New York City’s Borrowing Plan Fails to Gain Traction Jimmy Vielkind and Katie Honan 6-7 minutes New York state lawmakers have given little support to New York City’s plans to borrow up to $7 billion to fill revenue gaps, hindering Mayor Bill de Blasio’s efforts to reach a budget deal by the end of the month. The state Assembly and Senate convened at the Capitol last week to take up a series of bills that changed police practices as well as lower-profile measures requested by local governments around the state. But borrowing legislation sought by Mr. de Blasio was never brought to a floor vote. State Sen. Liz Krueger, a Democrat who sponsored the bill at the mayor’s request, said it was being reworked. Ms. Krueger said she didn’t expect any voting would take place until the state’s primary elections on June 23. “I don’t know that it’s dead,” Ms. Krueger said in an interview last week. But she laid out long odds for passing the borrowing legislation, saying leaders of the New York City Council as well as City Comptroller Scott Stringer would need to support the borrowing plan. Neither has happened. An aide to City Council Speaker Corey Johnson said the body wasn’t consulted before Mr. de Blasio asked state lawmakers for the borrowing authorization. “Borrowing has to be a last resort, and it cannot and should not replace the work this administration has to do in identifying savings in city agencies,” Mr. Johnson, a Democrat, said. Mr. Stringer urged “extreme caution” in borrowing and estimated that, if the $7 billion were repaid over 20 years, it could require $556 million of annual debt service. Mr. de Blasio asked state lawmakers to approve the borrowing authorization last month. According to preliminary estimates, the city faces a $9 billion gap in its budget over the next two fiscal years. The deficit is largely from the new coronavirus pandemic, which devastated the economy. The city has more than 17,000 confirmed virus-related deaths. It also lost some 885,000 private-sector jobs in April, its largest decline in history, according to the state Department of Labor. Both Congress and the Federal Reserve are pumping trillions of dollars into the economy to fight the economic damage caused by the coronavirus. WSJ explains where all that stimulus money is coming from. Photo Illustration: Carlos Waters / WSJ The Citizens Budget Commission, a nonpartisan fiscal watchdog, has recommended against enacting Mr. de Blasio’s proposal. In a report released earlier this month, the organization suggested belt-tightening measures as an alternative, including shrinking the city’s workforce through attrition, selling off some city assets and putting in place a small and temporary increase in taxes. Mr. de Blasio said he didn’t agree with the commission’s suggestions, calling them too austere. “I come from an ideology that believes in the power of government investment, but I also believe in balancing budgets,” he said at a press conference last week. A spokesman for Gov. Andrew Cuomo, who also raised concerns about the borrowing, didn’t return an email seeking comment on the legislation’s current status. Mr. de Blasio and members of the council are currently deliberating over the $89.3 billion executive budget presented by the mayor in April. They have until June 30 to reach a deal. “We need borrowing authority, just like after 9/11, to limit any further damage this virus could have on our communities and our economic recovery,” Laura Feyer, a spokeswoman for Mr. de Blasio, said. “If borrowing is not passed then the cuts will be more severe, because of the need for a balanced budget.” New York City was last granted borrowing authority after the Sept. 11, 2001 attacks and used $1.5 billion of the authority to help close a more than $6 billion gap over two fiscal years, according to Ms. Feyer. At the time, the budget was $41.4 billion. Budget cuts could be devastating as the need for social services is growing due to Covid-19, city officials and social-service providers said. Jennifer Jones Austin, chief executive officer and executive director of the social-services organization Federation of Protestant Welfare Agencies, said her 170 agencies have seen increased demand for basic services such as food support. Ms. Jones Austin, who is also the chairwoman of the city’s Board of Correction, said the city has borrowed in the past and managed its debt and thinks this is the relief it needs. Without the borrowing power, “there’s a good chance that critical services and supports for everybody from young children to others will have to be cut,” she said. Leaders of the state Assembly and Senate haven’t announced when or if they will return to the Capitol for another lawmaking session this year. A spokesman for Senate Majority Leader Andrea Stewart-Cousins, a Democrat from Yonkers, declined to comment on the borrowing bill. A spokesman for Assembly Speaker Carl Heastie, a Democrat from the Bronx, said he was continuing to monitor the situation and would act responsibly. Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com and Katie Honan at Katie.Honan@wsj.com Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved.