Budget gaps in New York City occur when projected government spending exceeds anticipated tax revenues and other available resources, requiring the administration to identify savings or new revenue to maintain a balanced budget. This page covers CBC’s work on structural budget deficits, the use of one-time resources to close funding holes, the impact of agency spending growth, the role of CityFHEPS and other social service programs, and strategies for improving operational efficiency.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
Double Executive Order 12 saving initiatives to $2 billion in fiscal year 2027 and increase by $1 billion annually thereafter to reduce spending without cuts to critical services.
Implement additional actions to reduce costs stemming from CityFHEPS, due process (Carter) cases, and other fast-growing areas.
Fund additional new spending and City Council initiatives with recurring savings.
Increase the fiscal year 2027 General Reserve to $500 million to protect against economic volatility and unexpected spending shocks.
The City should pursue a full-scale effort to shrink spending that does not deliver for New Yorkers instead of relying on short-term strategies to close budget gaps.
The City should prioritize holistic transformation to achieve excellence in government rather than relying on fiscal maneuvers.
The City should avoid raising already nation-leading taxes, which risks competitiveness.
Key Data
In June 2026, the CBCNY reported that New York City's projected budget gaps are expected to grow from $7.1 billion in fiscal year 2028 to $9.8 billion in fiscal year 2030, even before accounting for future employee raises.
In March 2026, the CBCNY noted that expanding CityFHEPS eligibility could cost between $5.7 billion and $22.3 billion over five years, potentially doubling the city's fiscal year 2030 budget gap.
A December 2025 analysis revealed that the MTA faces a $1.1 billion structural budget gap in 2029, which is the difference between its recurring revenues and recurring expenses.
Reflecting in October 2025 on the 1975 fiscal crisis, the CBCNY recalled that New York City faced a reckoning when it had to repay debt totaling $453 million that it did not have.
The budgets are in. Now find out what matters. With the Fiscal Year 2027 New York State and New York City budgets finalized, CBC invites you to a timely briefing with our research staff on what the budgets mean for New York's fiscal outlook. We'll highlight the most significant policy…
New York City's fiscal year 2027 budget relies heavily on one-time resources and short-term savings to close significant gaps, leaving the city vulnerable to future fiscal instability. Projected budget gaps are expected to grow from $7.1 billion in fiscal year 2028 to $9.8 billion in fiscal year 2030, necessitating more substantial, recurring spending reductions to ensure long-term sustainability.
Recommendations related to Budget Gaps
Double Executive Order 12 saving initiatives to $2 billion in fiscal year 2027 and increase by $1 billion annually thereafter to reduce spending without cuts to critical services.
Implement additional actions to reduce costs stemming from CityFHEPS, due process (Carter) cases, and other fast-growing areas.
Fund additional new spending and City Council initiatives with recurring savings.
Increase the fiscal year 2027 General Reserve to $500 million to protect against economic volatility and unexpected spending shocks.
Key Data
$7.1 billion
— Projected budget gap in fiscal year 2028.
$9.8 billion
— Projected budget gap in fiscal year 2030.
$12.7 billion
— Total value of gap closing actions proposed to balance the budget.
$5.0 billion
— Value of one-shot actions that patch budget holes but do not solve long-term problems.
$2.8 billion
— Value of delays and stretch-outs used to preserve or worsen fiscal problems.
$500 million
— Recommended increase for the fiscal year 2027 General Reserve to protect against economic volatility.
$124.7 billion is the amount Mayor Mamdani proposes to spend in fiscal year 2027. The budget process is never simple, but this year the intensity ratcheted up. Revealing a large budget gap, the City administration negotiated with the State for aid to bridge it while simultaneously pursuing its ambitious programmatic…
New York City's fiscal year 2027 executive budget relies on short-term strategies and one-shot fixes, such as a $1.2 billion accrual sweep, rather than a comprehensive effort to reduce spending. Consequently, City-funded spending is projected to grow by 28 percent, or $24.4 billion, between fiscal years 2025 and 2030, with outyear budget gaps swelling to nearly $10 billion.
Recommendations related to Budget Gaps
The City should pursue a full-scale effort to shrink spending that does not deliver for New Yorkers instead of relying on short-term strategies to close budget gaps.
The City should prioritize holistic transformation to achieve excellence in government rather than relying on fiscal maneuvers.
The City should avoid raising already nation-leading taxes, which risks competitiveness.
Key Data
28 percent
— The rate at which City-funded spending is projected to grow between fiscal years 2025 and 2030.
$24.4 billion
— The total increase in City-funded spending between fiscal years 2025 and 2030.
nearly $10 billion
— The projected size of outyear budget gaps by fiscal year 2030.
$1.2 billion
— The amount of the accrual sweep used as a one-shot budget fix.
Expanding the Fair Fares NYC program to 250 percent of the federal poverty level would cost $146 million annually, which is significantly more fiscally responsible than the $900 million required for a fare-free bus program. This targeted approach preserves the City's limited fiscal resources during a time of significant budget gaps while still providing necessary transit affordability for low-income residents.
Recommendations related to Budget Gaps
Raise the Fair Fares NYC eligibility threshold to 250 percent of the FPL.
Improve low uptake and utilization of Fair Fares NYC through expanded education, outreach, and enrollment strategies.
Leverage proven strategies, such as signal priority and physically separated busways, to make the City's streets more conducive to faster bus traffic.
Work with the MTA to further improve bus speeds.
Key Data
$900 million
— The annual cost to the City to replace the MTA’s current bus fare revenues if buses were made fare-free.
$146 million
— The annual cost to the City to expand Fair Fares NYC eligibility to individuals making up to 250 percent of the FPL.
722,000
— The number of additional New Yorkers who would become eligible for Fair Fares NYC under the proposed expansion to 250 percent of the FPL.
31 percent
— The current enrollment rate of the 1.23 million New Yorkers eligible for Fair Fares NYC.
7.0 miles per hour
— The average speed of New York City buses, which is 29.3 percent slower than the 9.9 miles per hour average among other major US bus systems.
$232 million
— The total cost of the expanded Fair Fares NYC program.
$127 billion is the size of NYC's Preliminary Budget for Fiscal Year 2027. After reporting a yawning $12 billion budget gap estimate, Mayor Mamdani revised that number down to $5.4 billion, thanks in part to Governor Hochul's willingness to chip in. But don't let the shrinking gap fool you: the…
The CityFHEPS rental voucher program has experienced rapid growth, with costs projected to reach $3.1 billion by fiscal year 2030, creating significant fiscal pressure on the city's budget. Capping the number of vouchers at current levels could save $330 million in fiscal year 2027 and $3.0 billion over the five-year financial plan, helping to mitigate the city's multi-billion dollar budget gaps.
Recommendations related to Budget Gaps
Now is the time to cap the number of CityFHEPS vouchers at the current level.
The City should certainly not pursue an unaffordable expansion that would explode costs even higher.
Turnover among current beneficiaries would allow the City to issue vouchers to some new households each year; priority should be given to those with the greatest need.
The City should scrutinize large programs and drill into agency budgets to eliminate wasteful spending and improve efficiency.
The City would need to offset CityFHEPS funding by restraining other low impact spending.
Key Data
$330 million
— Savings in fiscal year 2027 from capping the number of CityFHEPS vouchers at the current level.
$3.0 billion
— Savings over the five-year financial plan from capping the number of CityFHEPS vouchers.
$7 billion
— Annual budget gaps the City is facing in years where the CityFHEPS program would still cost more than $2 billion.
$1.7 billion
— Projected cost of the CityFHEPS program in the current fiscal year.
$9.5 billion
— Amount added in the preliminary budget for CityFHEPS on top of the previously budgeted $3.1 billion.
New York City faces a $9.4 billion budget gap for fiscal years 2026 and 2027, driven by spending that has significantly outpaced inflation and revenue growth. To address this, the city should prioritize operational efficiency and spending restraint rather than relying on tax increases and the depletion of fiscal reserves.
Recommendations related to Budget Gaps
The City should reject tax increases that would harm the City’s economic competitiveness and place additional burdens on residents and businesses.
The City should reduce ineffective spending and improve operational efficiency, including spending on education, procurement, and administrative operations.
The City should right-size spending in areas where demand has changed, such as adjusting school funding to reflect declining enrollment and managing the growth of the FHEPS housing voucher program.
The City should build and maintain adequate reserves by not drawing down the rainy day fund or RHBT and including $1 billion of in-year reserves to protect against economic downturns.
Key Data
$9.4 billion
— The combined fiscal year 2026 and 2027 budget gap after adjusting for updated revenue and accurate spending forecasts.
$16 billion
— The amount by which fiscal year 2026 spending exceeds what it would have been if it had grown at the rate of inflation since fiscal year 2017.
$100 million
— The amount of in-year reserves included in the fiscal year 2027 budget, representing just 0.1 percent of the total budget.
$15 billion
— The estimated funding required over two years to mitigate the effects of a significant economic downturn.
$2.6 billion
— The amount of recurring savings identified that could be achieved before drilling down into specific agency operations.
$1 billion
— The amount of recurring annual savings included in the Preliminary Budget, which is considered far below the level needed for a sustainable fiscal path.
New York City faces a projected $6.7 billion budget gap in fiscal year 2028, prompting concerns about the reliance on one-shot resources like the $1.2 billion pulled from the Rainy Day Fund and Retiree Health Benefits Trust. To address these fiscal challenges, the administration is encouraged to avoid tax increases and instead pursue structural savings, such as securing relief from state class size mandates and adjusting school funding for declining enrollment.
Recommendations related to Budget Gaps
The City should eliminate spending that does not improve New Yorkers’ lives to make government more efficient and effective.
The Administration should not raise taxes, which would make the City less attractive for residents and businesses.
The City should redouble its efforts to find more substantial savings by the Executive Budget.
The Mayor should partner with municipal unions to redesign work processes and broaden responsibilities to increase efficiency.
The City should secure relief from the State class size mandate to achieve up to $1 billion in savings.
The City should adjust school funding for declining enrollment to achieve $400 million in savings.
The City should consolidate union welfare benefit funds to achieve $200 million in savings.
Key Data
$127 billion
— Total amount of the city's preliminary budget.
$1 billion
— Potential savings from securing relief from the State class size mandate.
$400 million
— Potential savings from adjusting school funding for declining enrollment.
$200 million
— Potential savings from consolidating union welfare benefit funds.
$1.2 billion
— Amount pulled from the Rainy Day Fund and the Retiree Health Benefits Trust to balance the budget.
$6.7 billion
— Projected budget gap in fiscal year 2028.
New York City's fiscal challenges stem from excessive spending growth, which has consistently outpaced inflation over the last decade. To close budget gaps, the city should prioritize operational efficiencies and productivity improvements rather than raising taxes, which would undermine competitiveness.
Recommendations related to Budget Gaps
The City should ensure a multi-year improvement plan that emphasizes recurring savings driven by productivity, service redesign, and evidence-based impact.
Agencies should identify efficiencies based on aligning staffing and workload, streamlining administrative functions, leveraging technology to automate manual processes, and eliminating or redesigning programs that have not demonstrated effectiveness.
The City should augment current efforts with a citywide, data-driven management framework that supports continuous improvement.
The City should expand operational flexibility, modernize job titles, spur employee input into quality and process improvement, and pursue gainsharing arrangements that allow employees and residents alike to benefit from greater productivity.
The City should prioritize state-of-good-repair investments and improve capital execution to control capital costs, moderate debt service, and reduce maintenance spending over time.
Key Data
$2.3 billion
— Amount the City spent more than it received over the past three years.
$15 billion
— Amount the City would be spending today if spending growth had merely kept pace with inflation over the last decade.
New York City faces a significant budget shortfall that requires immediate action through operational efficiency and spending reform rather than tax increases. By implementing performance management systems, updating labor relations, and eliminating wasteful processes, the city can improve public services and restore fiscal stability without relying on additional revenue.
Recommendations related to Budget Gaps
The best fiscal rescue plan starts by diving into every agency, cutting unproductive spending, and streamlining operations using technology and eliminating wasteful bureaucratic processes.
The Mayor should set ambitious minimum savings targets—not for blunt across-the-board cuts, but to generate options so he can make strategic choices that focus programs without harming New Yorkers.
The Administration should implement a citywide performance management system to improve services and guide smarter budget decisions.
To meet 21st Century needs, the City must also update 20th Century labor relations, technology, and bureaucratic processes.
The Mayor should request relief from Albany’s class size mandate that costs the City $1 billion, partly to support high-performing schools serving low-need students.
Key Data
$8 billion
— Estimate of the budget gap facing New York City.
$2.3 billion
— Amount the City spent more than it received over the past three years.
$1 billion
— Cost to the City of Albany’s class size mandate.
17.44%
— Combined corporate tax rate in New York City.
11.5%
— Combined corporate tax rate in New Jersey.
New York City faces a projected fiscal year 2027 budget gap approaching $8 billion, a problem that requires prioritizing effective programs and restructuring government operations rather than raising taxes. To address this, the city should leverage technology and modernize operations, while the state should repeal the class size mandate that drives unnecessary spending.
Recommendations related to Budget Gaps
Mayor Mamdani’s first task should be to comb through City programs to identify and protect those that deliver significant positive impact and shrink those that do not.
The City should leverage technology, modernize outdated operations, and work with labor to boost productivity.
The spending plan should reflect the reported $1 billion in savings from rebidding the City’s health insurance plan.
The City should lay out a multi-year effort to restructure City government to be more efficient and results driven.
The State should repeal the class size mandate, which restricts the Mayor’s flexibility and drives higher spending that widens the budget gap.
New York should prioritize what works and shrink what doesn’t—before turning to the easier option of raising taxes.
Key Data
$8 billion
— Estimated fiscal year 2027 budget gap for New York City.
$14.5 billion
— Amount by which City spending would be lower today if it had tracked inflation.
$1 billion
— Projected savings from rebidding the City’s health insurance plan.
The MTA's November 2025 Financial Plan shows near-term stability but masks a significant $1.1 billion structural budget gap in 2029, driven by reliance on one-time resources and optimistic assumptions. To ensure long-term fiscal health and avoid future service reductions or bailouts, the MTA must implement structural efficiencies, control paratransit costs, and aggressively address fare evasion.
Recommendations related to Budget Gaps
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
Continue to reduce fare evasion, which is on track to cost more than $900 million this year.
Collaborate with the City to improve uptake, assess the cost-effectiveness, and consider expanding Fair Fares NYC.
Reduce paratransit per-trip expenses by using the paratransit fleet and broker services strategically to ensure users are provided with the lowest-cost transportation option that meets their needs.
Continue biennial fare and toll increases and consider tying them to year-over-year expense growth instead of a flat 4 percent.
Key Data
$1.1 billion
— The MTA's underlying structural budget gap in 2029.
$2.1 billion
— The amount of one-time resources the multi-year financial plan relies on.
$900 million
— The estimated cost of fare evasion in 2025.
$325 million
— The projected revenue reduction if ridership levels are 5 percent below forecast.
$150 million
— The cost of each percentage point above 2 percent for wage increases in the first year.
$159 million
— The estimated increase in paratransit reimbursement in 2029 due to assumed legislative change.
The incoming administration faces a budget gap between $5 billion and $8 billion that requires balancing service reductions with improved efficiency and fiscal discipline. Additionally, the current financial plan continues to underfund essential services by at least $4 billion annually, including significant shortfalls for rental assistance and homeless shelters.
Recommendations related to Budget Gaps
The Mamdani Administration should rein in spending growth by shrinking low impact services and improve efficiency by managing better and collaborating with labor to balance the budget.
The administration should end the City’s practice of underbudgeting for known spending, which distorts the fiscal picture and undermines smart choices.
The administration should set aside funds to soften the initial blow of federal cuts and protect vulnerable New Yorkers from the next recession.
Key Data
$5 billion to $8 billion
— The projected budget gap that the Mayor-elect's first budget proposal must close.
at least $4 billion
— The amount of annual planned spending in future years that the budget continues to underfund.
at least $1 billion
— The amount of annual planned spending underfunded for the CityFHEPS program.
$600 million
— The amount of annual planned spending underfunded for homeless shelters.
The incoming administration faces a significant budget gap of $6 billion to $8 billion, exacerbated by chronic underbudgeting and a lack of preparation for economic downturns. To restore fiscal stability, the city must implement disciplined financial management, including accurate revenue forecasting, performance-based budgeting, and structural reforms to spending and hiring.
Recommendations related to Budget Gaps
The next administration should present a full and realistic accounting of revenues and expenses, working with the Office of Management and Budget to identify the City's total spending obligations, how much revenue is available, and the risks.
The administration should implement a savings plan that streamlines operations, reduces duplication, phases out lower-impact programs, leverages technology to automate manual processes, and increases productivity in collaboration with labor unions.
The new administration should shift vacant positions across agencies and units based on needs and eliminate excess vacancies to right-size headcount.
The City should increase the General Reserve by $1 billion per year to strengthen the City’s ability to absorb the initial impact of unexpected cuts or delays in federal aid.
The City should work with the City Council to pass a Local Law to strengthen the Rainy Day Fund by requiring deposits during economic expansions, restricting withdrawals to a recession or severe emergency, and setting the fund’s target size.
Key Data
$6 billion to $8 billion
— Projected budget gap the incoming administration must close.
$4.5 billion
— Amount by which the City's projections understate fiscal year 2027 spending.
$2.3 billion
— Cumulative amount by which annual expenses exceeded annual revenues over the past three fiscal years.
$14.0 billion
— Estimated amount needed to cover two years of tax revenue declines during a recession.
$2.0 billion
— Current balance of the City's Rainy Day Fund (Revenue Stabilization Fund).
19,302
— Number of full-time and full-time equivalent vacant positions as of June 2025.
Fifty years ago today New York City came within hours of bankruptcy, one of the most significant events of the Fiscal Crisis. This episode features interviews with two of the era’s heroes—Stephen Berger, who served as Executive Director of the State Emergency Financial Control Board, and Eugene Keilin, Executive Director…
New York City's current budget is precarious, as revenues are insufficient to sustain expanded spending, creating a situation that mirrors the fiscal instability of the 1970s. To ensure a stable future, the government must prioritize fiscal discipline, focus on effective services, and modernize operations to deliver a high quality of life.
Recommendations related to Budget Gaps
The City must keep its fiscal house in order.
The City must focus on what works most and trim what doesn’t, even if it’s popular.
City government needs to deliver a high quality of life, lest people leave.
The City and municipal unions should work together to modernize government.
The City should collaborate with nonprofit providers to focus resources on the most effective evidence-based services.
Key Data
$453 million
— Debt that New York City had to repay 50 years ago, which it did not have the money to cover.
$120 billion
— Annual amount New York City already spends, which can deliver a great deal if focused well and efficiently used.
The Metropolitan Transportation Authority faces a structural budget gap exceeding $800 million annually, with an additional $345 million operating gap projected for 2027. To address these shortfalls, the transit agency must implement proposed fare and toll increases, continue reducing evasion, and pursue further operational efficiencies.
Recommendations related to Budget Gaps
The MTA should implement the proposed fare and toll increases to support ongoing operations and protect riders from unexpected price hikes.
The MTA should continue efforts to reduce fare and toll evasion, which currently results in significant annual revenue losses.
The MTA must continue to rein in expenses to help close its structural budget gap.
The MTA and labor unions should pursue work rule changes that increase productivity and operational flexibility.
The MTA should continue the promotion of Fair Fares NYC to assist those who struggle to afford public transit.
Key Data
$345 million
— Operating budget gap projected for 2027.
$800 million
— Annual structural budget gap, representing the difference between recurring revenues and expenses.
$350 million
— Annual revenue expected from the proposed fare and toll increases.
$1 billion
— Estimated revenue lost to fare and toll evasion last year.
$900 million
— Projected revenue loss to fare and toll evasion for the current year.
$500 million
— Recurring operating efficiencies identified by the MTA over the past several years.
Fare and toll evasion cost the MTA approximately $1 billion in 2024, which exacerbates the agency's $800 million structural operating budget gap. Addressing this revenue loss is critical for maintaining fiscal stability and funding necessary capital projects without relying on excessive debt.
Recommendations related to Budget Gaps
The MTA should refine and continue a multi-faceted approach to reducing fare and toll evasion to help close the structural budget gap.
The MTA should accelerate the rollout of new faregates funded in the 2025 to 2029 Capital Plan to improve revenue collection.
The MTA should accelerate the rollout of proof-of-payment to allow EAGLE Team inspectors to enforce fare payment on local and express buses.
The MTA should publish comprehensive and regular data on fare and toll evasion to ensure public accountability and assess progress.
The MTA should work with the City to assess the cost-effectiveness of deploying police officers to enforce fare payment.
The MTA should work with the City to assess the effectiveness of the Fair Fares Program and consider expansion to support riders.
The MTA should publish data to show the cost-effectiveness of their interventions and tailor programs to ensure they are getting the maximum return on their investments.
Key Data
$1 billion
— Estimated cost of fare and toll evasion to the MTA in 2024.
$800 million
— The MTA's structural operating budget gap that reducing evasion is essential to close.
$900 million
— Projected total losses from fare and toll evasion in 2025 if current trends continue.
330
— Number of subway fares evaded every minute during 2024.
710
— Number of bus fares evaded every minute during 2024.
36 percent
— Decrease in fare evasion at locations where unarmed gate guards have been utilized.
Download the Presentation The New York State and New York City budgets are unaffordable and unprepared both for a recession and for federal budget cuts that will start hitting this fiscal year and grow in the future. Check out CBC’s New York State and New York City Fiscal…
New York City's fiscal year 2026 budget faces significant challenges, with a $3 billion shortfall for planned expenses and projected future budget gaps reaching up to $10 billion. Despite strong tax revenues, the city failed to add any funds to its Rainy Day Fund, while spending obligations continue to outpace current revenues.
Recommendations related to Budget Gaps
The City should deposit at least $2 billion into the Rainy Day Fund to help preserve services and stability during the next recession.
Key Data
$8 billion to $10 billion
— The size of future budget gaps, once adjusted for underbudgeted programs.
Over $3 billion
— The amount the fiscal year 2026 budget is short to pay for likely expenses and planned programs.
$610 million
— The amount that fiscal year 2025 spending obligations exceeded fiscal year 2025 revenues.
$122.7 billion
— The total fiscal year 2026 spending obligation once adjusted for prepayment of fiscal year 2026 obligations and underbudgeted programs and expenses.
$0
— The amount added to the Rainy Day Fund.
7.6 percent
— The City-funded spending increase from fiscal year 2025 to fiscal year 2026, once adjusted for prepayments and underbudgeted expenses.
