable housing. Vouchers are a Band-Aid, and they're a one-shot that can help people when they need it, but they are not a long-term solution.

Chair Linda Lee (03:22:56)

The long-term solution is we need to build 500,000 more units of housing in New York City. My last question, which I'll reframe as a statement, was from the prior testimony. Which talked about how the city may not have the supply to absorb that demand and was curious on your thoughts on that.

Speaker D (03:23:10)

But I can yield back to the chair as well. Well, look, I'll just say very quickly, yeah, look, if you have a voucher, this is great. But if you don't have a voucher and you're a tenant who's struggling, you're now competing for homes with someone who has a voucher. And that's tough. This is why this is not the ideal long-term solution. It is important to prevent a given family entering homelessness. But we have 3 million households in New York City. We have 2 million tenants. Over half of our residents, of our renters, are severely rent-burdened. I mean, the numbers are mind-boggling. And we have 65,000 voucher families right now. So clearly we have to do more to build the housing that people need.

Chair Linda Lee (03:23:58)

So they're not fighting over vouchers and not competing with each other for scarce apartments. Thank you very much. You got it.

Speaker F (03:24:06)

Thank you. Okay, great. Councilmember Brewer followed by Deputy Speaker. Thank you very much. You talked about the Carter-Conner cases, and I'm certainly very aware of them. And you mentioned, as we all did and we said to the IBO, more schools mean less money going towards the private schools. So do you— I don't know if it's IBO or you to do that kind of analysis. I don't think DOE is going to do it. And it is absolutely the right place to go.

Speaker D (03:24:32)

So I didn't know how you are looking at that, if at all. Just— well, we certainly are. But I have to say that Chancellor Samuels, who you and I worked closely with together— very well— Councilmember, took on some tough school mergers. I'm aware. And I know that he is thinking about doing this citywide. That's my impression. I'll let him speak. But I actually think that the DOE is quite aware of this dynamic and trying to figure out how to address it. But we're also doing the analysis here, and it's just an unavoidable outgrowth of reducing enrollment that they're going to be some schools that drop below critical level. There's some that have below 150 students.

Speaker F (03:25:15)

Even, and I think some below 125. These numbers are really not defensible. Yeah, I know, I'm very aware of the school merger issue. I'm talking about trying to get IEP slots. Oh, forgive me. That's okay, into the mergers I know well and I agree with you, but the issue of trying to get slots for the IEP students so they're not going to Winston and everywhere else.

Speaker D (03:25:33)

We're pushing for this. I was wondering, yeah. And actually, I know the mayor has mentioned this himself. Yes. So I can only assume DOE is working on it. Okay.

Speaker F (03:25:42)

But I just say we got to pick up the pace because the alternative is not working. That's what I'm saying. We all need to pick up the pace. With all due respect to everybody, it has been talked about for the last 30 years. So I think we need to do it. Number 2 is Rikers. We all know that new borough supposedly coming, but right now, as you know, correction has the challenges of utilizing capital funding for projects that would normally be eligible, but because of the impending closure, you don't meet Directive 10, which I know only too well, that 5-year issue. So one issue that comes up constantly, and I've talked to the commissioner about it, is the cell doors are broken. $38 million to fix them. But I don't think they fit into Directive 10. And I don't know how you would play a role in that. I know you have to sign off on the waiver. And I'm just wondering where that's at. That means the doors are broken.

Speaker D (03:26:33)

Correction officers are upset, etc., so are persons who want to be safe, who are detainees. How are we looking at that issue? Yes. So we do establish this directive that determines the parameters for capital eligibility, but it is set by generally accepted accounting principles, GAAP. And so we are not able to adjust the 5-year timeline. And we've been in consultation with OMB on this.

Speaker F (03:27:01)

This is a major challenge. If either of my colleagues here want to— Who would grant the waiver if there is a waiver to be granted?

Speaker D (03:27:08)

Would that be OMB or you? I don't think there is— I don't think it's possible because of the way the bond market works.

Speaker F (03:27:18)

But Executive Deputy, would you like to— Yes. Okay. So we don't give waivers on direct 10. But if there is a certificate to proceed or a determination from OMB regarding this particular submission from DOC, we'd be happy to review and see what that determination is and then discuss with OMB as well. This is a matter of what is the minimum, you know, life of these assets and if Rikers is supposed to be closed, right, before— I do. I'm just concerned because it's a real life and death issue. You know, it's not like putting new wallpaper up or something. It sounds like there are two issues here. What the actual work is, whether it's maintenance of capital work, and then there is the time span. So both of those things we'd be happy to look at, but this is— you understand this is a joint endeavor and eligibility determination with OMB as well. I will push on both. Insurance. We all know about insurance rates going up. Does the city also have this as an issue? Because obviously housing, cars, etc., the whole discussion that obviously the governor is talking about it, etc. So I didn't know if that comes into what should we be doing about our insurance costs. Is that something that is brought up at all in your thinking?

Speaker D (03:28:37)

We're all looking for every place possible to save money. Good for you for focusing on this, and I am actually not sure if we've done that analysis., but, uh, Deputy Comptroller, do you have thoughts on that?

Louisa Chaffee - IBO Director (03:28:50)

I believe the city is largely self-insured, certainly for health and hospitals. For example, for malpractice, the city is self-insured. So there'd be no savings whatsoever in insurance? Every, every category.

Speaker F (03:29:01)

I don't know if you know, um, Francesco, but certainly for healthcare, I can say the city is self-insured. Okay, so we— all right, so there's no savings at all is what you're saying? That's interesting. Okay. Consultant contracts is, again, it's a buzzword, and it could mean, you know, you need consulting contracts in some cases, but is this something that you look at generally? Obviously not everyone. I know DOE has many too many, as an example, but how do we look at this, you know, sort of fuzzy project in some way?

Speaker D (03:29:32)

Councilmember, this is actually one category of very few that we think we could achieve some savings over what the mayor has proposed. Yeah, so I appreciate you identifying that. I don't know if we've pegged a number on it, have we? But you're working on it. But we did, we— yes, and we did identify this as one category where we actually think, uh, we could get the cost down below what the mayor has projected.

Speaker F (03:29:57)

Okay. And then just finally, AI, that's something that is on everybody's mind.

Speaker D (03:30:00)

Um, do you have some number as to how it might or might not impact tax savings?

Speaker F (03:30:06)

Savings? Yes. Do you mean by making government more efficient? I do. Just start with the police department. And I've never—

Speaker D (03:30:11)

you go to the police department, you're just trying to get your car insurance because somebody busted the window, and out comes the paper and the pencil. Yeah, exactly. Look, you've been beating the drum on technology for a long time, and we still have a long way to go. I think we're farther behind than ever because of how fast AI is moving. I couldn't put a number on what it will save, but I think the opportunities are vast. Look, there is risk and peril here too. Yes. Or safety and bias and more. We got to put all that on the table. But, you know, we have very complicated systems in New York City government that are run on technology from the '80s.

Speaker F (03:30:52)

Yes. Our payroll system. Yes. Is run on mainframes from the '80s. Correct. And the cost of finding a coal boat guy somewhere. What's that? You got to find a coal boat guy somewhere. Yes, exactly. All right.

Chair Linda Lee (03:31:02)

So it's something that everybody's looking at is what you're saying. Yes. All right. Thank you. Thank you. Thank you so much. And there was actually a situation in Chicago where they actually used AI and technology to actually track and make more efficient PD over time.

Public Advocate Jumaane Williams (03:31:20)

So it was a really interesting case.

Speaker D (03:31:23)

Which I'll tell you about later. But yes.

Public Advocate Jumaane Williams (03:31:28)

Okay. Sorry. Deputy Speaker. No problem. Thank you. Hi. Hello, Deputy Speaker. Okay. I have a few questions. The first questions are on the MWBE report. So as of January, your office issued the annual report on MWBE procurement, and you found that MWBEs only account for 5% of the citywide procurement value, and that only only 8% of the value of contracts subject to MWBE participation goals were registered to MWBEs.

Speaker D (03:31:55)

Why did your MWBE report show such low numbers for the amount of city contract dollars going towards MWBE-certified firms? Thank you, Deputy Speaker. We actually now have a legal obligation in my office because the City Council passed a bill that requires us every year by January 31st to do a full report on MWBEs and how good our contracting is. It only covers mayoral agencies, so I just want to put that on the table. So Health and Hospitals isn't covered, NYCHA is not covered, EDC is not covered. It also only covers what's in Passport, and there's a problem with getting subcontractors registered into Passport. Passport. So there's some undercounting there. Uh, but having said that, I think the numbers are pretty stark and they should serve as a wake-up call to us. And, uh, it's very important to distinguish the number of contracts and the dollar value of contracts. If you only look at the number of contracts, the picture is a lot better. We had about 250,000 contracts and purchase orders last year and about about $50,000 going to certified firms, so that's about 25%, but that's not dollar value, and the MWBE firms are getting much smaller contracts. The average contract for firms that are not certified is about $3.7 million. The average contract for certified MWBEs is only $750,000, so you have to focus on the money, and when you do, you get a very disappointing number. That's why we came out at 5%. And look, our job is to put that out there so we can rally and do better. And if you want, I can talk about ideas we can do that, but the numbers are pretty stark and that should really upset all of us.

Public Advocate Jumaane Williams (03:33:48)

Thank you. Yes, I would love to talk to you about how we can improve the numbers going forward. I won't ask you your thoughts now. But I would love to talk to you about that. But I will just ask a random question I thought about because I know the state requires 30% MWBE contracting on all government contracts.

Speaker D (03:34:11)

So is the city not in compliance of the state law that requires 30%?

Public Advocate Jumaane Williams (03:34:17)

I think we're governed by city council laws. And I believe those are targets. And so there's no— which is the problem, right? Because there's no real penalties if contractors don't meet, which I thought the city was also going by 30%.

Speaker D (03:34:34)

I thought they adopted the state. Yes, but I believe it's a target. Okay. And one of the reasons why we did the report and probably why the council wanted to put it into law is we go agency by agency. So you look at every single agency and you you can compare who is performing well and who is not.

Public Advocate Jumaane Williams (03:34:53)

And there is a shockingly wide range of performance in MWBE contracting, so a little bit of public exposure here and sunlight will help. Okay. Yes. I held a roundtable with a former comptroller to talk about MWBE-related issues, so I would love again to follow up with you on this. —because I don't think we've been talking about it enough as a city, because there's been so many advancements in terms of legislation, but the actual impact— I don't really see significant impact. So I would love to talk to you about that. OK, a few other questions.

