FY 2027 Executive Budget Hearing (Department of Finance & IBO)
Committee on Finance · June 9, 2026 · 1hr 34m
Source: https://hearinghearings.nyc/hearings/committee-on-finance-executive-budget-hearing-2026-06-09/

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Did sound tech stuff with my church back in the day. So fun. Are you guys ready?

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Hello, Commissioner Lee and Deputy Commissioner Young. Okay, sorry. Welcome to our third hearing of today. I am CM Linda Lee. To our familiar face, Commissioner Richard Lee and your team, thank you all for joining us today to answer our questions. As a reminder, my usual: before each section of the hearings, we are doing all-day public testimony tomorrow starting at 9:30, so make sure you sign up. Have folks sign up. Public testimony is all day tomorrow starting at 9:30 AM. So I think that is actually it on my part. I am just happy to see you here, and we have got a least cheering... no relation, brother from another mother. So I am very excited. Okay, sorry.

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I do. Deputy Commissioner Shea, I do. And Deputy Commissioner James, I do.

Okay. Good afternoon, Chair Lee, members of the Finance Committee, members of the City Council. My name is Richard Lee. I am the Commissioner of the New York City Department of Finance. Thank you for the opportunity to testify today on the Fiscal Year 2027 Executive Budget. To my left is Jacquelyn James, our Chief Financial Officer and Deputy Commissioner for Administration and Planning. To my right is Deputy Commissioner Shea. I am grateful for their leadership and their deep commitment to this agency.

This is my first opportunity to appear before you as Commissioner. I am honored to lead an agency that plays a central role in the life of the City. The Department of Finance collects the revenue that makes City government possible. We assess more than 1 million properties, administer tax benefits and relief programs, collect taxes and other charges, adjudicate parking summonses, record property documents and provide services that touch homeowners, renters, small businesses and many others. We collect more than $50 billion in taxes and other revenues, in Fiscal Year 2025 alone. Since joining, I have been struck by the expertise and dedication of the people who work here. I have also been clear with our agency staff about the values that I want to guide our work: fairness, customer service, clarity and accuracy. New Yorkers interact with us because they have an obligation, a question or a problem that they might find unpleasant. It is our duty to ensure that those interactions are as helpful and efficient as possible.

Since our preliminary budget testimony, the agency has advanced several important priorities for this administration. First, we completed a comprehensive review of the City's collection of debt. That includes unresolved violations issued by several agencies that have become judgments and have been referred to us for collection. Following that review, the City successfully recovered more than $9 million from Amazon for unpaid idling violations — an important example of what it means to enforce the City's laws fairly and effectively. Just as important, this review has given us a clear understanding of how we can strengthen collections going forward. This includes improving coordination across agencies, using data more efficiently and identifying cases where enforcement can produce meaningful results.

We will continue to build on this work, including an amnesty program in FY27 upon authorization by the Council. Second, the agency has identified and implemented both operational and tax expenditure savings totaling more than $22 million in the current fiscal year and $29 million in Fiscal Year 27. At a time of significant fiscal pressure, the agency remains focused on protecting the City's revenue base and ensuring that public dollars are used as intended. Third, we issued the final property tax roll, reflecting valuation of more than one million properties and supporting the City's single largest source of revenue.

This work is highly technical but underpins the property tax system and the services New Yorkers rely on every day. We have also supported several major administration priorities. Since Mayor Mamdani established the Mayor's Office of Deed Theft Protection, led by Peter White, the City's first office dedicated to coordinating prevention, outreach, enforcement and victim support related to deed theft, the new office will coordinate the work of the City Records Office, the Sheriff's Office and various other divisions, while also providing new services and resources to vulnerable homeowners. We look forward to continuing our partnership with City Hall, law enforcement, the courts, elected officials and community partners.

The administration has also brought on new leadership. Mark Ederer has been appointed to lead the Mayor's Office of Pension Investments. Mayor Mamdani has also appointed Edwin Raymond as the new Sheriff of New York City. The Sheriff's Office carries out critical civil and judicial enforcement responsibilities and we are grateful for Sheriff Raymond as he assumes leadership of the office.

Looking ahead, we have several priorities for the coming year. The first, as always, is the efficiency of our own operations. The FY27 Executive Budget reflects a slight change from the preliminary budget and reflects the savings referenced earlier. We are in the process of onboarding 50 auditors to strengthen tax enforcement and ensure that the City's laws are administered with fairness and accountability. An effective tax audit and enforcement division is central to our mission and this investment underscores the administration's commitment to efficient revenue collection.

As a result of this initiative, as well as better retention of existing auditors, the projection for audit revenue has been increased by $50 million for Fiscal Year 27. We will continue to work with the Council on the creation of the land bank and a new shared vision for property tax enforcement. As the Council knows, the Mayor paused the tax lien sale for FY26 to allow for a comprehensive review of next steps. That pause gives us an opportunity to think carefully about the tools the City should have to resolve delinquency, protect homeowners and support neighborhood stability. We will also take the lead implementing the proposed surcharge, which was included in the recently passed New York State budget, to close the City's budget gap while protecting core services.

And finally, we will continue to improve how we communicate with and serve New Yorkers. Whether someone is applying for a property tax exemption, making a payment, contesting a parking ticket, recording a deed or trying to resolve debt, they deserve a process that is clear, accurate, accessible and respectful. In closing, I want to thank the Council for your partnership and oversight. I know you share a commitment to administering the City's tax laws and revenue laws fairly, collecting what is owed, connecting New Yorkers to help when they need it and improving the experience of every New Yorker who comes to their City government for assistance. Thank you very much and I am happy to answer any questions that you might have.

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Great, great. I forgot to mention we have been joined by Deputy Speaker Williams, Whip Hanks, CM Brewer, CM Mealy and CM... sorry, I was getting a little teary-eyed hearing you testify. I am sorry, because I am very proud of you. I just want to say that again. So I am getting a little emotional. Sorry about that, but yes, very proud of you.

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Ha ha. Okay, property tax reform.

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With that, we will get into questions.

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Okay.

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Hmm. Oh boy. Okay. So property tax reform is something we have all talked about before. It has been promised by mayor after mayor but nothing has happened. Fundamentally, everyone believes that it needs to be reformed, and this obviously lies with your agency. You have a lot of the key data and expertise that will be required to develop a workable solution. A few months ago, this administration said it would form a plan that would be released within weeks. So I just wanted to know when you can tell us what it will look like.

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So Mayor Mamdani has been long clear about the importance of property tax reform and fixing the inequities in our system. That is why we are busy at work right now to craft a proposal that is going to be largely built off of the recommendations from the Advisory Commission on Property Tax Reform, which clearly lays out a lot of these structural reforms that are needed to make the system more equitable, less regressive and more transparent. We are looking at this from a holistic view — how the impacts of changes to one class of one type of property are going to impact other building types and property types in other classes. How, if we move co-ops and condos to a different system, that would impact small rentals, large rentals and commercial properties. So we are looking at this very holistically and we are hopefully going to be able to do this in the next State legislative session.

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In the next State session. Okay. That is consistent with what OMB had mentioned as well. And as we know, it definitely impacts the outer boroughs in certain parts. Deputy Speaker Williams talks about this a lot in Southeast Queens. So...

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Let me ask — do you believe that real tax reform can be done on the local level, or, I am assuming I know the answer, does it need State action? Because you have to wait till the next State session. So yes, we believe that the reforms — the necessary steps to get to the final and best state of reform — will require State legislative changes. Okay.