New York City's fiscal year 2026 budget agreement leaves future budget gaps of more than $9 billion while failing to adequately prepare for federal cuts or a potential recession. To ensure long-term stability, the city must prioritize critical services, increase efficiency, and shrink low-impact programs rather than increasing spending at twice the rate of inflation.
Recommendations related to Budget Gaps
The City should put aside $3 billion to soften the first blows of federal cuts and protect against a future recession.
The City must stabilize the budget and secure the future by increasing efficiency and shrinking low impact programs.
The City can be more affordable, safe, and stable if it prioritizes critical services, manages them to deliver results, and protects its fiscal foundation.
Key Data
$3 billion
— Amount that should be set aside to soften the first blows of federal cuts and protect against a future recession.
$9 billion
— Future budget gaps projected after accounting for underbudgeted expenses.
$11 billion
— Amount of revenue a typical recession would sap over two years.
New York City faces significant fiscal challenges as spending outpaces revenue, necessitating a strategic reset to ensure long-term stability and competitiveness. Leaders must prioritize sustainable spending, fiscal discipline, and evidence-based management to address looming budget gaps and prevent service cuts.
Recommendations related to Budget Gaps
Leaders should choose to trim spending to sustainable levels, build up rainy day funds during good times, and negotiate labor deals that balance fair wages with fiscal reality.
Leaders should focus on evidence-based programs in education and mental health and make the hard choice to eliminate ineffective initiatives, regardless of their political popularity.
Leaders must hold the line on taxes to ensure the city remains affordable and competitive.
Leaders need to choose management systems that deliver results and hold officials accountable to ensure the city gets what it pays for.
Key Data
$115 billion
— The city's annual budget, which only 11% of New Yorkers believe is being spent wisely.
100,000
— Net residents lost to Florida between 2018 and 2022.
$13.7 billion
— Personal income lost to Florida between 2018 and 2022 due to resident migration.
New York City faces significant financial instability as spending outpaces revenue, creating gaping budget gaps that threaten essential services. To address this, the city must implement structural reforms, including cutting spending to sustainable levels, capping debt service, and utilizing performance-based budgeting to improve fiscal health.
Recommendations related to Budget Gaps
The city should cut spending to sustainable levels and stop low-balling budget estimates.
The city should run regular Programs to Eliminate the Gap (PEGs) smartly to save money.
The city should build up the Rainy Day Fund with mandatory deposits in good times.
The city should cap debt service and redefine the City’s debt limit to reflect all obligations and resources.
The city should negotiate thoughtful labor deals that balance fair compensation and fiscal reality.
Key Data
$115 billion
— The annual amount the City spends, which necessitates making every dollar count through improved service delivery.
New York City's fiscal year 2026 budget faces future gaps ranging from $8 billion to $10 billion, with proposed costs reaching $121 billion while remaining at least $3 billion short of funding existing service levels. To address these shortfalls and prepare for potential economic downturns or federal funding cuts, the city must prioritize high-impact programs, increase efficiency, and avoid underbudgeting.
Recommendations related to Budget Gaps
The Mayor and City Council should break the habit of underbudgeting and adding unaffordable spending during negotiations and instead focus priorities and set aside money to address the next recession and likely reductions in federal funding.
The City needs to hold spending to an affordable level by prioritizing high impact programs, shrinking others, and increasing efficiency.
The City should add $1 billion in next year’s General Reserve to soften the first blows of federal cuts and $2 billion to the Rainy Day Fund.
Key Data
$8 billion to $10 billion
— Future budget gaps range from this amount once underbudgeted expenses are added.
$121 billion
— Fiscal year 2026 proposed costs balloon to this amount when adjusted for the expenses prepaid in the current year and expected costs not funded.
$3 billion
— The fiscal year 2026 budget is at least this amount short to fund existing service levels, like FHEPS, overtime, and public assistance.
$1 billion
— Amount that should be added to next year’s General Reserve to soften the first blows of federal cuts.
$2 billion
— Amount that should be added to the Rainy Day Fund.
New York City faces significant fiscal risks from potential federal budget cuts that threaten vital services, while current spending practices have created annual underbudgeting of $4 billion and future budget gaps that may exceed $10 billion. To mitigate these threats, the city must implement immediate fiscal discipline, including holding the line on new spending and bolstering reserves, to ensure essential services remain protected.
Recommendations related to Budget Gaps
The city should hold the line on new spending by not adding or expanding programs in the Executive and Adopted Budgets.
The city should buttress the fiscal year 2026 General Reserve by adding at least $1 billion to help absorb the immediate blow of federal cuts.
The city should strengthen the Rainy Day Fund by adding $500 million, reserving it for short-term emergencies like a recession.
The city should restrain spending growth through a “Program to Eliminate the Gap” to streamline administrative overhead and increase efficiency.
The city should end the budget-estimating gimmickry to provide New Yorkers with accurate and reasonable estimates of revenue and expenses.
Key Data
$10 billion
— Potential size of future budget gaps even without federal cuts or a recession.
$4 billion
— Amount of annual underbudgeting that drastically understates the size of future gaps.
$1.1 billion
— Amount the city spent more on fiscal year 2024 obligations than it took in.
$7.4 billion
— Amount of federal aid the city receives that supports vital services like child care vouchers, family shelters, and school food programs.
$1.4 billion
— Annual federal operating support for the New York City Housing Authority.
$2 billion
— Federal dollars that fund more than 96,000 housing vouchers administered by the New York City Housing Authority.
New York City faces significant fiscal risks from potential federal funding cuts, which currently account for $7.4 billion of the Fiscal Year 2026 Preliminary Budget. To mitigate these threats and address existing structural issues like $4 billion in annual underbudgeting, the City must restrain spending growth, bolster reserves, and improve the accuracy of its financial reporting.
Recommendations related to Budget Gaps
The City should hold the line on new spending in the Executive and Adopted Budgets to manage potential federal funding shortfalls.
The City should buttress the General Reserve with at least another $1 billion in fiscal year 2026 to help absorb the immediate blow of federal cuts.
The City should strengthen the Rainy Day Fund by depositing $500 million and reserve the Fund for a short-term emergency like a recession, rather than for temporary mitigation of recurring federal cuts.
The City should implement a Program to Eliminate the Gap (PEG) to restrain spending growth, focused on streamlining administration, increasing efficiency, and shrinking programs that deliver less value to residents.
The City should end the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter.
Key Data
$7.4 billion
— The amount of federal aid included in the City’s Fiscal Year 2026 Preliminary Budget.
$1.1 billion
— The amount the City spent more on fiscal year 2024 obligations than it received.
$4 billion
— The annual amount of underbudgeting that understates future budget gaps.
$91 billion
— The amount the State receives from the federal government, primarily for public health insurance and education.
$1.4 billion
— The amount in federal public housing operating subsidies NYCHA relied on last year.
$2.7 billion
— The amount in federal funds that supported more than 133,000 housing vouchers across NYCHA and the City.
$280 billion is the total number of dollars held by New York City’s five pension funds over which the City Comptroller is custodian and investment adviser. The Comptroller plays a critical role in the City’s fiscal health, integrity, and accountability. In June, New Yorkers will head to the polls to…
New York State's proposed fiscal year 2026 budget fails to address an $18.2 billion structural budget gap while rapidly increasing spending and taxes. To strengthen the state's fiscal foundation, the state should restrain spending growth to 2.7 percent annually and reserve at least $2 billion of the projected surplus to mitigate potential federal funding cuts.
Recommendations related to Budget Gaps
Restrain spending growth, ideally to 2.7 percent a year, to repair the State’s fiscal foundation and improve its ability to address possible federal cuts.
Reserve at least $2 billion of the projected $3.5 billion fiscal year 2025 surplus as a contingency fund if needed to mitigate the initial impact of federal cuts.
Not extend or increase personal income and business taxes.
Redirect the $3 billion slated for Inflation Refund checks to more impactful uses.
Develop and implement a Medicaid savings plan that targets high and growing cost services.
Reject new or expanded economic development subsidy programs that have not been proven effective by rigorous evaluation.
Key Data
$18.2 billion
— The size of the structural budget gap in the proposed fiscal year 2026 budget.
$3.5 billion
— The amount of the projected fiscal year 2025 surplus.
$2 billion
— The amount of the projected surplus that should be reserved as a contingency fund.
10.9 percent
— The rate at which the Governor proposes to increase State Operating Funds spending.
13.8 percent
— The rate at which the Legislature proposes to increase State Operating Funds spending.
$3 billion
— The amount slated for 'Inflation Refund' checks that could be redirected to more impactful uses.
New York City's budget is currently precarious, with expenses exceeding revenues and a reliance on depleting surplus funds to cover shortfalls. The city faces significant outyear budget gaps, reaching up to $10.1 billion by fiscal year 2028, necessitating immediate hard choices to avoid compromising critical services.
Recommendations related to Budget Gaps
End the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter, in the Fiscal Year 2026 Executive Budget.
Implement a Program to Eliminate the Gap (PEG) to reduce spending growth by streamlining administrative operations, increasing program efficiency, and scaling back or eliminating programs that deliver the least value to residents.
Not fund any new or expanded programs in the Executive Budget or during adoption.
Add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
Key Data
$3.6 billion
— The amount the fiscal year 2026 preliminary budget is short to provide planned services.
$10.1 billion
— The projected budget gap for fiscal year 2028.
$4.0 billion
— The amount by which current services are underbudgeted annually.
$6.1 billion
— The high point of accumulated surplus funds reached in fiscal year 2022.
$9.6 billion
— The projected budget gap for fiscal year 2029.
$7.8 billion
— The projected budget gap for fiscal year 2027.
The CityFHEPS rental voucher program has grown to cost over $1.1 billion in fiscal year 2025, creating significant fiscal pressure as the city faces large budget gaps. To ensure sustainability, the city must prioritize targeting these vouchers to households that will benefit most rather than relying on an expensive, entirely city-funded program that has not reduced the shelter population.
Recommendations related to Budget Gaps
The City should make decisions about the level of CityFHEPS spending that is appropriate and sustainable as part of a multi-pronged affordable housing strategy.
The City should maximize the impact of CityFHEPS by targeting vouchers to households who will see the most benefits.
The City must ensure that paying for CityFHEPS does not require cuts in other critical programs and services.
Key Data
$1.1 billion
— Cost of serving the 52,000 existing CityFHEPS voucher holders in fiscal year 2025.
$519 million
— The fiscal year 2026 CityFHEPS budget, which represents a 52 percent decrease from the current year.
52,000
— Number of households holding CityFHEPS vouchers at the end of 2024.
$20,000
— Average annual cost per household for CityFHEPS vouchers.
27 percent
— Amount more that CityFHEPS costs the City compared to shelter for a typical single adult by the end of the fifth year.
$1.8 billion
— Amount more that CityFHEPS will cost compared to shelter over five years for the current 52,000 voucher holders.
The Fiscal Year 2026 Preliminary Budget relies on underbudgeting to close gaps on paper, masking a nearly $4.0 billion shortfall needed to fund existing services. When adjusted for this underbudgeting, the projected budget gaps for fiscal years 2027 through 2029 actually range from $8.0 billion to $9.0 billion rather than the reported $4.2 billion to $5.1 billion.
Recommendations related to Budget Gaps
The Administration should break its severe underbudgeting habit and provide credible spending estimates.
City leaders should prioritize programs that work, shrink those that don’t, and improve the quality and efficiency of government operations.
All leaders should focus on using accurate estimates and making the right choices for New Yorkers not only today but in the future.
Key Data
$4.0 billion
— The amount the spending plan is short to fund existing services.
$8.0 billion to $9.0 billion
— The actual range of budget gaps for fiscal years 2027 to 2029 when underbudgeting is taken into account.
$2.5 billion
— The amount of spending added to fiscal year 2025 in the middle of the year.
$700 million
— The estimated amount fiscal year 2025 remains underbudgeted, largely for overtime.
6.7 percent
— The growth rate of City-funded spending in fiscal year 2025, adjusted for underbudgeting and pre-payments.
5.0 percent
— The growth rate of City-funded spending in fiscal year 2026, adjusted for underbudgeting and pre-payments.
New York City faces a reported $5.5 billion budget gap for the upcoming fiscal year, which is likely larger when accounting for underbudgeted expenses and new spending initiatives. To ensure long-term fiscal stability, the City must provide accurate revenue and expense estimates while avoiding the precarious path of relying on underbudgeting to artificially shrink these gaps.
Recommendations related to Budget Gaps
The City should proactively assess potential risks and opportunities regarding federal changes to its finances and economy, but should not take pre-emptive actions.
The City should make mandatory deposits to the Revenue Stabilization Fund in fiscal year 2025 to ensure sufficient reserves for future economic downturns.
New programs and initiatives must be paid for with higher revenues or offsetting savings to avoid widening future budget gaps.
The City must provide accurate and reasonable estimates of future revenues and expenses to ensure spending is affordable in fiscal year 2026 and beyond.
Key Data
$5.5 billion
— The reported budget gap for the upcoming fiscal year, which may be larger when accounting for underbudgeted expenses.
$2.0 billion
— The amount the City currently underbudgets spending in fiscal year 2025.
$3.6 billion
— The amount the City currently underbudgets spending in fiscal year 2026.
$5.6 billion
— The total budget gap reported for fiscal year 2027.
$6.3 billion
— The total budget gap reported for fiscal year 2028.
$11 billion
— The estimated revenue loss the City would face over two years during an average recession.
The $5 billion in commitments secured by the City Council as part of the City of Yes compromise must be incorporated into the upcoming Preliminary Budget to ensure fiscal responsibility. Failure to offset this new spending with reductions elsewhere threatens to exacerbate the existing fiscal year 2026 budget gap, which already exceeds $8 billion.
Recommendations related to Budget Gaps
The new operating budget spending must be paid for with reduced spending elsewhere or it will widen already huge budget gaps, potentially driving budget cuts.
The $5 billion in commitments secured by the City Council as part of the compromise should be reflected in January’s Preliminary Budget.
Key Data
$5 billion
— Commitments secured by the City Council as part of the compromise.
$8 billion
— The fiscal year 2026 budget gap when underbudgeted services are taken into account.
The City's November 2024 financial update reveals that future annual budget gaps will likely exceed $8 billion, significantly higher than the $5.5 billion figure reported by the administration. To address these shortfalls and stabilize finances, the city must prioritize critical services, improve operational efficiency, and reduce spending on lower-impact programs.
Recommendations related to Budget Gaps
The Administration should start taking steps now to close next year’s budget gap in the January Preliminary Budget.
To balance the budget and serve New Yorkers, the Administration should prioritize critical programs, increase efficiency, and shrink spending on lower-impact programs.
Key Data
$3 billion
— The amount by which the budget continues to low-ball spending for ongoing programs annually in future years.
$8 billion
— The amount of future annual budget gaps the City will actually face, according to analysis.
$5.5 billion
— The amount of future annual budget gaps reported by the City.
New York City's Mayor's Management Report lacks the necessary outcome-based metrics, resident feedback, and spending links to effectively serve as a management tool for addressing the city's multi-billion-dollar budget gaps. Improving the report's transparency and accountability by incorporating granular expenditure data and performance targets would provide a stronger foundation for identifying service efficiencies.
Recommendations related to Budget Gaps
Add outcome, quality, and efficiency metrics that demonstrate how well the City is doing its work.
Link performance metrics to more granular expenditure data, such as the budget function analysis.
Incorporate a periodic, statistically valid, representative resident feedback survey that provides New Yorkers’ ratings on quality of life and government services.
Include more performance targets and a direction for the targets to move.
Utilize the DMMR to provide geographic data for select indicators.
Key Data
$27 million
— Spending on HRA food assistance programs in fiscal year 2022.
$57 million
— Spending on HRA food assistance programs in fiscal year 2023.
$1.26
— Average cost per pound of food distributed in fiscal year 2023.
$1.51
— Average cost per pound of food distributed in fiscal year 2022.
66.4 percent
— Share of restaurants inspected in fiscal year 2024.
99.5 percent
— Share of restaurants inspected in fiscal year 2019.
The MTA's proposed 2025-2029 capital plan is overly ambitious and requires trimming to address the significant funding gap, which includes a structural budget gap that will exceed $1 billion by the end of the decade. To stabilize the operating budget and support necessary debt financing, the state must unpause congestion pricing while the MTA focuses on reducing fare evasion and increasing labor productivity.
Recommendations related to Budget Gaps
The MTA should trim the plan to a more achievable level to reduce the funding gap and transparently present what will happen in the next five years.
The State should unpause congestion pricing; any alternative makes financing these new projects harder.
The MTA must reduce fare evasion, and labor must be a partner to increase productivity; both are essential to stabilize the operating budget and provide the capacity to finance debt.
If the plan is not trimmed, the MTA should at least transparently schedule essential rebuild and improve projects before expansion projects.
Key Data
$8.6 billion
— Proposed and previously planned expansion projects that divert resources from essential rebuilding and improvement efforts.
$10 billion
— Proposed amount in new MTA bonds that is not currently affordable.
$1 billion
— The MTA’s structural budget gap that will be exceeded by the end of the decade.
15%
— Portion of an operating budget that is not fully funded, making debt less affordable.
3 is the number of current and former Comptrollers who sat down to discuss the City and State's finances, economy, population loss and more. While jobs and tourism have recovered, New York continues to face challenges with hybrid work affecting downtowns and the office market, housing affordability, future budget gaps,…
CBC's Ana Champeny and Patrick Orecki delivered a briefing on the fiscal year 2025 budgets of New York State and New York City, including basic fiscal overviews and the risks facing the State and the City.
New York City's fiscal planning relies on underbudgeting for essential services and utilizing prior-year revenues to mask structural deficits, resulting in projected annual budget gaps that likely exceed $9 billion. These persistent shortfalls are exacerbated by unfunded mandates and the expiration of temporary funding, necessitating more rigorous fiscal management to ensure long-term stability.
Key Data
$4.7 Billion
— The projected budget gap for fiscal year 2025 if Program to Eliminate the Gap (PEG) savings had not been implemented.
7.3%
— The total share of the $15.4 billion in original PEG savings that were restored over five years.
$2.6 Billion
— The amount the budget is short in the current year to support existing service levels.
$3.3 Billion
— The amount the budget is short in each future year to support existing service levels.
$9.3 Billion
— The projected budget gap for fiscal year 2026 when accounting for expected spending increases.
$1.1 Billion
— The amount of prior-year revenues the City spent down in fiscal year 2024 to cover its obligations.
New York City's budget faces significant shortfalls, with a $2.2 billion gap in fiscal year 2025 and even larger deficits projected for future years, necessitating more transparent accounting and accurate funding of planned services. To ensure long-term fiscal stability, the city must offset new spending with recurring savings and prioritize building its Rainy Day Fund to at least $12.7 billion.
Recommendations related to Budget Gaps
The budget should be transparent and accurately reflect the costs of planned programs to foster a fact-based debate and prioritization of programs.
If the City chooses not to fully fund a program, it should be clear that it will be trimmed or cut.
To ensure new spending is sustainable, it should be budgeted on a recurring basis and offset with recurring spending reductions from efficiencies or the reduction or elimination of lower impact or underutilized programs.
The City should deposit at least $500 million in the Rainy Day Fund (RDF) in fiscal year 2024 and budget to deposit at least $553 million in fiscal year 2025.
The City should ultimately build its reserves to $12.7 billion, which would cover two years of recessionary tax revenue losses and permit spending to grow 2 percent a year.
The City should enact mandatory deposit rules to ensure the RDF is built up over time.
Key Data
$2.2 billion
— short in fiscal year 2025 to continue current programs
$2.6 billion
— short in the outyears
$2.8 billion
— short in the outyears
$65 million
— short for Early Intervention services in fiscal year 2025
$22 million
— short for Department of Sanitation litter basket service
$12.7 billion
— target reserves to cover two years of recessionary tax revenue losses
New York City's fiscal year 2025 executive budget proposes a 6.3 percent increase in city-funded spending, totaling $5.2 billion, which includes $2.2 billion in underbudgeted support for planned programs. This spending growth, which has risen by $16.9 billion since fiscal year 2020, significantly outpaces inflation and persists despite the expiration of federal COVID-related aid.
Key Data
$5.2 billion
— The proposed increase in City-funded spending from fiscal year 2024 to fiscal year 2025.
$2.2 billion
— The amount of underbudgeting of support for planned programs in the fiscal year 2025 budget.
$16.9 billion
— The growth in City-funded spending from fiscal year 2020 to fiscal year 2025.
$4.4 billion
— The amount by which City-funded spending outpaced inflation between fiscal years 2020 and 2025.
$4.9 billion
— The decrease in federal aid between fiscal years 2024 and 2025.
$19.0 billion
— The increase in all-funds spending between fiscal years 2020 and 2025.
New York City's Fiscal Year 2025 Executive Budget relies on low-balled expenditure estimates, masking the true scale of future budget gaps that range from $5.5 billion to $5.7 billion between 2026 and 2028. To avoid a future fiscal crisis, city leaders must prioritize high-impact programs and base their financial decisions on realistic projections rather than adding unaffordable spending.
Recommendations related to Budget Gaps
The Mayor and City Council should base their budget negotiations and decisions on reasonable and realistic spending and revenue estimates.
City leaders should narrow future budget gaps and break the habit of adding more unaffordable spending.
City leaders should prioritize high-impact programs and shrink or end less effective ones.
Key Data
$5.5 billion to $5.7 billion
— The range of reported budget gaps between fiscal years 2026 and 2028.
$2 billion
— The amount of services that are underbudgeted annually, which makes the reported budget gaps understated.
6.3 percent
— The increase in City-funded spending in the Fiscal Year 2025 Executive Budget.
$200 million
— The amount of FHEPS housing voucher costs that appear low or fall off a cliff in the out-years.
New York City faces significant fiscal uncertainty as current budget projections fail to accurately reflect the true costs of continuing programs, potentially leading to annual budget gaps exceeding $8.0 billion. If additional risks such as class size mandates, housing voucher expansions, and asylum seeker services are realized, these gaps could balloon to $17.4 billion by fiscal year 2028.
Recommendations related to Budget Gaps
Include reasonable estimates of costs of all planned programs in the budget.
Provide accurate, but reasonably conservative revenue estimates.
Reduce future budget gaps by prioritizing programs that are highly needed and proven to work.
Implement additional savings plans, focused on increasing productivity and shrinking lower impact and priority programs.
Put extra funds available now into the Rainy Day Fund and commit to saving it for a recession or severe, one-time emergency.