Speaker D (03:35:34)

Can you just walk me through, in general, the methodology your office uses to analyze the mayor's prelim? Any fiscal indicators or benchmarks you have and how we evaluated the mayor's plan. The biggest effort we put into was really examining their revenue projections. And we have a 150-page report that's covering that and also the expense side. This is available online. And, you know, we don't, we don't take the mayor's projections for granted. We want to interrogate it, and we came up with some lower numbers that in total mean about $1.8 billion less that we project in revenue in this fiscal year and the one ahead.

Public Advocate Jumaane Williams (03:36:21)

And, and that's one more challenge for us to overcome right now. Okay, does the Comptroller's Office currently conduct any equity analysis of the city budget, specifically examples of how spending impacts different communities by race, income, or geographical location?

Speaker D (03:36:41)

Well, the office has done many individual reports looking at that for given programs and agencies, but there's not the kind of broad-based equity impact requirement that— such as there is now for rezonings.

Public Advocate Jumaane Williams (03:36:55)

But that's something that I would love to work with you much more on. Okay, and so I'm sure you'll have a similar answer to this question, but I'm going to ask it anyway for the record, which is, are there any data sets or indicators that your office relies on to measure budget allocations, to measure whether or not budget allocations are equitably distributed across neighborhoods?

Speaker D (03:37:23)

Geographically, you mean? Yes. I don't know if we've done a good geographic analysis on the budget. Budget, but I—

Public Advocate Jumaane Williams (03:37:29)

have we? No. But we would love to, and we're going to partner with you, Deputy Speaker. Yes, I look forward to working with your office because fortunately or unfortunately, I do plan to give you guys more work so you can properly analyze the budget for equity. It is really like the dying thing in my last 4 years because New York City is so significantly behind on how we analyze our budget. I mean, the process itself doesn't even allow us to really analyze it in that way, particularly because of the units of appropriation issue. You can't even really see what's happening from agency to agency. So I do look forward to working with you and getting your feedback to empower and encourage and require you all to do more of a deep dive around budget equity.

Chair Linda Lee (03:38:18)

Likewise, Deputy Speaker.

Speaker D (03:38:20)

Thank you. Nice. Thank you. And next we have Councilmember Wong, followed by Councilmember Mealy. Thank you, Chair. Thank you, Councilmember. Great to see you. Nice to see you again. Yeah, before my questions, I want to say that as a budget director of the former Councilman Robert Holden, I can sit here all afternoon to tell you the bugs and the usability issues of Passport. So if you— I feel your pain, Councilman. Yeah, so if you have your next meeting, I'll be glad to come and tell you you my experience. Thank you. Okay, my first question is this. There are a lot of homeless shelters in my district, and what I noticed them is that they will fill them up to the seam and send the bill to the city every month. Here are the number of occupants, you know, X number of residents, send us a check. Because of that payment model, I see very little incentive for them to get the homeless out of this system and into affordable housing. So my question to you is that, is it feasible for you to modify the contract so they could be paid only when someone is out of the system and into a real housing unit? Only then that they will be paid based on the number of months they stay in the shelter, which is something something you would consider? So I think there are a variety of performance metrics in the contracts, but I'm not sure if they're exactly like you described.

Louisa Chaffee - IBO Director (03:39:51)

Do you happen to know, Executive Director? I mean, they are paid based on the number of people— they have to provide services and food, and so they do pay based on the number of people that are residing there. I do believe—

Speaker D (03:40:08)

I know they used to have have performance incentives for achieving placement rates. I don't know the latest in terms of— Right. But that is the framing. They are supposed to place people in permanent housing. And I don't see that happening because if they place, there's vacancies and then they get paid less. Right? So there's no— I think there's always someone waiting to come and take that bed. But we will look into the state of those contracts. I'm all for having performance metrics. Look, we have a very wide range of the quality of service providers amongst our homeless agencies, and there needs to be accountability so that all of them become better. And having good metrics in the contract is obviously one way to do that. Okay. Yes. And I'll follow up with you on the shelters that I believe is just more interested in filling up than rather than placing getting the homeless into housing. So, thank you. Yeah, here's my second question. We still have time. Before we ask homeowners to pay more in taxes, do you believe the city has done enough to identify waste or control spending growth? And is there a comptroller report that I could read about it where you could identify waste or like control spending growth? Thank you. Well, Councilor Morlock, as you've heard me say, I don't think we should raise property taxes for a variety of reasons. And I do think that we can do more to find some savings and efficiencies in the budget and to do some hard work on reconfiguring some of the programs. That should be our priority. I'm committed to doing that work with you. If you're asking about a report from our office on waste, look, we audit every city agency and that can uncover all manner of fraud and waste, and these are ongoing. We have many audits ongoing right now, actually. They take a while. They can take a year or two or more because there's such intense work involved. But I think you're referring to some sort of broader report on the state of waste. Yeah, like, here are the programs that don't work, or here are the programs that yield very little results, and those fundings or should be reallocated. That's the kind of report I'm looking for. Yeah, and I think you're right. We shouldn't judge just by how much we spend. We should judge by what impact we get for the city and for New Yorkers. We don't do that enough. I agree. Sometimes we just fund a program and walk away and we got to ask what's working. And, you know, you rightly proposed we need performance metrics in our homeless shelter system so people get placed.

Chair Linda Lee (03:42:39)

And I agree with you, and I'd like to work with you on that. Thank you. Thank you. Great. Yes, I love performance metrics and being able to measure if something's working or not.

Louisa Chaffee - IBO Director (03:42:55)

And next we have Councilmember Aviles. Thank you, Chair.

Chair Linda Lee (03:42:57)

Good to see you. Likewise, Councilmember. I guess I have a couple of different questions, and since I was in and out, it's possible you've answered them already. No problem. But I'd like to start with NYCHA.

Speaker D (03:43:12)

I was wondering if your office has put forward any recommendations and/or looked at PAC-converted developments in terms of just general oversight. Well, in the 2-plus months I've been there, no. My predecessor, Comptroller Lander, did put out a report that was fairly critical. This is something that we're extremely interested in. This is— it does appear that the current administration intends to continue, at least in one prominent case, in Chelsea Elliott Fulton Houses, and that might indicate that they're open to it in other developments as well. So it's something we're going to be looking at closely. You know as much about public housing as anyone in New York City because obviously having chaired the committee, and boy, we're not left with a lot of easy options here. And with a federal government that's turned its back on us, with a state government that helps some but not enough relative to the $80 billion we need to invest in the capital of these buildings, we're going to have to look at creative solutions. And RADPACT is one of them. But yeah, we need to keep it under scrutiny, especially now that we have a number developments that have been running already for a couple of years, and we can look at how they're doing.

Louisa Chaffee - IBO Director (03:44:35)

100%.

Chair Linda Lee (03:44:35)

You know, I think— excuse me— as you know, NYCHA currently has over 6,000 units sitting empty. Is your office— do you think you will be looking at that and the long-term impacts of a growing number of units that are empty amidst the housing crisis? Yes, I am very worried about this.

Speaker D (03:44:53)

The turnaround turnaround time is getting longer and longer, longer between— and the numbers are growing.

Chair Linda Lee (03:44:59)

Yes, therefore, because it's taking longer, you're getting a bigger inventory, which I think is now approaching 7,000 units. Yes.

Speaker D (03:45:06)

In the middle of a housing crisis with 175,000 people on a waiting list. Yes, so it's unacceptable. We are pushing on that. I'm not sure if that would work for the timeline of an audit, which tends to be be slower, but I would like to join with you and the council to push very, very hard on that. We have got to get those apartments full. There's also been reporting that now some people are breaking into them and living there, which is a security issue. Of course, people are desperate, I get it, but this is not acceptable.

Chair Linda Lee (03:45:36)

We've got to get those apartments renovated and turned around faster and families in there as soon as possible. Thank you. We'd love your help in making sure that happens. Similarly, I think there has been In terms of supportive housing, vacant supportive housing units is another deep concern where we understand there are thousands of supportive housing units empty in the middle of a housing crisis.

Speaker D (03:46:03)

This is a different issue, also very problematic, but I don't think this is about a renovation challenge. No, it's not. And it's not even, I think about the nonprofits, I think this is the bureaucracy which is too too slow to get people identified and placed.

Louisa Chaffee - IBO Director (03:46:17)

And again, we're in the middle of a shortage on supportive units as well.

Chair Linda Lee (03:46:22)

This has to be sped up. Yes, I couldn't agree more. In terms of just shifting a little bit, commercial vacancies— I see in my district a growing number of commercial vacancies. I'm wondering if you have any suggestions.

Public Advocate Jumaane Williams (03:46:37)

We know the impacts of these vacancies are really profound, and we're hearing in Brooklyn that there's 21.8%.

Speaker D (03:46:47)

And so do you have any recommendations? Are you tracking that? I'm very worried about this. When you have vacant storefronts, it saps life from a neighborhood. It's a public safety issue. It's a public health issue. There's so many secondary problems. We have very little data on this, which is why I I was excited to hear you have such a precise number in your community, so thank you for doing that work. I would like to figure out a way to have a citywide data set to track this, which we don't currently have. Councilmember Brewer actually has done some good analysis in the Upper East Side on Broadway. I think it required councilmember interns going block by block, so I'm not sure if we can do that citywide. But I have some ideas using technology to build this out.

Chair Linda Lee (03:47:30)

If we can get a good number, we can track this, and it would help us focus attention on solving this problem. Couldn't agree with you more, and certainly the impacts are innumerable.

Louisa Chaffee - IBO Director (03:47:44)

And certainly one of the main drivers is the rent is too damn high, and particularly in commercial context.

Speaker D (03:47:52)

Do you think commercial rent stabilization could help support that? Maybe. I think it's more complicated than residential. For a variety of reasons. I think we should be looking at it though, but I think we have some underlying challenges that are beyond that. Competition from the internet probably being the biggest, costs being a major factor of utilities, of real estate taxes. Here we are talking about that.

Chair Linda Lee (03:48:21)

Look, for people who are complaining about retail storefronts, please don't order your toothbrush online, go to a store in the neighborhood and buy from a local merchant. Heard. Thank you. Thank you, Controller. Thank you. Great. Thank you. And I'm just going to go into a few more questions before we wrap it up. But going into the debt service savings, so in the past 10 fiscal years, the city has been able to identify at least $195 million $100 million in debt service savings annually, with average annual savings exceeding $300 million. However, this year, OMB has only identified $156 million in savings thus far. And for example, our staff believe that the interest assumptions used by OMB are a bit unrealistic, as projected interest rates are always higher than the actual rates, and right-sizing these rates would create savings, including variable rate debt costs which would be felt immediately.