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We are holding you to that. Okay. So for savings — there are a number of savings that were taken as part of the directed savings plan from Executive Order 12, and this includes compliance savings, tax credit changes and a vacancy reduction. These all provide savings of $22 million in FY27. There is also savings for FY26. Can you please explain where the savings are coming from?

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Sure. So that reflects the department's 1.5% savings target related to the Chief Savings Officers' targets for FY26. A lot of it reflects the timing adjustments for when we were able to bring on new hires and implement some of the programs that were previously added. I will have our Chief Financial Officer Deputy Commissioner James maybe add a little bit.

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It had to do with some programs that we got funded for early in the beginning of the year and they did not get implemented until about six months later. So those were savings we were able to offer up to OMB.

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Okay. And there is a baseline reduction of 12 positions from the agency for savings starting in FY26. What are these positions and will this deal with public-facing services?

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So we worked closely with OMB to identify the vacancies that were reduced without impacting any operations on customer service or revenue collections. These are all non-revenue-generating managerial positions and we are working internally to absorb the workload. Okay.

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And we are also going to see $13 million per year in additional revenue from co-op and condo mailings. Can you please explain the source of the revenue and how it will impact co-op and condo residents?

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Yeah. So the co-op and condo abatement is limited to primary resident unit holders. Using the latest available income tax information, the agency's tax policy division identified a certain subset of the population of recipients that do not actually qualify as primary residents. So the agency sent out notices requesting proof of residency. The estimate that you mentioned — the $13 million — is the projected result of that notification, including anticipated owners who would work with us to re-establish or prove residency status as a result of those mailings. Through this initiative, we are ensuring that the part of the program is targeting the owners it is intended to assist.

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Okay. And then moving on to violations — we discussed violations and outstanding debt at length and we were happy to see one of your first actions as Commissioner was to announce a 30-day review to increase collections of outstanding debt. This has been an important issue for the Council, as you know, in recent years. In your announcement you identified that $573 million in outstanding debt is potentially collectible and an additional $744 million is deemed uncollectible, for a total outstanding debt. Is that correct?

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Yes, that is correct. This is as of the beginning of Fiscal Year 2026. Again, as you mentioned, we did identify $573 million in outstanding debt that is potentially collectible and an additional $744 million that is deemed uncollectible.

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And then how did you break down the categories of what is collectible or not collectible?

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So in some cases when debt is categorized as uncollectible, it is because the respondents cannot be sufficiently identified or verified, which limits our ability to pursue outreach or any other enforcement action. In other cases it might be because the business that received the violation might have gone bankrupt and no longer exists, or they might simply lack the financial ability to satisfy the outstanding debt. So those are largely the main reasons why we have an uncollectible category.

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Okay. And then your announcement of collections is just 12% of the collectible debt. So would you be willing to set targets for additional collections of outstanding debt in the fiscal year and what would those targets be?

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So the FY27 Executive Budget right now sets our collection target at about $70.1 million, with an additional $25 million in collections driven by the amnesty program, which was added at our preliminary budget. As we implement a lot of the findings that we have from our review, we are hoping to improve some of these collections. Should it be real in the middle of the year, we are happy to update you.

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Okay. And how much would you like to see collected in a year?

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Again, we are reviewing some of the processes internally to improve collections. One of those examples is how we collected the $9 million from Amazon. We had a direct approach — a case management approach of working directly with Amazon Logistics, walking them through the process and identifying ways to bring them into compliance. So initiating a lot of strategies like that, plus others across the board internally, we are hoping to better the collections. We are happy to update you as we go along throughout the fiscal year.

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Okay. And what was the rationale behind the 30-day review?

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So our teams internally collect outstanding debt all the time, every day.

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Right. That is what I was wondering. Your mission, Sheriff, on that — who oversees our collections divisions?

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The reason why we wanted to do a 30-day review is because we wanted to really encourage our entire agency — everyone who is impacted by collections and administration — to think creatively about what we can do to really enhance and improve collections and improve compliance across the board. So it is an internal sort of brainstorming on how we can better it.

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Okay. And then what were some of those findings in terms of how to improve?

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So some of the findings...

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...include things like better targeting and better classification, finding ways that we can tie and work with our sister agencies — like the other issuing agencies — to tie to other programs or licensing that they might have. It also includes looking at State legislation that will be needed in order to improve some of our collections. It is reaching out through our Executive Account unit to again do a closer touch with some of our highest-balance accounts and figure out ways that we can better target the timing of some of these violations. The largest collection of violations comes in within the first year of the issuance of the violations. So we are trying to better time it so that we can target them in the first year. Okay, perfect.

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Sorry, just to cover myself — we have been joined by CM... I was not sure if I mentioned you before.

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Okay. Airport revenue — the preliminary budget included just $100 million in rental revenue from the Port Authority for the City's airports in FY26. At the time, the Council believed that this was underestimating actual rental payments. So as Commissioner, do you receive the Port Authority's transmittal of rental payments and annual statement? What was the amount of actual revenue that the City received from the Port Authority for FY26?

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I can get back to you on that one. We have the report, I just need to pull it up in a little bit. We are happy to work with you on it. If any changes need to be made, we have received it. I will get back to you. Let me just pull it up right now.

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Okay. All right, so moving on to Section 1127 returns. As a condition of City employment, any employee who is not a resident of New York City is required to make a payment equivalent to what their New York City income tax would have been if they were a City resident. It is the Council's understanding that...

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...the Department of Finance has been incorrectly calculating Section 1127 returns for 10 years, which has resulted in more than $100 million in lost revenue to the City. This error was recently fixed, which has led to some City employees seeing a reduction in their tax refund or even charges to their account as a means for the City to recoup the missing revenue. I feel like that impacts some folks here. Can you please explain how the 1127 bills were supposed to be calculated and what went wrong to lead to a ten-year miscalculation?

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So the Section 1127 waiver is essentially a contractual condition for employees who live outside New York City. The City Charter requires that New York City employees who live outside the five boroughs have to pay the equivalent of their New York City personal income tax. So each filing year, employees would withhold a portion of their income to cover this tax liability. If they withhold greater than the tax liability, they get a refund. If they withhold less, they have to pay into it. As part of that process, the school tax relief, or STAR benefit, was calculated against the City's personal income tax up until 2016. After 2016, it was shifted to be a credit calculated against your state personal income tax. So they were essentially receiving it on the state side, but our systems kept continuing to provide this on the City side as well. So essentially they were receiving a STAR credit from both the state and the City. Earlier this year, we made the discovery that the City was still calculating this benefit off the 1127 return. We notified City Hall and then we recalculated the refunds and balances for this tax year, for 2025. No other changes are going to be made on the Section 1127 for tax years before 2025.

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Okay, so they are not going to be penalized for taking the...

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Yeah, we are only correcting it for this year. We are not doing a clawback for any

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previous years. Okay. How was the mistake discovered?

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How was the mistake discovered? Oh, so it was discovered while we were doing an internal review of the 1127.

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Before I got here. Okay. What is the exact amount of the lost revenue as a result? Do you know? It averages just about $10 to $12 million a year. It is different per year. Okay. And then

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does she have her own plans? Your answer to that part. So who is responsible now for the administration of the 1127 waiver? That still remains

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the Department of Finance. Okay. Sorry, the Department of Finance is the primary administrator of the 1127 waiver.