Key Data
$17.4 billion
— Potential budget gap by fiscal year 2028 if risks like class size reduction, FHEPS expansion, and asylum seeker costs are included.
$8.0 billion
— Annual future budget gap estimate, excluding costs for class size reduction, FHEPS expansion, or asylum seekers.
$3.0 billion to $3.9 billion
— Estimated amount by which the fiscal year 2025 financial plan understates the cost of continuing current programs.
$1.45 billion
— Total amount of in-year budget reserves, including the general reserve and capital stabilization reserve.
$60 billion is how much NYCHA plans to invest in its infrastructure over 5 years. Facing ongoing challenges such as budget gaps, weakening rent collection, and deteriorating physical conditions, NYCHA CEO Lisa Bova-Hiatt and Chair Jamie Rubin shared their strategies for managing the nation's largest public housing system.
The New York City Housing Authority faces a persistent operating budget gap driven by rising expenses and weak rent collections, alongside massive, underfunded capital needs totaling $60 billion over five years. To address these challenges, the agency must prioritize structural reforms, including modernizing property management and leveraging programs like the Preservation Trust to stabilize its financial and physical condition.
Recommendations related to Budget Gaps
Fix or replace deteriorating buildings with PACT and the Preservation Trust.
Improve management effectiveness and efficiency, and publicly track progress and impact.
Negotiate savings, boost productivity, and modernize property management through collective bargaining.
Overhaul the rent collection process.
Key Data
$791 million
— The gap between public housing expenses and core operating income in 2023.
$60 billion
— NYCHA's total five-year capital needs.
$8.2 billion
— The five-year capital plan for 2024 to 2028, which funds only 14 percent of total capital needs.
$511 million
— Federal capital funds diverted in 2022 and 2023 to fill the operating budget gap.
$1.5 billion
— Personnel costs in 2023, accounting for half of the public housing operating budget.
46.5 percent
— The share of households behind on their rent in October 2023.
New York State faces significant structural budget imbalances, with projected gaps reaching $9.9 billion by fiscal year 2028, despite an improving economic outlook. To achieve long-term fiscal stability, the state must implement strict spending restraint, particularly in Medicaid and school aid, and avoid tax increases that could harm economic competitiveness.
Recommendations related to Budget Gaps
Restrain State Operating Funds spending growth to 2.0 percent annually in order to close the State's $16.4 billion structural imbalance.
Reject extraordinary Executive Budget powers, as they only serve to create fiscal risk and reduce accountability.
Publish basic, multi-year financial plan tables with the one-house and enacted budgets to foster transparency.
Deposit additional closeout balances to the Rainy Day Reserve.
Rein in Medicaid spending growth by targeting savings in high-growth areas such as home- and community-based care.
Eliminate hold harmless provisions, as proposed by the Governor, to help the State better target resources.
Enact policies that boost housing production and reject those that disincentivize new housing.
Enact OPEB reforms, including the IRMAA cost elimination, to provide recurring savings.
Reject the NYC sales tax capture, as the State should not foist its costs onto local governments.
Enact proposed fare and toll enforcement policies to protect the critical revenue base of transportation authorities.
Key Data
$9.9 billion
— Projected out-year budget gap in fiscal year 2028.
$16.4 billion
— The State's structural budget imbalance in fiscal year 2028.
2.0 percent
— Recommended annual spending growth limit to close projected gaps.
$20 billion
— Current principal reserves balance.
$28 billion
— Estimated reserves needed to meet the target standard of two years' recessionary receipts losses plus two years' growth of 1 percent in State Operating Funds spending.
$100 billion
— Medicaid spending benchmark that will be exceeded in the out-years.
New York City faces a precarious fiscal position with a $3.6 billion shortfall in the fiscal year 2025 budget needed to maintain current service levels. Future budget gaps are projected to reach between $8.8 billion and $9.7 billion, necessitating transparent budgeting that fully funds existing programs before expanding new ones.
Recommendations related to Budget Gaps
We urge you to ensure that your proposals to add or modify spending are affordable and do not make the City budget even more fiscally precarious.
This first requires that the City fully fund the programs it plans to deliver.
The spending plan has to accurately reflect the program plan.
The funding required to support the current level of City FHEPS vouchers should be in the budget before adding or expanding this or other programs.
Only when the budget is transparent—and completely and accurately funds the City’s current programs and the full cost of desired program expansions—will the prospect of a fiscal reckoning be clear.
Prioritization based on data and efficient and quality service delivery are hallmarks of the thoughtful, nuanced approach needed.
Key Data
$3.6 billion
— The amount by which proposed spending in fiscal year 2025 is short to continue the current level of services.
$8.8 billion to $9.7 billion
— The projected future budget gaps for fiscal years 2026 through 2028, assuming ongoing programs are fully funded.
$2 billion
— The amount set aside in the Rainy Day Fund, which is considered insufficient for the next economic contraction.
$10.2 billion
— The total resources found across fiscal years 2024 and 2025 through higher revenue, in-year reserves, and spending reductions.
$1.45 billion
— The amount of in-year budgetary reserves, which is far exceeded by the $3.6 billion in underfunded ongoing programs.
$800 million
— The amount that costs for City FHEPS vouchers are expected to exceed this year.
New York State faces a $9.9 billion budget gap in fiscal year 2028, which masks a larger $16.4 billion structural imbalance caused by rapid spending growth. To achieve fiscal stability, the state must restrain spending growth to 1.5 percent annually and avoid further tax or spending increases.
Recommendations related to Budget Gaps
To close the State’s structural imbalance, SOF spending growth would need to be kept to 1.5 percent annually over the life of the financial plan.
The enacted budget should restrain spending to put the State on a path to budget balance.
Forward-looking budget choices this year should avoid layering on further tax and spending increases to relieve building budget pressure.
The State should prioritize restraining spending more rather than inflaming the problem by additional unsustainable spending.
Policymakers should avoid additional tax increases as they would weaken the State’s competitiveness.
Key Data
$9.9 billion
— The projected budget gap for New York State in fiscal year 2028.
$16.4 billion
— The structural imbalance revealed when accounting for non-recurring resources.
$6.4 billion
— The amount of nonrecurring resources from pre-payments, rolled resources, and temporary tax increases relied upon in the fiscal year 2028 budget.
$26 billion
— The total growth in State Operating Funds spending from fiscal year 2021 to fiscal year 2024.
$51 billion
— The projected growth in State Operating Funds spending over the 8 years between fiscal years 2021 and 2028.
7.9 percent
— The average annual growth rate of State Operating Funds spending from fiscal year 2021 to fiscal year 2024.
New York City faces significant fiscal challenges, with projected out-year budget gaps reaching as high as $9.7 billion by fiscal year 2028. To address these mounting costs and stabilize the city's financial position, the government must prioritize transparency by clearly identifying which programs will be funded, shrunk, or eliminated.
Recommendations related to Budget Gaps
The City must take additional actions to slow spending growth and close budget gaps.
The budget should be more transparent by showing the full costs of programs and identifying which will be shrunk or eliminated.
Mayor Eric Adams and the City Council should take action to put the City on solid fiscal footing before the fiscal year 2025 budget adoption.
The City must clearly and transparently show which programs are funded and which will be shrunk or eliminated following the cancellation of the April 2024 Program to Eliminate the Gap.
Key Data
$9.1 billion, $8.8 billion, and $9.7 billion
— Projected out-year budget gaps for fiscal years 2026 to 2028, respectively.
$3.6 billion to $3.9 billion
— Annual shortfall in the Fiscal Year 2025 Preliminary Budget needed to continue programs at the current services level.
$6.0 billion
— The annual spending increase in fiscal year 2025 if the current level of services were fully funded.
$2.3 billion
— The proposed increase in City-funded spending in fiscal year 2025.
$15.4 billion
— The increase in City-funded spending between fiscal years 2019 and 2025.
New York City's fiscal year 2025 preliminary budget faces a $3.6 billion funding shortfall, which would grow to between $8.8 billion and $9.7 billion in subsequent years if current service levels are maintained. To address these gaps, the city must prioritize essential programs, increase transparency, and implement additional savings measures to ensure long-term fiscal stability.
Recommendations related to Budget Gaps
The City should implement an additional PEG in the Executive Budget to balance the fiscal year 2025 budget while ensuring projected spending fully supports all planned programs.
The City should shrink or eliminate programs that the available resources cannot fully support to ensure the budget accurately reflects the City’s plans.
The Administration should maintain balance in the fiscal year 2025 budget, as required, and present budget gaps that account for all planned services for fiscal years 2026 through 2028.
The City Council should ensure that its proposals for added or modified spending are affordable based on fully funding or reducing the current set of planned programs.
The City should provide substantially more transparency to show which programs are not fully funded and whether the City plans to shrink or end those programs.
Key Data
$3.6 billion
— The funding shortfall in the fiscal year 2025 budget needed to maintain current program levels.
$8.8 billion to $9.7 billion
— The projected budget gaps for fiscal years 2026 through 2028 if current service levels are fully funded.
$2.2 billion
— The City-funds fiscal cliff included in the fiscal year 2025 budget.
$675 million
— The federal-funds fiscal cliff included in the fiscal year 2025 budget.
$800 million
— The amount of chronic underbudgeting in the fiscal year 2025 budget.
$194.9 million
— The total PEG restorations for fiscal years 2024 and 2025.
Future budget gaps of $5 to $6 billion understate the city's fiscal challenges, as the current budget continues to underfund recurring programs and rely on fiscal cliffs. To address these issues, the city must transparently budget for all program costs, prioritize spending, and increase efficiency to align recurring expenditures.
Recommendations related to Budget Gaps
The City should do much more to transparently budget for the projected costs of all programs, or explicitly shrink or sunset them.
The City should detail the sources of these savings and the underlying projections, so that New Yorkers understand what services are being provided, for how long, and to how many households.
The City should further restrain spending by prioritizing programs and increasing efficiency, and all who are interested in a strong future New York should engage and support this effort.
Key Data
$5 to $6 billion
— Range of future budget gaps that understate the magnitude of the City’s remaining fiscal problem.
$2.5 billion
— Mid-year addition in fiscal year 2024 spending resulting from fiscal cliffs and underbudgeting.
$800 million
— Annual cost of the current, non-expanded FHEPS housing voucher program.
$2.3 billion
— Increase in adjusted fiscal year 2025 City-funded spending from fiscal year 2024.
$15.0 billion
— Amount by which fiscal year 2025 City-funded spending is higher than in fiscal year 2020.
$1.2 billion
— January round of agency PEG savings in fiscal years 2024 and 2025.
The November 2023 Program to Eliminate the Gap (PEG) aims to address multi-billion-dollar budget gaps, with 80 percent of savings coming from non-service-reducing measures like re-estimates and funding shifts. While agencies were directed to find 5 percent savings, the actual reduction is closer to 2.2 percent of total City-funded spending due to significant exclusions from the PEG target.
Recommendations related to Budget Gaps
City agencies should use a data driven approach to identify less- or in-effective programs and inefficient processes that can be shrunk or streamlined to reduce costs.
Agency leadership should collaborate with line staff to determine how programs and services can be delivered more efficiently.
Returning to standardized procurement practices wherever possible should increase competition and drive down the cost of providing services.
Savings on benefits are possible over the long term and should be a component of efforts to stabilize City finances.
Efforts to identify efficiencies should be continued and strengthened.
Key Data
$7.1 billion
— Projected out-year budget gap in fiscal year 2025.
$10.8 billion
— Spending on housing and services for migrants and asylum seekers in fiscal years 2024 and 2025.
80 percent
— Share of the November 2023 PEG savings that should not affect services.
2,407
— Number of full-time positions eliminated in fiscal year 2025 through vacancy reduction initiatives.
$360 million
— Amount of annually recurring efficiency savings identified by agencies.
2.2 percent
— Average PEG reduction across fiscal years 2024 to 2027 as a share of total City-funded spending.
New York faces a structural budget gap of $17 billion that threatens the state's fiscal stability and competitiveness. To address this, the state must exercise spending restraint and avoid raising taxes, which are already among the highest in the nation.
Recommendations related to Budget Gaps
New York must exercise spending restraint to put the state on a path to fiscal stability.
The state should address the structural budget gap in the upcoming budget proposal.
New York should avoid raising taxes, as combined top personal income and business tax rates are already the nation's highest.
Key Data
$17 billion
— The structural budget gap facing New York State.
New York City faces significant budget shortfalls, with projected gaps reaching up to $10.6 billion for fiscal year 2025 and growing to $12.2 billion by 2027. To address these fiscal challenges, the city must prioritize efficient service delivery and negotiate labor reforms rather than raising taxes or depleting financial reserves.
Recommendations related to Budget Gaps
New York City’s leaders should make some tough choices to close the fast-approaching budget gaps without taking the easy but unwise route of raising taxes.
The city should protect reserves for when it is faced with a recession, rather than using them to avoid solving problems caused by unaffordable spending.
The city should prioritize key services, relentlessly manage them to get results, and operate effectively and efficiently to grow financially stronger.
Labor should be part of the solution, specifically through agreed-upon changes to work rules, job titles, health insurance, and other benefit structures.
The city should maximize efficiency and minimize the impact on New Yorkers when making hard choices during this time of fiscal reckoning.
Key Data
5.3%
— The decline in New York City's population from 2020 to 2022.
$7.1 billion
— The projected budget gap for New York City in fiscal year 2025.
$10.6 billion
— The potential budget gap for fiscal year 2025 when accounting for fiscal cliffs and regularly underbudgeted areas.
$5.8 billion
— The comptroller's estimate for the New York City budget gap in fiscal year 2025.
$12.2 billion
— The comptroller's forecast for the New York City budget gap by fiscal year 2027.
20%
— The portion of savings in the most recent Program to Eliminate the Gap that affects current services.
$10.6 billion is the real-world, all-in budget gap that NYC could be facing once you include all spending that is currently unbudgeted or underbudgeted. In a co-production with Ben Max's podcast "Max Politics," CBC President Andrew Rein and Vice President for Research Ana Champeny about the City's decisions and unforeseen…
New York City faces a significant $10.6 billion budget gap driven by the expiration of temporary federal aid, the end of a tax revenue surge, and rising costs from collective bargaining agreements and migrant services. To address this, the City must prioritize essential services, improve operational efficiency, and engage labor unions in reforming work rules and benefit structures rather than raising taxes or depleting reserves.
Recommendations related to Budget Gaps
The City should avoid raising taxes or dipping into reserves to address the budget gap.
The City should prioritize services with significant impact and increase efficiency rather than expanding services.
The City must secure agreed-upon changes to work rules, job titles, health insurance, and other benefit administration structures with labor to deliver services efficiently.
The Council should focus on data to help make hard choices and minimize the impact on New Yorkers.
The City should focus on identifying the most critical priorities and services and delivering them well.
Key Data
$7.1 billion
— The City's financial plan shows a gap for fiscal year 2025.
$10.6 billion
— The more accurate budget gap when including fiscal cliffs and areas the City regularly underbudgets.
$16 billion
— Added costs through 2027 from recent collective bargaining agreements that did not include offsetting productivity increases.
92 percent
— Portion of previous savings programs that did not directly affect program services.
20 percent
— Portion of the most recent savings program (PEG) that will affect current programs.
The Metropolitan Transportation Authority faces potential operating budget gaps that could grow to $927 million by 2027 due to various revenue and expense risks. To maintain fiscal stability, the agency must continue biennial fare and toll increases, meet operational efficiency targets, and consider increasing its general reserve.
Recommendations related to Budget Gaps
The MTA and stakeholders should closely monitor ongoing results because certain risks threaten its projected revenue and expenses.
It is critical that the MTA continues biennial fare and toll increases, implements efficiencies to meet its savings targets, and continues to identify ways to increase productivity and reduce costs.
The MTA should consider whether the general reserve should be gradually increased to better buffer against identified risks.
The MTA and stakeholders should closely monitor implementation and fiscal impact of operational efficiency savings to ensure they materialize.
PMT revenues warrant close attention to ensure collections meet forecasts going forward.
Key Data
$927 million
— The potential operating budget gap projected for 2027.
$1.1 billion
— The amount of annual dedicated taxes added by the state's stabilization plan.
$700 million
— The amount of annual fare and toll revenue lost due to fare evasion.
$165 million
— The annual required subsidy for the paratransit program.
$250 million
— The average annual risk associated with casino revenue in 2026 and 2027.
$185 million
— The 2023 annual contribution to the General Reserve.
New York City faces a widening fiscal year 2025 budget gap that has reached $10.6 billion when accounting for underbudgeting and the fiscal cliff. To address this, the city must prioritize efficiency, collaborate with labor to adjust work rules, and secure increased financial support from federal and state governments for asylum seeker costs.
Recommendations related to Budget Gaps
The City should conduct a citywide look at program impact and efficiency to identify all opportunities to reduce costs without cutting critical services.
The City should consolidate welfare benefit funds, which could save $150 million without cutting actual benefits.
The City should work with labor to make changes as needed to work rules and job titles, with a focus on maintaining high-quality critical services while reducing costs.
The federal government should share a fair portion of the costs for serving asylum seekers and migrants.
The City should efficiently provide only the most critical services to reduce the high costs associated with asylum seekers and migrants.
Key Data
$7.1 billion
— The fiscal year 2025 budget gap, which widened from a previously estimated $5.1 billion.
$2.4 billion
— The cost of the fiscal cliff excluded from the fiscal year 2025 budget gap calculation.
$1.1 billion
— The amount of program underbudgeting excluded from the fiscal year 2025 budget gap calculation.
$10.6 billion
— The total adjusted fiscal year 2025 budget gap when including the fiscal cliff and program underbudgeting.
$150 million
— Potential savings from consolidating welfare benefit funds without cutting actual benefits.
$10 billion
— The increase in projected spending on asylum seeker and migrant services over four years.
New York City faces substantial fiscal challenges, with budget gaps reaching over 12.5 percent of City-funded spending, necessitating hard choices about service prioritization and government efficiency. To achieve structural stability, the City must address recurring expenses, manage fiscal cliffs, and reconcile underbudgeted costs like asylum seeker services and housing vouchers.
Recommendations related to Budget Gaps
The City must prioritize effective programs and shift other funds to support them, while eliminating or scaling back those that are less impactful.
Achieving structural stability will require hard choices about which services to continue and which to end or scale back.
The City must increase government efficiency and focus on getting the basics right to achieve structural stability.
The City should update its spending projections and include longer-term costs for asylum seeker and migrant services.
The City should increase the budget for uniformed overtime, Carter Cases, and student transportation to the actual levels they’ve historically reached.
Key Data
12.5 percent
— The portion of City-funded spending that the City's budget gaps currently reach.
$11.3 billion
— The fiscal year 2025 budget gap the City will have to close.
$839 million
— The amount fiscal year 2024 may be short to fund planned services.
$1.3 billion
— The cost of programs not funded in the fiscal year 2024 budget.
$4.7 billion
— The updated fiscal year 2024 cost projection for asylum seeker and migrant services.
$433 million
— The estimated cost of complying with the class size reduction mandate in fiscal year 2026.
New York City faces a looming fiscal cliff with projected budget gaps reaching up to $13.8 billion, driven by expanded city programs and the costs of supporting asylum seekers. To stabilize the city's finances, officials must prioritize impactful programs, improve operational efficiency, and manage headcount while avoiding the addition of new spending that offsets savings efforts.
Recommendations related to Budget Gaps
To stabilize the budget and minimize any pain from cuts, the most impactful programs should be prioritized first, allowing the city to end programs meant to be temporary and consolidate duplicative efforts.
The city must greatly improve its data on program efficiency and effectiveness, and implement a performance management and accountability process.
Agencies should implement changes to deliver services more efficiently and help the city run better.
The city should examine how it uses space and vehicles, and identify savings through centralized procurement.
The mayor’s office should take a hard look at staffing and performance, and make nuanced decisions regarding city headcount to ensure city government can function well.
Strong consideration should be given to reviving the Program to Eliminate the Gap (PEG) monitoring function that the New York State Financial Control Board provided years ago.
Key Data
$13.8 billion
— The potential upper estimate of the Fiscal Year 2025 budget gap.
50%
— The increase in city-funded spending over the past decade while recurring revenues have not kept pace.
$16 billion
— The amount added to the budget for city worker raises without identifying a funding source.
42 percent
— The maximum portion of the Fiscal Year 2025 budget gap attributed to the cost of caring for new arrivals.
$2.5 billion
— The amount of programs, from housing vouchers to education for 3-year-olds, funded by federal Covid aid and a temporary tax revenue surge.
15%
— The total amount of savings city agencies are directed to propose across three rounds of cuts.
New York State faces significant long-term fiscal challenges, with projected budget gaps of $9.5 billion in fiscal year 2026 and $7.7 billion in fiscal year 2027. Addressing a structural imbalance exceeding $16.8 billion requires decisive action to restrain spending and stabilize the state's fiscal foundation.
Recommendations related to Budget Gaps
The State should take decisive action to rein in spending in the upcoming budget in order to stave off significant future cuts.
Significant spending restraint is still needed to stabilize and strengthen the State's fiscal foundation.
Key Data
$4.3 billion
— The reduced projection for next year's budget gap.
$9.1 billion
— The previous projection for next year's budget gap.
$9.5 billion
— The projected budget gap for fiscal year 2026.
$7.7 billion
— The projected budget gap for fiscal year 2027.
$9.1 billion
— The amount of fiscal year 2027 reliance on prepayments, reserves, and sunsetting tax increases.
$16.8 billion
— The state's long-term structural imbalance.
New York City faces a potential fiscal year 2025 budget gap of $13.8 billion, with less than half of that amount driven by the $6.1 billion estimated cost of services for migrants. The remainder of the deficit stems from previous savings programs being outpaced by new spending on programs, collective bargaining, and pensions, necessitating a restructuring of operations to reduce costs.
Recommendations related to Budget Gaps
The City should proceed with the Mayor's directive to direct agencies to propose 5 percent budget savings—PEGs—for the November plan and to prepare for two more 5 percent rounds in January and April to help close the budget gap.
The City must restructure operations to significantly reduce costs, which is critical to addressing the budget gap regardless of the migrant crisis.
The federal government should provide much more fiscal aid to help NYC manage the costs of serving new migrants and asylum seekers.
The State’s commitment to funding migrant services should be bigger to help alleviate the burden on the City's finances.
The City should reduce the costs of shelter and services, which currently appear extraordinarily high.
Key Data
$13.8 billion
— Potential fiscal year 2025 budget gap.
$6.1 billion
— Estimated cost of services to migrants next year.
