Feds to City: Drop Dead (Again)

Four decades after Washington gave the thumbs-down to a city bailout, federal funding has diminished to a trickle. Now Bill de Blasio and mayors nationwide are taking matters into their own hands.

The steady decline of federal funding to urban America means cities have to fight for every dollar.

The steady decline of federal funding to urban America means cities have to fight for every dollar. (Illustration by Mark Hammermeister for Observer)

The mayor and the senator looked somber.

They stood in front of the wood paneling of the One Police Plaza briefing room, where NYPD brass answer questions from the city’s press corps about shootings and stabbings, threats and tragedies. Other serious men in suits, the leaders of the city’s first responders, flanked them. But the threat Mayor Bill de Blasio and Sen. Charles Schumer assembled those officials to talk about didn’t come from a guerrilla or a gunman or a gang. 

“In the past, we’ve been able to rely on the federal government to be a true partner and a strong partner,” Mr. de Blasio said. “But we’re troubled by what we see in this new budget proposal.”

President Barack Obama’s administration had proposed to slash urban anti-terrorism funding in half, a move that unsettled Mr. de Blasio and Mr. Schumer—the senator himself said he was “shocked, disappointed, chagrined.” But it shouldn’t have surprised either of them.

The proposed terror funding cuts are just the latest slight by the federal government against New York City and urban America at large. Even as more and more Americans (62.7 percent in the last U.S. Census) call cities their home, the president, the Congress and the people who are trying to be the next president seem to be ignoring them, or worse, disparaging them—and that translates into stalled policy efforts and diminished funding for cities like this one that do the heavy financial lifting for the rest of the country.

And so, on an almost-spring day in Washington, Mr. de Blasio moved with the aggressive motorcade and long strides of a very important, very tall man on a mission.

He was in the nation’s capital to plead his constituents’ case: to first publicly, and then privately, press for Mr. Obama’s administration to abandon the terror cuts—and to ask for a little help bailing out a massive public hospital system for good measure.

Like the walk along Capitol Hill, the task was something of an uphill climb. But the mayor had hope.

“In the end, there is something traditional but very valuable about sitting in the room with someone who has the power to make the difference, making the case, making sure they understand the challenge and are registering the depth of it,” Mr. de Blasio told the Observer. He’d spent the day testifying before the House committee and holding private meetings with Homeland Security Secretary Jeh Johnson and Health and Human Services Secretary Sylvia Matthews Burwell.

“When you’re the mayor you don’t run from these problems,” said Mick Cornett, the Republican mayor of Oklahoma City.

A few weeks before Mr. de Blasio and Sen. Charles Schumer first rang alarm bells about the terror funding, they were prodding Congress for approval of a highway bill that contained more funding for mass transit—a bill that took 10 years to pass. Not long before that, they were pleading with lawmakers to pass the Zadroga Act, which provides health care for September 11 first responders—the same men and women Congress heralds every year in platitude-laden anniversary statements but whose health care is apparently too expensive for some people’s taste. And that’s to say nothing of the lack of action on more broadly urban issues: infrastructure, transportation, criminal justice reform, education funding and dealing with a broken immigration system.

Stepping up to fill the policy void have been cities, and their mayors.

“We are triaging all the time, trying our best to keep up—but it’s far from what it should be for a modern economic capital,” Mr. de Blasio told the Observer in an interview at his City Hall office last month. “We understand at this point in history we’re left on our own a lot of the time. And it simply means we can’t be what we could be…We’ve almost become used to the notion of the absence of the federal government on a whole host of these issues. But it doesn’t have to be this way.”

Mayor Bill de Blasio testifies to a House subcommittee in Washington.

Mayor Bill de Blasio testifies to a House subcommittee in Washington. (Photo: Andrew Propp for Observer)

And historically, it hasn’t. Mr. de Blasio names Fiorello La Guardia as his favorite mayor in the city’s history: “That’s his desk right there,” said Mr. de Blasio, proudly pointing to the spot where he sat during our interview. But it would be nearly impossible for any mayor today to achieve what La Guardia did, even though Mr. de Blasio presides over a booming city and La Guardia led a struggling one. The difference—what enabled the Little Flower to build public housing and create public radio and launch public health clinics—is federal help.

In 1978, just a few years after the Daily News famously summed up President Gerald Ford’s response to the city’s fiscal crisis as “drop dead,” 22.7 percent of New York’s budget came from federal aid, according to an analysis from Mr. de Blasio’s office. But that figure began to fall quickly in the trickle-down 1980s, landing at 11 percent by 1988. There have been periodic spikes—in the early aughts, in response to the September 11, 2001, terror attacks; in 2010, with the injection of federal stimulus dollars; in 2013, with money meant to reimburse the city for the cost of Hurricane Sandy. But overall, the trend is strikingly down: in 2015—when the city budget was $75 billion—the federal government only chipped in 8.9 percent. The city predicts that the figure will continue to fall in the out-years.

