THREAD: angry and confused about NYC's latest budget, one that didn't #DefundNYPD? Here's how the NYC's budget process works

Tl;dr: it's long, complicated, and not always transparent--but the process is *supposed* to let feedback "trickle up" from the public into the budget

Let's talk about what the budget actually is first, and then we'll talk about the timeline and process of how the budget is adopted.

Technically, NYC's budget consists of 3 different items: the expense budget, the capital budget, & the revenue budget.

First, the expense budget consists of agency operating budgets (NYPD, NYPL, CCRB, TLC, DYCD, DOB, electeds' office budgets, etc), programmatic spending, public employee salaries/benefits, etc. The expense budget is what's commonly known as "the budget" (see Charter §100-111)

Here's an example from the NYPL budget of what the expense budget looks like. The expense budget is separated into "units of appropriation," each of which are a program or a grouping of similar programs. The city is required to provide details about each unit, like you see here

Source: https://www1.nyc.gov/assets/omb/downloads/pdf/erc4-20.pdf

Expense budget items are also separated into units "for personal services" and units "for other than personal services."

Personal services = public employee salaries/benefits. Other personal services = not personal services.

The example in the previous tweet also shows 2 "lump sum" items, which are not allocated to specific units/programs. That $$$ will actually be allocated by the agency itself to specific programs, with approval from OMB later in the fiscal year.

There's also a subset of the expense budget called the "contract budget," which is the portion of the expense budget consisting of "technical, consultant or personal services provided to the city through contracts." (§104)

Common examples of items in the contract budget are: IT services, office equipment, maintenance, security, cleaning, etc. Here's an example of the Department of Transportation's contract budget:

Another example: @kallos pointed out that NYPD's administrative budget contained $50M for "data processing equipment." That line item is in both the expense budget and the contract budget (I believe the contract budget actually lists $56M) https://twitter.com/kallos/status/1278748273885544448?s=20

And that's the expense budget!

The second "budget" NYC has is the capital budget, which funds long-term infrastructure like buildings, parks, sewers, property acquisition, bridges & tunnels, equipment procurement, etc. (Charter §210-224.3)

Capital budget items must cost at least $35,000 and have a "period of usefulness" of at least 5 years. The Charter also contains stringent and highly specific provisions about certain types of capital budget items.

For instance, publicly-accessible public buildings must contain works of art.

For the purposes of this provision, it's unclear to me if @JustinBrannan and @HelenRosenthal's Twitter feeds count as works of art installed in City Hall or not

Here's an example of a capital budget item from the Health & Hospital Corporation's FY2020 budget. You'll note that the budget item is for construction and that there are specific budget amounts allocated by month

Source: https://www1.nyc.gov/assets/omb/downloads/pdf/ccp-10-19b.pdf

Here's another capital budget item example, this time from CUNY. The item is for "equipment & furniture" procurement (not construction), which I believe is why there are no specific $$$ amounts allocated by month here

Source (same as above): https://www1.nyc.gov/assets/omb/downloads/pdf/ccp-10-19b.pdf

Finally, the last of NYC's three "budgets" is the revenue budget, which is essentially how the City raises money. Mostly this is taxes but also includes various other services and fees.

Here's an example of the @NYCCOIB's revenue budget in FY2020. Looks like they brought in $165,000 in FY2020 (though were only expected to generate $124,000 of revenue that year)

I'll refrain from discussing the revenue budget too much here, could easily be a separate thread. So that's what "the budget" *is*.

A few fun facts about the budget, then we'll talk about the budget process and how the NYC government creates/adopts the budget

For context, here is broadly how different Mayoral administrations have allocated the (expense) budget. Notice health/social services share of the budget declined in past 20 years, education % flat, pensions % is up

Source: https://council.nyc.gov/budget/fy18-22_financial_plan_overview/

Also, the "public safety and justice" % of the budget declines, but only because Giuliani went wild with it. It's declined back to about what it was roughly pre-Giuliani.

Another interesting fact about the budget is that while NYC is spending more, most $$$ is coming from NYC's own revenues / tax base. State & federal funding hasn't been generous as our expenses have gone up. Legend in next tweet

Source (same as above): https://council.nyc.gov/budget/fy18-22_financial_plan_overview/

Legend in the graph above: blue (top line) is funding from NYC itself, purple (middle line) is state funding, green (bottom line) is federal funding.

Now, the fun part: how is NYC's budget created/adopted? It's a hideously complicated process that involves LITERALLY EVERY stakeholder in the city including the public, every community board & borough board, every Borough President, the comptroller, the Mayor, the City Council...

...every executive agency head esp the OMB, every public commission/board, and *supposedly* also the Public Advocate.

Although personally I don't really think the Charter actually grants the PA any authority over the budget. https://twitter.com/NYDailyNews/status/1277996531837272067?s=20

The budget process runs on a fiscal year ("FY") cycle, which is NOT the same as the calendar year.