3 to 1
— Ratio by which previous savings programs were overmatched by additional spending for new and expanded programs, collective bargaining, and pensions.
5 percent
— Budget savings directive for agencies in the November plan and subsequent rounds.
$13 billion
— Potential fiscal year 2025 budget gap if the City's asylum seeker cost estimate proves accurate.
New York State continues to increase school aid despite facing projected annual budget gaps of $9 billion to $14 billion, which are expected to grow to $22 billion by fiscal year 2028. To help stabilize state finances, the state should rein in spending growth by better targeting aid to high-need districts rather than providing $2.8 billion to districts that already possess sufficient local resources.
Recommendations related to Budget Gaps
To balance the budget, the State should rein-in spending growth; poorly targeted school aid is a reasonable option for spending control.
The State should reduce or reallocate aid to help stabilize the State’s ongoing finances and better target aid to high-need districts.
The State should have a comprehensive performance management system for school districts that uses robust metrics to track activities and results, identifies and spreads best practices, and appropriately holds districts accountable.
The State should pursue cost savings by freezing or reducing aids to districts that already fund a Sound Basic Education, including by distributing expense-based aids based on need.
Key Data
$9 billion to $14 billion
— Projected annual budget gaps beginning next year.
$22 billion
— Projected budget gap by fiscal year 2028.
$2.8 billion
— State aid directed to districts that already fund a Sound Basic Education with local and regular federal resources.
$85 billion
— Total spending on elementary and secondary education for the 2023-24 school year.
$35,095
— Total spending per pupil for the 2023-24 school year.
8.8 percent
— Increase in New York State school aid for the 2023-24 school year.
New York City's projected budget gaps are significantly larger than reported, growing from $8.7 billion in fiscal year 2025 to $11.5 billion by fiscal year 2027 when accounting for fiscal cliffs and chronically underbudgeted programs. These figures exclude additional potential costs from labor arbitration, class size mandates, and asylum seeker support, indicating that the city's fiscal challenges are far from manageable.
Recommendations related to Budget Gaps
The City should flexibly allocate vacant positions where they are needed to improve agency staffing.
The City should speed up review and approval processes to hire staff more expeditiously.
The City should increase flexibility of work rules, job titles, and schedules to address staffing challenges.
The City should modernize and better manage civil service regulations to improve hiring efficiency.
The City should identify other ways to better compete with the private sector for talent to fill vacant positions.
Key Data
$8.7 billion
— The actual budget gap projected for fiscal year 2025 after accounting for fiscal cliffs and underbudgeted programs.
$11.5 billion
— The actual budget gap projected for fiscal year 2027 after accounting for fiscal cliffs and underbudgeted programs.
$5.1 billion
— The reported budget gap for fiscal year 2025 before accounting for fiscal cliffs and underbudgeting.
$7.9 billion
— The reported budget gap for fiscal year 2027 before accounting for fiscal cliffs and underbudgeting.
$2.5 billion
— The amount by which budget gaps are understated due to substantial fiscal cliffs.
$1.1 billion
— The amount by which budget gaps are understated due to the chronic underbudgeting of certain programs.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
New York State faces significant fiscal challenges, with projected budget gaps of $9.1 billion next year and $13.4 billion in fiscal year 2027. Despite these financial pressures, the state continues to increase spending on economic development programs without sufficient evidence that these initiatives effectively create jobs or provide greater benefits than alternative uses of funds.
Recommendations related to Budget Gaps
The State and its localities should rigorously evaluate existing incentives and programs to determine their effectiveness.
The State and its localities should narrow, shrink, or eliminate programs that are not proven effective.
The State and its localities should adopt performance-based incentives whenever possible.
The State and its localities should create a unified economic development budget.
The State and its localities should increase oversight powers of the State Comptroller and Authorities Budget Office.
Key Data
$9.1 billion
— The projected budget gap for New York State next year.
$13.4 billion
— The projected budget gap for New York State in fiscal year 2027.
$10.7 billion
— Total State and local economic development spending in 2022.
$13 billion
— Projected annual economic development spending by 2025.
$4.4 billion
— Total State economic development spending in 2022.
$6.3 billion
— Total local and county government economic development spending in 2022.
The Metropolitan Transportation Authority faces a long-term structural budget gap that will reemerge after the current financial plan window, threatening the system's stability. To address this, the agency must implement operational reforms, such as one-person train operations and work rule changes, to align spending with recurring revenues.
Recommendations related to Budget Gaps
The MTA should implement one-person train operation (OPTO) on subways and proof of payment on commuter rail, which are industry standard practices that would increase efficiency.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels to ensure operations are efficient and cost-effective.
The MTA should negotiate work rule changes with labor unions to allow the agency to adjust schedules and services to meet shifting rider needs.
The MTA should bring its spending in line with its recurring revenues to avoid returning to taxpayers and riders for a new infusion of extraordinary resources.
The TWU and MTA should negotiate changes that provide the flexibility and adaptability needed to deliver cost-effective service levels aligned with transit rider needs.
Key Data
$900 million
— Projected annual budget gap beyond the five-year financial plan window.
$2.6 billion
— MTA budget gap for 2023 due to declining ridership, skipped fare increases, and fare evasion.
$690 million
— Cost of fare and toll evasion in 2022.
$442 million
— Annual savings from systemwide expansion of one-person train operation.
$300 million
— Annual savings from implementing proof of payment on commuter rail.
$1.6 billion
— Potential annual savings from meeting benchmark maintenance and operations levels.
The fiscal year 2024 budget agreement relies on $2.3 billion in available resources to increase spending without necessary offsetting savings, thereby widening future budget gaps. This approach delays essential fiscal stabilization and risks creating massive annual service crises by funding major programs only one year at a time.
Recommendations related to Budget Gaps
The City should prioritize programs, reduce spending on those with lower impact, and restructure operations to increase productivity.
The Administration, City Council, and the municipal unions should collaborate and ensure the City can deliver to New Yorkers what they need at a cost the City can afford.
The City should not wait until it slams into a fiscal wall to spend within its means.
The City should stop cliff dancing, which involves funding major programs one year at a time and potentially creating massive annual service crises.
Key Data
$2.3 billion
— The amount of available resources used in the fiscal year 2024 budget to add spending without offsetting savings.
New York City faces significant future budget gaps, projected to grow from $7.5 billion in fiscal year 2025 to $10.7 billion in fiscal year 2027. To stabilize the city's fiscal outlook, the city should avoid using short-term revenue surpluses to fund recurring programs without offsetting savings and must prioritize realistic spending projections.
Recommendations related to Budget Gaps
The City should adopt a budget that narrows future budget gaps.
The City should reduce future fiscal cliffs by including spending for ongoing programs in the outyears.
The City should offset all added spending for recurring activities with savings elsewhere in each year of the financial plan.
The City should include realistic annual spending estimates for all functions, including uniformed overtime and special education.
The City should deposit at least half of any additional fiscal year 2023 resources into the Rainy Day Fund.
Key Data
$7.5 billion
— Projected budget gap in fiscal year 2025.
$10.7 billion
— Projected budget gap in fiscal year 2027.
$400 million
— Cost to maintain the current FHEPS rental voucher program.
$4.3 billion is the Adams' Administration's estimate of the cost to house and provide services to asylum seekers this and next year. But that is only a small portion of the City's fiscal challenges. NYC Budget Director Jacques Jiha joined the CBC to discuss the fiscal year 2024 Executive Budget,…
New York City's budget gaps have widened to $7.5 billion, $9.7 billion, and $10.7 billion for fiscal years 2025 through 2027, despite various savings initiatives. To address these shortfalls while preserving essential services, the city should prioritize implementing additional programs that improve operational efficiency rather than relying on vacancy reductions or illusory savings.
Recommendations related to Budget Gaps
Future actions should focus much more on prioritizing impactful programs and restructuring operations to preserve services, lest the City balance its budget by reducing critical services unnecessarily.
The City should shift vacancies to where they are most needed and take steps to aggressively reform how it hires, especially for critical functions.
The City should implement additional PEGs that focus on improving efficiency—reducing costs without reducing services—to narrow budget gaps significantly while preserving services.
Key Data
$10.7 billion
— Projected budget gap for fiscal year 2027.
$4.1 billion
— Total cumulative recurring savings from the four savings plans.
$1.1 billion
— Average annual savings from the Executive Budget PEG from fiscal year 2024 onwards.
$542 million
— Total savings from the Executive Budget PEG in fiscal year 2023.
New York City faces significant future budget gaps projected to reach $10.7 billion by fiscal year 2027, exacerbated by the depletion of one-time federal aid and unsustainable spending expansions. To avoid service cuts or tax increases, the administration must implement productivity-focused savings plans and prioritize high-impact programs to ensure long-term fiscal sustainability.
Recommendations related to Budget Gaps
The City must implement additional PEGs focused on productivity and prioritization of higher impact programs to put the budget on a fiscally sustainable path.
The City should restructure operations and prioritize spending to ensure critical services are fiscally sustainable rather than using one-time funds to expand unsustainable programs.
The administration must avoid slashing services or raising taxes, as both actions would drive away residents and businesses of all types.
Key Data
$7.5 billion
— Projected budget gap for fiscal year 2025.
$9.7 billion
— Projected budget gap for fiscal year 2026.
$10.7 billion
— Projected budget gap for fiscal year 2027.
$3.0 billion
— Estimated shortfall in the fiscal year 2024 budget due to fiscal cliffs, underbudgeting, and asylum seeker aid assumptions.
$600.0 million
— Amount of federal aid for asylum seekers assumed in the fiscal year 2024 budget.
The New York City Police Department's fiscal year 2024 budget is understated by approximately $1.6 billion because it fails to account for the full costs of recent collective bargaining agreements and likely underbudgets overtime expenses. This shortfall persists despite the executive budget's efforts to reduce spending through hiring delays and other savings initiatives.
Recommendations related to Budget Gaps
Budgeted overtime should reflect reasonable expectations given management, policy, and history.
Key Data
$1.6 billion
— Estimated shortfall in the fiscal year 2024 budget due to underbudgeted collective bargaining agreements and overtime.
$817 million
— Projected total overtime spending for the NYPD in fiscal year 2023.
$900 million
— Estimated increase in member compensation costs in fiscal year 2024 due to the PBA collective bargaining agreement.
$452 million
— Fiscal year 2024 overtime funding set by the executive budget.
$110 million
— Net reduction in previously planned fiscal year 2024 spending resulting from agency operating budget savings.
New York City's Executive Budget reveals widening fiscal gaps, projected to reach $10.0 billion by fiscal year 2027 when accounting for underbudgeted programs and fiscal cliffs. To address these challenges, the City must prioritize essential services, improve operational efficiency, and avoid adding new positions while thousands of vacancies remain unfilled.
Recommendations related to Budget Gaps
The City should immediately start to prioritize essential programs, increase its operational efficiency, speed up critical hiring, and shrink lower impact programs.
The City should be shifting existing vacancies to where they are needed, not adding new positions.
The City should make every effort it can immediately and include additional savings in the Adopted Budget.
Key Data
$4.2 billion
— The projected budget gap in fiscal year 2025.
$7.0 billion
— The projected budget gap in fiscal year 2027.
$6.8 billion
— The projected future shortfall in fiscal year 2025 when adding costs of underbudgeted programs and fiscal cliffs.
$10.0 billion
— The projected future shortfall in fiscal year 2027 when adding costs of underbudgeted programs and fiscal cliffs.
$900 million
— The amount saved annually by the agency Program to Eliminate the Gap (PEG).
82 percent
— The portion of PEG savings that is offset by new spending.
New York City faces significant budget gaps, projected to reach $9.7 billion in fiscal year 2025 and $14.5 billion in fiscal year 2027, driven by rising labor costs and other fiscal pressures. To address these shortfalls, the city must prioritize high-impact services and improve government efficiency rather than relying on tax increases or service cuts.
Recommendations related to Budget Gaps
The city must thoughtfully rein in its spending by restructuring and prioritizing high impact services, not by slashing programs or pruning low hanging fruit.
The city should consolidate welfare-benefit funds to save $150 million from efficiency and purchasing power.
The city should reduce costs of centralized services while focusing savings on reorganizing operations, streamlining bureaucracy, and leveraging technology.
The city should increase sanitation productivity to save $100 million annually and pursue additional savings through overtime caps and ambulance staffing changes.
The city should avoid raising taxes and instead focus on the hard work to prioritize and deliver efficient, high-quality services.
Key Data
$9.7 billion
— Projected budget gap in fiscal year 2025.
$14.5 billion
— Projected budget gap in fiscal year 2027.
$17 billion
— Cost of employee raises agreed to by the city and union leadership over five years.
$150 million
— Potential savings from consolidating welfare-benefit funds.
$100 million
— Potential annual savings from increasing sanitation productivity.
23,000
— Number of vacant full-time city positions possible to fill.
The Adams Administration's savings plans, including Programs to Eliminate the Gap (PEGs), have reduced ongoing budgeted spending by approximately $3.0 billion annually. While these measures have eliminated over 11,000 vacant positions, the vast majority of the savings—92 percent—are derived from re-estimating costs, eliminating vacancies, and debt service savings rather than direct service cuts.
Key Data
$3.0 billion
— Combined annual reduction in ongoing budgeted spending from the three savings plans.
92 percent
— Portion of the plans' recurring savings that should not affect services expected to be delivered.
11,386
— Number of vacant full-time positions cumulatively eliminated by the savings plans.
23,000
— Number of full-time positions that remain vacant in the City, plus additional part-time vacancies.
3.4 percent
— Savings as a share of the total budget, excluding Medicaid, Public Assistance, and pension contributions.
0.3 percent
— Share of the total budget represented by reductions that potentially affect programs.
New York City's Department of Education faces significant fiscal challenges as enrollment declines while per-student spending continues to rise, leading to a projected $12.0 billion budget gap by fiscal year 2026. To address these pressures, the city must manage enrollment-related funding adjustments, evaluate programs funded by expiring federal aid, and prioritize initiatives that deliver the greatest impact.
Recommendations related to Budget Gaps
Consider per-student spending and recognize that declining enrollment could yield flat or reduced total spending.
Diligently manage the impact of enrollment declines in individual schools with appropriate changes in funding and staffing to ensure the smoothest possible continuity and equity of services.
Identify priority programs funded by expiring federal pandemic aid and be transparent about whether the DOE plans to replace the one-time federal funds with recurring City and State resources or to shrink or end the programs.
Evaluate and modify DOE programs and initiatives to prioritize those that deliver maximum impact to the target populations.
Key Data
$12.0 billion
— The City's projected budget gap in fiscal year 2026.
$36.9 billion
— The total DOE budget for fiscal year 2023.
$37,136
— The amount spent per K-12 DOE student in fiscal year 2022.
$41,069
— The projected per-student spending in fiscal year 2026.
$556 million
— The estimated fiscal cliff for programs currently funded by federal pandemic aid in fiscal year 2026.
$421 million
— The total savings directed by the Program to Eliminate the Gap (PEG) for the DOE in fiscal year 2024.
New York City faces significant fiscal challenges, with reported budget gaps projected to reach $6.5 billion by fiscal year 2027 and potentially exceeding $14.0 billion when accounting for additional costs like labor contracts and asylum seeker services. To address these shortfalls, the city must prioritize operational efficiency and leverage its 23,000 vacant positions to meet savings targets without resorting to layoffs.
Recommendations related to Budget Gaps
The City is right to initiate a PEG—a Program to Eliminate the Gap—for the Executive Budget.
Ample vacancies exceeding 23,000 Citywide not only eliminate any need for layoffs, but should allow agencies to meet their savings targets and still hire critical positions.
The best approach to preserving services is to improve operational efficiency, which should be the focus now.
The City should make work rules and job titles more flexible to increase operating efficiency and reduce ongoing costs.
Key Data
$6.5 billion
— Reported budget gaps by fiscal year 2027.
$8.8 billion
— Funding the City may need this year and next.
$14.0 billion
— Future budget gaps that may be exceeded by fiscal year 2027.
4 percent
— The size of the PEG savings program.
23,000
— Number of Citywide vacancies available to help meet savings targets.
$227 billion is the size of the NYS FY 2024 Executive Budget. The State's finances are in a precarious state, with the economy uncertain and the budget going from riches to rags. There is an $8 billion surplus this year, but outyear gaps of over $7 billion and a $12…
New York City faces a projected $12.0 billion budget gap by fiscal year 2026, exacerbated by expiring federal pandemic aid and consistent underbudgeting for specific mandates like Carter Cases. To address these fiscal realities, the Department of Education must prioritize per-student spending analysis and evaluate the impact of programs currently reliant on temporary federal funding.
Recommendations related to Budget Gaps
Consider spending levels per student rather than aggregate level and recognize that declining enrollment could yield flat or reduced total spending.
Identify priority programs funded by expiring federal COVID-19 pandemic aid and be transparent about whether the City plans to replace the one-time federal funds with recurring City and State resources or shrink or end the programs.
Evaluate DOE programs and initiatives to ensure that they are delivering maximum impact to the target populations and modify programs accordingly.
Key Data
$12.0 billion
— The likely City budget gap in fiscal year 2026.
$500 million
— The amount the City consistently underbudgets annually for Carter Cases that fund private school tuition for special education students, pupil transportation, and charter schools.
$321 million
— The Office of the State Comptroller’s estimate for the fiscal cliff in fiscal year 2025.
$556 million
— The Office of the State Comptroller’s estimate for the fiscal cliff in fiscal year 2026.
$401 million
— The decrease in the total fiscal year 2024 DOE budget from fiscal year 2023.
$243 million
— The decrease in federal COVID-19 pandemic aid contributing to the DOE budget reduction.
The New York City Housing Authority faces a structural budget gap driven by rising operating costs, deferred maintenance, and a record-low rent collection rate. To achieve solvency, the agency must implement structural reforms rather than relying on unsustainable non-recurring revenue and local government subsidies.
Recommendations related to Budget Gaps
Fix deteriorating buildings through the RAD program and the Preservation Trust.
Improve property management.
Boost rent collections.
Negotiate savings and increased productivity through collective bargaining.
Key Data
$152 million
— NYCHA's overtime spending in 2022, which increased 3 percent despite a goal of reducing it by 40 percent.
64 percent
— The all-time low rent collection rate reached in December 2022.
$454 million
— The amount of unpaid rent accrued by NYCHA households as of December 2022.
$789 million
— The amount of non-operating sources used to balance the 2022 budget, representing 28 percent of the total revenue budget.
$211 million
— The amount remaining in NYCHA reserves at the end of 2022, which is less than one month of expenses in cash on hand.
$100 million
— The amount NYCHA was forced to withdraw from its operating and replacement reserves because other transfers were not enough to bring the budget into balance.
The tentative contract agreement with District Council 37 is estimated to cost $16.2 billion more than currently budgeted over the contract period, causing city budget gaps to widen to $10.6 billion by fiscal year 2027. To offset these significant costs, the city must identify productivity savings and implement a growing, multiyear Program to Eliminate the Gap (PEG) in the executive budget.
Recommendations related to Budget Gaps
The effort to increase flexibility should be significantly expanded to identify changes in work rules and job titles that increase the efficiency of City operations, providing needed savings to offset the costs of raises, while increasing salaries and improving career paths.
The City should be implementing a growing, multiyear Program to Eliminate the Gap (PEG) in the Executive Budget to offset these multi-billion-dollar collective bargaining costs.
As the City negotiates other agreements and works to identify how best to adapt to remote work and flexible schedules, it should take great caution not to add economic costs to other contracts if remote work options vary.
Key Data
$16.2 billion
— Estimated cost of raises over the contract period if the tentative agreement sets the pattern for all other unions.
$10.6 billion
— Projected city budget gap in fiscal year 2027 following the additional spending from the contract agreement.
$6.5 billion
— Projected city budget gap in fiscal year 2027 prior to the contract agreement.
$3.2 billion
— Projected city budget gap in fiscal year 2025 prior to the contract agreement.
$2.5 billion
— Estimated additional spending in fiscal year 2023 resulting from the contract agreement.
$2.3 billion
— Estimated additional spending in fiscal year 2024 resulting from the contract agreement.
New York City faces significant future budget gaps and fiscal risks, including potential recessions and the expiration of federal aid, which could push deficits to over $10 billion. To address these challenges, the City must prioritize critical services, deposit $1 billion into the Rainy Day Fund, and implement a productivity program to restructure services for better cost-effectiveness.
Recommendations related to Budget Gaps
The Administration should prioritize critical services, manage them relentlessly, save for a rainy day, and protect from massive future cuts by restraining spending growth.
The Administration's planning for its Executive Budget should address the $1.1 billion fiscal cliff.
The Administration should deposit $1.0 billion in the Rainy Day Fund.
The Administration should initiate a productivity PEG (program to eliminate the gap) that tasks agencies with restructuring programs to improve the quality and cost-effectiveness of City services.
The City Council should focus not just on programs that serve New Yorkers today, but on how to mitigate significant future risks to ensure the City has adequate resources to serve New Yorkers in the near future.
Key Data
$5.0 billion
— Budget gap projected for fiscal year 2026.
$6.5 billion
— Budget gap projected for fiscal year 2027.
$10.0 billion
— Potential total budget gaps if future labor agreements, fiscal cliff funding, and migrant services are included.
$1.1 billion
— Fiscal cliff amount that the Executive Budget planning should address.
$1.0 billion
— Amount that should be deposited into the Rainy Day Fund.
$1.5 billion
— Resources rolled from fiscal year 2023 to help balance the fiscal year 2024 budget.
New York City faces manageable short-term fiscal challenges, but the long-term outlook is precarious due to significant budget gaps and underfunded programs. To ensure stability, the city must address recurring expenditure risks and potential revenue shortfalls, including a necessary deposit into the Rainy Day Fund.
Recommendations related to Budget Gaps
The City should deposit at least $1 billion into the Rainy Day Fund this year to prepare for a rocky economic outlook.
Key Data
$2.9 billion
— The reported fiscal year 2024 budget gap that the City must close.
$11.5 billion
— The potential budget gap that could be reached in fiscal year 2026 due to various risks.
$13 billion
— The potential total tax revenue shortfall over three years if the City enters a recession.
$1.1 billion
— The total value of fiscal cliffs expected next year from recurring programs that are currently unfunded.
$1 billion
— The amount the City should deposit into the Rainy Day Fund this year.
$350 million
— The expected annual savings from eliminating half of the vacant civilian positions.