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Okay. And how many employees are currently under the 1127 waiver right now? I think it is just about

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4,000. Okay, perfect.

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And then the business tax refunds. The general corporation tax and unincorporated business tax — since the beginning of fiscal year 2026, with some of these refunds occurring back to fiscal year 2025, does the department expect to continue issuing refunds for both sets of business taxes through the end of the fiscal year and into the next fiscal year? If so, how much does it anticipate issuing in refunds for both taxes by the end of fiscal year 20

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26? So yes, we do expect to continue issuing refunds for both fiscal years 2026 and 2025. For many businesses it is not actually that unusual to have pending refund requests, especially if tax filers are asking for an amendment or an extension or things like that. Some of the taxpayers may also be under audit and we might not be able to issue the refund until that is resolved. The latest business collection taxes report right now shows that we have about 304 refunds that could potentially be issued by the end of this year — again, potential, because it really depends on timing — but these refunds total about $81 million total. Okay.

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And then moving on to the block-by-block housing plan and assessments of the administration's block-by-block housing plan. The Department of Finance recognized that 2019 changes to rent stabilization laws changed the economics of rent stabilized properties. So in 2026 it made changes to the capitalization rates used in their valuation, reducing the property taxes of 15,000 properties. So why did it take so long for the Department of Finance to reflect the economics of these buildings, given that the change in law was made in 2019? Just wondering, you know, why?

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Why the gap? Yeah, so the department does share the concern over properly valuing these rent regulated units. So yes, the laws did change in 2019, but the market factors that influence valuations take a little bit of time to be reflected. Evaluations need to reflect actual changes rather than projections. So that is a little bit of that. The assessment process also has a built-in lag to give property owners sufficient time to provide their required documents.

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And so as an example, for fiscal year 2027, the income and expense reports we used were actually for calendar year 2024, which were actually received in 2025. So it does take a little bit of time.

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There is a lag in the reporting system and there is a little bit of market factors we have to encapsulate. But with that said, for the fiscal year 2027 assessment, we did actually make a few changes. One of those changes was to increase the capitalization rate by 50 basis points. This higher capitalization rate reduces the market value of the building. I am happy to have our first deputy commissioner add any additional notes if there are any. No additional notes unless you have further

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questions, Chair. Just a few more follow-up questions. So changes to market values are phased in over five years for most rental buildings, which implies the 1.3% reduction in taxes this year will grow over the next several years. So can you provide us with how much more relief these buildings

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will get in future years because of these changes? Sure. So just to kind of summarize, with the higher capitalization rate that we used for this year's roll, the rent regulated buildings had their market value reduced by 3.3% on average and their taxes reduced by about 1.3%. So the rent regulated buildings are a top priority for this administration and we are going to continue to evaluate the valuation methodologies that are used to ensure that all of these buildings are taxed fairly. But there are a lot of other factors that go into that calculation, and so I cannot really say with certainty what percentage or what dollar amount will be attributable to this change in the future. But we are going to continue working on this. We are going to ensure that the tax assessments are accurate and reflect the values to the best of our ability and will properly monitor this sector of the rental market as the year goes on.

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Okay. And then one last area before I pass it off to colleagues — the decline in Class A office parcels on the fiscal year 2027 final roll. So the final assessment roll shows a roughly 4% decline in the number of Class A office parcels, creating a loss of a little more than 7 million square feet of Class A office space, which results in a 15% decrease in taxable assessed value for this property class. These declines are outpacing the declines seen in the Class B office category, a class of office space that has been particularly well suited for office-to-residential conversions over the last couple of years. So as we continue to see a flight to quality in the office market in Manhattan, does the reduction in Class A office space reflect a new trend in the office-to-residential conversion pool?

I think it might be a little bit difficult to predict. We cannot really presume trends based on just a few years worth of data, and across all these building categories, fewer than half of the conversions were actually to residential use. Most of these conversions were into other uses like retail, hotel, warehouses, or whatever it might be. Of the thirty office buildings that we do know were converted to residential, only three were in the Class A office buildings. Yeah, only three were actually in the Class A office buildings of the thirty office buildings that we know were converted to residential. Okay. And so how much more square footage do you expect Class A office space to lose in future assessment rolls and how does this adjust

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the makeup

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of what each property tax class pays of the levy each

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year? So it is a little bit difficult

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to speculate based on just one year. We will continue to monitor this. The overall market value of former office property has been growing over the last couple of years. So the loss of office buildings that occurred — we do not really think there will be a huge impact. The impact will be minimal on the tax class shares. But either way, we will continue to monitor the conversions. Okay.

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Perfect. So I am going to pass it off to our Deputy Speaker, followed by the Majority Whip.

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Hello, Commissioner. I just wanted to follow up really quickly on Chair Lee's question about property taxes. So I know a lot of it requires state action, but the Mayor and the OMB director after the preliminary budget briefing committed to submitting something to Albany. When we have asked Albany, they say that it is the City that has to make recommendations — and that came literally out of the Speaker's own mouth. So has the administration made any formal submissions to the state regarding property taxes and if so, what is the status of something

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you can add to that? Yeah, so I would say that property tax reform does remain a priority for the administration and the Mayor, highlighting again some of the inequities in our property tax system. I believe it was a priority at the onset of the year, but as we got through the budget process when we had to close a historic $12 billion budget gap, a lot of discussions that happened in Albany shifted towards that. We are constantly in the process of reviewing property tax reform and some of the proposals that will have to go through, building off of the tax commission's recommendations. But all to say, to re-prioritize this — they are going to go home, so you have to try again for next session.

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Okay, moving to questions about racial equity. So your agency's racial equity plan commits to ensuring that 100% of the Department of Finance services become more, in quotes, "easily accessible and readily available to New Yorkers, particularly in historically underserved communities," by the end of 2026. How is your agency measuring whether that goal is actually being achieved and what benchmarks are currently being used to track progress? Are there any budget

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implications? So the Department of Finance is moving towards efforts to do outreach, focusing a lot on our Mayor's Office of... We are appreciative, of course, of recommendations and reviewing what steps we as an agency have to take to better align

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your goals submitted

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this. Yeah. So again, I have our James here if you want to maybe add

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a little bit. I just want to understand how you are checking the progress

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set by the goal that you guys put forward. But we are still working with the committee because the report has not been finalized yet. It is supposedly being finalized literally in a couple of weeks, so

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and then you guys have a goal to be 100% by 2026.

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So we do have a community outreach program. We do have initiatives already in place for tracking. Once the report is completely final, we will be able to work with the group that was just created — it is still being established — and some of the other outreach opportunities that we have to meet the goals that we put in the

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plan. Okay. Your plan also references expanding the use of technology to improve customer service. How is your agency ensuring that increased reliance on digital systems does not unintentionally create additional barriers for seniors and residents with limited digital literacy or New Yorkers with limited internet access?

So I would say that for all of our systems, we ensure that all New Yorkers are able to reach our services, especially at our business centers. Business centers are a core piece of our connectivity with the community. At all of our business centers, we ensure that we provide things like language access services, services for the hearing impaired, the vision impaired. So we are actively ensuring that all of our services are going to be met by those in need. Outreach events handled by our community affairs division have had more in-person events than ever in all of our communities. We are well aware that most of our outreach should be primarily offline, so we are working to improve that across the board and have more opportunities for people who might not have access to technology to be able to apply and get these benefits.

Okay. Your plan also referenced identifying barriers to access in underserved communities. What barriers has the agency identified so far and what policy or operational changes have been implemented in response?