Speaker D (03:49:16)

So do you believe that there are additional savings to be had in the debt service budget? Because I know there's different— I am going to pass it to Francesco. I just want to caution you here that I'm not so sure that this is going to be an easy pot of money to find, partly because rates are set by conditions beyond our control or by an event like a refinancing, and that But we have decided that it would not be prudent to add more savings into our projections, but I'm going to have Francesco weigh in, who's more of an expert.

Speaker F (03:49:54)

So the city has traditionally recognized those savings at the time when they are— with our refundings, for instance. And the city, you know, tends to set some assumptions that are that are a little more pessimistic than what it has— it then realizes, right? That's always been a buffer for the city. We have a couple of refundings coming up which are going to provide a few, you know, which are going to provide resources. It is— how should I say it— it is not an amount of money that that it's large enough and it's not an amount of money that it's current enough to— What's your estimate? We can get back to you with an estimate and we'll speak with your staff. But this is not, you know, it's sort of like taking risk in the future, right, to have savings possible, to already take savings in the future where, you know, it's not going to change structurally the situation.

Chair Linda Lee (03:51:00)

I mean, right, but well, I guess that's what I'm curious to hear about more because, you know, even when I was doing, again, much, much smaller scale, but my nonprofits did service budgeting every year, you know, there usually are things that you can sort of find and dig into. So I just wanted to get a sense of if you could provide more details on the type of savings that have been found in the past, and then also what role, if any, your office does play in finding those savings within the Comptroller's Office.

Speaker F (03:51:32)

That's me. So the Office of the Comptroller and the Office of Management and Budget, they work jointly on all of the debt issuances and identifying the bonds that need to be refunded to maximize the amount of refunding. What we do is we typically take the savings from the refundings and We pursue them aggressively and we spread them over the financial plan. This has been longstanding policy that we've applied.

Chair Linda Lee (03:52:03)

And we realize the savings in the budget as we issue the bonds and we get the savings in the financial plan. And then moving over to the interest earnings. Our council finance team believes that the city historically under-forecast the interest earnings on its cash balances based on revenues generated so far, and we believe that there's more money that OMB can recognize here and also in FY27 and in the out years as interest rates are expected to stay relatively elevated. In addition, there are a number of off-book entities with their own cash balances balances that earn interest that we should account for when balancing the budget.

Speaker F (03:52:46)

And so, like the RHB and the Hudson Yards Infrastructure Corporation, have you looked at interest earnings in the city's cash balance?

Speaker D (03:52:54)

Every day. No, I'm not kidding. So we have— I'm sorry, Comptroller. Well, let me just say big picture on that, then I'm going to pass it to you for the technical expertise. Look, this is all— we have what we call a short-term desk. This is money that needs to be incredibly liquid and has to be in very high-quality investments. And therefore, you're going to get a low interest rate. That's the tradeoff. You're not going to get very high interest rate on something that has to be liquid. You can't take on a lot of risk. And we have a whole team dedicated to our short-term desk in our Bureau of Asset Management., and I'm pretty confident that they're getting the right risk-return balance. So again, I would caution you that I don't think this is a big pot of savings to be achieved.

Speaker F (03:53:44)

And now I'm going to pass it off to you, Francesco. Well, we have the treasurer for the city, I think, sitting all the way over there, and we work closely with them to do overnight investment of the, of the city cash balances. Now, to the— those are done by the Office of the Comptroller. We also invest the Retired Health Benefit Trust balance, and that's based on investment guidelines that are set by OMB. But the fact that we do it, it means that OMB set guidelines that, you know, require us to invest in short-term assets, right? And so that's a conversation that, you know, needs to be had. If there is an opportunity to have higher interest on those, that's a— first we need to change the guidelines, and we wouldn't be able to do it, right? If it's not short-term, this is not something that, you know, we would do in-house at the Office of the Comptroller. HYIC is—

Chair Linda Lee (03:54:48)

it manages its bond proceeds and the interest on those, and the controller has no role in that.

Speaker F (03:54:55)

Are there steps the city could do to improve the revenue it generates on its cash balances? We— the Department of Finance has a forecast of cash balances, OMB does, we do every quarter publish. There are a couple of things. One, they're very dependent on short-term interest rates. So during the pandemic, we had zero earnings and large cash balances. Now we have higher interest rate and therefore higher income, but a trend of shrinking cash balances. The two things are going in opposing directions. It really will depend for this year and then the next what we see with the expense trajectory and with the revenue trajectory. That's going to be crucial. Crucial to understand where our cash balance is going to go. But there is not a sense— we do offsets. We calculate offsets to the interest income in our report. So it's part of, you know, when we come up with a re-estimate of the gap, that's part of it too. And we'd be glad to show you what our numbers are. And, you know, there are forecasts of where the interest rates are going to be. So, you know, that's also another margin of error.

Chair Linda Lee (03:56:06)

Is the Fed going to tighten or loosen and how fast, right? Right. And I know that cash balances can be tough because it is so fluid and it is moving around so quickly, but that's definitely whatever we can do to try to see how to increase that would be great. And of course, Comptroller's Office, you— the big responsibility you all have with our pension funds is obviously a huge thing. In terms of the pension annual returns, in fiscal 2025, the city's pension systems achieved a 10.3% aggregate net return on investments, significantly exceeding the 7% actuarial assumption.

Speaker D (03:56:50)

So can you please update the committee on the year-to-date returns for the city's pension system? I want to answer that, but I have to update you on some very serious breaking news related to our topic today, which is Moody's has just issued a report and they're revising their outlook for us, which is very unusual, from stable to negative. This is not a bond downgrade, but it's serious and it should focus us on the challenge of these structural deficits that we've been speaking about. They cited this in their analysis. I want to say what I said earlier, that our bond ratings are all stable and we expect that to continue for the near future. We have a bond sale next week that we expect to go forward normally. But I do want you and us to absorb what just happened. This is the first time since the pandemic that Moody's has had a negative revision in its outlook for us.

Chair Linda Lee (03:58:00)

And it's a reminder of the scale of the challenges ahead of us.

Speaker D (03:58:06)

Sorry, just really quickly on that point. So how's that going to impact future borrowing? I don't think it has an immediate impact. It doesn't change our bond rating, but this can sometimes be a precursor to a bond doubt. Downgrade. It doesn't necessarily mean it will be, but I think that should be considered a greater possibility in the months ahead. Moody's cited our action, our plan to take money out of our reserve fund during an otherwise strong economy. As I think I mentioned earlier, this generally serves as a warning sign to rating agencies. But again, a word of confidence here. We have not had our actual rating changed, and we don't think that's imminent. And we don't expect that this will undermine our scheduled sale next week or in the near future, which we do fully expect to be successful.

Speaker F (03:58:57)

Do you want to add anything to that? Yeah, I mean, we need to be in the market rain or shine, right, because of the size of our capital plan, and we need to issue billions of dollars every month. Month. This is one of the considerations that the market will take into account. We will see where the interest rates are going to be and the cost of borrowing. Certainly, it's not a downgrade, but it's a negative outlook, meaning that Moody's identified a structural spending problem. That's where the emphasis is. If that is addressed, addressed in a similarly structural fashion, then the outlook could go back to stable, right?

Chair Linda Lee (03:59:47)

So this is not a final determination, but certainly puts the accent on a further— Well, it's definitely something we need to look out for. And I think to reiterate the point, I think that's why on the council side, we were very cautious or hesitant to say that we, I mean, we're very much against drawing down on the rainy day funds for this exact reason, because we were afraid that potentially this could have an impact on exactly what you're mentioning. And so hopefully we're able to figure out a way to, you know, dig a little deeper into the budget to figure out where there are cost savings, because I think that that's a big concern that we've had from the beginning with the rainy day fund drawdown. Okay, good to know. Do you want me to speak on the pensions?

Speaker D (04:00:32)

Oh my gosh, sorry. Yes. So going back to the pension, because that's better news. Yes. Our pensions are in good shape. We have at latest count, I believe, $316 billion in our 5 funds combined. And we have a much higher rate of funding than most other jurisdictions in America. We're currently up to about 90% fully funded, and we're on a path to get to 100% fully funded through our payment plan by 2033. This is good news. And workers, city workers and retirees should feel good hearing those numbers. We have a goal on the rate of return, and our goal is to get 7% as a long-term average. And we've been meeting that and beating it. In recent years. Last year, I believe we hit 10.3%, and this year I believe we're at 8.3%. So we're down a little bit because the market hasn't performed as well so far, but even, even still, we're above our benchmark. Really, though, the average retiree shouldn't even get so caught up in those numbers that I say, because we are, we are built built for the long term. We are perpetual investors. We are universal investors. We are not day traders. We have built a very, very robust, diverse portfolio that does not live and die by the price of oil going up and down one day across all kinds of assets, private assets, public assets, equity, debt in America, in countries around the world.

Chair Linda Lee (04:02:13)

I'm really proud of our team, and I feel good about the state of our pensions today. Thank you for that, and I'm sure the rest of us are also very thankful for that. I know you touched upon this earlier, but if you could just talk a little bit more about how the current economic challenges, including possibly Iran war, mean for the health of the city's pension funds. I know this is obviously a long-term game, as you mentioned. And how may these affect returns in the current year? Hopefully you said it's 8.3 or 8.6? 8.3. 8.3, okay. So far this year. So far.

Speaker D (04:02:52)

And then so how do these potential things, how do you foresee it potentially impacting? Look, I care a lot about the economic impact of the war for New York City because of its, It's pumping up fuel costs and inflation more broadly, and also a variety of other critical supplies. 30% of the world's fertilizer goes through the Strait of Hormuz. And this is going to be a blow to the US economy. We're already feeling it, arguably, and therefore a blow to New York City's economy. Having said that, the pension is a much longer view. And while obviously we monitor day-to-day, hour-by-hour developments in the markets. We're, we're somewhat protected from that kind of fluctuation because of how diverse and broad our asset base is. So I would not want a retiree sitting at home seeing oil price spiking because of the war in Iran and worrying about their pension.