New York State's budget process relies on opaque accounting practices and insufficient oversight, which mask structural budget gaps and limit the ability of legislators and the public to make informed fiscal decisions. To improve transparency and accountability, the state should adopt Generally Accepted Accounting Principles, strengthen reserve funds, and implement more rigorous, independent fiscal analysis.
Recommendations related to Budget Gaps
Manage, report, and balance the budget in accordance with Generally Accepted Accounting Principles (GAAP) on a modified accrual basis.
Strengthen the Rainy Day Fund by raising deposit and balance caps, combining all reserve funds, and mandating deposits when revenues are strong.
Strengthen the debt cap.
Tightly tie appropriations to planned spending by reducing unfunded and undefined spending authority.
Require financial plans to be published with the enacted and one-house budgets.
Require fiscal estimates with other legislation to ensure the impact of new spending is understood.
Prevent the use of Messages of Necessity on budget bills to allow for a thorough review of the bills prior to passage.
Implement comprehensive, transparent long-term capital planning processes to reduce deferred needs.
Fully fund the Authorities Budget Office.
Establish the Independent Fiscal Analysis Office to provide rigorous, nonpartisan data analysis and monitoring of the State’s budget.
Key Data
$220 billion
— The amount the State spends annually on wide-ranging and far-reaching programs and contracts.
$1.7 billion
— The amount of Medicaid payments the State delayed to shift into the following fiscal year, making current-year spending appear lower.
$9.0 billion
— The total amount of the State’s principal reserves at the end of fiscal year 2022.
$3.3 billion
— The amount held in the Rainy Day funds at the end of fiscal year 2022.
$5.7 billion
— The amount held in the Reserve for Economic Uncertainties at the end of fiscal year 2022.
$27 billion
— The estimated amount needed to cover two years of average recessionary receipt shortfalls plus one percent spending growth.
New York City faces a precarious long-term fiscal outlook with projected budget gaps reaching $4.6 billion in fiscal year 2025 and $5.9 billion in fiscal year 2026. To ensure future stability and preserve essential services, the City must immediately restrain spending and implement transformative changes to improve the quality and efficiency of government operations.
Recommendations related to Budget Gaps
The City must start taking action immediately to restrain spending over the long run to reduce the future gaps.
The City should restructure government operations to be more productive rather than relying on spending re-estimates.
The City should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The City and agencies should have flexibility to shift vacant positions across and within agencies to units and titles that have critical staffing needs.
The City must improve the quality and efficiency of the City’s operations today to preserve services for New Yorkers.
Key Data
$4.6 billion
— Projected budget gap in fiscal year 2025.
$5.9 billion
— Projected budget gap in fiscal year 2026.
80 percent
— Portion of fiscal year 2023 and 2024 savings comprised of spending re-estimates.
24,000
— Number of vacant full-time positions remaining after the November Plan reductions.
$350 million
— Expected annual savings from the elimination of roughly 5,000 vacant civilian positions.
$2.9 billion
— Reduced fiscal year 2024 budget gap.
The Metropolitan Transportation Authority faces a structural operating budget deficit of at least $2.5 billion annually, necessitating significant efficiency reforms and labor contract adjustments to avoid service cuts or tax hikes. Addressing this fiscal challenge requires prioritizing state-of-good-repair capital investments and implementing congestion pricing while avoiding the diversion of capital funds to cover operating gaps.
Recommendations related to Budget Gaps
The MTA should increase efficiency by adopting operating strategies common to other public transit systems and aligning costs with industry benchmarks to close its structural operating budget deficit.
MTA leadership and labor unions should work together to change labor contracts to identify and phase in efficiency reforms that narrow the structural gap.
The MTA should keep laser-focused on increasing its capital project throughput and prioritize the state of good repair before expansion projects to ensure the system functions reliably.
Congestion pricing should be implemented expeditiously, and revenues should not be diverted to narrow the operating budget gap.
Riders should pay reasonable fares that increase with costs to support the system's financial future.
Key Data
$2.5 billion
— Recurring annual expenses for the MTA that exceed its revenues.
$35 billion
— Capital investment needed in the next few years to bring tracks, cars, and signals to a state of good repair.
$100 million
— The size of the MTA's current efficiency plan, which would close just 4% of its gap.
44%
— The amount by which New York City Transit subway facility maintenance productivity is lower than the national median.
$6 billion
— Future budget gaps approaching this amount for the State.
$10 billion
— Future budget gaps approaching this amount for the City.
The Metropolitan Transportation Authority faces a recurring annual structural deficit of approximately $2.5 billion, exacerbated by fiscal risks that could add up to $2 billion annually. To address these gaps, the agency must implement efficiency-focused operating reforms and restructure long-term debt while seeking additional state aid to ensure fiscal stability.
Recommendations related to Budget Gaps
The MTA should seize the opportunity and runway created by federal aid to implement efficiency-focused operating reforms and—to the extent possible—restructure its long-term debt, which would reduce its structural deficit before the region’s critical transit system risks falling off the fiscal cliff.
The MTA should implement a multi-year phase-in plan starting with efficiencies under the purview of management, followed by implementing changes collectively bargained with labor over time.
Key Data
$2.5 billion
— The MTA's projected annual recurring structural deficit.
$2.0 billion
— Potential annual fiscal risks from recession, collective bargaining costs, and other factors.
$7.0 billion
— Amount of American Rescue Plan Act (ARPA) federal stimulus funds proposed to cover deficits through 2024.
$700 million
— Amount of Federal Emergency Management Agency (FEMA) reimbursement funds proposed to cover deficits through 2024.
$800 million
— Minimum additional aid the MTA proposed the State provide in 2023 to balance the budget.
$1.6 billion
— Minimum additional aid the MTA proposed the State provide annually beginning in 2024 to balance the budget.
New York City faces a precarious fiscal outlook with projected budget gaps reaching $4.6 billion in fiscal year 2025 and $5.9 billion in fiscal year 2026. To ensure future stability and preserve services, the city must prioritize improving operational efficiency and eliminating unneeded positions rather than relying solely on spending re-estimates.
Recommendations related to Budget Gaps
The City should make additional and ongoing efforts to reduce these budget gaps.
The City can and should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The best way to preserve services for New Yorkers when they need them most is to improve the quality and efficiency of the City’s operations today.
More transformative changes are needed to ensure future stability.
Key Data
$4.6 billion
— Projected budget gap in fiscal year 2025.
$5.9 billion
— Projected budget gap in fiscal year 2026.
$1 billion
— New spending included in the budget for services provided to migrants.
$900 million
— Cost increase to budget gaps in the first year if employee raises of three percent annually are implemented.
$2.5 billion
— Cost increase to budget gaps in the third year if employee raises of three percent annually are implemented.
$4.3 billion
— Potential revenue shortfall in the first year of a recession.
New York City faces significant financial uncertainty as budget gaps could approach $10 billion, driven by potential recession risks, pension fund investment losses, and unfunded fiscal cliffs. While the City has initiated a program to identify efficiency savings, the upcoming financial plan must address these substantial, unreflected budgetary risks to ensure long-term stability.
Key Data
$10 billion
— Potential future budget gaps that the City and State Comptrollers have warned could be reached.
$4.2 billion
— Reported budget gap for fiscal year 2024.
$3.7 billion
— Reported budget gap for fiscal year 2025.
$4.0 billion
— Reported budget gap for fiscal year 2026.
$861 million
— Required increase in City pension contributions for fiscal year 2024 due to investment losses.
$2.0 billion
— Required increase in City pension contributions for fiscal year 2025 due to investment losses.
New York City faces a fiscal cliff of at least $1 billion by fiscal year 2026 due to the use of one-time federal COVID-19 relief funds for recurring programs. To address this, the City must transparently identify programs at risk of underfunding and either eliminate them or reallocate existing resources to cover their costs.
Recommendations related to Budget Gaps
The City should clearly state that these programs will end when the federal aid is depleted, or that they will continue and either widen the City’s budget gap or be supported with identified revenues or other program reductions.
The City should release a list of programs that will be underfunded when the federal aid is depleted, which is a key component of the fiscal cliff.
If the City intends to continue these programs with City dollars, it should include them in baseline spending in the financial plan and either widen budget gaps or fund them with resources reallocated from existing programs.
The City’s budget gaps should be accurate and complete.
Key Data
$1 billion
— The federal funding fiscal cliff expected in fiscal year 2026.
$3.7 billion
— The current fiscal year 2025 budget gap.
$4.1 billion
— The projected fiscal year 2025 budget gap if fiscal cliff programs are continued without reallocation.
$4.0 billion
— The current fiscal year 2026 budget gap.
$5.1 billion
— The projected fiscal year 2026 budget gap if fiscal cliff programs are continued without reallocation.
New York City faces significant future budget gaps that could reach $10 billion, far exceeding the administration's current projections of $4 billion. To address these fiscal challenges, the city must prioritize operational efficiency, modernize union contracts, and strategically manage its 28,000 vacant positions rather than relying on unsustainable spending.
Recommendations related to Budget Gaps
The city needs to both restrain spending and better manage vacancies and hiring.
The city should increase efficiency and reduce underutilized services to preserve and enhance critical city services.
The city should reorganize operations, streamline bureaucratic approvals, leverage technology, and fundamentally change ways of doing business to boost productivity.
The city should modernize union contracts to reduce recurring costs, fund workers’ raises, and narrow budget gaps.
Key Data
$10 billion
— The amount that future budget gaps will actually approach, according to city and state comptrollers.
$4 billion
— The amount of annual budget gaps the city currently anticipates in the near future.
$2 billion to $3 billion
— The amount by which annual pension contributions will be higher than budgeted due to poor stock-market performance.
$1 billion to $2 billion
— The cost of recurring programs like 3-K expansion and housing-voucher enhancement currently supported by one-time federal COVID aid and city revenues.
$1 billion to $1.5 billion
— The amount that may remain unfunded per year if the city agrees to 3% raises for collective-bargaining agreements.
28,000
— The number of vacant positions currently existing within the city government.
New York City's implementation of a Program to Eliminate the Gap (PEG) is a necessary step to stabilize the budget against rising costs from pension contributions, collective bargaining, and the exhaustion of federal COVID aid. By targeting savings of 3 percent this year and 4.75 percent in future years, the City can restructure operations and leverage its 28,000 vacancies to maintain essential services while addressing fiscal challenges.
Recommendations related to Budget Gaps
The City should change work rules and other contractual components to increase efficiency and provide PEG savings as the best way to raise employee salaries without creating an unsustainable fiscal burden.
The City should identify savings of 3 percent this year, growing to 4.75 percent in future years to restructure programs and operations to achieve the PEG targets.
Key Data
3 percent to 5 percent
— The range of the Program to Eliminate the Gap (PEG) that was previously called for in June.
3 percent
— The amount of savings the City is directed to identify this year.
4.75 percent
— The amount of savings the City is directed to identify in future years.
28,000
— The number of current vacancies in the City, which should allow for hiring critical service-providing positions while meeting PEG targets.
New York City's fiscal year 2023 budget agreement increases spending by $1.15 billion, despite facing annual budget gaps that have grown to an average of $4 billion. To achieve fiscal sustainability, the administration must prioritize restructuring operations and require agencies to implement recurring efficiency savings of 3 percent to 5 percent.
Recommendations related to Budget Gaps
The Administration should be requiring agencies to find recurring efficiency savings of 3 percent to 5 percent to be included in the November 2022 financial plan to bring spending levels back down to fiscally sustainable levels.
The City will need to take actions to bring recurring revenues and recurring spending in line.
Restructuring operations and focusing on priorities will be essential to address the budget gaps.
Key Data
$4 billion
— The average annual budget gap currently facing the City.
$3.7 billion
— The average annual budget gap as projected in the Executive Budget.
$300 million
— The amount of additional savings identified in the Adopted Budget, likely from re-estimates and debt service savings.
$4.5 billion
— The amount of money available to allocate in the budget.
$1.15 billion
— The amount by which the budget deal increases spending over the Executive Budget.
New York City faces a potential $9 billion fiscal disaster by 2026 due to existing budget gaps, pending employee raises, and looming fiscal cliffs. To avoid this, the city must prioritize programs, increase service efficiency, and bolster reserves rather than expanding services with temporary revenue.
Recommendations related to Budget Gaps
The mayor and council must resist the temptation to use additional tax revenue to expand services, and instead deposit this money into the Rainy Day Fund (RDF) for the next recession.
The city should schedule $500 million annual deposits to the RDF, which could come from the budgeted General and Capital Stabilization Reserves.
The executive budget should address the budget’s fiscal cliffs where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
The city must lower costs, ideally by improving efficiency or by reducing lower impact programs.
The city should use this next round of collective bargaining contracts to further increase productivity, which would generate savings to fund raises and stabilize the budget.
Key Data
$9 billion
— The combined total of the existing budget gap, employee raises, and fiscal cliff that creates a recipe for fiscal disaster by 2026.
$17 billion
— The potential three-year revenue shortfall if the city experiences another recession.
$900 million
— The total value of fiscal cliffs next year where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
$1.5 billion
— The estimated annual savings from implementing a 3% Program to Eliminate the Gap for Productivity.
$4.3 billion
— The cost of 3% annual raises for city employees in the third year.
New York City's Program to Eliminate the Gap (PEG) for fiscal year 2023 relied heavily on re-estimates and vacancy reductions, with only 6.2 percent of savings derived from actual operational efficiencies. To improve long-term fiscal stability, the City should implement a productivity-focused PEG that targets 3 percent of City-funded agency spending through management reforms and technology.
Recommendations related to Budget Gaps
The Mayor’s Office of Management and Budget (OMB) should initiate a productivity PEG to generate options to save 3 percent of City-funded agency spending.
The analytic work should start immediately, and the total or selected productivity improvements should be part of the Executive Budget due in late April.
Agencies should identify management reforms that reduce unit costs, streamline operations, and leverage technology.
The City should identify and implement efficiencies in centrally managed services like space leasing and fleet, which should provide additional savings.
PEGs should generate recurring savings that reduce baseline spending, not just reductions in one or two years.
Key Data
$1.5 billion
— Targeted annual savings in fiscal year 2023 from a 3 percent productivity PEG, growing to $1.6 billion by fiscal year 2026.
6.2 percent
— Share of cumulative five-year savings that came from increased efficiency.
61.6 percent
— Share of savings that came from re-estimates of planned spending and shifting support for services from City funds to other sources.
24.1 percent
— Share of savings that came from the elimination of vacant positions.
7,026
— Number of full-time positions eliminated across 42 agencies through the PEG's vacancy reductions.
$290 million
— Annual savings generated from the elimination of 7,026 full-time positions.
$0 is the size of the New York State budget deficit in each year of New York State’s five-year Executive Budget financial plan, as proposed by Governor Kathy Hochul. The Governor’s budget proposal balances the budget in each of the next five years, an unprecedented level of fiscal stability for…
The New York City Housing Authority faces significant financial instability, with operating costs exceeding revenues and a declining rent collection rate that threatens to widen its budget gap by $132 million. To address these deficits, the authority must secure approval for the Preservation Trust and implement labor productivity reforms to align operating costs with industry standards.
Recommendations related to Budget Gaps
The City and State should approve the Preservation Trust, which has the potential to generate much needed capital investment and to deliver significant operating savings and productivity improvements.
NYCHA should implement labor productivity increases, which would bring operating costs in line with industry benchmarks and maximize the potential benefits of the Preservation Trust.
NYCHA, in collaboration with its federal monitor, HUD, and labor, needs to redouble efforts to boost productivity and bring operating costs closer to peer housing authorities and private property managers.
Key Data
$2.7 billion
— Public housing operating expenses in NYCHA’s calendar year 2022 adopted budget.
70 percent
— NYCHA's rent collection rate as of January 2022.
$132 million
— The amount by which NYCHA's budget gap would increase if the rent collection rate continues at 70 percent in 2022.
$1.2 billion
— Total operating funds spent by NYCHA since 2018 on various action plans mandated under the HUD settlement agreement.
$359 million
— Operating funds spent by NYCHA in 2021 alone on action plans mandated under the HUD settlement agreement.
New York City faces significant fiscal challenges with projected budget gaps of $2.7 billion, $2.2 billion, and $3.0 billion for fiscal years 2024 through 2026, alongside looming fiscal cliffs from expiring federal aid and unfunded recurring programs. To address these issues, the administration must implement more rigorous efficiency programs, transition recurring programs to stable funding sources, and establish mandatory annual deposits into the Rainy Day Fund.
Recommendations related to Budget Gaps
The Executive Budget should include another Program to Eliminate the Gap (PEG) focused on increasing agency and central service efficiency, actions to mitigate the coming impacts of the City and federal fiscal cliffs, and annual deposits to the Rainy Day Fund (RDF).
The Executive Budget should build on this start and include a PEG targeting 3 percent in fiscal year 2023 and each year thereafter, focused on strategies that increase efficiency and reduce unit costs.
In addition, the Executive Budget should include efficiency savings from centrally managed services like space and fleet.
City agencies should have clear plans for how to taper federal funds over the next few years, while the Executive Budget should propose a plan to start to transition recurring programs to recurring funding.
The Executive Budget should include planned deposits of at least $500 million annually in each year of the financial plan.
The Mayor and City Council should also advance legislation to mandate deposits and establish stricter controls for use of the RDF.
Key Data
$2.7 billion
— Projected budget gap for fiscal year 2024.
$2.2 billion
— Projected budget gap for fiscal year 2025.
$3.0 billion
— Projected budget gap for fiscal year 2026.
$650 million
— Recurring programs funded in fiscal year 2022 that lacked fiscal year 2023 funding as of November 2021.
$1.3 billion
— Recurring programs that will lose federal funding in fiscal year 2026.
$11 to $12 billion
— Recommended reserve levels for the City.
The Metropolitan Transportation Authority faces an annual structural deficit of at least $2.0 billion, which is currently being covered by $11.9 billion in federal aid and borrowing. To stabilize long-term finances and avoid service cuts or tax hikes, the agency must implement operational efficiencies and continue planned fare increases alongside expanded Fair Fares funding.
Recommendations related to Budget Gaps
The MTA should implement changes that increase the efficiency of its operations.
The MTA should continue planned fare increases, which, importantly, would be coupled with the City’s increased funding for Fair Fares.
Restructuring operations and preserving the fare policy would help stabilize the MTA’s finances for the future and stave off possible future service cuts or dramatic tax or fare increases.
Key Data
$2.0 billion
— The annual structural deficit faced by the MTA.
$11.9 billion
— The amount of federal aid and borrowing covering the MTA's structural deficit from 2021 to 2025.
$1.6 billion
— The amount of selected re-estimates over the plan period that may help cover the structural deficit.
$321 million
— The amount by which MTA operating expenses ended 2021 below plan.
$2.9 billion
— The amount borrowed from the Municipal Liquidity Facility (MLF) to support operations.
$1.5 billion
— The amount of planned savings actions cancelled in the November 2021 Plan.
The City's preliminary budget for fiscal year 2023 includes a program to eliminate the gap, but still faces projected budget gaps of $2.7 billion, $2.2 billion, and $3.0 billion in fiscal years 2024 through 2026. To address these challenges and prepare for future economic downturns, the City must identify additional efficiency savings, rationalize benefit levels through collective bargaining, and commit to annual deposits of at least $500 million into the Rainy Day Fund.
Recommendations related to Budget Gaps
The Administration should identify additional agency and central function efficiency savings to include in the Executive Budget.
It is critically important that the Administration work with its municipal unions to identify and implement efficiency savings and rationalize benefit levels and administration during collective bargaining negotiations.
The Administration should review federal COVID-related spending to ensure resources strategically support the City’s recovery without creating unsustainably-funded programs.
To help the City weather the inevitable future recession or severe emergency, the financial plan should include annual deposits of at least $500 million to the Rainy Day Fund.
The City should take significant additional actions in the Executive and Adopted Budgets to stave off the looming fiscal cliffs and save for the inevitable next downturn.
Key Data
$2.7 billion, $2.2 billion, and $3.0 billion
— Projected budget gaps in fiscal years 2024 through 2026.
$653 million
— The fiscal year 2023 fiscal cliff caused by programs only funded for fiscal year 2022.
$1.3 billion
— Amount of programs funded with federal monies that will dry up in fiscal year 2026.
3,200
— Number of unneeded vacant positions removed from the fiscal year 2022 authorized headcount.
7,000
— Number of vacant positions eliminated in fiscal year 2023 and beyond.
$866 million
— Savings delivered in fiscal year 2022 by the Program to Eliminate the Gap.
New York City faces significant fiscal challenges, including a $653 million City-funded fiscal cliff and projected budget gaps of $2.9 billion, $2.7 billion, and $2.1 billion for fiscal years 2023 through 2025. To address these issues, the city must identify recurring revenues for expiring programs, implement efficiency savings, and build reserves to prepare for future economic downturns.
Recommendations related to Budget Gaps
Agencies should leverage technology to improve service delivery.
Agencies should reduce spending on low impact programs.
Agencies should work with labor to change work rules to increase efficiency.
The City should either remove the unspecified labor savings or identify specific actions to achieve them.
NYCHA and H+H should implement reforms to achieve fiscal stability.
The City should be building reserves to be prepared for the next downturn.
Key Data
$1.7 billion
— Total annual savings from City-funded agency spending through the Program to Eliminate the Gap (PEG).
$653 million
— City-funded fiscal cliff starting in fiscal year 2023 that requires recurring revenues or program elimination.
$2.9 billion
— Projected budget gap for fiscal year 2023.
$2.7 billion
— Projected budget gap for fiscal year 2024.
$2.1 billion
— Projected budget gap for fiscal year 2025.
$1 billion
— Cost of annual raises of two percent over three years in fiscal year 2023.
2026 is the year the MTA will likely have spent all of its one-time COVID-19 federal aid, and when the MTA will have to address the estimated $2.5 billion annual structural operating deficit which that aid is now covering. At an event with CBC Trustees, MTA Chair and CEO Janno…
New York City's financial plan faces significant challenges, including recurring budget gaps that are understated by $750 million annually due to unrealistic savings assumptions. To ensure fiscal sustainability, the incoming administration must address these gaps, manage upcoming fiscal cliffs, and restructure the budget through measures like a 3 percent to 5 percent Program to Eliminate the Gap.
Recommendations related to Budget Gaps
Mayor-elect Adams should actively manage these budget gaps starting on day one.
The City’s plan should include annual deposits to the Rainy Day Fund crucial to preparing for the next recession.
Mayor-Elect Adams should proactively take steps to restructure the City’s budget and workforce to be fiscally sustainable with recurring City revenues.
The administration should support a 3 percent to 5 percent Program to Eliminate the Gap to help restructure the budget.