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So I could answer that a little bit. One of the core goals that I came up with when I came on board at the Department of Finance is something I tell my staff, which is that the Department of Finance in the past, when we have been giving out information, it is not

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always understandable. Information equity is a really big thing. When a property owner receives a notice of property value, it is really difficult to understand — even for myself when I bought my first home, I looked at it and did not really know what it said. So one of the core priorities that I have right now is ensuring that all of our information, whether it is through mailings or our website, is properly informing people and bettering the equity of information so that people are able to better understand what their situation is, what opportunities they have, or what other pathways they might have in order to resolve any of those situations or be in a better position accessing abatement programs and whatever it might be. So I would say over the next year I am hoping to improve upon that so that our information equity outreach to communities who do not typically have that access will put them in a better position.

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Thank you. So the agency acknowledges the historic impacts of redlining and inequitable property assessment practices. How is your agency incorporating that historical context into current assessment policies, outreach efforts and protections? Yeah, so I will

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pass to our first deputy in a second. But our assessments follow a very specific formula and we look at properties in a very specific area in order to determine our assessments. So for Class 1 properties, we look at sales in comparable areas to determine what their market value is. From there, we calculate the assessed value based upon the ratio target and then apply the cap. So it is a very formulaic way that we do all of our assessments, whether you live in southeast Queens or northeast Queens. The formula is the same and that is all sales-based for Class 1 condo market. Again, that is in our Class 2, which goes back to reform a little bit, in that we have to utilize comparable rents and utilize their income and expense information to determine what their market rate and assessed values are. But we have a fairly consistent valuation methodology across the board whether you live in Queens or Brooklyn. I will let our first deputy maybe expand a little bit on our methodology.

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Well, I would like to just emphasize what the Commissioner was saying — that property tax reform is really a key component here. Because while we have the same methodology, for example, for assessing Class 1 homes throughout the City, the caps that limit how quickly a home can have its assessed value increase have a disproportionate impact on neighborhoods that have not been gentrifying. So those neighborhoods have assessment ratios that are relatively high and so they have higher effective tax rates compared to neighborhoods that have been gentrifying. Their values have been going up, but because of the caps, their assessed values have not been keeping pace. So that is why we think the conversation about property tax reform is so important and why we want to get the property tax reform right before we propose something formally to the legislature.

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Okay. Last question. I passed a bill requiring notifications when liens or mortgages are recorded against someone's property. In your racial equity plan you included a long-term goal of increasing participation in the notice of recorded document program to protect homeowners from deed fraud, given the prevalence of deed fraud. Obviously this administration takes that seriously, and there are concerns in communities of color and among elderly homeowners. What additional protections or outreach initiatives is the Department of Finance considering beyond the current program? I just wanted to understand how that notice differs from the bill that passed — if it is the same thing or if it is something different. I just want to

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understand. I am happy to look at the bill one more time to see if there are any differences. But I would say one of the key components of the deed theft prevention office is to look at a lot of these liens — how properties are being recorded, what happens during that process, what legislative changes need to be made in order to pause the recordings if we think that there is some sort of fraud going on, and how do we improve upon the processes internally, working with investigations and the sheriff's office plus other divisions within the Department of Finance. I have to look at the bill that you are proposing one more time to see if there is something that we can include. But the recording of these documents is something that we are really focused on. Last year when we passed all those bills and made

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sure — your package of bills that passed through the finance division last year.

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I am happy to take a look at the legislation. Okay.

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A majority of Hanks, followed by Narcisse. Thank you, Chair. Hello. Did you miss us? I did. OK, always know, do you not? So do we talk about lien sale cancellation a little bit? OK, I am not... I am going to ask it anyway. The administration canceled lien sale this year pending a six month review and potential reform to how the City enforces its property taxes and water bills. Can you provide a timeline of when we can expect to hear what the new tax enforcement would look like?

(00:39:32)

So the Mayor has made it clear that this administration's priority is to stabilize and protect housing and to minimize displacement. We are taking this commitment seriously as you consider how to enforce the collection of outstanding property taxes while making sure that we are holding accountable those individuals to make sure that they are paying and doing everything that we can to address and reach out to those homeowners that are at risk of a lien sale. Right now we are undergoing a comprehensive review. It is a six month review on the current lien sale process as a whole in order to figure out how enforcement could look like in this new era. It is a six month review that ends this summer and we are looking forward to discussions with the Council and other partners as we move forward.

I would say that with the reform package that passed earlier this year we are ready to work with the Council on the creation of the land bank and we are getting prepared to put in our nominees for the working group for this new land bank board, which I believe is due on July 28. Let us hope that that is a five borough task. I hope so too.

(00:40:53)

Has this pause impacted activities of the current tax lien trusts?

(00:40:57)

The current tax lien... the current liens in the trust right now are subject to the previous contracts and the authority has not been impacted by the pause in the lien sale for this year. But with that said, we are reviewing the entire enforcement ecosystem, including previous lien sale means as part of our review.

(00:41:23)

So that leads me to my next question. With the postponement, do you believe that will make up that revenue shortfall next year?

(00:41:30)

We as an administration really need time to ensure that we are enforcing these taxes, property charges and water bills in an equitable way that is aligned with the Mayor's goal of changing behavior from taxpayers who are due for enforcement. It takes time to show up in our collections data but we will monitor the situation and keep working with the budget office and the City Council throughout the process and keep everyone abreast of any changes in evaluation that we might see. Thank you.

(00:42:04)

Thank you. Going to move on to Operation Padlock to Protect. So Operation Padlock to Protect was an initiative during the previous

(00:42:15)

administration to lock up illegal marijuana shops on a large scale. Will the new administration continue this operation or will it be altering its approach to illegal marijuana stores?

(00:42:26)

Well, the City is committed right now to continuing the enforcement on unlicensed cannabis sales, and this is in order to support the legal industry's growth and to ensure that we are fighting against dangerous products that are sold in our communities. The Sheriff will continue to lead these enforcement operations relating to all judiciary and civil law. We are undergoing a review of the operations across the entire Sheriff's Office and our new Sheriff, Sheriff Raymond, will be reassessing steps as we go forward. Thank you.

(00:42:59)

So much. It is good to see you. Good to see you too. Thank you, Chair. Awesome.

(00:43:03)

CM Narcisse, followed by Won. Thank you.

(00:43:07)

Jeremy, and thank you, Commissioner. I am happy to see you but one thing I am going to tell you honestly: I miss you because I cannot come and bother you all the time. There is no problem to tell you my vision. So Nathan got it. So in the preliminary plan, DFTA received new positions to create the Office of Deed Theft Prevention. Can you please provide an update on how many positions have been fulfilled so far in the new office, what specific work will be done with other City agencies, and if there is any need to increase the size of this office or if five positions are enough?

(00:43:52)

So far there are five positions within the Office of Deed Theft Prevention that sits at the Department of Finance. We are in the midst of appointing the deed theft ombudsperson so that should be coming soon and we will be posting shortly for two more positions: the Deputy Director, which is pending, as well as a Community Coordinator. In terms of the work of the Office of Deed Theft Prevention, the office will primarily serve as a liaison across our agency, across all divisions, and working with enforcement entities and advocacy and legal groups as well as handling a lot of the incoming inquiries that we have related to deed theft prevention. Some of the other agencies that we have reached out to as part of this office has been the Mayor's Office of Civic Engagement as well as beginning the stages to forge alliances with the District Attorney's offices across the five boroughs as well as the State Attorney

(00:45:02)

General. Your last question was if five positions are enough. So right now we are budgeted for five. We are in the process of onboarding three and going to keep working within our agency. A lot of the work that we are doing for this office is really uplifting it from internal resources, utilizing all the resources that we have at our land records office, our Office of the Taxpayer Advocate and across the board to work within the Department of Finance to help outfit it. If we do feel that there is an additional need, we are happy to reach that conclusion and reach out to the budget office should there be a need to do so.

