NYC Finances Face $8 Billion Risk From Trump, Comptroller Warns
(Bloomberg) -- President-elect Donald Trump could jeopardize $7.9 billion in federal aid to New York City, posing “grave risks” to the city’s finances, Comptroller Brad Lander said.
Most Read from Bloomberg
Saudi Neom Gets $3 Billion Loan Guarantee From Italy Export Credit Agency Sace
Arizona Elections Signal Robust Immigration Enforcement Under Trump
The Democrat said his office had spent the days since last week’s presidential election conducting an assessment of fiscal risks the incoming Republican administration might present. The study, he said, is based on Trump’s campaign statements, actions taken during his first term and proposals outlined in Project 2025, the ultra-conservative policy blueprint that the Trump campaign has disavowed.
“America made a choice that is going to be felt in every corner of the world, including very much right here in New York City,” Lander, who is running for mayor in next year’s election, said at a press briefing on Wednesday.
New York receives $7.9 billion in federal aid each year, which accounts for 7% of the city’s $112 billion annual budget, Lander said. Nearly half of that goes toward education and early childhood programs, including $700 million for schools serving low-income students and $545 million that supports universal free breakfast and lunch programs for roughly 1 million public school students.
The $7.9 billion figure doesn’t include other federal aid and one-time capital funding infusions received by agencies like the Metropolitan Transportation Authority (a state agency), the City University of New York system and New York City Health and Hospitals, the entity that runs the city’s public hospital system.
Lander said his assessment is based in part on how Trump treated New York during his first term, when he repeatedly attempted to cut funding to non-defense discretionary programs, including education aid, public housing, food stamps and Medicaid. Shortly after taking office in 2017, Trump released a budget that would have slashed $190 million in federal aid for anti-terrorism and homeland security grants used by the New York Police Department.
Congress largely failed to approve those cuts, but shortly before he lost his reelection effort in 2020, Trump threatened to strip federal aid to what he called “anarchist jurisdictions” like New York and other Democratic-controlled cities where racial justice protests proliferated in the wake of the murder of George Floyd. That effort didn’t succeed.
The “most immediate and financially significant risk” Trump’s presidency poses, Lander said, is the possibility Trump could kill or significantly delay the implementation of congestion pricing, the city’s proposed first-in-the nation tolling program. It would have charged drivers $15 to enter or exit Manhattan below 60th Street, but the plan was paused in June by Governor Kathy Hochul shortly before implementation. Trump is on record opposing the program.
The governor has refused to say whether she intends to revive it, most likely with a lower toll, before Trump takes office in January. Hochul hasn’t identified an alternative funding source to fill the $1 billion hole in the state’s budget left by pausing the program, and Trump is unlikely to give congestion pricing the final federal approvals the program needs.
Trump’s plan to implement new tariffs could also hurt the city economy by creating higher inflation and jeopardizing industries that rely heavily on imports, like fashion, Lander said. And more broadly, Trump’s threats to implement mass deportations of undocumented immigrants could have an outsize impact on the city’s economy, which depends on immigration for population growth and labor.
Lander did identify at least some potential positive benefits to the city’s economy from the second Trump presidency: For example, New York could become more attractive to high-income residents if the administration were to lift the cap on deductions for state and local taxes, known as SALT, which was imposed in the 2017 tax law.
And extending alternative minimum tax provisions enacted under the same tax law could also benefit high earners, improving the city’s competitiveness, according to the comptroller.
A spokesperson for the Trump campaign didn’t immediately respond to a request for comment.
--With assistance from Michelle Kaske and Stephanie Lai.
Most Read from Bloomberg Businessweek
A Guide to Trump’s Tariff Plans: Expect High Drama and a Bumpy Rollout
North Dakota Wants Your Carbon, But Not Your Climate Science
For Europe, the Next US President Is a Shock—and a Catalyst for Change
©2024 Bloomberg L.P.