The city manages to work around the missing money “imperfectly,” Mr. de Blasio said with a resigned laugh as he waited in a basement hallway to meet with the city’s congressional delegation. “That’s the reality. We can in some cases find a way to be more efficient. In some cases we devote our own resources as best we can. But it’s never the same as having a federal partner.”

The analysis of federal aid in the city budget does not include money for independent authorities, like the ones that run the city’s public housing and public hospitals—which are also seeing less funding. New York City Housing Authority CEO Shola Olatoye said the city has lost more than $1 billion in federal funding since 2001.

“The sad shame is that the continued federal disinvestment has meant a steady and insidious decline of this precious asset,” Ms. Olatoye said at a New York Law School breakfast. “The result? Slow repairs, persistent repair challenges. The headlines. Trash. Really deplorable conditions in some of our communities.”

The city has devoted some of its own resources, as Mr. de Blasio said—it stopped charging NYCHA property taxes and for police protection, freeing up cash for repairs. Long-term, the administration has more controversial plans to become solvent: leasing the grassy open space outside housing projects to developers to build 17,000 new apartments.

But as Ms. Olatoye said, the consequences of disinvestment are still making headlines. Last week U.S. Attorney Preet Bharara demanded records about “unsafe and unhealthy” conditions in the city’s public housing—including records about elevated levels of lead in the blood of tenants, and whether the city may have lied in seeking federal reimbursements for repair work.

Mayor Bill de Blasio huddles with his counsel Maya Wiley before meeting with the city's Congressional delegation.

Mayor Bill de Blasio huddles with his counsel Maya Wiley before meeting with the city’s Congressional delegation. (Photo: Andrew Propp/Observer)

It’s not just a New York City problem. On the very day Mr. de Blasio went to Washington, the nation’s capital announced its Metro system was so outdated and dangerous it needed to be abruptly closed for 29 hours, a near-perfect distillation of the federal government’s dismal failure to invest in urban infrastructure.

“When you’re the mayor you don’t run from these problems,” said Mick Cornett, the Republican mayor of Oklahoma City and the incoming president of the U.S. Conference of Mayors. “These problems are part of your everyday experience, and the people who elected you are part of your everyday conversation. When you get in Washington and looking at big-picture problems like multibillion-dollar transportation bills, it gets lost.”

Mr. Cornett and Mr. de Blasio worked together on the massive transportation bill, which finally passed in December, as far back as last May. They held a press conference together just a few hours after yet another example of its sad state—the derailment of Amtrak Train 188, en route from Washington to New York and carrying 243 people (including this reporter), in a fatal crash that killed eight.

“Washington is such a partisan city that if the Republican mayor can show up with the Democratic mayor, I think it helps a little bit,” Mr. Cornett said.

Mr. de Blasio smiled at the mention of his Oklahoma City counterpart’s name, saying they “teamed up really well.”

“Look, mayors made an impact on the highway bill,” Mr. de Blasio said. “It took a lot of different pushes and pulls. We ultimately got to a good place—not perfect.”

“I see some coalitions starting to form that could break this logjam,” he added. “That gives me a little bit of hope.”

First responders push for the passage of the Zadroga Act.

First responders push for the passage of the Zadroga Act. (Photo by Chip Somodevilla for Getty Images)

And he’ll need it. In January, the middle of the city’s fiscal year, Mr. de Blasio had to hastily allocate $337 million to the city’s public hospitals—which are run by an independent corporation recently rebranded as NYC Health + Hospitals—just to keep facilities like Bellevue open. The cause of the shortfall, according to the city, is a reduction in federal reimbursements for uninsured patients, a result of the Affordable Care Act: The legislation assumes that more people will have insurance, and they do—but undocumented immigrants who aren’t eligible are still heading into the city’s public hospitals for care.

The terror funding cuts are a more high-profile and explicit threat to the city, though given the reluctance of Republicans to cut anti-terror money, those cuts may not actually happen. But cash-strapped public hospitals are in many ways a more pernicious problem, and one Mr. de Blasio discussed with Health Secretary Burwell last week. He even brought backup: HHC President Dr. Ram Raju and new Deputy Mayor for Health and Human Services Herminia Palacio also attended the meeting.

“And she was very receptive and fully understands how many people our public hospital system serves and how it’s a priority for the federal government to work with us to try to resolve these issues,” Mr. de Blasio said. Still, he tempered expectations. “Nothing final has been determined—I want to be very clear,” he said. “We have more work to do.”