Chair Linda Lee (04:04:01)

Really, they're protected from that kind of day-to-day impact. And that's good. No, I just— thank you for saying that on the record too, because I think, as you mentioned, it is a longer-term game. So yeah, it's good news for them. Um, and on cash balances, um, so we— I know, I know we discussed this a little bit before, but on November 28, 2025, the city's unrestricted cash balance reached a seasonal low of $3 billion compared to $4.6 billion in FY25 and $5.2 billion in FY24. And while these lower balances are temporary and typically the balances rebound with large inflows of revenue, they're still a little concerning. And apparently these cash balances are not even as large as what we understand as the balances include in the assets for the rainy day fund. And so the mayor's preliminary plan currently includes the use of nearly $1 billion of resources from the RDF to help balance the budget.

Speaker D (04:05:00)

So what is your benchmark for unrestricted cash balances being of concern?

Speaker F (04:05:05)

Okay, so I think the unrestricted cash balance in the RDF and the healthcare benefit trust are different questions, correct?

Speaker D (04:05:14)

The Retiree Health Benefit Trust certainly is not in our cash balance. Yeah. Right, so the Retiree Health Benefits Trust which I want to remind council members what that is, because I'm not sure people understand. That is to essentially have assets squirreled away for the healthcare that we're going to retire— we're going to provide retirees in the years ahead. And that's a very large obligation. Yep. That is probably $100 billion that we have currently $5 billion in this fund for. Now, we're not legally obligated. It's not like the pension, uh, this is not subject to state law, so it's, it's not an apples-to-apples comparison, but it's not exactly a slush fund. And that's why we should be a little bit cautious if we're drawing it down, because it does serve another purpose.

Speaker F (04:06:07)

I'm going to refer to you, Francesco, on the other cash funds. So the city has not not borrowed on a short-term basis for decades now. We certainly look at the cash balance, particularly at the beginning of December when it hits a low point, very closely, and we work collaboratively with OMB as well to monitor it and to take measures that, you know, would avoid having to borrow short-term, right? Before COVID our balance, you know, would go to about a billion $1 billion, sometimes less, at the beginning of December that kept us nervous, let me put it that way. You are right, the revenue stabilization fund is just a general fund balance that is left over at the end of the fiscal year. Therefore, that amount of money is part of our cash balances now. I will make a couple of observations. First, it is using the rainy day fund at the end of the fiscal year. It's not like taking a check out of it all at once. What determines the cash balance is not the accrual process and how you allocate the expenses and the revenue to the fiscal year, but when you actually pay and receive the money. What we are seeing is that if your expenses are growing faster than your revenues, which is the situation that we find ourselves in, we have a narrower narrower cash balance. And, you know, we can do a lot of things. We can try to apply bond proceeds earlier than we would otherwise have in order to shore up the cash, you know, towards the beginning of December. And we can have transfers for certain entities to the city earlier in the fiscal year so that we achieve the same outcome.

Chair Linda Lee (04:07:56)

But certainly, you know, that billion $1 billion is, you know, it's as low as we are comfortable it getting, let me put it that way. And is it going to impact the liquidity problems if it gets to approximately $1 billion?

Speaker F (04:08:15)

Or if $1 billion is withdrawn, sorry. Yeah. Oh, we're going to have, if the city is is spending more than it receives, the cash balance is going to be lower, right, no matter what, right? Whether we— and so, you know, over time, the average cash balance will be lower as if we dipped into the rainy day fund. That, you know, that if we were $3 billion last year, maybe eventually we're going to be at $2 billion, right? We would want to avoid going to below the billion dollar. That makes us nervous, plus whatever is left over in the revenue stabilization fund. But we're also, you know, that gives us— let me put it this way—

Chair Linda Lee (04:08:54)

that gives us a little bit of buffer if we wanted to temporarily go below $2 billion.

Speaker D (04:09:02)

Okay. Yep. Thank you. And Councilmember Carr, if you wanted to ask questions.

Speaker F (04:09:06)

Thank you, Chair. Comptroller, always good to see you.

Committee Counsel (04:09:07)

Councilmember, great to see you. Likewise. I want to talk a little bit about about the two topics I brought up with IBO earlier today, and in particular the relationship between NYPD headcount and the overtime budget, which I know you've talked about previously. So, you know, when you joined this council in 2014, the NYPD headcount was over 35,000.

Speaker F (04:09:28)

Now we struggle to stay above 33,000. And in that first year, I remember the council pushing for civilianization so that more able-bodied officers can get redeployed out of desk jobs and out into the streets.

Committee Counsel (04:09:41)

The following year, 1,300 new officers were hired as part of that budget push.

Speaker F (04:09:46)

And the notion was that we would achieve savings for those hires through overtime reductions.

Committee Counsel (04:09:53)

So given that we're only saving allegedly $17.8 million this year for canceling the phase-in of the 5,000 new officers that the mayor ended earlier this year, are we not being pennywise, pound-foolish when we have an OT budget budget for this fiscal year that's approaching $900 million?

Speaker D (04:10:09)

Well, we've also been— first off, let me say I appreciate your question on this, and I know how much you care about public safety, and I know how much your borough and your district supports law enforcement. So you're asking very important questions. And yes, we certainly got into a bad spiral where we were understaffed and we ended up covering that with extra overtime, which in some cases was demoralizing for the staff, particularly younger members. Definitely. Who have families at home and want to be able to see them. And that probably accelerated resignations, which only made the reliance on overtime worse. So in the last year or so, we've started to get the cycle going in the right direction because we have had, under Commissioner Tisch, some large academy classes. And so I think we are getting closer to the budgeted headcount. I don't know if we're quite there, and I think that should help us. Having said that, we actually think that the mayor— it's one of the few categories where we think the mayor's proposal is actually underestimating expenses— was in overtime, if I'm not mistaken. And so this is clearly still an issue, and it's a reminder that We do need to, as quickly as possible, get to full headcount. That may require moving through some additional academy classes soon, which I would certainly support.

Committee Counsel (04:11:32)

Do you have anything to add on that, Krista?

Speaker F (04:11:34)

Okay. No, that's great to hear, because I think, you know, we hear about the hemorrhaging of existing officers.

Committee Counsel (04:11:41)

Retention is very difficult even as new hiring continues. And, you know, I hear from folks in the precinct about how exhausted they are with the overtime time, because everyone loves overtime, but they hate mandatory overtime. So I think that's a point well said, and I'm glad that we have an area of cooperation there. I also mentioned earlier when the folks at IBO were here about the burden that our combined tax rate has here, in particular the driving out of taxable wealth from our city. And the Citizens Budget Commission report indicated that our share of the nation's million millionaires plummeted 31% 2010 to 2022. And if we had kept our tax levels at 2010 levels, we would have actually taken in $13 billion more in personal income tax in 2022. So what do you—

Speaker D (04:12:30)

what's your perception of that issue as folks are pushing for increases in the personal income tax and other tax rates? This is, this is a very big high-stakes question, and we had a little bit of an experiment in 2021. When the income tax rates were raised in New York, and both sides have used that experience to make their case. On the one hand, it's true that the number of millionaires and high-income people actually has gone up since then, but if you look at the national picture, it's gone up nationally because we've had a good economy, and New York City's share of that has grown more slowly than states like Texas and Florida Florida, which is what the IBO report pointed out. And so I guess I'd say we have to be very careful that we remain competitive with other parts of the country. And I'm also aware that we have some tough fiscal challenges as well. And I also believe in progressive taxation. I think the wealthy should pay more in a time of great inequality. So I'm personally balancing all of those considerations. And I know the council is as well, but you're putting one of them on the table, which is if people leave New York City, that is a loss for everybody. And in a mobile society, we can't rule that out.

Chair Linda Lee (04:13:50)

We need to make sure that doesn't happen. Thank you. Appreciate it. Thank you, Chair. Thank you. I believe— does anyone else have any other questions? If not, I believe this portion is over. I just want to say I appreciate you not only as a colleague, friend, but also in this role as comptroller, because we definitely do need to figure out how we're going to find more savings and balance the budget. But also to your point earlier, I think it's not just with the schools, but also with healthcare or anything else, is that sometimes, you know, if you do invest a bit more up front, it will save in, you know, down the line, the city and state dollars.

Speaker D (04:14:27)

And so, um, appreciate that perspective.

Chair Linda Lee (04:14:29)

Grateful for your leadership, Madam Chair. This is a wonderful hearing. Thank you so much, everybody. Thank you. And we're going to move to Department of Finance. Okay. Hello. Thanks for bearing with us. Okay.

Committee Counsel (04:18:12)

So I'm just going to turn over to our committee counsel to administer the oath. Good afternoon. Do you affirm to tell the truth, the whole truth, and nothing but the truth before this committee, and to honestly respond to council member questions?

Chair Linda Lee (04:18:28)

Acting Commissioner Scheer? I do. And Deputy Com— oh, sorry, Deputy Commissioner James?

Committee Counsel (04:18:37)

