New York City Budget Crisis

Will Disorganization and Higher Property Taxes Push People With HIV Into the Streets?

"I went online at a friend's apartment to find the telephone number for HIV and AIDS Services (HASA). I called the number and learned it was 'no longer in service,'" reports Marsha, a 38-year-old HIV-positive woman with two children living in New York City. A recorded voice said no other information was available.

When Body Positive called HASA to check on services, an employee mumbled a few words, and then hung up. A second attempt to contact an HASA frontline employee was successful. That employee said from where he sat, "everything looks fine with the city AIDS budget." However, journalist Benjamin Ryan in Gay City News described New York City's umbrella AIDS agency as "recklessly disorganized."

HASA is the New York City agency responsible, at last count, for providing services to 45,080 HIV and AIDS clients: 31,036 people who are directly eligible for their services and 14,044 family members. Housing support is provided for about 25,000 clients and home care for 2,500. Descriptions and locations of city AIDS services within the five boroughs fill more than 100 pages in a directory.

Marsha is concerned that Mayor Michael Bloomberg's proposed 25 percent property tax hike combined with cuts to HASA and other social and city services totaling $844 million will close the door on the only stable housing she's had in years.

Sober after two drug rehabilitation stays, Marsha "plans on staying sober" but needs dependable housing to complete her upward climb. She is one of 20,000 HASA clients receiving rental subsidies for their own apartments. Another 5,000 clients rely on long-term housing arrangements accompanied by varying levels of social services to make their independence achievable. The basic rental subsidy is capped at $650 monthly in a city dismantling rent control and now facing hefty property tax hikes. Sheila fears the convergence of budget cuts and rising taxes will push up rents, making it impossible for her and others like her to keep or find affordable housing. "A $650 rental cap will not be enough to cover rent increases," one source said.

Bloomberg's Inheritance

By the time he assumed office, the "in-place" budget that Bloomberg inherited from predecessor Rudy Guliani was running a $1.1 billion deficit, down from $5 billion. Consequently, in October 2002, Bloomberg directed all City Hall chiefs to slash budgets by 7.5 percent. He chopped another $844 million in city services hoping to achieve immediate savings of $1.1 billion.

Bloomberg's directive eliminated 1,900 police officers, leaving 37,210 on the force, the smallest number in recent years. Education lost $215 million. Thirty or more senior citizen centers faced shuttering. Street cleaning may be curtailed. Eight fire companies went dark. First-round cuts required two dozen venerable cultural institutions, including Carnegie Hall and the Museum of Modern Art, to slash budgets. New Yorkers may end up paying bridge tolls on all Manhattan crossings. So far, the budget has seen 264 line-item cuts.

For Bloomberg's first round of 7.5 percent cuts, HASA shrunk administrative and general staff 30 percent through early retirements and attrition. However, the originally proposed $2.3 million cuts in service contracts to nonprofit organizations providing HIV clients with housing did not take effect.

Solo Performance

The first Bloomberg budget, proposed last November, kicks in July 1, 2003 through June 30, 2004. By law, the mayor must submit to the 51-member city council a budget plan for 2003-2004 by January 16, 2003, at which time Bloomberg predicted a $7.5 billion deficit within a $42 billion annual budget. This is the second deficit of epic proportions faced by the city in two consecutive years. The remaining $1.1 billion from the first Guliani deficit of $5 billion is the shortfall Bloomberg ordered agency commissioners to shore up with his first round of belt-tightening.

Of the $42 billion budget, $28 billion is federal and state money meant for specific programs, like HIV and AIDS, and for federal-, state- or court-mandated spending. Of the remaining $14 billion, $9 billion goes to four "untouchables": education, police, firefighters, and sanitation. That leaves at least a $7.5 billion deficit in a city that mandates a balanced budget. By comparison, the World Trade Center terrorist attack cost the city $36 billion in lost wages and business, property damage and clean up, according to the Federal Reserve Bank of New York. The federal deficit for fiscal year 2002 was $152 billion, according to the Wall Street Journal.

Further aggravating a bruised budget is the city's bone-dry borrowing options. Squeezed, Bloomberg is proposing a 25 percent property tax increase he expects will pull in $1.25 billion to help close the inherited 2002 gap and another $2.5 billion for 2003. The delegations elected from the city's five boroughs, which form the 51-member city council, have proposed their own levels of property tax increase. Manhattan city council members suggest 20 percent; Bronx pitches 17.5 percent; Brooklyn says 17 percent; Queens wants 12.5 percent, and Staten Island is pushing 5 percent or less.