NYC's fiscal year runs from July 1 - June 30, so we're now in FY2021. FY2020 was July 1, 2019 - June 30, 2020. You can think of this roughly like school years.

AFAIK, most of NYC government is aligned on the FY timeline. Orgs tend to take a break at the beginning of the FY / summer. For example, City Council is required to hold 2 meetings per month, except for in July / August (Charter §42). Community Boards also don't meet those months

In fact, July & August are the two months of the year where there are essentially no budget-related occurrences relating to the current FY's budget (though there are some things happening with the last FY's budget. We'll talk about that later).

In September, Community Boards across NYC begin their first meetings of the year; the budget process usually kicks off shortly thereafter.

The first public event around the *next* fiscal year's budget is Community Board hearings, which should be held in September/October or so. Specifically, CBs submit lists of budget priorities in their community districts to NYC agencies for the next fiscal year

The deadline to submit priorities is 30 days before the day agencies must submit to the Mayor expense & capital budget estimates for the next 4 FYs, and revenue budget estimates for the next FY. The specific deadline is set by the Mayor and not codified in the charter.

It's also not codified into the Charter exactly how CBs decide what their priorities are (beyond the one public hearing). At my local CB last year, around 25 folks showed up for the hearing, mostly CB members. There was generally consensus/a vote around what to include

It's generally a friendly and transparent process in Manhattan CB9, but because CBs vary wildly across the city, your local CB may not be as friendly about the process, as open to public feedback, or as good about publicizing the meetings

Each agency is then required to respond to the CB's budget priorities. Many of the responses are generally a polite way of saying "sorry, we can't pay for that next year, maybe later"

Example: https://www.columbiaspectator.com/news/2020/02/25/of-community-board-9s-80-financial-priorities-only-two-were-given-money-from-the-city/

Here's the GIANT PDF of budget priorities that were submitted to the City by CBs late last year. NYC responded earlier in 2020, and you can see each request and the agency response. Items are listed for both expense & capital budgets in order of priority.

https://www1.nyc.gov/assets/manhattancb1/downloads/pdf/budget-priorities/Register%20of%20Community%20Board%20Budget%20Requests%20for%20the%20FY%202021%20Budget.pdf

For instance, here are Bronx CB3's top 3 budget requests for FY2020. You can see the agency responses were all some variation of "we have no $$$ for this right now"

Sometimes, CB requests *do* make it into agency budgets, though! For instance, also from Bronx CB3's expense requests

By the way, this budget process is one important way of making sure your voice is heard, so...show up to your CB budget meetings (and other meetings)

In December: while all of that is happening with the CBs and agency estimates, the Comptroller is required to submit to the Mayor by 12/1 a report about capital spending/obligations for the *current* fiscal year + about the City's finance for capital projects in the next 4 FYs

By December 15, the Comptroller is supposed to report to City Council about the NYC financial plan & about the City's finances

Then in January of the next fiscal year, the budget process really begins in earnest. By January 16 (coincidentally also my birthday), the Mayor must submit a preliminary budget to the Council, BPs, Comptroller, City Planning Commission, Dept for City Planning, & every CB/BB.

You can think of this preliminary budget as a "first draft" of the budget for next year's budget. Over the next 6 months, various agents make comments on the budget, and it's revised over and over before being finally adopted by the Council in June.

By 2/1, the Independent Budget Office releases a report of expected revenues and expenditures for the next FY. You can find an archive of all these IBO publications here: https://www.ibo.nyc.ny.us/publicationsAnnuals.html#fy20

By 2/15, CBs are supposed to submit a statement to the Mayor (and various other actors) about how they feel about the agency responses to their budget requests for the next Fiscal Year. By the same date, the Mayor must submit to the Council a report of tax benefits in NYC

By 2/25, each Borough Board then submits a statement about budget priorities to the Mayor, Council, & OMB Director

By this time, the Mayor should already be preparing the executive budget, which is final draft of the preliminary budget that's submitted to the City Council for review in April.

In fact, the Mayor is *required* by the charter to consult with Borough Presidents when drafting the executive budget. And by 3/10, BPs submit recommended edits of the preliminary budget for the Mayor,

By 3/10, the Council is also supposed to submit to the Mayor an estimate of its operating expenses in the next Fiscal Year. This estimate is the first required budget-related action of the Council in the current FY (in terms of drafting the budget for the next FY)

By 3/15, the IBO releases a report analyzing the preliminary budget, which if you'll remember was released by January 16. Here's the analysis from earlier this year of the preliminary budget (which was the earlier version of the budget that was passed): https://www.ibo.nyc.ny.us/publicationsAnnualsPrelimBudget2020.html

Then, before 3/25, the City Council must hold hearings and submit a statement to the Mayor recommending changes to the preliminary budget. All of this feedback is then supposedly incorporated into the executive budget, which the Mayor submits to the Council by 4/26.