I do. You may begin. Yep, go ahead with the testimony. Thank you so much. Good afternoon, Chair Lee and members of the Finance Committee and members of the City Council. My name is Jeffrey Scheer, and I am the Acting Commissioner of the New York City Department of Finance. Thank you for the opportunity to testify today on DOF's fiscal year 2027 preliminary budget. I am joined today by Jacqueline James, our Chief Financial Officer, and Deputy Commissioner for Administration and Planning. Deputy Commissioner James oversees DOF's procurement, facilities, and operational planning, and I am grateful for her leadership and support. Since this is the first time many of you are hearing from me in this role, I will begin with a brief introduction. I've spent my career in New York City public service,, and I have been with DOF for 28 years over 2 tours of duty, most recently serving as First Deputy Commissioner. My first job in city government was working as an office associate in DOF's Tax Audit and Enforcement Division. I'm honored to serve as Acting Commissioner of this great agency, and I look forward to working closely with the council on the issues that matter most to you and your constituents. DOF is responsible for collecting the revenue that makes city government possible. We administer the city's tax and revenue laws and perform a range of other responsibilities that touch nearly every New Yorker, including homeowners, renters, drivers, entrepreneurs, and more. We value more than 1 million properties each year and produce the annual assessment roll that determines property tax liability. We bill and collect property taxes, business taxes, and other charges. We grant property exemptions, abatements, and relief to developers, businesses, homeowners, and renters. We also record deeds and other property-related documents, adjudicate parking tickets, manage the city's banking and payment services, and represent the mayor on the boards of the city's 5 pension systems. In his inaugural address, Mayor Maldonado said that his administration will answer to all New Yorkers. In its range of services, The Department of Finance plays an essential role in delivering on that commitment. Our mission is to administer the tax and revenue laws of the city fairly, efficiently, and transparently; to instill public confidence and encourage compliance; and to provide exceptional customer service. Whether a New Yorker is purchasing a home, starting a business, business, applying for a benefit, or disputing a parking ticket, our responsibility is to make that interaction clear, accessible, and as easy as possible. That responsibility is especially important at a time when the city confronts significant fiscal challenges. As we face and make tough budgetary decisions, effective revenue administration is essential to maintaining public trust. The work we do supports the services New Yorkers rely on and ensures that compliance is fair. In other words, that those who can pay do pay, and those who cannot pay are connected to meaningful options for relief. Turning now to our preliminary budget. DOF's Fiscal Year 2027 preliminary budget budget is $378.5 million, following a fiscal year 2026 budget of $387.6 million. Our budget supports core revenue administration, frontline customer service, public safety functions carried out by the Sheriff's Office, and the technology systems we rely on to do our work. The preliminary budget reflects an authorized headcount of 2,015 positions. As with other agencies, we are operating below authorized levels, as— and as of the release of the preliminary plan, our headcount was 1,726. We continue to recruit and hire aggressively, within civil service rules and citywide hiring processes to fill critical titles and sustain service levels. In fiscal year 2025, DOF collected more than $50 billion in taxes and other revenues, including property taxes, business taxes, and a wide range of charges and fines that support supports city operations. Our budget is, at its core, an investment in the people, systems, and customer-facing services that ensure the fair and efficient collection of those revenues. The Fiscal Year 2027 preliminary budget includes several key items that will help us meet our responsibilities and respond to emerging needs. We are working with the Mayor's Office to establish the Office of Deed Theft Prevention, which will increase outreach, prevention, and enforcement for this priority issue. We also will be expanding our outreach efforts to various communities and populations. I would like to take this opportunity to thank City Register Colette McCain-Jacques and Deputy City Register Commissioner Carmelita Horton for recently appearing at a Safeguard Your Finances community forum organized by State Senator James Sanders. DOF stands ready to assist any councilmember who needs help spreading the word in their community. Next, we have made technical adjustments to right-size our other-than-personnel services budget to better represent to represent the annual cost of our property and business tax computer systems. These adjustments will make our budgeting more transparent and consistent year to year. Finally, as part of the citywide efficiency exercise, we will do our part to work with the Office of Management and Budget to identify savings and operational efficiencies while protecting core revenue new functions and customer service. Even as we manage staffing and fiscal constraints, DOF has continued to make meaningful progress across our operations. We continue to meet our customers wherever they are—at our walk-in centers, through in-person events across the five boroughs, and through direct mail and digital communications. Last year, we surpassed our prior record for in-person outreach, participating in 272 events citywide and meeting more than 2,600 taxpayers. We are also working to strengthen our email outreach efforts. We have set the goal of increasing the number of emails we send to customers by 50%. I am pleased to share that we are well on our way to meeting this goal. In the first 2 months of this year, we have reached 74,000 customers with targeted, timely information designed to help them take action, apply for benefits, and comply with the city's tax laws. This is 50,000 more emails than we sent through the same period in 2025. We have also made improvements to critically important customer-facing operations. For example, in our commercial parking violation hearings work, we have reduced the number of outstanding cases and implemented video hearings to give commercial vehicle operators a more convenient option to contest violations. We have also continued to strengthen our procurement process practices. The City's Comptroller's Fiscal Year 2025 Annual Report on Minority Women-Owned Business Enterprise Procurement reflects strong performance by DOF, including a meaningful improvement in the number of MWBE small purchase registrations with our agency. Specifically, We achieved a 50% MWBE utilization by contract value for Local Law 74 eligible contracts and purchase orders, compared with the citywide average of 8%, and we ranked among the top 5 most improved agencies by volume of MWBE small purchase registrations. I'd like to thank CFO James, and Agency Chief Contracting Officer Roman Shapolyansky for this work. We remain committed to expanding opportunity and ensuring that city contracting dollars reach the diverse businesses that power New York. As many of you know, a major focus of the past year has been implementing reforms to property tax enforcement that were enacted by the Council when it reauthorized the tax lien outreach and sale process through Local Law 82 of 2024. I want to thank you for your partnership in strengthening protections for homeowners and improving the city's approach to debt resolution. Ahead of last year's lien outreach and sale process, We undertook an unprecedented effort to ensure that owners understand both the risks of leaving unpaid taxes and charges unresolved and their expanded options to address their situation without having their lien sold. Working with the mayor's Public Engagement Unit and with our partners at HPD, DEP, and the Center for New York City Neighborhoods, We combined direct outreach, events, and communications to connect owners with property tax exemptions, targeted payment plans, and other options to help them avoid the lien sale. As a result of these efforts, 85% of the owners with properties on the initial outreach list were able to take action to be removed from the outreach pool before the sale of liens, a higher rate than in previous years. In addition, the property tax delinquency rate fell by about 0.5 percentage points, approximately $150 million compared to fiscal year 2024. Looking ahead, Mayor Mamdani has paused the lien sale for 2023. 2026 so that the Department of Finance can conduct a comprehensive 6-month review and determine next steps. We also remain committed to property tax reform. As the Council knows, the current property tax system is complex and widely viewed as inequitable. DOF supported the work of the New York City Advisory Commission on Property Tax, which issued a report in December 2021 calling for significant change. Since then, we have continued to analyze how the current system is falling short and the implications of different options to improve the system. Mayor Momdani has been clear that reform is a priority, and we are working to create a legislative proposal based upon the recommendations recommendations of the advisory commission. We will continue the work— we will continue the work underway to advance reforms that make the system fairer and more transparent while protecting the stability of the city's revenue base. In addition, we have been tasked with preparing to run an Environmental Control Board amnesty program in fiscal year 2027. ECB debt consists of unresolved violations issued by several agencies, but most notably those issued by the Departments of Buildings and Sanitation that have become judgments and been referred to DOF for collection. If authorized by the council, an amnesty program will help owners and businesses resolve long-standing longstanding debt, come into compliance, and avoid escalating penalties. We look forward to working with the council on the legislation that would be necessary to implement this program. Finally, in the context of the city's budget gaps, we will continue to assist City Hall and the Office of Management and Budget with revenue and tax policy initiatives that meet the needs of the city while staying focused on fairness, customer service, and efficient administration. In closing, I want to thank the council for your partnership and constructive engagement. The Department of Finance— the Department of Finance's work is invisible when it is done well, but it is foundational to everything the city does. We remain committed to treating New Yorkers with respect and courtesy, improving how we communicate and deliver services, and administering the city's tax laws fairly and effectively.

Chair Linda Lee (04:33:17)

Thank you for the opportunity to testify today. I would be happy to answer any questions you may have. Great. Thank you so much for your testimony. So according to Fiscal 2025 Annual Comprehensive Financial Report, The amount of DOF business tax warrants has been increasing steadily over the past 5 years. The amount of collectible unpaid business taxes grew from $760 million in fiscal 2021 to $1.14 billion in fiscal 2025, a 50% increase. This means the outstanding business taxes are over 11% of the amount the city collects on given year.

Committee Counsel (04:34:02)

So what accounts for this large growth in uncollected business taxes? Yes, thank you. So while we are always looking to improve our work, we do have an effective business tax warrant collection program. We call businesses with large delinquent bills before we electronically file the debts in court as tax warrants. That is followed up by post-warrant notices, referral to 3 successive collection agencies, and in some instances, by levying upon active taxpayers' bank accounts. Every year we go through the inventory of uncollected business tax warrants to determine what portion of them are collectible. Currently, non-collectible Unpaid is defined as businesses that are bankrupt or dissolved, that haven't filed a return or made a payment in 7 or more years, or they last filed more than 3 years ago and indicated that they have zero assets. In fiscal year '25, after we did this review, we determined that we had a balance of unpaid warrants totaling $1.1 million, as you indicated, that are potentially collectible. The businesses with warrants range in type, but the majority are in the services and trade sectors. In terms of the growth, we are looking into the growth. For many of these businesses, we have insufficient information regarding their current status. Many of these businesses may already be closed. We are looking to see if the uncollectible criteria we use needs to be updated as we're seeing more business closures during and after the pandemic than we had previously. These closures may not be reflected in our uncollectible criteria.

Chair Linda Lee (04:36:07)

We will keep the Council informed as we explore this further and understand better. The trend. Thank you, appreciate that. And what do you consider to be, I guess, a healthy delinquency level for business taxes?

Committee Counsel (04:36:24)

I'm sorry, didn't hear. Like, what would be what you would consider a healthy delinquency level for business taxes? I'd have to get back to you on that. And then also, I just Again, note that the challenge we face is that there are always— there are new businesses and then there are existing businesses that are going out of business. So it's a dynamic population. So there always will be some that go out of business. In fact, we know instances of businesses that have gone out of business before they file their final return with us.

Chair Linda Lee (04:37:03)

So we know from the get-go that collecting is not possible. Right. And how many— so how— I mean, so is there a way, knowing that there's a lot of businesses, for example, that are going to close maybe due to hardships or various different reasons, do you have a plan that you have that you would implement to actually reduce those levels of delinquencies? Like, in other words, is there a way to capture that data and information before they actually—

Committee Counsel (04:37:30)

like, before it gets to the point where something is considered not collectible? So there are some things that we do now. We do receive information services that will provide information. Most of that information, however, pertains to larger businesses. So for the mom-and-pop shops, the information largely is not there. I think I think as a result of this exercise, we may explore taking further actions if we conclude that there's—

Chair Linda Lee (04:38:00)

that the growth is due to more than simply business closures. Okay. And how many—

Committee Counsel (04:38:06)

I know it's hard to estimate, but in your sort of rough estimate, how many delinquent business entities are there currently, and what can you tell us about these businesses? I'd have to get back to you on the number. The one thing that I do want to say is that when we are talking about business tax warrants, the average dollar amount is small compared, for example, to our business tax audit program. So for business tax audits, we are auditing the largest companies, the Fortune 500 and others, and we reach settlement with those companies and get agreed audit cases roughly 90% of the time, and for the 10% where we do not, they typically are appealing, and if they are to lose the appeal, they pay. So we're not in the position where we have to issue warrants for delinquencies. The delinquencies that become tax warrants are typically businesses that are smaller that have filed late returns. So there are late payment penalties, late filing penalties, um, underestimated tax penalties.