Mayor Bill de Blasio and Homeland Security Secretary Jeh Johnson emerge from a closed-door meeting in Washington.

Mayor Bill de Blasio and Homeland Security Secretary Jeh Johnson emerge from a closed-door meeting in Washington. (Photo: Andrew Propp for Observer)

It all begs the question: Should cities have to work so hard to get their fair share from the federal government? In 2013, New York City residents paid $57.3 billion in federal income tax—and that doesn’t include all the taxes the feds took from New York City business or non-residents who work here. The city received far less back in federal funds.

The question in New York parlance: What gives?

“We saw it with Zadroga,” said Congressman Daniel Donovan, the only Republican who represents New York City and as such serves as an emissary for its issues to the GOP members who run the House. “There are people down here—no one believed that the rescue workers or recovery workers didn’t deserve health care. There were people here who believed that was a New York problem and New York should pay for it. There are people here who believe that New York should be funding a lot of what our nation’s expenses are, because of the amount of money that’s in New York and the tax base and Wall Street and everything else.”

Richard Alles, a 9/11 first responder from Queens who lobbied Congress on Zadroga, said the experience was “humiliating.” Mr. Alles, who is an officer in the Uniformed Fire Officers Association, had to ask fellow first responders, men and women who were dying of cancer, to go to Washington to tell their stories. They always went.

“They weren’t afraid of dying. They didn’t regret what they had done for their country,” Mr. Alles said. “All they cared about was that their family was taken care of and that they were doing the right thing for first responders in the future.”

The first time Zadroga was authorized, Mr. Alles attributed some of the reluctance to questions about the science. But by last year’s fight, it was clear the cancers were linked to 9/11. “I have to chalk it up to it still being a New York issue,” he conceded.

“The one thing that is consistent in Congress is that there is never enough money,” Congresswoman Carolyn Maloney said. “So a lot of our fights are really fights over money.”

It’s perhaps the same attitude that made it easy for middle-of-the-country representatives who have their hand out for federal help after every tornado to vote against giving New York and nearby states $60 billion after Sandy. (A great deal of that money is still being used, including $5 billion to repair the L train tunnel damaged by the storm.)

Staten Island Congressman Daniel Donovan, who chaired the terrorism funding hearing.

Staten Island Congressman Daniel Donovan, who chaired the terrorism funding hearing. Andrew Propp/Observer

“I found it ironic people like Lindsey Graham, who were so adamantly opposed to the Sandy support, immediately rushed to the federal government for help after the rains came down and the flood came down in his state,” said James Oddo, the Republican borough president of Sandy-devastated Staten Island. “There was a lot of hypocrisy involved. And when it’s your community and your constituents who are desperately hurting, you do what we tried to do—and that’s move heaven and earth to try to give them some relief.”

Ask Congresswoman Carolyn Maloney about convincing Congress to fund city priorities and she’ll rattle off $6 billion worth of infrastructure projects in her Upper East Side district, talking about securing the funds almost as if it were a competitive sport.

The most visible endeavor is the Second Avenue subway, an idea that’s been kicked around and under-funded since the 1920s. After $1.2 billion from the federal government and a hefty dose of cash from the state—which runs the MTA, and like the city winds up carrying some of the load when the federal government doesn’t—the first leg of the line is expected to open later this year. Ms. Maloney is so proud of the project she held her re-election campaign kick-off beside it on Saturday.

“There’s a lot to be said about quality of life. Sometimes, the Lexington Avenue subway is so crowded I say, ‘I’ll walk 20 blocks.’ I can’t get on it,” she said. “And that just starts your day off in a bad way.”

Ms. Maloney said there is some hostility toward New York from her colleagues, some of whom are upset their states have not bounced back from the recession as fast as New York. But she reminds them New York is a “donor state,” giving the federal government more than it receives back.

“The one thing that is consistent in Congress is that there is never enough money,” she said. “So a lot of our fights are really fights over money.”

“Nobody cries salty tears over any dollars denied to New York,” David Birdsell said.

The myopia extends across party lines. President Obama may not really intend to cut homeland security funding, but that didn’t stop his administration from ripping into Mr. Schumer as he led the push to restore the money. White House spokesman Josh Earnest went after him for opposing Mr. Obama’s Iran deal, saying he lacked credibility on terror issues, was wrong on that deal and was “wrong this time, too.”

“He [Mr. Schumer] was saying the truth that needed to be said: that no budget should be cutting back on anti-terror funds for New York City when we’re the top terror target, where in fact the challenge is becoming greater than ever—and we’re investing a huge amount of our own money, a vast majority of which will never get reimbursed by Washington,” Mr. de Blasio told the Observer, in a rare knock on the Democratic president’s administration.