Bloomberg also wants the 800,000 commuters to city jobs to generate through a new tax another $1 billion in 2003. Under his plan, for example, commuters earning $100,000 would pay $2,400 in commuter taxes. All told, Bloomberg must raise $4.4 billion in taxes and cut $2 billion in services by 2004. That's how bad the fiscal crisis is.

Bloomberg's AIDS-related cuts include $62 million over 20 months in the Department of Health and Mental Hygiene. He cut $65 million in the Department of Social Services, which includes savings of $5 million from lower-than-projected HIV caseloads through 2004.

Déjà Vu All Over Again

When budget cuts were first ordered, one agency official told the New York Observer "the new targets are almost impossible." Observers liken the current crisis to the 1970s, when accountant Abe Beame was elected mayor to employ his remedies to City Hall's fiscal woes. Beame faced a 19 percent shortfall in 1975, according to Diana Fortuna of the Citizens Budget Commission, while for 2003 Bloomberg faces one of 15 percent. Although similar in scope, the current crisis is more troubling than the 1970s because resulting from that turmoil the city is now legally required to annually balance its budget or risk financial takeover by a state board of control. During the 1970s, city elders brewed deals allowing the city four years to achieve balanced books. No state intervention loomed in the wings back then. Now pessimism looms.

New York City Budget Crisis: Will Disorganization and Higher Property Taxes Push People With HIV Into the Streets?

"How you allocate pain is a difficult exercise, and there are no painless alternatives," financier Felix G. Rohatyn, says of the current situation. He helped lead the city through the 1970s crisis. "I have a reputation for being a pessimist. You don't have to be a pessimist to be heavily concerned with what one sees."

As a client who relies on adequate HASA and social service funding to keep a roof over his head, John is "heavily concerned." Originally proposed cuts of $2.3 million in direct service contracts to nonprofit organizations providing HIV clients with housing dollars did not show up in Bloomberg's budget. But John is nonetheless concerned that higher property taxes could lead to higher rents.

Fully employed at one time as a bank manager, John's HIV disease and mental health problems forced him from his job. He couldn't keep up with full-time work and numerous medical appointments. "I need rest just to physically survive," he says with fatigue in his voice.

His fatigue worsens over fears of funding cuts. "If deep cuts are around the corner, I'm scared," John says. "I'm in no position to pay full rent." His current HASA-subsidized rent payment is $214 monthly for a one-bedroom unit in "congregate housing." He first sought an emergency bed at the Jamaica YMCA, eventually moving himself into his current residence.

"If cuts come down, everyone in my building is in the same boat," John warns. All 40 people living in his building are assisted at some level of HASA rent subsidy. Without subsidies, or facing huge rent increases to offset landlords' property tax increases, they fear returning to less stable emergency beds in standing room only (SRO) hotels or, worse yet, homelessness. Although not all have AIDS, a record 37,931 New Yorkers are homeless. To fight the rising tide, Homeless Services Commissioner Linda Gibbs late last year considered leasing three repossessed cruise ships as a way to provide the homeless with beds.

Official View

In her City Council testimony last November, Human Resources Commissioner Verna Eggleston, who oversees HASA, outlined her view of the current crisis. Herein is the fiscal crunch, according to Eggleston: HASA allocates $19 million to support emergency housing services, but spent $30 million in that category. To support long-term housing units, HASA allocated $53 million, but spent only $43 million. The looming fiscal crisis, Eggleston thinks, is not one of insufficient funding but one of misapplied funds that do not match expressed client needs.

"On an average day there are about 100 requests for emergency housing placement. Most of these requests are from people who are currently on our caseload, and over 85 percent have already been housed by HASA," Eggleston explained in her testimony. "Only about 10 percent 475 to 500 new clients cases HASA accepts monthly are found to be homeless and in need of placement in emergency housing that same day," she noted. The average nightly rate paid by HASA for emergency housing is $50.

In Eggleston's view, the stew of agencies charged with managing clients in the system and assessing their needs must cooperate more to get the most appropriate "bang for the buck." She put her money where her mouth is by proclaiming "One Client, One HRA, One Plan" and last fall convened HASA's 80 staff into a retreat, beginning the realignment process, as she put it, "at home."