Chair Linda Lee (04:39:29)

So these warrants are typically for a few hundred dollars, so that it's a much smaller amount on average, and therefore we have to careful about the cost that we put into trying to recover each one. Okay. Good to know. And then just really quickly, because in your testimony you had mentioned, because obviously we agree that there definitely needs to be property tax reforms that we look at, and I think you had mentioned that you're working to create a legislative proposal based upon recommendations recommendations of the advisory commission, and I just wanted to get a sense of if you know what that timeline looks like. We are still actively working on it. I don't have a precise timeline. Okay. If you do have any updates to that, we would love to know that and continue the conversations there as well. Of course. Okay. Going to the final assessment rule— oh, wait. Should I go to these? Okay. Um, sorry, really quickly, before City Hall announced that there would be no lien sale for this fiscal year, and I presume you must have prepared a list of lien sale eligible properties and their debts, and can you tell us how many properties would have been on the 90-day warning list and how much in tax liens would have been on that list?

Committee Counsel (04:40:49)

So we did not prepare such a list because we knew it was important to review the the status of the lien sale with the incoming administration. What we can say is that even without the lien sale, we are going to be sending quarterly delinquency notices to owners who haven't paid, and that we estimate that we will be sending those notices to 140,000 owners. I want to emphasize that that count is not the same as owners who might be put in a lien sale at-risk pool, because we're emailing or we're noticing all owners with delinquencies. To be in a lien sale outreach and sale at-risk pool, typically you need to have at least $3,000 in debt. That's at least 3 years old for Class 1 homeowners, so it's older, larger debt, so the numbers would be smaller, but we have not drawn that, and we do not intend on drawing that until we have a better understanding of the future of the lien sale itself.

Chair Linda Lee (04:42:05)

Okay. But just to clarify, so I'm understanding this, because you're saying that there's 140,000 owners that you're going to send the court quarterly notices too, which is different, um, than what you normally send under the typical lien sale notification, correct? And the difference is that the—

Committee Counsel (04:42:20)

under the typical lien sale, usually it's $3,000 in debt, or is that the current that you're sending out? Yes, well, I should have said $5,000. $5,000, okay. But it's $5,000 for, um, the lien sale. When we are reminding people of their delinquencies,. I believe we use a cutoff of as low as $100, and we do not use an age threshold. This is a reminder notice. It is not an indication that we are about to take any sort of enforcement action, and we want to make sure people know regularly that they are delinquent. We have found in the past that that just indicating that on their next bill was insufficient. We want to let them know before that. And how many times do you send it out before the— We send it out quarterly. Before the enforcement happens? Yes, well, the enforcement happens, if there's enforcement, the debt has to be for Class 1, 3 years old. So we can send many of these notices businesses before there's any enforcement action.

Chair Linda Lee (04:43:35)

And again, I want to make clear, the mayor has paused the lien sale, so there is no enforcement action on the table at this time. Yes, totally understood. And out of those— can't yet— right. So just to go back to my initial question, so if it was businesses as usual with the lien sales. Do you know typically how much that would estimate to in terms of the number? I do not know. We did not prepare that this year. Okay.

Committee Counsel (04:44:14)

And then typically speaking, how much of that breakdown is related to the water debt— outstanding balance, sorry? We will get back to you with the numbers from last year's lien sale process. Okay. So you can see that breakdown, both in terms of the initial outreach list, which again last year I think was approximately 35,000 owners, and then we'll also provide a breakdown for the number of liens sold.

Chair Linda Lee (04:44:46)

There was, I think, roughly 4,500 liens that were ultimately sold last year. Okay. Sorry, I'm just writing this down. Okay. And then moving on to vacancy savings. You mentioned that your headcount is at 1,726 out of the budgeted 2,015.

Louisa Chaffee - IBO Director (04:45:04)

How much less in payroll have you spent compared to what was budgeted thus far because of these vacancies?

Public Advocate Jumaane Williams (04:45:09)

I'm going to defer to Deputy Commissioner James. So I haven't looked at our our expenditures year to date. We weren't doing that kind of exercise. We were looking at the vacancies that we got and the proposal that the mayor proposed on us, which is 128 positions, roughly around $12 million. So that is our proposal that's on the table to reduce. We're working with OMB very closely, because while that number is high, we have to ensure that we can hire revenue-generating positions, as spoken by the mayor. We have to ensure that we have continued compliance with some of the things that we have to do.

Louisa Chaffee - IBO Director (04:45:45)

And we—

Chair Linda Lee (04:45:45)

and so we're working with OMB to meet the mandate but make sure that we can still do all those core things that we're supposed to do. And then actually, going in, that goes into my next question, which is, I know that IBO had mentioned that there are 50 additional auditors that are included in the budget.

Public Advocate Jumaane Williams (04:46:04)

So just I just wanted to see how that fits into this overall picture. So our total vacancy right now was 284, and they divide that by the number, and that's how they came up with the 1. Our total vacancy is 284. The 50 city tax orders is part of that number. So you have to take that off the equation first and then divide it by half, and then that's what we talk to OMB about.

Chair Linda Lee (04:46:26)

So we are working that number down with OMB because that is the mandate that we have to adhere to. Okay, so the 50 is not included in that vacancy number? Yes, it is. It is included. Okay, okay. Um, so to be hired? Yes. Okay. Um, and so I know that both the current and prior administrations, they've used the hiring of additional auditors as a strategy to increase the revenues. Um, can you please provide an update on the effectiveness of the additional auditors that were included in the previous PEG program, and specifically how many auditors were hired and how much additional revenue were they able to collect compared to the projected amount?

Committee Counsel (04:47:13)

Yes, so the fiscal year '25 November Plan PEG authorized the hiring of 45 city tax auditors. Of those positions, DOF has hired 37, and there are currently 8 vacancies. The 37 entry-level auditors, known as CTA, City Tax Auditor Level 1s, were onboarded in January 2025 and are expected to generate approximately $52 million by the end of the calendar year. While entry-level hires support the long-term auditor pipeline, it takes time to train and develop a CTA one before they can assume responsibility for more complex and high-value cases, which are typically handled by more senior auditors. So hiring auditors is a long-term investment, and I guess the other thing that I want to emphasize is we have to have proper supervision. I mentioned training, but also supervision. So there's a limit to how many auditors we can hire at once, and we also have to make sure that we're hiring the right mix of auditors, that we're hiring new supervisors as well as entry-level, and retaining them so that 2, 3, 4 years down the road, we are reaping the rewards of that investment.

Chair Linda Lee (04:48:32)

[Speaker] Yep, and I think the retention piece is sometimes the harder part versus bringing them in, so I can appreciate that. And what are—

Committee Counsel (04:48:43)

are any limitations that may prevent the hiring of the auditors that the mayor announced, in addition to any other folks that you're looking to hire? Well, the challenge that we face is that of using the civil service list hiring process. So we believe in that list, but it is a process, and we are working with City Hall We just met with DCAS this week and with OMB to strategize about how we can leverage the list quickly and often so that we can hire as many auditors as possible. How long does the process usually take on average? Well, we had a hiring pool in mid-February from that list. And we are planning to have another hiring pool from the same list in late March or early April. So that roughly, that's the turnaround time. There are a lot of other factors involved, such as what other positions are we trying to fill. As Jackie, as our Deputy Commissioner testified, we have other vacancies. Obviously, the other vacancies vacancies are at the top of our priority list, that's about as fast as we can go.

Chair Linda Lee (04:50:08)

If we manage to exhaust the civil service list, then we may be able to hire more auditors provisionally. Okay. And then assuming— because I know onboarding takes a little while—

Committee Counsel (04:50:18)

so assuming that they're able to get onboarded successfully, what's the realistic projection for additional audit revenue in fiscal year '26? And how does DFO plan to reach that goal? Yes. So the first thing I should say is that the preliminary budget does contain additional audit revenue for fiscal year 2026. Our projection was increased by $150 million. However, the projection is based on current staffing levels and current assigned inventory, so current cases that, that are panning out. Out, and it's not dependent on the additional hiring.

Chair Linda Lee (04:51:02)

For fiscal year '27, our goal was increased by $100 million, and factored into that is our expectation of the new hires as well as being able to retain some of the auditors who have recently come on board. And then what, what changed?

Committee Counsel (04:51:18)

Because if the number of folks are what accounted for that change, assuming that, you know, in the previous administration, this administration, with the numbers being the same of staff? In terms of fiscal '26, what changed was a couple of some large audits came to fruition.

Chair Linda Lee (04:51:41)

They're very hard to project. They came in a little higher than what we expected. Okay, great. And we understand that the Chief Savings Officer report is not yet due. But can you give us any insight as to what areas of savings are being considered, and can you share the guidelines and targets that DOF was provided in developing your savings?

Committee Counsel (04:52:05)

Sorry. Yes, I'm sorry. Before Jackie—

Chair Linda Lee (04:52:09)

Deputy Commissioner James is our expert, so I want to start by reintroducing Jacqueline James as DOF's Chief Saving Officer.

Public Advocate Jumaane Williams (04:52:17)

She really is the expert when it comes to this. Talking to the right person. So our target for '26 is roughly around $4 million, and in the out years, it's approximately $8 million each year after that. What we're currently looking at is looking at areas in our operation that may have duplications, that may have some overlapping.

Louisa Chaffee - IBO Director (04:52:37)

So that's one of the areas that we're looking into and we're focusing on. Another area is technology.

Public Advocate Jumaane Williams (04:52:43)

We're looking to see if we have anything that may be obsolete, technology that may need to be upgraded, or in some cases, maybe insourced. So those are some of the things that we're looking at as well. We're also looking at our contracts. Now, contracts are very difficult to go in and renegotiate once you have an active contract. But we do— but we are looking at the service levels of some of our contracts, and if we can reduce some of those service levels, it will have an impact on how much money we're paying.

Chair Linda Lee (04:53:09)

So those are some of the areas that we are looking at right now to generate some savings for this initiative. Okay, perfect. And then speaking of contracts, the DOF contract budget increased by roughly $13 million, with much of the growth occurring in the maintenance and repair category.

Committee Counsel (04:53:28)

So just wanted to know, can you provide the committee with an update on the contract to replace STARS, which is Summons Tracking and Accounts Receivable System and CACS, the Computer Assisted Collection System. Yes. So another way to describe STARS is it's our parking ticket computer system. So the good news is that the replacement that we, for shorthand, we've been calling Parking 2.0. That contract was recently registered and we will be having a kickoff meeting next week to start the work with the vendor.

