New York, NY – Today, New York City Comptroller Brad Lander laid out the city’s economic and fiscal outlook in his office’s annual State of the City’s Economy and Finances. The Comptroller’s Office sees economic growth at a moderate pace that continues the city’s economic recovery, though below the strong growth trajectory in the years before the pandemic. Overall, the outlook for the City’s economy is one of stability following the pandemic-induced recession and the uncertainty of just one year ago.
“Notwithstanding the anxious vibes, New York City’s economic recovery is strong with jobs back above pre-pandemic levels. With stronger management from City Hall to address challenges of affordability and quality-of-life, well-targeted plans to address fiscal stress, and strategic investments in our city’s future, New York City’s economy can continue to thrive and grow in the years to come,” said Comptroller Brad Lander.
Fiscally, the Comptroller’s Office projects tax revenues to exceed currently budgeted projections, but those revenues alone will not be sufficient to close the budget gaps the City is facing next year and beyond. The gaps are a combination of long-standing areas of overspending, appropriate salary increases for City workers in a high-inflation environment, the growth in asylum seekers without sufficient Federal support, and the expiration of Federal pandemic stimulus.
Based on its forecast of revenues and expenses, the Comptroller’s Office is projecting a small surplus of $517 million for FY 2024. For FY 2025, the City faces a projected gap of $7.77 billion. When FY 2024 surplus funds are applied to prepay FY 2025 expenses, as they typically are, the projected FY 2025 gap shrinks to $5.80 billion. When the Comptroller’s Office’s adjustments to OMB’s projections are included (including habitual areas of underbudgeting), restated gaps are projected to grow in the out years, reaching $12.24 billion in FY 2027.
Addressing these gaps without harming core services that New Yorkers rely on will require stronger management from City Hall. The Comptroller calls for redoubling efforts to control ballooning costs in areas such as claims against the City, special education Carter Cases, and overtime spending, rather than cuts to agency programs and staffing (including public libraries, CUNY, community schools, job-training programs, alternatives to incarceration, parks programs, and a tax savings program for low- and moderate-income New Yorkers). The Comptroller urges the Mayor and City Council not to use the City’s long-term reserves to cover the budget gaps, but instead to preserve their use for periods of recession.
In order to continue valuable programs funded by now expiring Federal Covid aid including 3-K, Summer Rising, student mental health services, and others (at a cost of $470 million), the Comptroller urges Albany to consider modest revenue increases on the top 1% households in order to provide support municipalities across the state to continue these critical investments for New York’s future.
Stronger management to address fiscal challenges will also require more detailed and up-to-date information on policy impacts and cost trends, including the population of asylum seekers and real-time cost data on the price of emergency procurements as well as more specific reporting on the progress of implementing PEGs to assess whether projected savings are being achieved. To this end, the Comptroller calls on OMB to reinstate recurring oversight meetings with the City’s fiscal monitors, as previously requested by the NYS Comptroller and the Citizens Budget Commission.