"Lopsided" is what Renee Ross, senior policy associate at New York AIDS Coalition (NYAC), calls Eggleston's view. NYAC represents 200 HIV service providers in the city and State of New York. "Commissioner Eggleston's position is that all agencies involved just don't know how to or won't get along with each other to provide the best housing placements for clients. That's simply not true," Ross says. Rather, she points to a stressed HASA staff laboring under caseload ratios of 1 staff to 35 single clients and/or families and 1 staff to 28 families, as of September 30, 2002. "This is lunacy," she says, adding "complaints internal to HASA pitched by their own employees should tell them where the problem is." Besides internal complaints, nonprofit organizations shepherding clients through service mazes also complain that HASA consistently violates its own caseload ratios.

A Solution?

Terri Smith-Caronia, Housing Works' city-side public policy director, offers a historical perspective and suggestions for avoiding rising rents in a fiscally challenged city. "We're aware that the mayor has floated a ridiculously high property tax rate increase that city council will whittle down," she points out. Even so, she remains concerned that "any increase may cause landlords to raise rents to offset increased tax rates, thereby reducing the number of affordable apartments." Her solution is to link property tax hikes to an increase in the $650 rental subsidy cap.

New York City Budget Crisis: Will Disorganization and Higher Property Taxes Push People With HIV Into the Streets?

"We all realize the city's in trouble, but our clients also will be in trouble if the level at which rents will likely rise aren't offset by increases to their rental subsidy," she says. She'd be willing to settle for gradual increases in rental caps that eventually close the gap. "If the city raises property taxes by 15 percent, then it should consider raising the rental subsidy cap by 15 percent, if not all at once, then gradually," she suggests. Her colleague Jennifer Flynn, NYC AIDS Housing Network agrees. "Without a cap raise, rising rents will force HASA to pay for less housing at higher prices," she claims.

Smith-Caronia offers another solution that requires, according to her, that city officials "get honest" about how they historically have been spending federal dollars specifically earmarked for AIDS housing. "It's time for the city to get honest about the HOPWA Swap," she says. HOPWA stands for Housing Opportunities for People with AIDS and is a federally funded program. The city receives $52 million annually to support housing for its AIDS caseload.

"They take $25 million off the top and pay for case managers at HASA," she claims. Of the remaining $25 million, another $10 million is "saved." At least that's how the amount has been described in previous years' budgets, a description Smith-Caronia decries. "What they mean is that city officials take those 'savings' and pay for street repairs, tree planting, but certainly not housing for people with AIDS." The money isn't "saved," she says, but spent on other projects at the expense of people with AIDS.

Even if the federal HOPWA funds are moved around, a shuffle Smith-Caronia says federal watchdogs disallowed in 1998, but then let pass into practice the next year into 2002, she says officials could still use the remaining $15 million to woo state money. "Why not approach the state house in Albany requesting matching funds of $15 million and use it for AIDS-related housing which was, after all, the original intent for the federal funds?" she asks.

Frank Pizzoli is a freelance writer whose work appears in Positively Aware_,_ POZ_,_ OUT's HIV Plus_,_ HIV Positive_, and city papers nationwide. His booklet "It's a Queer Life" is available for free at


  1. Mayor's budget figures compiled from New York Observer, Oct. 14, 2002, page 1 by Greg Sargent and George Will's syndicated column, October 25, 2002, "Bloomberg Does His Arithmetic."

  2. Comparison figure of $5 billion NYC deficit to U.S. government deficit of $152 billion for fiscal year 2002 from Wall Street Journal, October 25, 2002, page 1 column.

  3. The New York Times, October 10, 2002, "City Budget Gap Grows, and Visions of the '70s Grow Vivid" by Michael Cooper (Quotes from Felix G. Rohatyn).

  4. The New York Times, October 10, 2002, "City Budget Gap Grows, and Visions of the '70s Grow Vivid" by Michael Cooper (Comparison of 1975 to 2003 shortfalls of 19 and 15 percent respectively by Diana Fortuna, Citizens Budget Commission president).

  5. Figures for 1,900 police jobs lost, commuter tax cost and projected income, $125 million education cuts, and 25 percent property tax increase from The New York Times, Thursday, November 14, 2002, page A32, "Bloomberg Favors a Tax on Commuters" by Michael Cooper.

  6. Human Resources Commissioner Verna Eggleston's remarks to City Council drawn from a transcript of her testimony delivered November 6, 2002.

  7. Case load ratios of 1 staff to 35 for single and/or family case loads and 1 staff to 28 for all family caseloads, as of September 30, 2002, from Jennifer Flynn, executive director New York City AIDS Housing Network.

  8. Renee Ross, senior policy associate at New York AIDS Coalition (NYAC).

  9. Terri Smith-Caronia, director of NYC Public Policy, Housing Works.