A White House official told the Observer the administration has “no higher priority than keeping the American people safe.” But the official said New York has not spent the money it already has (city officials say all of it is allocated, but that it takes time to bid out and build equipment or train employees). The White House also pointed to $100 million in new grants for anti-terror—but those will be awarded to cities through a competition.

“We’re sort of [in] the worst of all possible positions,” said David Birdsell, dean of Baruch College’s public affairs school. “We’re the wealthiest and most prominent wealth-generating location in the United States, so nobody feels any sympathy—and they love to see us taken down a peg. You know, the largest population, the glossiest museums. So nobody cries salty tears over any dollars denied to New York. But it’s also, it’s a little popular to be able to take a punch at New York.”

There was a notable thaw after 9/11, but every New Yorker has had the experience of telling someone where they’re from, only to be met with disbelief: How can you live there? “Can you imagine any other place—can you imagine saying to somebody from Pawtucket, R.I.,” Mr. Birdsell feigned disgust, “Pawtucket?

Even presidential candidates do it, without any fear that generalizing about 8.1 million people might hurt them in the polls. U.S. Sen. Ted Cruz, in search of the Republican presidential nomination, sneered about Donald Trump’s “New York values.” The line conjured up Sarah Palin’s 2008 assertion that “real America” is found in small towns.

Does that rhetoric help lead to utter disregard toward urban policy in Washington? “It certainly doesn’t help,” Mr. de Blasio said.

Indeed, beyond rhetorical bomb-throwing aimed at the city, noted Mr. Birdsell,“This campaign is alas not unique, but remarkable, in the complete absence of urban issues in any of the candidates’ platforms.”

Work being done at the future 72nd Street Station of Second Avenue Subway.

Work being done at the future 72nd Street Station of Second Avenue Subway. (Photo: Patrick Cashin for Metropolitan Transportation Authority)

There are a handful of cold political truths about why these issues get so little attention in presidential races. Democrats already know they will win cities, Republicans know they will lose them, and then there are the states that shape the early narrative of the presidential race—Iowa and New Hampshire—which are not exactly known for their bustling and diverse metropolises.

“I think this is par for the course in a presidential campaign,” Bruce Katz of the Brookings Institution said in an interview. “Campaigns are mostly horse-race driven. The focus is on politics and personality.”

The real test, he said, comes later—in the transition and the early days of an administration, when a president has a short window of time to get things done while riding on the goodwill of his or her election. It’s still hard to get anything done, particularly in the Senate, where, say, Montana has as many votes as New York.

“It’s a completely different century,” Mr. Katz said. “The conversation about the federal government feels at times like a 1960s conversation.”

Mr. Obama introduced an Office of Urban Affairs in the early days of his administration, appointing as its head a New Yorker, former Bronx Borough President Adolfo Carrión, but little came of it. Still, Mr. Katz said Mr. Obama did have an urban agenda, if in a less top-down way than in the past—putting money into planning, backing good ideas that emerged from cities with “catalytic resources that spur innovation.”

“I think the message to cities is, ‘Look, you’re not going to get a lot of new initiatives.’ They’re not going to ride in on a horse and save the day here,” Mr. Katz said. “So you’ve got to basically figure out yourself: a) what are your priorities and b) how do you take the resources you’re getting and leverage them up to the maximum percent?”

And in a time of “federal drift and dysfunction,” as Mr. Katz put it, it’s up to not just mayors but also private and civic groups, universities and hospitals, pension and sovereign funds, to “get really disciplined about how they’re trying to basically play the hand they’re dealt.” In that way, a city like New York will fare better than cities with weak economies. 

“It’s a completely different century,” Mr. Katz said. “The conversation about the federal government feels at times like a 1960s conversation.”

Ironically, back then, the reason the federal government was pumping money into New York and other cities was because of their decay. In that way, the city has been a victim of its own success.

“This is a very different discussion than it was, you know, in the heyday of government investment, for example Dwight Eisenhower,” Mr. de Blasio concurred. “A Republican president, former general, led the charge on a federal government that invested heavily. You know, we got the interstate highway system because of Dwight Eisenhower. He very much believed in a muscular role for government investing to build our economy. But that was at a point when cities were, as you note, cities were actually in decline in many ways, in the ’50s going into the ’60s.”

Now, Mr. de Blasio said, we’re in a clear trend of cities growing and leading the economy. And that, he said, is not a reason to back away: it’s a reason to invest once again.

“You’d think the Republicans in Washington would be clamoring for more support for the cities and more opportunities to invest because it will spur on the private sector economy,” he said. “There’s a real contradiction, those who profess a belief in the free enterprise system but aren’t willing to make the government investments that would actually help to build jobs where they will and can be built—which is our cities.” 

Feds to City: Drop Dead (Again)