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Q&A
Discussion on when and how to use the rainy day fund
0:47:29
·
3 min
Council Member Brewer and Andrew Rein discuss the appropriate use of the city's rainy day fund and other financial reserves. Rein provides insights on fiscal planning and the importance of maintaining reserves for emergencies.
- Rein suggests protecting the $2 billion rainy day fund for short-term emergencies like recessions
- He discusses the retiree health benefits trust and its intended purpose
- Rein emphasizes the need to bolster the general reserve and be cautious about using one-time funds for recurring federal cuts
Gale A. Brewer
0:47:29
I mean, I suppose that if it was a very, as you suggest, transparent executive budget, then you could know to answer some of those questions.
0:47:38
But if it's not, then we're gonna have trouble, figuring out where are the worst cuts that would impact New Yorkers the most.
0:47:46
So my question is with this rating day fund, at what point do you think it should be used?
0:47:52
How would you decide that, etcetera, etcetera?
0:47:56
So Like I said, I'm not so good on the future.
0:47:58
I like the current.
Andrew Rein
0:47:59
As a you know
Gale A. Brewer
0:48:00
I know the bond
Andrew Rein
0:48:01
My grandmother who came over with her, you know, sixteen year old sister and twin brother on a boat many years ago always told me, you know, I keep some money aside in the coffee jar.
0:48:13
I think it's a rule that we all think about personally and hopefully we have the discipline and I think it's a rule to protect New Yorkers today.
0:48:19
As the IPO said, we have $2,000,000,000 in a rainy day fund.
0:48:22
We should protect that for a short term ish emergency like a recession.
0:48:27
We might be entering one.
0:48:29
We will enter one.
0:48:30
I can't tell you when.
0:48:31
We know that prior to COVID, the average recession set the city revenues scale to where we are around $10,000,000,000.
0:48:39
We have $2,000,000,000 in that fund right now.
0:48:42
You can do the math.
0:48:43
That's around one fifth of that.
0:48:44
We should protect that for that.
0:48:46
Now we have the retiree health benefits trust.
0:48:49
It was used it should be to pay for, as a city retiree, all of our health.
0:48:53
We have a hundred billion dollar liability for all of our health insurance when we retire.
0:48:57
We have $5,000,000,000 in the trust.
0:48:59
That ratio ain't so good.
0:49:00
Although the Blasio administration and the Bloomberg administration used it as a rainy day fund.
0:49:04
We should actually protect that, you know, to the extent we can.
0:49:08
It's the right thing to do because we have that liability.
0:49:11
So therefore, we have the rainy day fund.
0:49:13
We have a general reserve next year.
0:49:14
We need to bolster that.
0:49:15
But the rainy day fund, let's hold it for the rainy day and whatever we have of the surplus role of the general reserve, it might be our transition fund.
0:49:23
But remember, the federal cuts for the foreseeable future will will be recurring.
0:49:28
You sap a fund one time, then you're just creating another another fiscal cliff.
0:49:33
And we need to remember, the cuts right now that are being challenged in courts are based on a federal continuing resolution based on the authorizations of the last Biden budget.
0:49:43
The next federal annual budget will be written by this congress and this president low.
0:49:47
With fewer fewer restraints, let alone, of course, reconciliation on the tax cut on the tack to pay for the tax cuts, which is where the Medicaid cuts might have the most get most affected.
Gale A. Brewer
0:49:57
Okay.
0:49:57
Thank you.
Philip Duncan
0:50:00
What do
Justin Brannan
0:50:01
you think of OMB suggestion that
Andrew Rein
0:50:07
the more money we put into reserves, the more we might be vulnerable to?
0:50:12
You know, this this was a question that came up when we, you know, we strongly advocated for the city to create the city charter change and then state law to change rainy day fund to create the rainy day fund, and we think there should be mandatory deposits and limited withdrawals.
0:50:27
There's always been the question, well, if we can prepare, no one will come to the rescue.
0:50:32
I my observations of federal policy right now is that I have not seen it being dictated by how much New York City is holding in any one bank account.
0:50:41
So I don't think that that concern, which might be a state local concern at times.
0:50:47
Again, I don't think it is overplayed and should be ignored because we need a rainy day fund.
0:50:51
But I don't think that that that's what's driving the federal government right now.
0:50:54
I think if we prepare for potential cuts, we will protect New Yorkers more.
Christopher Leon Johnson
0:51:00
Okay.
0:51:01
Thank you.