Mayor-elect Adams should work with municipal unions to leverage the next round of collective bargaining agreements to make changes allowing the City to be more productive and close budget gaps.
Key Data
$2.9 billion
— Budget gap for the next year as stated in the November 2021 Financial Plan.
$750 million
— Amount by which annual budget gaps are higher than stated due to illusionary labor and attrition savings.
$1.3 billion to $4 billion
— Annual federal fiscal cliff arriving starting in fiscal year 2025 with the depletion of federal COVID-aid.
$500 million
— Commitment to a deposit into the Rainy Day Fund in fiscal year 2022.
$2.2 billion
— Cost by fiscal year 2025 for 2 percent annual raises for City employees.
New York City faces annual budget gaps of $5 billion, necessitating a 3-5% savings program to eliminate the gap and bring spending in line with tax revenues. To achieve fiscal stability, the city must implement operational efficiencies, reform health benefit costs through employee premium-sharing, and collaborate with municipal unions.
Recommendations related to Budget Gaps
The budget and workforce should be brought to levels supported by the city’s already high taxes to address fiscal instability.
The administration should implement a 3-5% savings Program to Eliminate the Gap (“PEG”) to leverage technology, redesign operations, share services and manage functions like fleet and office space citywide.
Additional budget savings should come from bringing health benefit costs to sustainable levels by reasonable employee premium-sharing, like that for state employees.
The administration and labor should find efficiencies to help close budget gaps and fund the raises for the workforce.
Key Data
$5 billion
— annual budget gaps the city faces starting next year.
$13 billion
— in COVID federal aid that the administration must ensure has impact.
3-5%
— savings target for the Program to Eliminate the Gap (“PEG”) called for by the mayor.
The Metropolitan Transportation Authority faces a structural annual deficit of at least $2.0 billion, which is currently being masked by federal aid and borrowing. To ensure long-term financial stability, the agency must improve operational efficiency and proceed with planned fare increases while the City expands the Fair Fares program.
Recommendations related to Budget Gaps
The MTA should use this runway to implement changes that increase the efficiency of its operations.
The MTA should continue planned fare increases.
The MTA should couple fare increases with the City aggressively rolling out Fair Fares.
Key Data
$2.0 billion
— The structural annual deficit the MTA faces, which is currently covered by federal aid and borrowing.
$2.9 billion
— The amount of MLF debt available to support operations through 2025 and cover the 2026 deficit.
$9.8 billion
— The portion of the 2020-2024 capital plan funding that was identified as being at risk.
$10,623 million
— The total 2021-2025 July Financial Plan baseline deficit before savings actions and one-shot aid.
New York City faces annual budget gaps estimated between $3.9 billion and $4.8 billion, necessitating a strategy that includes using federal aid wisely, restraining spending, and building a robust Rainy-Day Fund. To ensure long-term fiscal stability, the city must prioritize sustainable workforce levels, negotiate health benefit cost-sharing, and implement a regular, periodic Program to Eliminate the Gap.
Recommendations related to Budget Gaps
To narrow these gaps, stabilize City finances, and prepare for a future economic downturn the City should use federal aid wisely, restrain spending and the workforce to fiscally sustainable levels, and make deposits into its Rainy-Day Fund.
The incoming Administration should identify programs that are not sufficiently strategic and beneficial, end them and freeze associated hiring, and then reallocate those federal funds to more beneficial uses.
The City should enact a local law to limit withdrawals to a recession or severe emergency, both of which should be legally defined.
To bolster the fund over time, the new City law should mandate deposits when the economy is expanding.
The City should also bring health and welfare benefit costs to sustainable levels, which requires negotiating changes with municipal labor unions.
The incoming Administration should deposit funds regularly into the RDF and improve its legal framework.
Key Data
$3.9 billion and $4.8 billion
— The adjusted annual budget gaps beginning in fiscal year 2023 after accounting for one-time items.
$1.3 billion
— The amount of unspecified recurring labor and attrition savings included in the budget.
$1.3 billion to $4.1 billion
— The projected fiscal cliff in fiscal years 2025 and 2026 resulting from the use of non-recurring federal aid for recurring programs.
$488 million
— The amount of the City's fund balance that was previously legally inaccessible but unlocked by the creation of the Rainy-Day Fund.
$500 million
— The additional deposit made into the Rainy-Day Fund in the Fiscal Year 2022 Adopted Budget.
$21.1 billion
— The total amount of COVID-related federal aid New York City is expecting from fiscal year 2020 through fiscal year 2025.
The City's new retiree health care plan fails to reduce actual expenditures because the $600 million in annual savings are diverted to a stabilization fund rather than the operating budget. Consequently, the City continues to face the same financial obligations, leaving existing budget gaps unaddressed.
Recommendations related to Budget Gaps
The City should reduce the cost of retiree health benefits by 50 percent to help close budget gaps.
The City should implement premium sharing for Medicare and pre-Medicare eligible retirees to reduce recurring spending.
The City should pursue the elimination or reduction of Part B premium reimbursement to achieve necessary fiscal savings.
The City should use the change in how benefits are financed to pave the way for employee premium contributions for health insurance coverage.
Key Data
$3.1 billion
— Annual cost of retiree health and welfare benefits.
$122 billion
— The City's current liability for retiree health benefits, also known as other postemployment benefits (OPEB).
$600 million
— Annual reduction in the City's cost of retiree health insurance under the new plan.
$2,400
— Cost per member per year for Medigap plans with no retiree premium contribution.
$2.6 billion
— Cost for pre-Medicare insurance, Medicare Part B reimbursement, and Medigap plans.
$504 million
— Annual cost for union-administered welfare fund contributions for retirees.
New York State faces projected budget gaps of at least $5 billion in the years beyond fiscal year 2025, despite a near-term projection of a $2 billion gap. Additionally, six school districts currently face a combined funding gap of $35.9 million to meet their calculated sound basic education needs.
Recommendations related to Budget Gaps
The State should consider significantly restraining the new funds it provides to wealthy districts to address future budget pressures.
The State should more highly target State aid to low-wealth districts to ensure resource adequacy and financial sustainability.
The State should take significant steps to ensure that the increases in recurring State and non-recurring federal funds drive substantial improvements in educational outcomes.
The State should identify its goals, establish expectations for results, and enhance its monitoring and accountability processes to ensure students benefit from funding.
Over time, initiatives should be evaluated to identify what works so programs and learning strategies can be either replicated or terminated.
Key Data
$5 billion
— Projected budget gaps the State is likely facing in the years beyond fiscal year 2025.
$2 billion
— Projected budget gap in fiscal year 2025.
$35.9 million
— Combined funding gap faced by six districts to meet their calculated sound basic education need.
$8 billion
— Unsolved gap in the enacted State budget from the previous year.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
The New York City Fiscal Year 2022 Adopted Budget leaves the next administration with annual budget gaps of approximately $5 billion, exacerbated by the use of temporary federal aid to fund recurring programs. To ensure long-term fiscal stability, the city must implement mandatory deposits into its Rainy Day Fund and prioritize structural savings rather than relying on unspecified labor savings.
Recommendations related to Budget Gaps
The City should enact legislation that sets minimum mandatory deposits into the Rainy Day Fund to ensure the City has the resources to weather a recession.
It is imperative that the City track federal spending in detail, including metrics for program goals and results.
The City must scrub agency operating budgets to evaluate program effectiveness, prioritize spending, and increase operational efficiency.
The next Administration must address the looming fiscal cliff created by using federal funds for recurring programs.
Key Data
$5 billion
— Annual budget gaps left for the next Administration in fiscal years 2023 to 2025.
$1 billion
— Amount of annual unspecified labor savings included in the budget, which serves to understate the magnitude of the City's gaps.
$11 billion
— Estimated amount the City should have in its Rainy Day Fund to weather a recession.
$500 million
— Amount deposited into the Rainy Day Fund in the Fiscal Year 2022 Adopted Budget.
$1.3 billion to $4.0 billion
— Amount of federal aid used annually to fund recurring programs, creating a fiscal cliff.
$15 billion
— Amount of additional federal aid received.
New York City faces annual budget gaps approaching $5 billion for fiscal years 2023 through 2025, yet the City plans to increase its workforce size despite these financial constraints. Instead of expanding the workforce, the City should utilize current vacancies and federal aid to strategically reallocate staff and prioritize efficient service delivery.
Recommendations related to Budget Gaps
The City should not increase the size of its workforce given annual budget gaps in fiscal years 2023 to 2025 nearing $5 billion.
The City should utilize federal aid and current vacancies to hire strategically to reallocate City workers to where they are necessary.
The City should restructure operations to prioritize efficient service delivery that benefits all New Yorkers.
The City should continue to reduce actual headcount, albeit more slowly, rather than reversing course to increase both actual and authorized headcount.
Key Data
$5 Billion
— Annual budget gaps in fiscal years 2023 to 2025.
13,926
— Number of vacant authorized full-time and full-time equivalent positions as of February 2021.
52%
— Portion of the City’s budget spent on salaries, wages, fringe benefits, and pensions in fiscal year 2020.
13,364
— Number of positions by which the City workforce shrank between April 2020 and February 2021.
6,850
— Number of additional positions the City proposed to fill in the Fiscal Year 2022 Executive Budget.
The Metropolitan Transportation Authority faces a long-term structural fiscal imbalance, with a projected $2.4 billion shortfall in 2024 despite federal aid. To achieve fiscal sustainability, the agency should implement operational reforms—including productivity improvements, conductor operating changes, and health care savings—that could yield up to $2.9 billion in annual savings by 2024.
Recommendations related to Budget Gaps
The MTA should increase subway facility maintenance productivity to the national median to save $981 million annually by 2024.
The agency should improve bus vehicle operations, facility, and vehicle maintenance productivity to save $367 million annually by 2024.
The MTA should align LIRR vehicle operations and maintenance productivity with Metro-North Railroad to save $242 million annually by 2024.
Increasing local bus speeds by 15 percent would achieve $268 million in annual savings by 2024.
The MTA should expand One-Person Train Operation (OPTO) on subways to save $221 million annually by 2024.
Implementing proof-of-payment on commuter rail would save $292 million annually by 2024.
The MTA should apply the State’s current cost-sharing agreement for retired New York State employees to its own retirees to save $263 million annually by 2024.
The agency should increase the represented employees’ share of health insurance premium contributions to 18 percent to save $130 million annually by 2024.
Implementing a value-based health plan redesign would save approximately $270 million by 2024.
Key Data
$2.9 billion
— Total annual savings potential from proposed reforms by 2024.
$2.4 billion
— Projected MTA cash shortfall in 2024.
$25 billion
— Estimated cost to the MTA over the 2020-2024 period due to the pandemic.
13,000
— Number of full-time positions that could be reduced by 2024 through these reforms.
44 percent
— Amount by which NYCT subway facility maintenance productivity is lower than the national median.
18 percent
— Percentage of total planned headcount that could be reduced by 2024.
The next New York City Comptroller will play a critical role not only in holding the next Administration and agencies accountable, investing and managing five pension funds with $248 billion in assets, and partnering in $13 billion City debt issuance, but also in spotlighting and promoting New York City’s fiscal…
New York City faces significant budget gaps exceeding $5 billion annually from fiscal years 2023 through 2025, which can be mitigated by implementing a multi-year plan that includes federal aid, operational efficiencies, and workforce adjustments. These strategies, including a recurring Program to Eliminate the Gap and increased reserve deposits, would reduce the cumulative budget gap by 62 percent while maintaining essential services.
Recommendations related to Budget Gaps
The City should implement a recurring, mandatory Program to Eliminate the Gap (PEG) to identify ways to increase efficiency and reduce costs.
The City should remove half of the current vacancies (about 6,500 of the roughly 13,000 vacancies) in each year of the financial plan to increase long-run fiscal stability.
The City should phase in employee and retiree contributions for health insurance premiums over three years to reduce recurring labor costs.
The City should increase the fiscal year 2022 general reserve to $500 million to better prepare for the next crisis.
The City should replenish the $2.6 billion of the Retiree Health Benefits Trust Fund used in fiscal years 2020 and 2021 by fiscal year 2025.
The City should make $500 million annual deposits to the Rainy Day Fund, or 75 percent of the annual tax revenue growth above 3 percent, whichever is greater.
Key Data
$5 billion
— Annual budget gaps projected for fiscal years 2023 through 2025 when unspecified labor savings are eliminated.
$15 billion
— Total infusion of federal aid the City is poised to receive.
62 percent
— Reduction in cumulative fiscal year 2023 through 2025 budget gaps if the recommended strategies are implemented.
6,500
— Number of current vacancies the City should remove from the budget in each year of the financial plan.
$500 million
— Target for the fiscal year 2022 general reserve.
$2.6 billion
— Amount of the Retiree Health Benefits Trust Fund used in fiscal years 2020 and 2021 that should be replenished by fiscal year 2025.
New York City's Fiscal Year 2022 Preliminary Budget relies on short-term strategies to address budget gaps that are projected to exceed $5 billion annually for fiscal years 2023 and beyond. The city should utilize federal aid from the American Rescue Plan to stabilize its finances and implement long-term structural changes, such as negotiating work rule changes and rationalizing employee benefits, rather than relying on one-time fixes.
Recommendations related to Budget Gaps
The Executive Financial Plan should include a plan for prudent use of federal resources over multiple years, coupled with a commitment to innovative improvements across City government to increase efficiency and cost-effectiveness.
The City should spread federal funds over multiple years to support a glide path toward stability as the economy and tax revenues recover.
Successfully negotiating work rule changes with the City’s municipal unions and rationalizing employee benefits could yield substantial recurring savings exceeding $1 billion per year.
The Executive Budget for Fiscal Year 2022 and ensuing negotiations should prioritize judicious use of the new resources over two to three years to support a long-term plan for fiscal stability.
Federal funding should be used to temporarily backfill shortfalls in tax revenues due to the pandemic, appropriately with a post-federal support fiscal stability plan.
Key Data
$5 billion
— Annual budget gaps projected for fiscal year 2023 and beyond.
4.3 percent
— Expected decline in property tax revenue.
$5.6 billion
— Estimated direct federal aid from the American Rescue Plan Act of 2021.
$1.15 billion
— Additional Federal Emergency Management Agency (FEMA) reimbursement.
$3.8 billion
— Projected budget gap in fiscal year 2022 as of November 2020.
$640 million
— Amount by which personal income tax and business taxes were ahead of the plan.
The state should provide full transparency regarding fiscal year 2021 budget withholdings and repayments by agency, while also omitting extraordinary executive budget powers from the fiscal year 2022 enacted budget. These powers, including midyear modifications and the creation of a COVID-19 relief fund, are unnecessary given the state's improved fiscal picture and subvert the legislature's role in the budget process.
Recommendations related to Budget Gaps
The Division of the Budget should publish on its website timely and complete information about funds that were withheld and repaid as part of the fiscal year 2021 State budget midyear adjustment process.
The State should omit from the Enacted Budget three extraordinary budget powers that are unnecessary and inhibit the Legislature’s ability to exercise its appropriate role in the budget process.
State Operations spending should be managed within amounts appropriated for specific, clearly identified purposes by the Governor and Legislature in the budget.
The State should provide transparency of the fiscal year 2021 withholdings and repayments by agency or recipient, and provide similar detail for the final proposed 5 percent spending reductions in the current year and permanent spending reductions in the out-years.
Key Data
$700 million
— Legally required notification to the Legislature by DOB has only included payments that were withheld beyond a statutory payment date, a subset of withholdings totaling about $700 million in calendar year 2020.
$628 million
— There are broad categories of withheld funds that are not itemized or broken out by agency, such as $628 million in total Transportation withholdings.
$584M
— Of the total transportation withholdings, $584M is listed as 'non-statutory, non- 18b Transit Operating Aid, Mobility Tax.'
$426 million
— A DOB spokesperson stated that $426 million was withheld from and will be repaid to the Metropolitan Transportation Authority (MTA).
$98 million
— A DOB spokesperson stated that $98 million would be cut from the Metropolitan Transportation Authority in fiscal year 2021, pending receipt of federal aid.
5 percent
— Mr. Mujica said in his budget briefing on January 19, 2021 that 'most' withholdings would be reduced from 20 percent to a total of 5 percent and become cuts.
$5.3 billion is the current estimate of the budget gap the next Mayor will have to close in her or his first year. Ben and CBC President Andrew Rein introduce listeners to CBC's mayoral candidates forum "Managing NYC’s Fiscal Crisis" that featured 10-minute conversations with each of eight candidates: Maya…
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
New York City faces significant fiscal challenges with tax revenues falling $20 billion below projections, prompting consideration of early retirement incentives to achieve $1 billion in annual labor savings. However, analysis suggests that workforce reduction through attrition is a more cost-effective strategy than early retirement incentives, which carry high upfront costs and potential long-term fiscal risks.
Recommendations related to Budget Gaps
The City should reduce its workforce through attrition and not pursue the ERI to address fiscal stress.
Localities considering an ERI must perform a thorough analysis of the costs and benefits before implementation.
Governments should commit to a strict hiring freeze if an ERI is implemented to ensure potential savings are realized.
Key Data
$20 Billion
— The amount by which tax revenues for fiscal years 2020 to 2024 fell below January 2020 projections.
$1 Billion
— The amount of recurring annual labor savings the City aims to achieve as part of its budget-balancing plan.
$110,000
— The estimated average additional pension contribution per retiree under the proposed ERI.
$90,200
— The average salary of a municipal employee retiree.
$1.1 Billion
— The estimated incentive cost for 10,000 separations under the proposed ERI.
$5.9 Billion
— The potential five-year salary savings if positions vacated by the ERI are kept vacant.
The Metropolitan Transportation Authority faces a projected $7.9 billion cash shortfall for 2022 through 2024, requiring strategic use of federal aid and revenue management to ensure long-term financial stability. While recent revenue performance has exceeded expectations, the agency must prioritize essential capital investments and maintain service standards while navigating uncertain ridership levels.
Recommendations related to Budget Gaps
The MTA should not substantially change its policy of regular fare and toll increases.
Implementing and ensuring full uptake of Fair Fares is a key companion of such policy in order to assist low-income riders.
The MTA should focus its investment on the highest priority state of good repair and critical system replacement work.
Further service 'right-sizing' tailored to the reduction and resumption of economic activity and commuting are appropriate.
It will be important to understand whether the MTA uses federal aid to reduce future budget gaps or to reverse previously identified plans.
Key Data
$7.9 billion
— Forecasted three-year, 2022 to 2024 cash shortfall.
$2.9 billion
— Amount borrowed to support operations in the 2020 and 2021 budgets.
$4 billion
— Federal COVID relief bill aid expected to be delivered.
$1.5 billion
— Amount of cash the MTA reported having more than expected at the end of 2020.
$1 billion
— Annual net revenue from congestion pricing that 30 percent of the 2020-2024 capital plan relies on.
$8.8 billion
— Reported amount of transit aid to be directed to the NYC area.
New York State's fiscal year 2022 budget addresses significant financial shortfalls through a mix of federal aid, tax increases, and spending reductions. Alternative strategies, such as shifting capital financing to long-term debt and reducing economic development spending, could balance the budget without relying on tax hikes or delaying middle-class tax cuts.
Recommendations related to Budget Gaps
The State should focus its capital investments on the most critical projects during this period.
The State should reduce its planned capital disbursements by 10 percent and finance up to 50 percent of the remaining paygo capital spending with debt to save $1.6 billion in fiscal year 2022.
The State should implement a 50 percent reduction in proposed economic development capital spending while financing 50 percent of the remaining paygo spending with debt to yield $713 million in fiscal year 2022.
The State should smooth the year-to-year fluctuations in school aid to avoid a sudden drop-off.
The State's overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.
Key Data
$1.6 billion
— Savings achieved in fiscal year 2022 by reducing planned capital disbursements by 10 percent and financing 50 percent of remaining paygo capital spending with debt.
$713 million
— Additional yield in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of remaining paygo spending with debt.
$15 billion
— Initial annual tax receipt shortfall estimated by the State last April due to the pandemic.
$9.4 billion
— Combined budget gap for fiscal years 2021 and 2022 after accounting for higher projected receipts, federal aid, and lower Medicaid utilization.
$1.5 billion
— Estimated tax revenue generated in fiscal year 2022 by the proposed temporary personal income tax surcharge on high-income earners.
$500 million
— Projected annual yield from mobile sports wagering authorization by fiscal year 2025.
New York State faces significant budget gaps of $8.2 billion in the current fiscal year and $16.7 billion in fiscal year 2022, necessitating a combination of spending cuts, federal aid, and revenue actions. To address these deficits, the state must avoid gimmicks like shifting costs to local governments or converting short-term debt into long-term obligations, while focusing on targeted spending reductions and realistic revenue projections.
Recommendations related to Budget Gaps
The Executive Budget should present a plan to close the entire State budget gap if it does not receive federal aid.
Any proposal for marijuana legalization should be realistic about the timing of revenue, and avoid dedicating revenue to uses beyond programs related to the consequences of use.
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
The Fiscal Year 2022 Executive Budget should increase use of debt to finance capital expenses and limit capital expenses to investments that are necessary to maintain critical infrastructure, preserve public health and safety, and provide demonstrable economic benefits.
New York State should focus its scarce resources on those districts that lack the local resources to fund a sound basic education.
The State should not convert this short-term debt to long term debt to fund operations.
Key Data
$8.2 billion
— Budget gap reported for New York State in the current fiscal year.
$16.7 billion
— Budget gap reported for New York State in fiscal year 2022.
$1.7 billion
— Amount of State Medicaid costs shifted from March 2019 into April 2019.
$2.6 billion
— Amount of payments withheld by the State as of the end of September.
$2.5 billion
— Amount contained in New York's rainy day funds.
$1.5 billion
— Amount contained in the Economic Uncertainties Fund.
New York City's fiscal year 2023 budget gap is projected at $4.3 billion, a figure likely understated by $1 billion due to unrealized labor savings. To address this multiyear fiscal shortfall, the City must implement significant restructuring, improve productivity, and modify employee benefits rather than relying solely on program reductions.
Recommendations related to Budget Gaps
The City should take aggressive steps to rein in spending by increasing efficiency, prioritizing programs for the most vulnerable, and collaborating with labor to change costly work rules and reduce the cost of benefits for City workers.
To address the fiscal shortfall, the City must implement headcount reductions that are made permanent.
The City must embark on significant restructuring and spending restraint to stabilize its long-run finances.
Key Data
3.2%
— The projected increase in City-funded spending between fiscal year 2021 and fiscal year 2022.