Along with the executive budget, the Mayor also must submit a "budget statement," which is essentially a giant report summarizing where the $$$ in the exec budget is coming from and going + details assumptions made during budget calculations.

For instance, here's this year's budget message (it's 97 pages long):
Here's this year's: https://www1.nyc.gov/assets/omb/downloads/pdf/mm4-20.pdf?te=1&nl=new-york-today&emc=edit_ur_20200417

By the way, I forgot to mention that BPs actually do get some control over the budget. During the consultation process with the Mayor in March, BPs essentially get to unilaterally allocate a small portion of the budget.

5% of the discretionary increases in the expense budget and 5% of the capital budget allocations (minus lump sum appropriations) are split between the 5 BPs, who then get to decide where to allocate that $$$ in their boroughs.

The estimated amounts each BP receives is communicated to each BP along with the preliminary budget, and the BP's allocations are included "without modification" in the exec budget (§102d, §211d - capital BP allocations are a little messier, but this is essentially the process)

After the exec budget is submitted in April, feedback is collected by various governmental orgs about the budget. Essentially, everything that happened for the preliminary budget then happens again with the exec budget.

By 5/6, BPs submit a comment to the Mayor on the exec budget. By 5/15, the IBO releases a report on the exec budget. Between 5/6 - 5/25, the Council holds hearings on the exec budget.

Here's the details from this year's Council hearing on our current budget, which was held on 5/21. I believe it was the only hearing on the FY2021 budget this year

https://legistar.council.nyc.gov/MeetingDetail.aspx?ID=783214&GUID=9DB77606-5897-46B6-8CC7-1B7171E2669C&Options=info|&Search=

Of course, the public, CB/BB members, and lobbyists/special interests are commenting and lobbying BPs, Council, Mayor, etc. on specific line items they want to save/delete.

By June 5, the Council is *supposed* to have adopted the budget for the next fiscal year. As we saw this year, it doesn't always work out that way (if there's no budget by 6/5, appropriations are automatically renewed through the end of the month)

When the Council adopts a budget, it's automatically approved and the Mayor doesn't need to sign it EXCEPT for any changes that are made to the Executive Budget (which if you'll remember was written by the Mayor)

Any changes made to the exec budget are subject to Mayoral veto, which the Mayor has 5 days to exercise after the Council adopts the budget. If there is a veto, the Council has another 10 days after that to override the veto w/ a 2/3 majority

This high(ish) threshold was likely the holdup this year that prevent the budget from being...better...than it actually ended up. That, plus the fact that our Mayor passionately defended NYPD funding.

Once the budget passes, then various reports are put out in the first couple months of the *next* fiscal year about the last year's budget, etc (so this is in July / August)

Alright, so what happens if the budget doesn't pass? If you'll remember from the budget hearing a few days ago on 6/30, some CMs and commentators referenced the "State Financial Control Board," which is a relic from the 1970s/80s

Back in the 1970s, NYC was in the unenviable state of being in a fiscal crisis and close to bankruptcy (due to suburban/white flight and a bunch of other factors). There's a famous headline from that time https://www.nydailynews.com/opinion/not-fiscal-crisis-70s-haunts-present-article-1.3082369

Then, in 1975, the NYS legislature created the Board to basically run NYC's finances. In 1986, the Board relinquished control back to the City. However, it's still around and waiting to pounce on the City if NYC's finances are deemed to be in bad shape https://www.nytimes.com/1986/06/30/nyregion/financial-control-board-loses-most-of-it-s-control.html

I think what happens is that the Board reviews the City's finances each July, then "certifies" those finances to be in good shape (or not) based on factors like "is the budget balanced?" (Fun fact, NYC is required to balance its budget) Other factors here: http://www.fcb.state.ny.us/ 

(It also reviews the City's financial plan every 4 years)

If we the NYC budget ran large deficits, or if NYC like...didn't have a budget...I think the Board would have stepped in and managed the City's finances like it did from 1975-1986

So, that's everything I've got about the budget for now. Some useful resources belowL

The Budget Basics guide from the IBO is a great intro to the budget process: https://ibo.nyc.ny.us/budgetbasics.html

There's also this very useful glossary of budgetary/financial terms from NYC OMB, which is handy if you want to do any deep digging on the budget/Charter: http://www.nyc.gov/html/omb/downloads/pdf/glossary.pdf

And OMB has a list of publications about the budget, including this year's preliminary/exec budget: https://www1.nyc.gov/site/omb/publications/publications.page

Here's also NYC Council's budget page: https://council.nyc.gov/budget/ 

ALSO CITYWIDE PARTICIPATORY BUDGETING IS HAPPENING IN FY2021 (the next 12 mo). This was mandated by a 2018 Charter amendment and should be in development now, so look out for news about it in the upcoming months!