(00:45:44)

Thank you. And when a homeowner believes they are being wronged, what can they do, especially the seniors? Is there staff there to help them handle

(00:45:55)

the situation? Yeah, so there is a full process for individuals once they receive a notice of property value to contest any market value assessment. I will let our First Deputy Commissioner walk us through that

(00:46:12)

process. Yes. So all property owners receive a notice of property value at the start of each year and

(00:46:23)

that is at the same time we issue the tentative roll. Property owners can use that information to either come to us for what we call clerical corrections or can appeal to the Tax Commission if they disagree with their valuation.

(00:46:42)

With regards to the process... I am sorry. How fast? Just like something that has long been special. We are talking about seniors and their complaints. Sometimes we try to help in my office but sometimes they end up in your office. So I just want to know how fast they can get a result.

(00:47:00)

I will have to get back to you on the turnaround for clerical errors but we will get back to you on that.

(00:47:08)

Thank you. I heard my Deputy Speaker was talking about deed theft, right? Homeowners, specifically the seniors. What role does Finance play in flagging suspicious ownership transfers and is it enough? What do you do from your office if you realize it is a suspicious transfer? So statutorily right now we do not have the ability to... if

(00:47:36)

a person is recording a deed and they are meeting all the legal requirements, we actually cannot prevent that from happening. That is one of the legislative fixes that we are hoping to see at the state level to give us a little bit more authority in those cases. Thank you.

(00:47:55)

We are also working on that.

(00:47:57)

I am sorry. We also urge property owners to sign up for our notification program so that way they come to us, they give us their mailing address or their email address and if there is a deed recorded against their property, we will notify

(00:48:20)

them. So I want to say thank you to you too, because your team has been coming to my office to help me out and thank you for the work you are doing. But whatever is new, I want to know about it because I want to help, because my area happens to be having the highest rate of foreclosure and deed theft. So I just want to make sure I help out on that.

One more, my time is limited. If the pied-à-terre surcharge moves ahead, is Finance ready to administer it and what is it expected to collect? And how does Finance treat a senior on a fixed income whose home value has soared

(00:49:02)

on paper but whose income has not moved at all? We are currently in the implementation stages of the pied-à-terre surcharge and we are confident that we will be able to meet the revenue target of $500 million that was included as part of the executive plan. I am sorry, your second part of that question was what?

(00:49:29)

How do you handle... you are talking about the last one. I am interested in someone whose home value soared but whose income is fixed. They do not have any budget increase. So how do you work with that?

(00:49:43)

So I just want to outline the contours of the program right now. The program is specifically designed so that Class One properties, those that are valued between $5 and $15 million, will see a surcharge rate of about 1.05% and those $25 million and above on their Class One market value will receive a 1.3% surcharge. For those who are in co-ops and condos, we have a similar sort of structure of 1%, 2%, 3% or 4% at various thresholds. We do not necessarily directly look at personal income. Our First Deputy Commissioner is going to oversee the implementation phase. I am happy to have him elaborate on some of the implications that we have to address in cases like this.

(00:50:36)

Yeah, so two other points that I want to make. First, just to emphasize the nature of the pied-à-terre surcharge: this is on people who own two or more homes.

(00:50:49)

So a second home, right? Second

(00:50:52)

home. So if it is someone and they are cash poor and their home has soared in value, we understand that. We do want to make sure people understand the residency requirements. The other point that I would like to make on this is that we do offer payment plans. So if we have someone in that situation and they have a surcharge and they are having difficulty paying it, we can offer a payment plan today.

(00:51:23)

For the time being. But regular seniors, I want you to pay attention to that because a lot of them are having difficulty holding onto their home

(00:51:29)

and if there is anything that flags in my district, I want to know because I want to help.

(00:51:34)

We are happy to... if there are any instances that are coming up that you see where we have a secondary home situation, we are happy to work with them on any sort of programs that we might have and assist in any way. So just feel free to reach out to our office. Thank you.

(00:51:51)

Commissioner, you could still bother him. You could still go bother him. Okay. CM Brewer.

(00:51:59)

Thank you. Commissioner, I have two questions: one regarding the trash bin reimbursement notice and another regarding the co-op and condo abatement compliance. My first question is that small property owners had to comply with the containerization bin rule in 2026, which was later extended to after Labor Day. Now some STAR recipients were eligible for reimbursement support but my office keeps getting calls that many are still waiting for these reimbursements. My question is how many Queens homeowners actually received that relief and was the outreach strong enough? Because it seemed to me that people do not know about this reimbursement still. And can we extend this past Labor Day? Please answer that.

(00:52:50)

So I will have to get back to you on the exact number. I am happy to provide that. We have extended the program to September 7th, the day after Labor Day. So we have extended the program and we are working closely with the Sanitation Department. September 8th is the new deadline and we have extended it as a result of your advocacy. Thank you for letting us know.

(00:53:13)

Thank you. My second question is the co-op and condo abatement. The executive plan has a baseline of $13 million annually from cooperative and condo compliance revenue. Now how much of that is true anti-fraud enforcement and how much comes from more aggressive compliance actions against ordinary property owners?

(00:53:35)

I would say it is sort of neither of the two. What we did was we went through the qualifications and we went through the list and we noticed that several of the population would not actually qualify for it. So we sent out those notices to those homeowners. There is an opportunity for them to then prove their compliance and we are happy to then reinstate them into the program. But it is because we found a certain subset of the population that we felt did not actually qualify and we want to make sure that we are providing this benefit to the people that actually qualify. Thank you.

(00:54:12)

I think I have time to squeeze in one more question. The pied-à-terre surcharge: the executive plan books $500 million from this pied-à-terre tax. What is your enforcement and compliance plan, especially for properties held in trusts? So the pied-à-terre sur

(00:54:33)

charge... right now we are in the process of promulgating a lot of those rules. The legislation does provide us a wide range of enforcement actions that we can utilize so as we get towards the rulemaking process we are going to develop a lot of those enforcement actions more closely. Again, our First Deputy Commissioner is overseeing the pied-à-terre surcharge implementation process. There is something

(00:55:02)

that I may have missed. Yeah, I would just add that the surcharge will be appearing on the property tax bills of the homeowners who are subject. We think that alone is going to drive voluntary compliance.

(00:55:18)

OK, thank you. Thanks, CM. Thank you.

(00:55:23)

Good luck. Good luck with that.

(00:55:25)

Thank you. I know they put their uncle, the brother or sister in there pretty regularly. I know most of the buildings. I have a question about the STAR increase. First of all, thank you to the staff who come to our office often and help with that issue as well as other matters. So STAR: obviously thank you to the state, $75,000 up from $50,000. So how is that going to be implemented? How are people going to know about it, et cetera?

(00:55:52)

On the STAR increase, I actually defer to City Hall on the action. We are going to be monitoring it but this is largely a budget action and so we will have to defer a little bit to the administration.

