In a day of unexpected news, both bad and good, Mayor Bill de Blasio on Thursday unveiled a $92 billion preliminary budget plan—$5 billion less than what was proposed just two month ago—that will prioritize spending on the city's coronavirus response; shore up funding for schools, including the continuing expansion of the mayor's signature pre-K program; and essential services.

With half a million jobs lost and unemployment over 10% due to the pandemic, New York City is facing a historic financial downfall. In the upcoming budget, the mayor was dealt a more than $5 billion shortfall that he said would be addressed primarily through forced savings by city agencies, renegotiated labor union contracts, and changes to the municipal pension plan.

"The years ahead are not easy," said the departing mayor, during a press conference at City Hall.

As of late Thursday, line-item details of the mayor's proposed budget were not yet released. But in the most dire revelation of the day, the mayor's office said that the city's property tax revenues are projected to drop by $2.5 billion, a staggering decrease driven by the COVID's impact on the value of hotels and office properties.

It represents the largest percent decline in the city's property tax revenue since 1996, according to the city. In fiscal year 2019, the city collected nearly $32 billion in taxes from real estate, making up more than half of the city's total tax revenue.

During the November budget, officials had forecasted around $31.8 billion in property tax revenue. The latest projection reflects an 8% drop.

The losses will be partially blunted by Washington. Moments before the mayor's presentation, the future Senate majority leader, Chuck Schumer, informed de Blasio that President-elect Joe Biden had agreed to cover the full costs of state and city expenses from the pandemic. Previously, the city had been expected to pay 25% of the costs incurred by its response to the virus outbreaks.

The city will now gain approximately $1 billion from the additional subsidy.

In another offset to losses, the city's personal income and corporate tax revenue actually increased in the past year, an outcome that de Blasio in his presentation coined as the "rich got richer."

Marking a departure from tradition, the mayor delivered his budget plan prior to the state budget presentation by Governor Andrew Cuomo. Cuomo, who has spent the week outlining the state's priorities in five separate state of the state addresses, is expected to present his budget proposal next week.

According to James Parrott, a former chief economist for Mayor David Dinkins, the early budget plan was strategic for de Blasio, who has often been forced to play defense during his battles with the governor.

"He wanted to signal clearly to the governor that the city is taking a big hit on its property taxes, and that the governor shouldn’t look to the city to close the state budget deficit," he said.

In other words, he added: "He’s sending up a flare, saying, 'Don't come after us.'"

During his presentation, de Blasio criticized the state for threatening $4 billion in cuts for New York City and warned Albany not to short-shrift the city on education funding, a long simmering complaint by city school advocates.

The mayor also took up his call for the state to raise taxes on the wealthy. Specifically, he and other Democrats have urged the governor to increase taxes on billionaires, an idea that Cuomo, a tax-cutting social progressive, has repeatedly resisted.

"Let’s tax the wealthy at the level they deserve," de Blasio said.

With his latest budget plan, the mayor staked out familiar policy territories geared toward helping lower-income New Yorkers—$35 million toward addressing the social and emotional needs of public school students, $14 million in expanding Wifi in homeless shelters, and $52 million in food assistance.

After being harshly criticized last year for cuts to the summer youth employment program, the budget now calls for restoring 70,000 slots at a cost of $132 million. 

The mayor has up until now avoided large-scale municipal layoffs that many had expected. In the fall, he spoke of the potential for 22,000 layoffs.

Still, the city has made major cuts to its workforce through attrition: 7,000 municipal workers have been cut since January, according to the mayor. Looking ahead, the city will seek to reduce an additional 5,000 employees.

Parrott said the city job cuts were significant. Since taking office in 2014, de Blasio has added more than 30,000 municipal employees.

Some critics have said the mayor has not shrunk the budget enough given the unprecedented nature of the crisis. Parrott has predicted that between 200,000 to 300,000 jobs lost from the pandemic will not return anytime soon in the near future.

In a statement immediately following the mayor's remarks, Andrew Rein, of the Citizens Budget Commission, urged the city to make more dramatic cuts, in the form of changes to employee benefits as well as headcount reductions.

"Unfortunately, nearly one year into the fiscal crisis, the City still has not substantially embarked on the significant restructuring and spending restraint needed to stabilize its long-run finances," he said.

Under the city’s budget process, the plan now moves to the City Council for review and hearings.