$4.3 Billion
— The projected budget gap for fiscal year 2023.
$1 Billion
— The amount by which the fiscal year 2023 budget gap is likely understated due to unrealized labor savings.
New York State and City face combined budget gaps of $73.3 billion over four years, and even with federal aid, significant local fiscal stability plans are required to address these deficits. Without sufficient federal support, the State and City must implement gap-closing measures totaling $46 billion and $10.6 billion, respectively, to stabilize their finances.
Recommendations related to Budget Gaps
State and City leaders should act with urgency to develop and implement credible fiscal stability plans.
The State and City still will have to implement significant actions to stabilize their finances in the long run.
The State still would have to implement gap-closing measures totaling $46 billion over the four-year financial plan.
The City still would have to implement $10.6 billion in gap closing measures from now through January 2024.
Key Data
$73.3 billion
— Total State and City budget gaps over four years.
$60.1 billion
— Recent State financial plan four-year deficit.
$13.2 billion
— November 2020 Financial Plan four-year gap for New York City.
$4.8 billion
— Adjusted gap for fiscal year 2022 for New York City that must be closed by the release of the Preliminary Budget.
$46 billion
— Gap-closing measures the State would have to implement over the four-year financial plan.
$10.6 billion
— Gap-closing measures the City would have to implement from now through January 2024.
New York City faces a significant fiscal crisis, with a $3.8 billion budget gap projected for fiscal year 2022 that requires immediate action to identify recurring savings. The current financial plan relies too heavily on non-recurring debt service savings and unachieved labor savings, necessitating a shift toward sustainable spending reductions and headcount management.
Recommendations related to Budget Gaps
The Mayor should immediately ask each agency to identify significant recurring savings, with a focus on improving long run efficiency, for potential inclusion in the Preliminary Budget.
Attrition and the hiring freeze should be used to reduce the City’s headcount over the full term of the four-year financial plan.
The City should continue to work with labor to identify efficiencies and align employee benefit contributions to those of other public agencies.
Spending should be restrained to a level that is sustainable when the economy recovers and federal aid is depleted.
Key Data
60%
— of the annual savings in the November 2020 Financial Plan's Savings Program do not recur.
0.35%
— of City-funded spending is represented by the fiscal year 2023 savings.
$1 billion
— in annual labor savings in fiscal years 2022 to 2024 remains unachieved.
$3.8 billion
— is the projected fiscal year 2022 budget gap that the City needs to close.
The Metropolitan Transportation Authority faces a $15.9 billion budget gap through 2024, necessitating a combination of service cuts, efficiency improvements, and potential fare and toll increases. To address this fiscal crisis, the agency must prioritize operational savings and labor collaboration before resorting to long-term debt or drastic service reductions.
Recommendations related to Budget Gaps
The MTA should focus on improving the system’s operating efficiency to mitigate the need for drastic service cuts and layoffs.
The agency should equalize employee and retiree health benefit contributions to those of State employees to generate annual savings.
The MTA must collaborate with labor, who should be active partners in generating savings.
The decision to convert short-term debt to long-term debt should be made only after increasing efficiency, adjusting service levels appropriately, and determining federal aid.
The MTA should recalibrate service levels to match depressed ridership during the pandemic.
Key Data
$15.9 billion
— Total budget gaps facing the MTA between 2020 and 2024.
$4.5 billion
— Amount of gap-closing initiatives the MTA has begun implementing.
$1 billion
— Potential savings from bringing bus operations and subway maintenance efficiency in line with other large systems.
$200 million
— Annual savings possible by equalizing employee and retiree health benefit contributions.
$2.9 billion
— Amount the MTA will borrow through the Federal Reserve’s Municipal Liquidity Facility to balance the budget.
4 percent
— Biennial fare and toll increases scheduled to take effect next year.
New York should exercise caution when considering recreational marijuana legalization as a solution for budget gaps, as experience in other states indicates it takes three to four years to realize consistent tax revenues. Rather than relying on these uncertain funds, any future revenue should be kept on-budget and not committed to specific purposes to ensure fiscal stability.
Recommendations related to Budget Gaps
State leaders should be cautious and pragmatic when considering recreational marijuana revenues to help close budget gaps, as implementing the necessary tax, licensing, and oversight structures takes approximately 12 to 18 months.
Any future recreational marijuana revenue should be kept on-budget, rather than being spent through off-budget trusts or other fiscal gimmickry, to ensure it effectively addresses budget gaps.
Recreational marijuana revenue should be free from capture and not committed to a specific purpose, allowing it to be used for recurring operating budget purposes.
It may be reasonable to dedicate a portion of marijuana revenue to cover administrative costs and fund consequential public health and substance abuse programming.
Key Data
$764,000,000
— California recreational marijuana revenue in the most recent year.
$395,523,567
— Washington recreational marijuana revenue in the most recent year.
$341,691,001
— Colorado recreational marijuana revenue in the most recent year.
$225,543,653
— Alaska recreational marijuana revenue in the most recent year.
$142,517,466
— Oregon recreational marijuana revenue in the most recent year.
$110,385,289
— Nevada recreational marijuana revenue in the most recent year.
New York City's fiscal management requires aggressive spending controls and realistic planning to address ongoing economic uncertainty and potential budget gaps caused by the pandemic. Officials must prioritize identifying recurring savings, removing unfeasible financial projections, and clearly accounting for pandemic-related costs and federal reimbursements.
Recommendations related to Budget Gaps
The City should provide a detailed accounting of both response costs and core services, such as education, that may cost more during the pandemic to better manage the budget gap.
The City should identify how much of its pandemic spending it expects to be reimbursed by the federal government, as unreimbursed costs will increase the budget gap.
Agencies should be tasked with identifying savings, especially recurring savings that improve the efficiency of government and provide multi-year budget relief.
Savings in future years that are not based on a feasible plan should be removed from the financial plan.
Unfilled positions should be removed from the financial plan to ensure accurate budgeting.
Key Data
$302 million
— Tax revenue collections in the first two months of fiscal year 2021 exceeded the Adopted Budget forecast.
$2.2 billion
— Committed spending on COVID-19-related expenditures in fiscal year 2021.
$8 billion
— Unspecified cuts to local assistance in New York State’s Enacted Budget for fiscal year 2021.
$63 billion
— Tax revenue collected in fiscal year 2020.
$1.6 billion
— Projected fiscal year 2022 savings.
$927 million
— Projected overtime spending in the Adopted Budget.
New York faces significant budget gaps of $8 billion this year and a projected $17 billion next year, but reinstating the stock transfer tax is an ineffective solution that would likely drive away securities firms and reduce tax revenue. Instead of relying on this tax, policymakers should pursue alternative strategies to address the state's fiscal challenges.
Recommendations related to Budget Gaps
Policymakers should leave the stock transfer tax dormant and find alternative ways to fill the budget gap.
New York’s leaders should reject proposals to revive the stock transfer tax to avoid negative economic impacts.
Key Data
$8 billion
— The size of the budget gap New York State faces this year.
$17 billion
— The expected size of the budget gap for next year.
$4 billion
— The amount the stock transfer tax would have yielded in fiscal year 2020.
$13 billion
— The amount advocates claim the stock transfer tax could yield in annual revenue.
$27.3 billion
— The pre-tax profits of the securities industry in New York City in 2018.
30 percent
— The outflow of trading activity in listed Swedish companies after the country introduced a stock transfer tax in 1984.
New York State faces a $9 billion budget gap for fiscal year 2020-2021, yet the lack of a detailed plan for closing this deficit has left schools, localities, and non-profits in a state of uncertainty. With at least $1.7 billion in local aid already withheld, there is an urgent need for transparent disclosure regarding planned spending reductions to allow stakeholders to manage their finances effectively.
Recommendations related to Budget Gaps
The State must release a specific and detailed plan for closing New York State’s fiscal year 2020-2021 budget gap.
The State should provide transparent disclosures regarding State budget actions, similar to the updates provided on the COVID-19 response.
The State must disclose the planned reductions for each affected program so that stakeholders can appropriately plan for and manage potential cuts.
Key Data
$9 billion
— The size of the New York State fiscal year 2020-2021 budget gap.
$1.7 billion
— The amount of aid to localities payments that the Division of Budget has withheld.
$8 billion
— The amount of potential cuts in local aid outlined in state budget reports.
$1 billion
— The amount of potential cuts in state operations outlined in state budget reports.
New York City faces a $4.2 billion budget gap in fiscal year 2022, necessitating additional savings programs and difficult fiscal decisions. Future spending reductions must prioritize securing recurring savings while maintaining essential services and the city's economic competitiveness.
Recommendations related to Budget Gaps
The City will likely need to implement additional savings programs in fiscal year 2021, as well as to identify savings to close the $4.2 billion gap in fiscal year 2022.
Additional hard choices will need to be made to address the city's budgetary risks.
The next round of cuts should aim to secure recurring savings, provide critical services to those most in need, and maintain the City’s competitiveness.
Key Data
$4.2 billion
— The projected budget gap in fiscal year 2022 that requires identified savings.
$92.8 billion
— The total New York City Fiscal Year 2021 Budget when adjusted for the use of prior year resources and reserves.
$1.5 billion
— The total year-over-year spending decline projected across 28 city agencies.
$652 million
— The total year-over-year spending increase projected across 48 city agencies.
$345 million
— The amount of the budget cut for the New York Police Department.
$266 million
— The projected increase in the city's subsidy to New York City Health and Hospitals.
New York City faces a fiscal crisis where borrowing or laying off 22,000 workers are presented as the only options, despite the current budget being $2 billion higher than in 2018. Instead of borrowing, the city should prioritize agency efficiency, implement a hiring freeze, and reduce health insurance costs through labor-management cooperation.
Recommendations related to Budget Gaps
Commissioners should comb their agencies to increase efficiency of city services, or reduce spending on lower priorities.
The city should use attrition, as a stricter hiring freeze could reduce the workforce by 7,000 employees a year.
The administration should reinvigorate the labor-management committee to reduce health insurance spending.
If the city borrows to address revenue shortfalls, it should produce and implement a multiyear plan that will lead to fiscal stability.
The Financial Control Board should certify and oversee the city's plan and borrowing to ensure fiscal responsibility.
Key Data
22,000
— Number of city workers threatened with layoffs if the city does not borrow funds.
$1 Billion
— Amount of labor savings committed to in the budget that have not yet been identified.
7,000
— Number of employees that could be reduced per year through a stricter hiring freeze.
$2 Billion
— Amount by which the current city budget, adjusted for inflation, exceeds 2018 spending.
14,000
— Number of additional workers the city has compared to the highest point before the last recession.
$5 Billion
— Amount the city would borrow, which would require paying back $7 billion.
New York City should avoid borrowing to balance its fiscal year 2021 budget, as there are better options available to address the current fiscal crisis. Any future borrowing must be a last resort, contingent upon implementing existing savings, addressing revenue shortfalls, and establishing a comprehensive fiscal stability plan overseen by the Financial Control Board.
Recommendations related to Budget Gaps
The City should implement all the savings included in this year’s adopted budget and more in the future before resorting to borrowing.
Borrowing should only be authorized for the amount needed to address additional revenue shortfalls.
No borrowing should occur without a comprehensive and feasible plan that leads to fiscal stability.
Any borrowing must be accompanied by certification, monitoring, and approval of major actions by the Financial Control Board.
New York City faces a fiscal crisis with future budget gaps and risks to revenue, necessitating that borrowing for operating expenses be treated as a last resort. Any authorization for such borrowing must be contingent upon strict conditions, including the implementation of budget savings and oversight by the Financial Control Board.
Recommendations related to Budget Gaps
New York City should not borrow now in order to balance the fiscal year 2021 budget.
The City must implement all savings included in this year’s adopted budget and identify and implement an equal or greater amount of savings in future years.
The amount authorized for borrowing must be limited to what is needed to address additional revenue shortfalls in the near term that are not supported by new federal aid.
Borrowing must be part of a comprehensive and feasible multiyear plan that leads to fiscal stability, as certified by the Financial Control Board (FCB) or that meets criteria defined in law.
A control period must be established during which the FCB is required to approve and empowered to condition each instance of borrowing, closely monitor the City’s fiscal management, and approve or reject City actions that have major fiscal impacts.
New York City faces a $1 billion budget gap that requires recurring labor savings to avoid layoffs. By reforming health insurance, consolidating welfare funds, and modernizing work rules, the City can achieve these necessary savings while maintaining essential services.
Recommendations related to Budget Gaps
The City should work with the MLC to consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
The City could reduce overtime for skilled trades and uniformed employees through the implementation of overtime caps.
The City should seek State legislation to eliminate the VSFs and have the assets transferred to the main pension funds.
The guaranteed return on the fixed return fund should be sharply reduced through State legislation.
The City should be given the flexibility to shift at least half of the ALS ambulances to a one paramedic, one EMT staffing model.
The City could make four firefighters the standard staffing for engine companies.
The City should reinvigorate the partnership with the MLC with the goal of implementing a new premium-sharing arrangement.
Key Data
$1 billion
— The recurring savings target from negotiations with labor unions required to close the fiscal year 2021 budget gap.
$1.2 billion
— The estimated annual value of the taxpayer-provided guarantee for the tax-deferred annuity (TDA) fund.
$1.3 billion
— Projected City payments to union-administered welfare funds in fiscal year 2020.
$1.1 billion
— Uniformed-agency overtime budget in fiscal year 2019.
$1.1 billion
— Total savings in fiscal year 2021 from the gap-closing plan.
$1.8 billion
— Total savings in fiscal year 2024 from the gap-closing plan.
The Metropolitan Transportation Authority faces a cumulative $16.2 billion budget gap through 2024 due to pandemic-related revenue declines and unplanned expenses. To address this fiscal crisis, the agency must implement difficult operational savings, including reducing headcount and adjusting service levels, while avoiding reliance on long-term debt.
Recommendations related to Budget Gaps
The MTA should work with the labor force to implement additional savings by increasing the efficiency of operations and reducing overtime and employee benefits costs.
The MTA should forego new headcount, as the financial plan's proposed increase of 776 positions and $250 million in personnel costs is not affordable at this time.
The MTA should rescope the capital program to focus on the projects that will preserve the system’s state of good repair and reduce future maintenance expenses.
The MTA should optimize service to match ridership patterns and support critical needs of the economy.
The MTA should increase tolls by a greater percentage than the currently planned 4 percent increase in 2021, as toll traffic has returned at a faster rate than ridership.
Key Data
$16.2 billion
— Cumulative budget gap for the MTA from 2020 through 2024.
$5.1 billion
— Anticipated shortfall in fare and toll revenue in 2020.
$1.6 billion
— Anticipated shortfall in MTA tax revenues in 2020.
776
— Number of new positions included in the fiscal year 2021 financial plan.
$250 million
— Increased personnel cost associated with new headcount in fiscal year 2021.
$567 million
— Estimated cost of new COVID-related cleaning in 2020.
The fiscal year 2021 budget was balanced using reserves and federal aid, but it relies on optimistic assumptions and lacks sufficient recurring savings to address future deficits. To ensure long-term stability, the city must conduct a thorough review of agency operations, reduce the workforce through attrition, and implement recurring labor savings.
Recommendations related to Budget Gaps
The City should undertake a thorough review of agency programs and operations to identify recurring savings, reduce the City’s workforce through attrition, and implement recurring labor savings.
A package that consolidates union welfare funds, phases in employee health insurance premium contributions, changes work rules to improve productivity, and shrinks the workforce through attrition could generate savings of the necessary magnitude.
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures, as borrowing should be a last resort.
If the City filled only a portion of those positions, broadening the existing partial hiring freeze, savings would be substantial.
Key Data
$10.4 billion
— The tax revenue shortfall and decrease in state aid opened a budget gap of this amount in fiscal years 2020 and 2021.
$1.9 billion
— Total federal aid used to close the gaps in fiscal year 2020 and fiscal year 2021.
$4 billion
— Amount of reserve funds and Retiree Health Benefits Trust Fund (RHBT) assets used to close the gaps in fiscal years 2020 and 2021.
$1 billion
— The target for recurring savings to be negotiated with the City’s municipal labor unions.
New York State faces projected budget gaps totaling $58 billion over the next four years, requiring difficult decisions to balance the budget. To address the $8 billion gap in the current fiscal year, the state must implement a transparent plan that avoids relying on past fiscal maneuvers and accounting shifts.
Recommendations related to Budget Gaps
The state should prioritize reducing school aid to wealthy districts to help close the budget gap.
New York should consider financing capital projects with bond proceeds rather than on a pay-as-you-go basis.
The state should focus on eliminating unproductive economic development spending to balance the budget.
Policymakers should consider walking back tax policy expenditures as a means to address fiscal shortfalls.
Any future budget plan should not rely on fiscal maneuvers and accounting shifts that have obscured spending growth and exacerbated budget pressures.
Key Data
$58 billion
— Projected budget gaps facing the New York State budget over the next four years.
$8 billion
— The amount of to-be-determined State aid to localities reductions included in the gap-closing plan.
$1 billion
— The amount of State agency spending reductions included in the gap-closing plan.
$726 million
— Additional federal Medicaid funding expected to benefit the State as of July 1.
$1.7 billion
— The amount of Medicaid payments deferred into fiscal year 2020 at the conclusion of fiscal year 2019.
The Metropolitan Transportation Authority faces a severe fiscal crisis with operating budget shortfalls estimated between $8.4 billion and $12.6 billion for 2020 and 2021, driven by the COVID-19 pandemic. To address these gaps, the authority must prioritize operational efficiencies, re-evaluate capital project timelines, and consider adjustments to fare and toll policies while reserving borrowing as a final option.
Recommendations related to Budget Gaps
The MTA should pursue greater efficiencies to lower operating expenses, which in large part require working collaboratively with labor unions.
The MTA should prioritize planned capital investments to lower debt service costs, including postponing expansions and possibly slowing accessibility improvements.
The MTA should optimize service levels by continually adjusting capacity to current demand and safety requirements.
The MTA should revise fare and toll policies to seek more revenue from fares and to raise tolls proportionally more than fares.
The MTA should borrow for operating expenses only as a last resort to sustain vital services during the crisis period.
Key Data
$8.4 billion and $12.6 billion
— Estimated operating budget shortfalls for 2020 and 2021.
$2.7 billion
— Cumulative shortfalls below MTA plan projections in 2020 to 2022.
$1 billion
— Annual revenue expected from congestion pricing starting in 2021.
$3.8 billion
— Federal aid already received by the MTA.
$3.9 billion
— Additional federal aid requested by the MTA for 2020.
$64 billion
— Capital commitments planned for the next five years.
New York City adopted an $88.2 billion budget for fiscal year 2021 that relies on achieving $1 billion in labor savings and implementing agency savings programs to remain balanced. Failure to secure these savings could lead to the layoff of 22,000 employees.
Recommendations related to Budget Gaps
The City must negotiate and manage the changes necessary to achieve the assumed savings to balance the budget.
The City should utilize attrition, increased productivity, and negotiated fringe benefit changes to achieve savings without layoffs.
Key Data
$88.2 billion
— The total budget adopted by New York City for fiscal year 2021.
$98.5 billion
— The size of the total budget in fiscal year 2020.
$92.8 billion
— The size of the total budget in fiscal year 2021.
0.1 percent
— The growth rate of adjusted city-funded spending in fiscal year 2021.
$2 billion
— The amount by which adjusted city-funded spending in fiscal year 2021 exceeds that of fiscal year 2018, when adjusted for inflation.
$1 billion
— The amount of recurring savings the City must successfully negotiate with municipal labor unions.
New York City's fiscal year 2021 budget relies on uncertain federal aid, optimistic revenue assumptions, and questionable savings targets, leaving the city vulnerable to large budget gaps in future years. Without implementing recurring efficiency savings and aggressive attrition, the city faces the risk of drastic service reductions and layoffs.
Recommendations related to Budget Gaps
City leaders should sharpen their pencils and focus their management on actions that reduce the yawning multiyear budget gaps presented by the fiscal crisis.
The City must implement a program of recurring efficiency savings and aggressive attrition to avoid placing residents, businesses, and employees at risk of drastic service reductions and layoffs.
Key Data
$300 million
— The amount by which the City aims to reduce police overtime, which is considered highly unlikely given the weak history of overtime management.
$1 billion
— The amount of savings the City expects to produce from working with municipal labor unions, though the budget lacks specificity on the actions needed to achieve this.
New York State and City face significant budget gaps, with potential shortfalls reaching $15 billion and $6.9 billion respectively by fiscal year 2022. To address these deficits, policymakers should prioritize controlling expenditures and seeking federal aid rather than raising taxes, which could harm economic competitiveness and drive away high-income earners.
Recommendations related to Budget Gaps
Improving the fiscal outlook for both the State and the City primarily requires controlling expenditures and advocating for federal aid.
Policymakers should prioritize advocating for federal aid to improve the fiscal outlook rather than relying on tax increases.
Any consideration of tax increases should include the impact on State and local economic competitiveness, as New York's tax rates are already among the highest in the nation.
Leaders looking to close budget gaps must be cognizant that combined State and City PIT rates are the second highest in the nation.
Leaders looking to close budget gaps must be cognizant that combined CFT rates are the highest in the nation.
Key Data
$15 billion
— Potential budget gap for New York State in fiscal year 2022.
$6.9 billion
— Potential budget gap for New York City in fiscal year 2022.
16.49 percent
— Combined effective corporate franchise tax rate on businesses operating in New York City.
12.696 percent
— Combined top personal income tax rate imposed in New York City.
$8 billion
— Potential budget gap for New York State in fiscal year 2021.
$1.6 billion
— Potential budget gap for New York City in fiscal year 2021.
New York City faces significant budget gaps projected to reach $6.9 billion in fiscal year 2022, requiring a combination of expenditure reductions, workforce attrition, and health insurance reforms to maintain fiscal stability. These measures, alongside a temporary property tax increase, aim to balance the budget without resorting to long-term borrowing or damaging service cuts.
Recommendations related to Budget Gaps
The City should reduce spending closer to norms of past recessions to help balance the budget.
The City should modestly shrink the workforce through attrition to achieve necessary expenditure reductions.
The City should implement a health insurance premium-sharing arrangement to provide significant recurring savings.
The City should resume study of and implement a volume-based fee for refuse to reduce waste generation and costs.
The City should reduce the five-year capital plan by $2.4 billion through operational strategies to reduce planned new school construction.
Key Data
$6.9 billion
— Projected budget gap for fiscal year 2022 after accounting for identified risks.