(00:56:06)

OK, so in other words, you do not want to do anything until you actually have to implement it.

(00:56:12)

Well, a local law is required for any demand that goes to the Council. I know, but I am just thinking in

(00:56:17)

the end, you are the one that does it?

(00:56:20)

Yes. So implementation-wise, yes, but we are again going to

(00:56:24)

look at how long it is going to take in terms of implementation.

(00:56:29)

The implementation... they are very anxious, they love it. The implementation can... I will get back to you on what that will entail. We already run the program so I cannot imagine it would be that much more of a change. So I am less worried about the implementation. It is really a matter of local law adoption and so once a decision is made, we will simply go ahead and administer it and I am pretty confident that we will be able to administer it very quickly.

(00:56:58)

And when you talked about the land bank, thank you, that was my bill. How long do you think it is going to take to put the committee together? Obviously it feeds off of the individuals who are not paying their taxes, et cetera. It also has to do with liens and figuring out how to deal with properties so people do not lose their homes and sort of alternatives to people losing their homes. But yes, what is the timing on that?

(00:57:24)

So we are going through the reform process internally at City Hall about what lien sale could look like into the future. In terms of the land bank legislation, we are preparing our nominees for the working group. The deadline should be July 28 and we are happy to work and, you know, thereafter formulate a working group, promulgate the rules related to the land bank, submit it to the state. I cannot really give a timeline per se because we do not know how long that process would take. Just the resolution of the board alone might take a few months. We are happy to work with the Council as you go through the bylaws, the application process with the state and then the process of implementation as we get to future iterations of a new and improved lien sale.

(00:58:17)

OK, I was happy to hear $573 million as a possible collection because in the past it was often nothing. I could not get anywhere. Having words with two and a half billion dollars just sitting there. So my question is, I think you used the word amnesty or maybe you said we are not going to do amnesty. I want to understand if that is possible. And then just going forward, even though hopefully you will collect that $573 million, one of the ideas is continuing to use collection agencies. Do they come through with what they promise? How are we going to keep... I mean, there is a guy in my area who puts up something on every single lamp post and it is really hard to get off. You cannot get it off. He should not be doing that and he should be fined and he should pay those fines. That kind of thing. So we

(00:59:09)

Did do the 30 day review internally just to see if we could improve any processes so that we can better collect. One of those things that we have identified is that most of the majority of collections are most responsive when we are able to reach out to them directly within the first year. So one of the priorities for us is for the account executive unit to do that, because the first try is to increase the first year outreach as much as possible. We do still utilize the collection agencies, and that is primarily through mail and phone calls. But it is

(00:59:47)

important that internally we start and try to target the first year with the uncollectible population. We are right now trying to review it. There are a couple of data strategies that we are trying to implement

(01:00:04)

to see if there are any additional information coming in that would then allow us to restart enforcement on them.

(01:00:15)

So when you did the great work with Amazon, the $10 million — was that something that had been sitting around for a while or was that something that was like a first year situation?

(01:00:25)

That has been a violation that has been sitting around for a while, and that was their largest single violation source. So they were the largest, and in that instance we directly reached out to Amazon. There is a fully wholly owned subsidiary — Amazon Logistics — and then did the one on one, you know, it is sort of like how you do with any other constituent. Actually, we did a one on one review of their idling violations, addressed any questions they might have, any challenges, and worked them through the entire process. And that was really an example of how we can work sort of in

(01:01:04)

tandem. What do you think about some of the other carriers? Quite a few of them have similar violations that could be handled in the same way. I know the project — I guess it is under parking violations — but the issue is, you know, you are making this up: you get a hundred violations, you can put them in a

(01:01:24)

pot and you only pay a percentage. I do not think that is terrible. Some people do. But the point is, are they paying it? It is one thing to get a discount. I do not think they should not even pay the discount. So I do have the list of the highest, the next highest violations by category. I do not have it with me right now. I am happy to sort of reconnect. I would love to hear that, but I do think they need to pay. Some of them are getting discounts — you are like they are paying their full share. Yeah, so right now

(01:01:52)

the strategies that we utilized for Amazon, we are just now going down the list — number 2, 3, 4, 5, 6 — just focusing on them right now to do that one on one personal outreach. I would like for

(01:02:04)

that list to work. Yeah, so we are happy to talk to you more about that and the strategies that we are realizing. Thank you. And then just finally with the Sheriff — I heard earlier, I worked a lot, closed 93, but the previous Sheriff focused on illegal cannabis. What are some other roles? I know you are working out the office issues. What role might the Sheriff play vis-a-vis the marshals, or on his own, or what are the different roles that that person might play from what you can see?

(01:02:42)

There are a lot of people who do not know this, but the Sheriff's Office does all about — all this much more than I wanted it to. They actually do quite a lot and it has been something I have been learning more and more about every single day. They execute child support, naming — they execute all civil law judgments. They have to execute evictions when necessary. Right now Sheriff Raymond is currently in his second week and we are working together to fully

(01:03:09)

... Do you know the vacancies? There are vacancies. Oh, Jeanne, I have...

(01:03:16)

I think there are — I think I know the number but go ahead. They are currently in the Sheriff's... oh, total. I am sorry. The total vacancy for the entire division is 50 to 31. Megan is the Deputy Commissioner. Right. And how many people are there? What is the full head count if it is fully operational? 320. Okay, that is quite a

(01:03:47)

few vacancies, but the active head count is 260. All right, thank you. Thank you. Just one last question on

(01:03:55)

the pied-à-terre tax. Now that we have the true outline of the new tax, can you tell us how much money you think it will raise next year?

(01:04:03)

We are confident that we will hit the $500 million target as outlined in the executive budget.

(01:04:09)

Right around $500 million. More confident on the $500 million. Okay, and how many

(01:04:14)

properties will this impact?

(01:04:18)

It is going to impact about 8,000 properties. 8,000. Okay, and how confident are you that these numbers will be the final numbers? So we are confident in our analysis, but with that said, we are going to start the engagement process with the owners to verify their residences and make any adjustments as per the legislation. Our models right now do account for some of these, but you know, there might be some changes here and there as we go through the process.

(01:04:46)

Okay, perfect. And then just lastly about the Section 1127 returns. So when you sent

(01:04:51)

out the letters to folks that were impacted, was it clearly outlined and explained what this letter was and how the amounts were calculated? Only because I think we have been hearing feedback from folks that it just did not seem clear how they were calculated. I cannot go back to you on exactly whether or not the exact calculations

(01:05:15)

were indicated, but we have reached out through multiple ways to ensure that individuals do know that this was an errant calculation that was entering this benefit for the past couple of years. We have updated it through our website and our compensation process and our calculation process. We have provided letters and we also worked closely with labor to address it with their impacted labor unions. I am happy to have our First Deputy Commissioner address if I have missed any specifics.

(01:05:51)

I would just say that if anyone feels the letter was unclear or they want more information, we manage this through our business tax and collection system and it provides a platform for people to contact us directly.