Public Advocate Jumaane Williams (04:54:22)

And you asked about CICS. The CICS system became fully operational in 2024. Okay.

Louisa Chaffee - IBO Director (04:54:25)

Okay, great. Go, go right ahead.

Public Advocate Jumaane Williams (04:54:27)

So I just want to answer the question that you asked about the maintenance and repair. Sure.

Chair Linda Lee (04:54:33)

And roughly what that is, is the Department of Finance and finally recognizing some of its maintenance contracts in 2026 and 2027, our security guard contracts, some contracts that weren't fully funded. That is what increased. Okay, perfect. Um, and then Deed theft, I know you mentioned that's been a huge concern on the council side as well because we're seeing a lot of that happening, especially with our older adults in the city. And the fiscal '27 preliminary plan includes a new need of $500,000 in fiscal '26 and $1 million baseline starting in fiscal 2027 for 5 positions in the new office to prevent deed theft.

Committee Counsel (04:55:15)

So what will be the function of this new office, and how will its scope differ or expand beyond the current scope of DOF's DTF operations? Yes. So first, I want to remark that the administration plans to make an announcement soon with more details concerning this office. But as the mayor has made clear in his campaign and reaffirmed with this addition in the preliminary budget, New Yorkers deserve to be protected and safe in their home and this includes protection from the terrible crime of predatory theft. Yes, DOF has— I'm sorry, doing too much reading. But DOF has worked on this in the past. You were asking about the extent to which this will be new and expansive. So I first want to talk about what we've done in the past. Currently, DOF flags suspicious deed recordings for investigation, receives and acts upon complaints filed by homeowners, works with law enforcement agencies to obtain convictions of perpetrators, and does outreach to vulnerable, vulnerable populations to prevent theft. By establishing this new office, we will be expanding our outreach, prevention, and enforcement efforts to maximize our fight against this appalling crime. We are hoping to do more detailed reviews within our LAM records office. We want to do more outreach to more sites within the community, and we want to make sure that people who come to us with complaints receive the dignity and respect they deserve and the support that they need during that difficult time.

Chair Linda Lee (04:57:12)

Thank you for that. Um, what are the titles of the 5 new positions? That is still being determined.

Committee Counsel (04:57:23)

Okay. Um, and what city and non-city agencies will the office be working with to fight deed theft? Well, I'll start with the non-city agencies. So, well, first I'll say that within the Department of Finance, there are multiple offices that are involved. So there is our Office of Land Records, which I have mentioned. So they do property tax recordings, and they are a first line of defense. They may see things in the recordings that are suspicious There is our office of our taxpayer advocate. They are there to support taxpayers whose issues may have fallen through the cracks and need special attention. And then there is our sheriff's office. So they are working to develop cases, develop evidence, incidents that can be referred to non-city offices. So that would be the 5 district attorneys and sometimes the Attorney General's Office for prosecutions. We also will be doing work, we expect, with other offices.

Chair Linda Lee (04:58:43)

The mayor's PEU unit, we expect also to be working with other agencies that deal with these populations, such as the Department for the Aging. And us as council members. Yes, definitely.

Committee Counsel (04:58:56)

No, so that was my last question on this topic, was just about the outreach efforts that you'll be performing and, you know, working with us on the council side to reduce the at-risk community. Yes, I said it before in my testimony. Testimony but want to emphasize it now. Any councilmember that wants to do a deed fraud prevention event with us, call me, call us, we will be there.

Chair Linda Lee (04:59:24)

It's very important for us that we leverage your knowledge of the communities to make sure that our outreach is as strong as it possibly can be. Thank you.

Public Advocate Jumaane Williams (04:59:34)

I'm going to pause and hand it over to our to my colleagues, and we'll start with Deputy Speaker Williams, followed by Council Member Brewer. Thank you. Um, the chair asked questions about this, but I don't think I recall hearing, like, how many tax assessors do you have now though, or tax auditors, whatever you call them?

Committee Counsel (04:59:58)

You're asking both about assessors and auditors? Actually, I'm asking about the assessors, the tax assessors. How many do you have now? I don't think we have—

Chair Linda Lee (05:00:12)

I know that we have 29 vacancies that we are seeking to fill among city tax assessors.

Public Advocate Jumaane Williams (05:00:19)

I don't know the total count. We actually— we have about 127 assessors, assistant city assessors, and city assessors combined. Okay.

Chair Linda Lee (05:00:32)

Do you have plans to fill those positions?

Public Advocate Jumaane Williams (05:00:34)

Yes, we do. Okay. We are working with DCAS to have the list established so that we can move forward with hiring those assessors. Okay. And would you say that contributes to the average time to close out the tax audits, or is it the auditor positions that is taking the time to close out? Because I know it's like up to 178 days to close out tax audits.

Committee Counsel (05:01:04)

I'm trying to figure out like— okay, so to me, what the tax assessors do versus the tax auditors? That's a good question. Okay, so we'll start there. So tax auditors are working with with large corporations on New York City corporation tax. Typically they are represented by large accounting firms and law firms. The amount of records that have to be reviewed is comprehensive, and audits do take a long It is true that when we have vacancies, especially when we have retention issues, which we have had in the past, when auditors leave us for accounting firms or for the IRS, that that can result in audit cases having to be reassigned to other auditors, and it will take a new auditor time to get up up to speed on that case. So that, that can in fact impact those cases. And then tax assessors, right? Tax assessors, their responsibility is to value all of the city's 1.2 million properties, so come up with the market value based upon the characteristics either in our database or that they see with their own eyes when they go out and inspect those properties.

Public Advocate Jumaane Williams (05:02:54)

Okay. Thank you. The other question I have, which you talked about in terms of the legislative proposal, I guess, you're going to put forward to send to Albany around property property taxes. So, you know, Southeast Queens, as many other parts of New York City, deal with this issue.

Committee Counsel (05:03:13)

And so I just wanted to know, like, timeline, like, when are you all going to have the legislative recommendations available, and when are you going to send it to Albany? We don't have a precise timeline. All I can say is that the mayor is committed to And we are working very hard with our partners in City Hall and in the Office of Management and Budget and the Law Department to do the review and analysis necessary to come up with a proposal.

Public Advocate Jumaane Williams (05:03:48)

Okay, thank you. I just feel like your agency commissions that previous mayors have created have been like looking at this for such a long time, and so I feel like Like for the most part, I'm sure there are tons of things that are already in the ethos. So I personally just don't understand like why this is not happening. It should have happened a long time ago. So I am very thankful to Mayor Mumdani for prioritizing this because the other administration I don't think prioritized it in the same way. But it would be helpful to understand the timeline. As you know, you know more than me, actually, that this is completely long overdue. So just pushing for there to be an actual timeline to give a little bit more confidence, especially as the mayor is proposing to raise property taxes. I feel like this is like a, a horse in the cart situation. I feel like we should reform property taxes before we like think of changing what the property tax rates are.

Committee Counsel (05:04:47)

So I do hope I hope that you all can come up with an actual timeline around this. Yes, so I hear and respect your advocacy.

Public Advocate Jumaane Williams (05:04:58)

All I will say is that the mayor has been clear that increasing property taxes is only a last resort, that it's not something that we want to do. I know, and I do appreciate his efforts to make it a last resort, but I do feel like everybody knows that the our property tax system is not an equitable system. And so, like, even having that as a last resort and not talking tangibly and with the same level of vibrancy as, like, raising taxes is, to me, not fair. But just the last thing on deed fraud. I know you're working on the Office of Deed Fraud Prevention, and I just wanted to know, do you timeline for that, when you'll actually establish the office? Is it already established? Like, do you have a timeline where you're like, this office is available, we can now send people here, or we can now get resources for our constituents?

Speaker F (05:05:57)

The administration will be making an announcement shortly. Awesome, thank you so much. You're welcome. Thank you. Councilmember Brewer followed by Councilmember Wong. Thank you very much. Thank you very much. First, I want to thank Rita Jen for all that she does for coming to our office and dealing with all the folks who are insane. So I appreciate it very much. Screedry and everything else. Thank you for her. A couple issues. First is the lean issues. Do you divide it up? I don't know what's going to— I mean, I really do understand the need to have a revisit, but is there a division that is palatable between commercial commercial and residential, or is it all not able to be divided like that? The reason I ask is, obviously, the residential is often the concern in terms of people losing their homes.

Committee Counsel (05:06:46)

So when you do a lien sale, is it clear who's commercial and who's residential? We certainly—

Speaker F (05:06:52)

in the data I said that we would be providing, we'll do that by property class. Perfect. That should make it clear to you. Okay, thank you very much. Second is, I know that I spent a lot of time with the sheriff, to his credit, closing 93 illegal smoke shops in my district. So one of the questions I have is, did that money ever show up?

Committee Counsel (05:07:15)

There were many fines, hard to find people who were to be fined or who were fined, and I was wondering if you ever got a cannabis number.

Speaker F (05:07:22)

I don't have that with me, but we will get back to you on that.

Committee Counsel (05:07:25)

Okay, I think it's very low, so that would be one of those ones that, you know, you are not around to be collected.

Speaker F (05:07:33)

I can confidently say the number is low, but we will get back to you. All right. And then the other issue along those lines is just the ghost— I call them ghost plates, I don't know what you call— curb illegal license plate use. In oversight and investigations, we did survey of ghost plates, and there's an awful lot of them. So obviously, you know why they do it, for many avoidance of tolls, etc. Is that something that you pay— that's the sheriff's issue, obviously, but do you pay attention to that? Is there some update on ghost plates? Obviously there are stings at bridges, but we've also advocated just stings in neighborhoods. You go to certain neighborhoods, you're gonna see an awful lot of illegal license plates.

Committee Counsel (05:08:17)

Is that something that you're focused on? And obviously collecting the fines might be challenging, but they shouldn't be there in the first place. That's correct, Councilmember. So we are focused on that. The NYPD leads a task force of agencies that conducts those sting operations, and they are done in a variety of places, not just at the bridges Bridges and tunnels. Our sheriff's office does participate on behalf of the Department of Finance. But I'm sorry, I also wanted to add another aspect just to make the problem more complex and bigger, is that we've become aware of victims of people who are using phony plates. So sometimes the plates that they use might be stolen plates. Yes. That somebody— they had— they were stolen. There are reports of plates that people took years ago to an outside New York DMV. There are also just the off-the-internet plates that might have to match an existing plate. And so when that happens, it's even worse because now you have a victim with an active New York registration that's getting bills from us for parking violations and camera violations that they did not commit. And people like that are naturally very concerned, and they are especially concerned that the violations will continue and will they have to be in a never-ending cycle of having to come or do parking ticket hearings with us. So our Office of the Parking Summons Advocate has established a program where people like that can come to us and OPSA can represent them at the hearings.. So if there are more tickets that come up, we can make sure that they are being represented and they don't have to actively defend each one.

