Mayor Promises 'Lockbox' for Pre-K Funds, But Similar Pledge Failed in '90s
CIVIC CENTER — As he pitched his plan to tax the city's rich to fund universal pre-K last month, Mayor Bill de Blasio promised Albany lawmakers the money would go into a "lockbox," where it could not be used for any other purpose.
To give an example of how his plan would work, De Blasio cited former Mayor David Dinkins' efforts more than two decades ago to fund public safety initiatives using a dedicated income tax.
“The city will place these [pre-K] funds in a ‘lockbox,’ just as [the Dinkins administration] dedicated the proceeds from tax increases in the 1990s solely to crime reduction efforts as part of the Safe Streets, Safe City initiative,” de Blasio said during testimony in Albany last month.
However, former Dinkins officials told DNAinfo New York that that so-called lockbox was far from secure. City Hall officials consistently tapped into the Safe Streets, Safe City funds for non-safety-related items when the city found itself in the grip of a budget crunch, officials recalled.
“We didn't have a lockbox with rigid sides,” said Norman Steisel, Dinkins' former first deputy mayor. “We had a sports sack.”
Michael Jacobson, a former deputy budget director under Dinkins, said fiscal challenges prompted their team to divert a portion of the Safe Street funds for unrelated purposes.
“Did every penny of safe streets go to a [new police hire]? I'm not sure,” said Jacobson. “That pressure was always present and I’m sure we did use some of that money to fill gaps.”
In a City Council budget hearing in March 1992, Jacobson said the city needed to use $80 million of Safe Streets money to help fill unrelated budget gaps — or else the city would have to make cuts from elsewhere in the budget.
"It's a zero-sum game," Jacobson told the council at the time, according to a report by The New York Times. "If you want to put that $80 million back you've got to get it from somewhere else. That means other cuts.”
Dinkins and his team had previously promised that the funds would only be used for Safe Streets, Safe Cities while negotiating the tax with state officials in 1991 — negotiations that are being mirrored now as de Blasio makes his case for the pre-K tax in Albany.
Back in the 1990s, the state eventually agreed to add a personal income tax surcharge, raise the city's property tax rate and create a lottery scratch-off game that would deliver $1.8 billion in funding over six years. The money was earmarked for the hiring of 3,500 new NYPD officers.
But the city faced a $2.2 billion budget gap at the time, which ultimately led to layoffs of 16,500 city employees.
As a result, Steisel said, the city had to be flexible with the budget, including with the Safe Streets, Safe Cities funding.
“That was a very difficult financial period,” said Steisel, adding that the city used accounting practices that didn't violate the letter of the memorandum of understanding that had been signed with the state. “The law did provide for certain flexibility.”
But Dinkins told DNAinfo New York he remembered the lockbox being ironclad.
“The money for Safe Streets, Safe City could not go into the general fund,” Dinkins said.
Asked about Dinkins' use of the lockbox model, de Blasio administration officials didn’t contest its mixed history on Safe Streets financing. But they were adamant that the $340 million in tax money for universal pre-K each year would remain separate from any other budget issues faced by the city.
The money would go into a “locked box, shielded from what we all know is the inevitable give and take of the budgeting process," de Blasio has said.
However, in light of the previous failures to keep a lockbox locked, some advocates are raising concerns about de Blasio's pledge.
“Lockboxes are impractical," said Elizabeth Lynam of the Citizens Budget Commission. "They don’t work very well in practice. They’re not recommended from a budget management perspective."
While the lockbox argument might make sense politically, Lynam said it often does not work in practice, and that using tax dollars to fund pre-K would not be a stable funding source.
“That’s a tax that tends to go up rapidly and go down rapidly,” she said.