(01:06:13)

There is a way for folks to get back to you. Okay, yes there is. Okay. I think that is it. All right. Okay, so we are

(01:06:22)

done with this portion with the Department of Finance. Thank you, Commissioner, for being here with us and for your team. Thank you so much. Okay, so good afternoon and welcome to the final portion of today's — the last day of our Executive Budget Hearings. I am CM Linda Lee. Welcome to our Director — just, okay, so welcome to our Director Louisa and your team, and thank you all for joining us today to answer questions. As a reminder, this is the last time I will be saying this: we are having our public testimony all day tomorrow starting at 9:30 a.m. So please make sure to sign up for the public testimony portion. We will be here all day tomorrow to make sure we listen to the feedback from the community and constituents. And with that, I will turn

(01:11:03)

Okay. Good afternoon, Council Finance Committee Chair and members of the City Council. I am Louisa, Director of the Independent Budget Office, and with me today are Sarah Parker and Sarita Subramanian, Senior Research and Strategy Officers. Do you all hear the echo? Okay, it is just me. This room just does not have the best acoustics. I am sorry. Thank you so much for the opportunity to testify on Mayor Mamdani's Fiscal Year 2027 Executive Budget. This

(01:11:38)

testimony is a condensed version of our submitted testimony. The late State budget presented challenges to New York City, but the funding included in the State budget aligns quite closely with the administration's projections for the current fiscal year and for 2027. The 2027 tax revenue forecast also aligns closely with the administration's projections, with a gap that can easily be addressed during the budget adoption process. On the last day of session, a two year extension of the deadline to implement the State budget class size law was passed. Including thereafter, it became clear that there would be bonuses for up to 2,450 teachers whose classes exceeded the class size caps, which estimates will require an additional $21 million. Meanwhile, notes that the administration's assumption that it can achieve $149 million in annual savings in the area of due process cases also remains untested.

New York City provides means-tested childcare vouchers. Generally, services are accessed through a portal. Currently close to 110,000 children receive such vouchers and there are over 25,000 children on the wait list because the portal has been closed since 2025. The Executive Budget contains an unexpected fiscal shortfall as funding drops from 2026 to $818 million annually starting in 2028. Estimates the City needs an additional $78 million in 2027, rising to almost $1 billion annually in 2028 to address this shortfall, and if the portal were to be reopened or the wait list addressed, even more funds would be needed.

The State did not provide any funds for the City FHEPS program, but instead set up its own separate housing voucher access program, which will yield about $33 million in funding for the City and support approximately 9,100 vouchers. This is a year to year program. Does not expect the administration to reduce City FHEPS funding as a result of this new State program. As a reminder, City FHEPS is budgeted at $2 billion and the Executive Budget reflects a plan to achieve $235 million annually in unspecified administrative streamlining.

Next, on to City pensions: projects, based on estimates from the Chief City Actuary, that the State's new Tier 6 enhancements will require additional funding above that which is in the Executive Budget — $41 million in 2027, growing to $69 million in 2030. Based on the actuary's analysis of a prior proposal, finds that the administration's proposed extending of pension liability payments to be consistent with sound practices. Cannot evaluate the Executive Budget's assumption around the so-called pied-à-terre tax. Revenue will depend on variables such as how property values are calculated, how the City administers collections and how second property owners behave in relationship to the surcharge.

Finally, it is difficult to overstate the pressures and uncertainties weighing on the City during this budget process. Based on the federal administration's global actions and policies as well as dramatic cutbacks in key programs — for example, about 43,500 New Yorkers are at high risk of losing their Supplemental Nutrition Assistance Program, their SNAP benefits, in the near term — and the relatively modest increases included in the State and Executive Budget of millions are likely insufficient to address the rising food insecurity. As many as 450,000 people statewide, half of them living in New York City, will lose health insurance due to federal changes undercutting the State's Essential Plan. Neither the State budget nor the Executive Budget addressed this health care access loss.

Meanwhile, with the ongoing war in Iran, the resulting economic uncertainties and sharply rising energy costs, the Executive Budget increases funding for power and energy by $376 million in 2027, rising to $477 million in 2030. This brings the total citywide budget for building energy costs up to $1.3 billion. Finally, notes that the Mamdani administration continues its practice of more accurately reflecting the City's expenses. Given the challenges ahead, also looks forward to being able to thoroughly analyze the proposals from the Chief Savings Officers as well as the work of the Commission on Government Efficiency and the new Charter Revision Commission. Thank you very much and we are happy to take

(01:17:12)

your questions. Great, thank you. And we have been joined by CM Narcisse. Thank you for sticking through to the

(01:17:22)

end. Okay, so in terms of class size, I know that you had outlined in your testimony you had mentioned some of the incentives. You know, it still is a bit difficult to sort of assess the true cost of this. But I know the administration planned $122 million to meet the 70% compliance next school year. So do you think that we are, you know, in agreement with that number?

(01:17:52)

Yes, yes.

(01:17:54)

Okay. And with the newly extended timeline, does have a new cost estimate to meet 100% class size compliance by 2030?

(01:18:03)

No, we have not updated our estimate. We plan to do that when we get new data, but based on our current estimate and the funding in the budget, we do feel that that is in alignment with what we would anticipate.

(01:18:18)

Okay, perfect. And then the Executive Budget plan does include the funding for class size bonus payments, which you had mentioned, which is good to see. Actually, we will move on to the next question. I am sorry. Moving on to Fair Fares: on June 4, 2026, released a report reviewing and estimating costs on multiple Fair Fares expansion scenarios, and we would like to learn more about how you reached these estimates, the assumptions used and the feasibility of some of these scenarios. So if you could walk us through your analysis and the factors and assumptions that you had

(01:18:58)

considered. So before I turn it to my colleague Sara, I would like to thank you for your attention to our Fair Fares report and also point out that on the same day we published a report on free buses and transportation affordability. That said, we are briefing the Council and we also have a webinar coming up on June 16. Okay, Sara.

(01:19:21)

Okay, I am going to take that one.

(01:19:23)

So yeah, so we did, as you mentioned, estimate five different scenarios. Two of those expanded the discount that is offered to eligible participants and then three scenarios expand the eligibility criteria to the federal poverty line — so 200%, 300% and 400% of the federal poverty line. In doing this analysis we used a variety of data based on current ridership and transit usage trends as well as Census data to estimate, particularly for those scenarios that would increase eligibility, what would be the expected increased use of transit, because those individuals tend to commute at higher rates than those that are currently eligible for the program.

(01:20:21)

And so as Louisa mentioned,

(01:20:22)

we have a lot of details in our report. We have a briefing that we are offering — people can sign up on our website. Happy to answer any more specific questions you might have. I think the complexity of estimating the cost of expanding Fair Fares is, as you mentioned, tricky because it is related to and linked to client enrollment levels and the transit utilization, which are definitely factors that can make the

(01:20:51)

amounts fluctuate quite a bit. So I know you had estimated a range of 19% to 32% for enrollment levels of eligible people and 19% to 63% for their transit utilization. And you just mentioned that they tend to utilize transportation more. So how did you come to that finding and as well as the wide range, and which do you feel are most likely?

(01:21:20)

Yes, so I think

(01:21:22)

we wanted to provide a broad range because there are a lot of different options that are on the table and ideas that people have for expansion. So does not take a position on any one of them, but we do note that we very clearly lay out our assumptions — for example, take-up rates at each of those levels as well as, like I mentioned, assuming an increased usage. I do want to note that in our report we also note that current usage is relatively low, largely because those that are eligible are less likely to commute. So we take a variety of factors into account, as well as, I think importantly, looking at those that are eligible for other fare discount programs. And I know

(01:22:13)

that this is something that the Council considers very important. One of the things that came up several times throughout the budget hearings was the fact that it seems like a lot of folks still do not know about this program, or if they are eligible, or where they can find out more or sign up. So one of the things that was proposed is putting some marketing money towards this to make sure that people are aware. So I wanted to know if you had done any sort of research in terms of whether there should be additional funding put towards making sure that folks know about this program, and what would be an appropriate amount for marketing dollars.