Speaker F (05:10:34)

We have nearly 200 license plates that have been enrolled in that program thus far. That's great, because we certainly hear about the program— I mean, the problem and the program. So we appreciate that very much. Just going back to the collection issue. So what you're saying basically is between the auditors last year and the auditors to be hired this year, hopefully they can be hired in a faster pace, that would be helpful. Maybe you said this earlier, but because I did the report with IBO at their request to figure out how much we are losing in terms of uncollected fines and fees, so you talked a little bit about the, some of the fines and fees, but just generally, do you have some sense about— because I think you talked about the businesses that are—

Committee Counsel (05:11:22)

is it mostly businesses that are not—

Speaker F (05:11:26)

fines and fees not being collected?

Committee Counsel (05:11:28)

Is there any other category, or is it mostly that? So that IBO report was some time ago. It was about 2 or 3 years ago, yeah. And it included quite a number of things in it. So one thing that I want to be clear is you referenced the auditors. So the IBO report did not include tax audits. So I do want to be clear about that. For the tax audits, we have a settlement rate that runs about 90%, and even for the 10% who do not settle, the vast majority of those businesses, if they lose— some of them do win upon appeal— but if they lose, they generally pay. So we do not have an issue with unpaid audits. Got it. There is an issue with unpaid fines and fees, and there are, as I was discussing with the chair, there can be business tax warrants that are the results of penalty and interest bills that are not audits, right?

Speaker F (05:12:41)

They are smaller bills, and I just want to make sure that, that we're being clear about that, that our audit program is collecting the assessments that it is generating. No, that's true. I was thinking about the other categories. Yes, I'm very clear on that. Yes. And then just one other question would be, are there any new needs, and you may not be able to say this, requested that you need that are not in the budget that OMB might include? Obviously you don't want to upset OMB, but nobody does. We never want to do that. No.

Committee Counsel (05:13:19)

But are there some other new needs? Because obviously you are, you know, also a revenue-generating agency.

Speaker F (05:13:25)

Agency. Right. There are some new needs proposals that we are still developing with OMB. We're having conversations with them. Okay.

Committee Counsel (05:13:30)

And my other question, the same old AI question, are there ways in the AI could be of assistance at the Department of Finance, or is it just something that's too new and too complicated? I think the— it's both of those things. So AI is field. Yeah. And there are all sorts of new tools that are being offered to us, and I think we need to carefully assess each one. We need to make sure that they— that we control them. We need to make sure that they are serving the customers the way that we want them to be served. But we are looking at some of them.

Speaker F (05:14:15)

So, for example, there are tools that would allow us to to take payments over the phone with a voice bot rather than having a person do it. Like every damn hotel you call. Yes. I thought I was talking to a person the other day. Yes. I kept saying, excuse me, what's the information? And they kept saying the same thing over and over again.

Committee Counsel (05:14:36)

I went, oh shit, I am not talking to a person. Go ahead. Yes. The same thing. Well, we don't want to do that to you or to our customers, so that, that's why it's something that we have to do very deliberately. We think that this function works well, and we would want to limit the, the, the bot to the people who actually want to pay. What it's important, we want to encourage those payments, we want them in right away, we don't want them waiting waiting, but then we don't think that the technology is there for the other calls.

Speaker F (05:15:15)

We're hoping by handling those calls, we can reduce wait times for all the other customers who are calling with questions that they want answered before they might want to make a payment.

Chair Linda Lee (05:15:24)

All right. Thank you. I must admit, that damn thing got me a hotel room, though. Thank you. It's crazy, because with the A&Tech, it's almost like By the time you assess to see if it's good, it's already old. You know, I mean, that's how quickly things are changing right now with AI. It's kind of crazy.

Speaker D (05:15:39)

Okay, sorry. So let me go ahead to Councilmember Wong, and then after that, Councilmember Maloney. Okay. Thank you, Chair. Thank you, Commissioner, for coming today. I have an issue in my district concerning about a sewer project in Middle Village, 80th Street. My office has recently been contacted by homeowners on the 80th Street in Middle Village, who suddenly saw thousands of dollars in additional charges appear on their property tax statements that's tied to sidewalk work that the city performed doing sewer and utility work in that area. These residents have already lived through years of disruptions, street street closures from infrastructure projects there, including the reconstruction of the street several years ago. And right now, about 35 properties that contacted my office are facing roughly $80,000 in combined charges that are currently reviewing— that we are currently reviewing with DOT and DDC to determine whether they were improperly assessed. This is on top of the actual property tax bills. And I'll be sending you a letter to your office later today asking that the Department of Finance place a hold on any penalties, interests, or nonpayment fees for these properties while we work on the relevant agencies to resolve the issue.

Committee Counsel (05:17:13)

My question is, would the Department of Finance be willing to work work with our office to pause these penalties while this matter is under review so residents aren't unfairly penalized while the city sorts out what happened. So I look forward to getting your letter, Councilmember.

Chair Linda Lee (05:17:34)

I can't answer that directly at this time, only to say that we will reach out to our sister agencies and we will make sure there's coordinated city response to the issue. Thank you. Thank you. You're welcome. Okay, Councilmember Maloney. Thank you so much for your testimony. I wanted to go back to technology investments, which it sounds like you're making, and the plan states that the Finance Information Technology Division budget is going to increase by $7.9 million. Compared to the year prior. I'm wondering if you had more information on a breakdown of the major projects, the systems driving the increase, and how the funding is going to be allocated to various initiatives.

Louisa Chaffee - IBO Director (05:18:20)

Yes, Deputy Commissioner James will address that. So there's two programs that we already have. It's one for our business tax system, and the other one is for our property tax system.

Chair Linda Lee (05:18:31)

And all we're doing is recognizing the base increase funding for those programs in the out years. Is a percentage of that budget going towards some of exploring some of the AI tech that we were talking about or any advancements in that regard?

Public Advocate Jumaane Williams (05:18:47)

So that $7 million is to support the existing programs that we have, the systems.

Chair Linda Lee (05:18:54)

We will be exploring all sorts of technology as part of our efficiency savings initiative.

Public Advocate Jumaane Williams (05:19:00)

And from those investments, what outcomes do you expect, whether it's increasing, improving tax collection rates, better processing times, anything like that? So our system currently works. That's where we collect most of our revenues, our business tax and our property tax system.

Committee Counsel (05:19:12)

This is just, again, recognizing it's a contract and we have to pay the vendor and we're just baselining the funding for the contract. Okay. I would add that these contracts allow us to make modifications to the system based on changing events. So for example, the Deputy Commissioner mentioned our property tax computer system. If any comprehensive property tax reform is passed, we're going to have to make changes to that system to make sure that we adapt to the new law. So as part of the allocations, we're preparing for those. Changes that may come? Well, we're dealing with changes all the time. Changes are being made at the state level regarding certain exemption programs. For example, we recently did the change relating to the expansion of the Cold War veterans exemption. So the category was expanded, and we had to make sure that our system would be be able to handle applications and to be able to distinguish those applications from the existing applications.

Public Advocate Jumaane Williams (05:20:32)

Thank you. Okay, and Councilmember Alderbolg?

Louisa Chaffee - IBO Director (05:20:35)

Yeah, I just have a question about, um, about hiring. You said that you are— top priority for hiring is auditors. Yes. And, uh, what But what are the issues that are, you know, keeping auditors from taking the jobs?

Chair Linda Lee (05:20:56)

And clearly you have issues with retention.

Committee Counsel (05:21:04)

Your auditors are going to work elsewhere. What strategies do you have in mind to recruit and retain auditors? Yes. I should add to my earlier remarks that we do a lot of outreach with local colleges to help with our recruitment, but then specifically with hiring, we are hiring through the city's civil service list.

Louisa Chaffee - IBO Director (05:21:34)

There currently is a list for city tax auditor, and we are moving through it.

Chair Linda Lee (05:21:42)

And for the Office of Deed Fraud Prevention, what's the staffing?

Committee Counsel (05:21:48)

I mean, you're going to need additional staff for that office, or are you moving staff around? We will need additional staffing. There is— there are funds in the preliminary budget to support that. Deputy Commissioner James can provide details if you would like that. We— the exact positions have not yet been worked out.

Chair Linda Lee (05:22:13)

We plan to have more details shortly. The administration will be making an announcement regarding that office in the near future. Okay, thank you. Okay, great. And then just my final set of questions is just around the final assessment roll. So on January 15th, DOF published the fiscal 2027 tentative assessment roll with total citywide assessments coming in at about 2— sorry, $326 billion. Assessments will be finalized by DOF towards the end of May and usually total about 1 to 1.5% lower than the level in the tentative roll.. These assessments are used to determine the fiscal 2027 property tax levy and are therefore a critical part in determining the available revenues for fiscal '27's budget. Is there anything happening this year that would lead you to believe that the change in assessments between the tentative and final roll will differ from the typical 1 to 1.5% reduction? No. We believe that it will be within that range.

Committee Counsel (05:23:24)

Okay. And then do you have any sense of how the Class 3 assessments undertaken by the state will come in this year?

Chair Linda Lee (05:23:33)

We do not. The state does their own thing. We do not have insight into that. Okay. Because I know that prior years they've been coming in particularly strong.

Committee Counsel (05:23:42)

So is there anything to indicate, even though I know you don't know But is there anything to indicate that this year will be any different? We haven't received information one way or the other. What you're saying is true.

Chair Linda Lee (05:23:55)

Last year they came in strong. We have not received any evidence to indicate one way or the other for this year. Okay. Perfect. I think that's it for me. And I think for other members as well. So I just wanted to thank you for being here and just filling in obviously, because I know that you're Acting Commissioner. So I just want to thank you so much. And as well as— well, I know you were calling her Jackie, so I feel like I should call her Jackie— Deputy Commissioner and your team. So thank you so much for testifying and coming today. Thank you, Chair. Thank you. Oh, I think I have to gavel out.

Speaker F (05:24:36)

And that's it for today. Thank you. For today.

Speaker D (05:24:36)

Thank you.