(01:22:50)

That is a good question. We do know in our report — actually, we looked at marketing costs relative to other programs and Fair Fares has one of the larger budgets in terms of marketing. We do also note, and you mentioned determining eligibility and some of the challenges in enrolling, and that is something that we also note in our report. For those that are not... it is a little bit easier for those that are already enrolled, but there are a lot of reporting requirements for those that enter through the open enrollment process and so we note that those might be barriers to entering the program.

(01:23:34)

Okay. Actually, just based off of what you just said, what would be some natural partnerships that might be able to expand eligibility or help folks know about it? Because we have a lot of municipal workers in the City. We have a lot of even just...

(01:23:50)

...within our own City employees. I wonder, as well, if they can help spread the word if there is increased eligibility there or if there is...

(01:24:01)

...a way to use nonprofit organizations and partnerships to be able to spread the word on that.

(01:24:08)

Well, in terms of inter-agency data sharing, one thing that we thought might be helpful to look at is that the Department of Finance has access to income data. I know that is very challenging from a data sharing perspective, but that is something that we point to as a potential option that could reduce some of the barriers that people face.

(01:24:33)

Okay, great. We are particularly concerned about the barriers of navigating access, considering the changes with the reductions in SNAP eligibility and the lack of access to health care. There will be even fewer people using Access and thus more people eligible for Fair Fares but not using the system. As Fair Fares is a City tax levy program and thus it is at the City's discretion how to administer it, there might be other models in the City as to how to distribute such a benefit. The example that came to mind was when the Department of Finance did the Earned Income Tax Credit and appropriately found the information via state law to inform people that they were eligible for an Earned Income Tax Credit. People filing their tax returns demonstrate their eligibility for Fair Fares — it could be that people would be automatically notified. Okay, that is a good idea.

(01:25:34)

And then at the General Welfare executive budget hearing, it was explained that estimating expansion costs was very complicated and that additional overhead funding would be needed depending on enrollment and utilization rates. So...

(01:25:49)

...given how challenging it is to forecast the impact of various program expansions, how does IBO advise that the administration should assess the budgetary needs for expansion? You mean how much money should be put into Access to assist Fair Fares participants in navigating the system? I believe the head count to work Access is... and $800,000 for... I am looking at Serena because she is meant to say yes or no. Maybe those are the correct numbers. I think... ah, we would be really happy to talk with you at greater length about how a benefits calculator can be used to utilize technology and assist people and have the important human staff do more outreach and less assessment of paperwork.

(01:26:50)

Yeah, good answer. Okay. And then just really quickly, this is my last question. Around the "Block by Block" which is the Mayor's new housing plan, it outlines several key objectives and tools for addressing the City's housing shortage. The report discusses several key agencies including NYCHA and others. For example, while the executive capital commitment plan includes $90 million of City capital funding for Section 9 vacant unit readiness, this amount is dwarfed by the additional $500 million for PACT conversions. Has IBO identified other key capital investment areas that could drive down the total capital need?

(01:27:35)

So NYCHA receives capital funding from the federal government directly and that is on an annual basis and that is budgeted separately within the capital budget, so it is separate from what is in the City's capital budget. But within the City's capital budget there is funding for the vacant unit readiness. It is currently budgeted through fiscal year 2028. This is part of a larger bucket of City capital subsidies for public housing, which was about $1.2 billion in fiscal year 2026, $136 million in 2027 and $210 million in 2028. So these funds are for capital work such as asbestos and lead abatement, elevator, boiler and roof repairs. One thing that we always note is that one of the things with NYCHA's budget is that it is subject to the ability to hire contractors to get construction projects started. So with any capital budget there is a certain amount of money that is budgeted in one year that might be rolled into the next year and that was quite typical.

(01:28:43)

I am just going to pass off to CM Nurse, who has a couple of quick questions, because we have got to run. Thank you for being here.

(01:28:50)

The homeless services budget has not topped the migrant crisis peak, even as arrivals fell. What does your analysis say to explain that? Can you explain that? Public hospitals face federal cuts in the hundreds of millions while the City claws back their pension savings. Does NYCH+H's financial plan hold up? Serena, what can you...

(01:29:23)

...speak to on the asylum seeker part? Sure. So, I am sorry, your question was about the Department of Homeless Services budget still remaining high despite the decline in asylum seekers. Yes, so that is something we have been tracking really closely, and particularly tracking the daily rate that they are paying for shelter, which remains relatively high. It was even more elevated during the asylum seeker crisis. There were expectations that that would decline, and I think even IBO factored that in, and we have not seen the level of decline in that daily rate. We are also seeing a large population of older single adults and adult families that has really contributed to the elevated costs. I believe the second part of your question had to do with the changes in federal funding and the impact on Health and Hospitals. The Budget Office does not directly receive Health and Hospitals financials, but we...

(01:30:33)

...are aware of the City's contributions and as I outlined in our testimony, we are very concerned about the soon-to-be-occurring circumstance of 400,000 to 450,000 people no longer being eligible for the State's Essential Plan and continuing to need legitimate health care and seeking services, and that this will have a very large impact on H+H. As we flagged, neither the State nor the City added any funding in their budgets for this circumstance.

(01:31:09)

Is there any agency that you realize is on the budget... if you had to say right now...

(01:31:15)

...from the budget side, is there any agency specifically that you...

(01:31:19)

...can say that you believe should receive additional funding? We are concerned about the Department of Correction not having enough funding. Yeah, that is...

(01:31:28)

I would also add to what Louisa said, we have a "Federal Changes, Local Impacts" report specifically focusing on H+H and we do coordinate with them to get their detailed financial statements, so we have that information. But we are pretty limited in the amount of information we have. In that report we also talk about a couple of different ways that the City and the State could fill that gap — they could provide alternate insurance for individuals or they could expand the free clinic options that are available. We fully recognize that...

(01:32:04)

...those are maybe at capacity and would require substantial additional funds, but that is an option that we point out in the report.

(01:32:13)

Thank you. And just really quickly, going back to "Block by Block," I know that you recently published a report on the current state of rent stabilized housing, which provides an overview of the distressed housing stock in New York. So in your opinion, does the Mayor's housing plan sufficiently address the rehabilitation and preservation of distressed housing in the City? If not, what additional strategies should the City implement?

(01:32:39)

So we did publish two reports and we also testified to the Rent Guidelines Board. I am going to ask Sarah to speak to the details.

(01:32:53)

We specifically looked at multiple indicators of distress for buildings with rent stabilized apartments in them. We looked at both signs of financial distress, looking at participation and eligibility for the lien sale, and also physical distress, so housing maintenance code violations and participation in the HPD emergency repair program. Distressed properties are not a monolith and different properties require different policy tools and interventions whether they are facing financial distress or physical distress. But one key takeaway from our analysis is that among rent stabilized apartments, rent stabilized buildings fare equal to or in some cases better than non-stabilized rental buildings across these multiple metrics of distress. So it is not something specific to rent stabilization. It is a small subset of housing more specifically citywide.

(01:33:52)

Thank you for making that distinction. And we have several other questions but I think we are going to have to follow up with you and look forward to the answers. You are always super thorough and helpful in your analysis, so thank you so much and thanks for being here with us to the very end. With that, I am going to conclude the formal agency budget hearings for the Executive Budget.