$6.1 billion
— Projected budget gap for fiscal year 2023 after accounting for identified risks.
$5.8 billion
— Projected budget gap for fiscal year 2024 after accounting for identified risks.
9,000
— Number of staff positions the City could reduce through attrition while remaining above the fiscal year 2008 peak.
$690 million
— Revenue generated in fiscal year 2022 from a proposed 2 percent increase in the average property tax rate.
$706 million
— Revenue generated in fiscal year 2023 from a proposed 2 percent increase in the average property tax rate.
Establishing a Rainy Day Fund for New York City requires strict legal definitions to ensure resources are reserved for genuine economic crises rather than serving as a slush fund for structural deficits. Legislation creating such a fund must mandate that withdrawals occur only during defined periods of economic contraction or severe emergency, characterized by specific revenue losses or expenditure spikes.
Recommendations related to Budget Gaps
Any withdrawal should be limited only to times of economic recession or severe emergency, which should be defined in law.
A recession should be defined as two successive quarters of economic contraction as indicated by declines in real gross city product or employment.
A severe emergency should be specified as being accompanied by revenue losses or increased expenditures of at least one percent of city-funded spending.
The Governor should negotiate a chapter amendment with the bill sponsors and legislative leaders to require that any withdrawal be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
Key Data
1%
— The threshold of revenue losses or increased expenditures of city-funded spending required to define a severe emergency.
50%
— The portion of the Rainy Day Fund balance that the current bill allows to be withdrawn to balance the budget.
2
— The number of successive quarters of economic contraction required to define a recession.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
The Economic Development Corporation faces significant fiscal strain due to the rising costs of operating the NYC Ferry system, which has led to operating losses and reduced the agency's ability to contribute to the City's budget. To address these financial pressures, the agency must implement further efficiencies, such as adjusting ferry fares and delaying costly expansions, to balance its budget and preserve resources.
Recommendations related to Budget Gaps
The Economic Development Corporation should continue to identify ways to make its ferry operations more efficient, such as implementing dynamic fare pricing and delaying the launch of costly planned expansions.
The Economic Development Corporation could generate additional recurring savings by modifying the ferry system’s fare policy and planned expansions.
The NYC Ferry system should charge higher fares on weekends and for noncommuters.
The NYC Ferry system should not run or expand routes to Coney Island and Ferry Point that will require extraordinarily high subsidies.
Key Data
$1.8 million
— The operating loss recorded by the Economic Development Corporation in 2019.
$53 million
— The amount spent by the Economic Development Corporation to subsidize NYC Ferry in 2019.
$10 million
— The estimated reduction in operating costs for fiscal year 2021 resulting from service changes.
$9.34
— The subsidy cost per ferry ride.
$384.2 million
— The total operating expenses for the Economic Development Corporation in 2019.
$382.7 million
— The total operating revenue for the Economic Development Corporation in 2019.
1975 is the year NYC found itself on the verge of municipal bankruptcy. How did the City turn around its fortunes? We present CBC's special panel discussion, "Sages of the Ages." Five New York fiscal experts--Steve Berger, Stan Brezenoff, Gene Keilin, Dick Ravitch, and Alair Townsend-- describe how they helped…
Legislation to establish a Rainy Day Fund for New York City currently lacks necessary safeguards to prevent the fund from becoming a slush fund rather than a tool for fiscal stability. The proposed bill should be amended to restrict withdrawals exclusively to periods of economic recession or severe emergency, as defined by objective fiscal indicators.
Recommendations related to Budget Gaps
The Legislature should amend S.8400/A.9789A to add essential restrictions on the use of the Rainy Day Fund.
Any withdrawal from the Rainy Day Fund should be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
Without an amendment to include these restrictions, the bill should be held.
New York City faces a $7.4 billion tax revenue shortfall over two fiscal years, yet has only implemented 2.1 percent in spending cuts for the 2021 fiscal year. State legislators are urged to reject a proposal allowing the city to borrow money for operating expenses until all other options for balancing the budget are exhausted.
Recommendations related to Budget Gaps
The State Legislature should reject S.8418/A.10520, which would permit the City of New York to issue long-term debt to pay for operating expenses.
City leaders must take sufficient action to reduce expenditures before borrowing for operations is considered.
The State Legislature should not consider granting borrowing authority until the City has exhausted options for balancing the budget that do not irreparably harm today’s New Yorkers.
Key Data
$7.4 billion
— The tax revenue shortfall projected over two fiscal years.
2.1 percent
— The amount of spending cuts to city-funded spending in fiscal year 2021.
The COVID-19 pandemic has created severe fiscal stress for New York's state and local governments, necessitating difficult decisions to balance budgets through measures like using reserves, reducing expenditures, increasing taxes, selling assets, or borrowing. These options must be weighed carefully to minimize harm to vulnerable populations while maintaining long-term economic competitiveness and intergenerational equity.
Recommendations related to Budget Gaps
State and local leaders should choose among available fiscal options based on their impacts, with the aim of minimizing harm, particularly to New Yorkers most in need, and maximizing benefit for the greatest number of New Yorkers.
The Citizens Budget Commission has recommended using no more than two-thirds of any rainy day fund in the first year.
The more fiscally prudent policy is to use proceeds from assets sales to create equivalent value on the balance sheet; that is, use the proceeds for capital investments or keep them as reserves.
Sound public finance generally requires that capital investments be financed with bonds of a duration equal to the useful life of the asset purchased.
New York’s large financing role for localities regarding Medicaid is highly inequitable and should be reversed rather than accelerated.
Key Data
$100 million
— Amount of capital spending avoided that saves about $6.5 million annually in debt service.
$6.5 million
— Annual savings in debt service achieved by avoiding $100 million of capital spending at current interest rates for 30-year bonds.
two-thirds
— Maximum portion of any rainy day fund recommended for use in the first year of a fiscal crisis.
2018
— Year of the most recent study on Medicaid financing demonstrating that New York’s large financing role for localities is highly inequitable.
New York City faces looming budget gaps, including a $5 billion shortfall projected for fiscal year 2022, necessitating a more assertive approach to fiscal management. Despite a partial hiring freeze, the current budget plan fails to project a multiyear reduction in the municipal workforce, which grew to an all-time high of 326,739 positions by the end of fiscal year 2019.
Recommendations related to Budget Gaps
The Administration should act now to shrink the workforce with the least impact on services to address fiscal challenges.
The Adopted Budget should show the decline in headcount that will be needed to manage the next few fiscal years and address looming budget gaps.
Key Data
$5 billion
— Projected outyear budget gap for fiscal year 2022.
311,018
— Number of full-time and full-time equivalent personnel in fiscal year 2008.
293,550
— Number of full-time and full-time equivalent personnel in fiscal year 2012.
326,739
— All-time high municipal employment reached at the end of fiscal year 2019.
333,859
— Authorized headcount positions in fiscal year 2020.
336,120
— Projected authorized headcount through fiscal year 2024.
$7.4 billion -- the two-year tax revenue shortfall for the City of New York revealed when Mayor Bill de Blasio released the Executive Budget for Fiscal Year 2021 last month. In this episode we hear from the person who will help guide NYC through one of its greatest fiscal challenges,…
New York State faces an $8 billion budget gap and should prioritize funding school districts that lack sufficient local resources to provide a sound basic education rather than distributing aid to wealthier districts. By consolidating various aid streams into a need-based Foundation Aid formula, the state can reduce costs while ensuring all students receive a constitutionally guaranteed education.
Recommendations related to Budget Gaps
The State should focus on first ensuring that all districts have sufficient funds to provide a sound basic education (SBE), and reduce funds to districts that already have sufficient local resources to meet this requirement to close the budget gap.
The State should first ensure that districts that lack sufficient local resources to meet SBE standards receive the necessary funding when evaluating measures to close the budget gap.
Decreases in funding should first target districts that do not need State aid to fund an SBE to address the fiscal crisis.
The State can reduce costs and ensure all districts have the necessary revenues to provide an SBE by incorporating funding from library, textbook, and software aids into a revised Foundation Aid formula.
New York should revisit how it distributes its school aid dollars by accounting for student need, district wealth, and total district revenues to realign the state budget.
Key Data
$8 billion
— The amount by which the State will reduce fiscal year 2021 local assistance spending to balance its budget.
129
— The number of school districts that received $1.6 billion in State aid in school year 2017-2018 despite raising enough local revenue to fund a sound basic education.
$1.6 billion
— The amount of State aid received by 129 school districts that already raised enough local revenue to fund a sound basic education.
$1.8 billion
— The amount of funding the Executive Budget proposed to fold into Foundation Aid to consolidate education aid.
$237 million
— The total cost of library, textbook, and software aids that provide the same amount per pupil regardless of student need or district wealth.
$223 million
— The total cost of high tax aid that provides more aid to wealthier districts.
New York City faces significant fiscal challenges, with projected budget gaps of $5.0 billion in fiscal year 2022, followed by $4.5 billion and $4.9 billion in the subsequent two years. To manage these shortfalls, the current budget relies heavily on non-recurring resources like reserves and the Retiree Health Benefits Trust, leaving the city without a long-term solution for its fiscal crisis.
Recommendations related to Budget Gaps
The City will need to address significant outyear gaps and with fewer reserves.
With just $100 million in the general reserve to hedge against those risks, additional spending cuts may be needed.
The City must identify a long-term solution to the fiscal crisis, as the current approach is reliant on tapping reserves.
Key Data
$5.0 billion
— Projected budget gap for fiscal year 2022.
$4.5 billion
— Projected budget gap for fiscal year 2023.
$4.9 billion
— Projected budget gap for fiscal year 2024.
$100 million
— Amount in the general reserve to hedge against fiscal risks.
$4.0 billion
— Amount in reserves and Retiree Health Benefit Trust Fund resources used to support spending.
$4.2 billion
— Amount of fiscal year 2021 obligations prepaid in fiscal year 2020.
New York City's Fiscal Year 2021 Executive Budget relies on short-term strategies like reserve diversions and optimistic revenue projections, leaving a looming $5.0 billion gap for fiscal year 2022. To address this multi-year fiscal crisis, the City must implement a more substantial, recurring savings plan by identifying non-core services for reduction and seeking operational efficiencies.
Recommendations related to Budget Gaps
The City should implement a larger savings plan with more recurring value to address the multi-year fiscal crisis.
Working with its labor partners, the City should identify non-core services and subsidies to reduce or suspend.
The City should seek additional efficiencies in agency operations, employee benefits, contracts, leased space, and fleet operations.
Spending reductions should be focused on paring down to efficiently providing core needed services to strengthen the City's ability to weather the economic downturn.
Key Data
$2.7 billion
— The two-year savings program included in the Fiscal Year 2021 Executive Budget.
2 percent
— The portion of the budget represented by the two-year savings program.
$2.6 billion
— Amount diverted from the Retiree Health Benefits Trust (RHBT) to balance the budget.
$1.4 billion
— Amount diverted from other reserves to balance the budget.
$5.0 billion
— The looming budget gap projected for fiscal year 2022.
7.4 percent
— The budget's assumption for tax revenue growth in fiscal year 2022.
New York City faces significant budget shortfalls and economic uncertainty, yet lacks sufficient reserves to manage these fiscal challenges effectively. Establishing a well-designed Rainy Day Fund with strict rules for deposits, withdrawals, and size limits is essential to protect the city's fiscal stability during future recessions and emergencies.
Recommendations related to Budget Gaps
State law should define a recession as two successive quarters of economic decline as indicated by private employment or gross city product.
An emergency should be defined as severe when it is accompanied by a revenue shortfall or expenditure increase equal to or greater than 1 percent of the budget.
Withdrawals from the RDF should be limited to no more than two-thirds of the fund balance in any year, to ensure funds are available for the second year of a recession or emergency.
The City should implement mandatory deposits equal to 75 percent of the tax revenue growth above 3 percent to ensure sufficient funds are accumulated.
The City should establish a target size of 17.2 percent of tax revenue for the Rainy Day Fund, which can serve as a cap on the size of the fund.
Key Data
$1.25 billion
— Amount set aside in reserves for the upcoming year.
$6 billion
— Estimated near-term revenue loss by the Office of the New York City Comptroller.
$20 billion
— Estimated three-year shortfall if a recession similar to recent history occurs.
$9 billion
— Amount that would have been netted in reserves if a Rainy Day Fund had been in place over the last 10 years.
17.2 percent
— Recommended target size of the Rainy Day Fund as a percentage of tax revenue.
71 percent
— Percentage of voters who approved the amendment to the New York City Charter to create a Rainy Day Fund.
The city faces a potential $6 billion revenue shortfall in fiscal years 2020 and 2021 due to the pandemic, with projections suggesting up to $20 billion in losses over three years. To address this, the city must move beyond its current $1.3 billion savings target and implement a more aggressive $3 billion plan focused on efficiency and structural spending reductions.
Recommendations related to Budget Gaps
The city should increase the target size of next year’s savings program to $3 billion to address the looming budget gap.
The savings plan should be significantly larger and explicitly focused on generating recurring savings in spending to meet imminent challenges.
Agencies should be charged with generating a menu of options for spending reductions that are rooted in improving efficiency and streamlining operations.
The city should control all non-critical spending in the current year to manage the fiscal challenge.
The city will have to work with municipal unions on workforce savings and potentially enact far-reaching measures like hiring freezes or layoffs.
Key Data
$1.3 billion
— The savings target announced for the Executive Budget for Fiscal Year 2021.
$20 billion
— The potential revenue shortfalls over three fiscal years if a recession occurs.
$6 billion
— The estimated revenue shortfall in fiscal years 2020 and 2021.
0.66 percent
— The amount of city-funded spending represented by the two-year savings presented in the Executive Budget for Fiscal Year 2020.
0.91 percent
— The amount of city-funded spending represented by the $1.3 billion target announced for the Executive Budget for Fiscal Year 2021.
0.23 percent
— The average amount of efficiency savings previously achieved.
The Citywide Savings Program identifies only 0.6% of city-funded expenditures as savings over five years, with efficiency savings accounting for just 33% of that total. Implementing a 1% annual efficiency savings target since fiscal year 2016 would have reduced the fiscal year 2021 budget by $2 billion.
Recommendations related to Budget Gaps
The Citywide Savings Plan should include greater efficiency savings to better manage the budget.
The city should aim to identify 1 percent annual efficiency savings in each budget cycle to reduce the growth of city-funded spending.
The administration should prioritize efficiency initiatives—changes to agency practices to reduce spending without reducing service—over routine budget adjustments like re-estimates and funding shifts.
Key Data
$2,360 million
— The total five-year savings identified by the FY2021 Citywide Savings Program.
0.6%
— The portion of city-funded expenditures identified as savings over five years in the FY2021 Citywide Savings Program.
33%
— The share of the FY2021 Citywide Savings Program comprised of efficiency savings.
0.23%
— The average efficiency savings as a percent of city-funded spending between FY2016 and FY2021.
$2 billion
— The amount the FY2021 budget would have been reduced by if 1 percent efficiency savings had been identified in each budget cycle since FY2016.
5.2%
— The projected annual growth of the city-funded budget between FY2015 and FY2021.
New York City and State face potential revenue shortfalls of $34 billion and $15-20 billion respectively in the event of a recession, yet they hold only 6-16% of the necessary reserves. To prepare for these fiscal gaps, leaders must restrain recurring spending, avoid tax increases, and prioritize depositing surplus revenues into rainy day funds.
Recommendations related to Budget Gaps
State leaders should close state budget gaps by restraining recurring spending without tax increases or fiscal gimmicks.
The state should stop increasing school aid to wealthy districts that do not need it for a sound basic education and put away those funds to protect New Yorkers in the future.
The mayor should immediately ask agencies to develop plans for productivity-based savings totaling 1% or more of city-funded expenditures to be included in the executive budget.
The City Council should identify savings and not add funds to support new or expanded programs.
The State must pass legislation enabling the use of a rainy day fund with the requirement that it only be used during an economic recession or severe emergency.
Key Data
$34 billion
— Estimated three-year revenue shortfall for New York State in the event of a recession.
$15-20 billion
— Estimated three-year revenue shortfall for New York City in the event of a recession.
6-16%
— Percentage of the potential revenue shortfall amount currently held in reserve by the city and state.
$700 million
— Amount of revenue already identified by the state above current projections.
New York State faces significant budget gaps totaling $7.1 billion in fiscal year 2021, driven largely by unsustainable spending growth rather than revenue losses. To address these shortfalls, the state should prioritize spending restraint, particularly in Medicaid and education aid, while avoiding tax increases and building rainy day reserves.
Recommendations related to Budget Gaps
The State should implement Medicaid spending control that does not shift costs to local government.
The State should ensure education aid increases are limited only to districts that currently lack revenues to fund a sound basic education.
The State should prioritize building rainy day reserves to the extent possible to prepare for economic uncertainty.
The State should focus on maintaining competitiveness by not increasing taxes.
The State should eliminate the annual Medicaid payment deferral that was initially implemented at the end of fiscal year 2019.
The State should reject shifting costs for Temporary Assistance for Needy Families onto New York City and special education out-of-district placement costs onto school districts outside of New York City.
Key Data
$7.1 billion
— The size of the budget gap in fiscal year 2021.
$4.0 billion
— The size of the budget gap in the current year.
$38.6 billion
— The total budget gaps over five years.
$18.0 billion
— The portion of the five-year budget gaps due to previously unbudgeted Medicaid spending.
$1.9 billion
— The amount of Medicaid payments the Executive Budget proposes to permanently delay.
$2.5 billion
— The amount of Medicaid savings in the budget that are yet to be determined.
New York City's budget grew from $72.8 billion in fiscal year 2014 to $92.0 billion in fiscal year 2019, driven by policy choices, new programs, and expanded services. Understanding these spending drivers is essential for implementing fiscal restraint to prepare for potential economic downturns and future budget gaps.
Recommendations related to Budget Gaps
The City should make spending restraint a greater priority in the upcoming budget season to prepare for potential economic downturns.
Municipal leaders should manage the factors that have led to rapid spending growth, such as the rising cost of contracts, overtime, or headcount growth, to help reduce the City’s need to take drastic actions when the inevitable downturn occurs.
Key Data
$92.0 billion
— Total New York City expenditures in fiscal year 2019, representing a $19 billion increase from fiscal year 2014.
4.8 percent
— The average annual rate of New York City budget growth between fiscal years 2014 and 2019.
$1 billion
— The amount by which spending for Department of Homeless Services shelter operations, intake, and administration grew between fiscal years 2014 and 2019.
$163 million
— The amount spent on the Summer Youth Employment Program in fiscal year 2019, up from $40 million in fiscal year 2014.
$345 million
— The budget for the Comprehensive After School System in fiscal year 2019, which more than doubled from $152 million in fiscal year 2014.
$166 million
— Total projected spending on the Universal Access Law in fiscal year 2022, rising from $77 million in fiscal year 2018.
7 days since the start of budget season, which commenced this year with the New York City Preliminary Budget released on January 16th. The State Budget, released just yesterday, may have a significant impact on the City’s finances this year: with the State facing a large budget gap, the Executive…
New York City's fiscal year 2021 preliminary budget limits new spending programs, but fails to adequately prepare for potential state aid cuts or economic downturns. To strengthen the city's fiscal position against looming budget gaps, officials should prioritize spending restraint, increase agency efficiency, and deposit new revenues into reserves.
Recommendations related to Budget Gaps
Greater agency efforts are needed to increase efficiency.
The City Council should follow the Mayor’s lead in holding the line on new spending initiatives.
New revenues should be deposited in the City’s reserves.
Greater spending restraint would allow the city to bolster its fiscal position.
Key Data
6 percent
— Annual city-funded spending growth in fiscal years 2018 and 2019.
4.0 percent
— Projected city-funded spending growth in fiscal year 2020.
1.7 percent
— Projected city-funded spending growth in fiscal year 2021.
0.4 percent
— Fiscal year 2021 savings amount as a percentage of city-funded expenditures.
$1.5 billion
— Lower bound of the amount added to the budget between the Preliminary Budget and the Adopted Budget over the last two years.
$2.0 billion
— Upper bound of the amount added to the budget between the Preliminary Budget and the Adopted Budget over the last two years.
New York State faces significant fiscal challenges, with a cumulative budget gap of $28.8 billion projected over four years due to structural imbalances and Medicaid overspending. To restore fiscal integrity, the state must implement spending restraint, improve transparency, and build adequate reserves to prepare for potential economic downturns.
Recommendations related to Budget Gaps
The State should include GAAP-basis financial statements in the Executive Budget, 30-day amendments, Enacted Budget, and Mid-Year Update.
The State should reconstitute the Medicaid Redesign Team (MRT) to identify savings that can be quickly implemented and those that can significantly restrain costs over time.
Increases in State education aid should be targeted to those districts that lack the funding to provide a Sound Basic Education.
The State should make every effort to increase its rainy day reserves, starting by moving $890 million in settlement funds from an ad hoc 'economic uncertainty reserve' to the State’s official rainy day reserves.
The State should pursue a revenue-neutral economy-wide carbon pricing system and other cost-effective approaches to achieve clean energy and emission reduction goals.
Key Data
$4 billion
— The fiscal year 2020 budget gap that must be closed.
$7.1 billion
— The fiscal year 2021 budget gap.
$28.8 billion
— The cumulative budget gap over four years from fiscal year 2020 to fiscal year 2023.
$1.7 billion
— The amount of Medicaid payments deferred from fiscal year 2019 into fiscal year 2020.
$28.2 billion
— The amount by which the Governor's retiree health insurance proposal would reduce the State’s outstanding long-term Other Post-Employment Benefits (OPEB).
$890 million
— The amount of settlement funds the State should move from an ad hoc economic uncertainty reserve to its official rainy day reserves.
NYC Health + Hospitals faces a persistent operating deficit, averaging nearly $3 billion annually between 2015 and 2017, which is largely driven by outpatient services and inadequate Medicaid reimbursement rates. To address this, the city should implement performance-based budgeting and benchmarks, while the state should reform Medicaid supplemental payments and redistribute commercial insurance surpluses to more equitably support safety-net care.
Recommendations related to Budget Gaps
The City Office of Management and Budget and H+H leadership should develop a new approach to financial planning and budgeting.
Multiyear goals should be set for increasing efficiency as evidenced in reduced unit costs such as lower cost per visit and per discharge.
Progress toward the benchmarks should be publicly monitored, and H+H leadership held accountable.
The State should better target Medicaid supplemental payments to H+H and other facilities with the greatest need.
The State should use more equitably the surplus operating revenue earned by large networks from commercial insurers to cross subsidize indigent care.
Key Data
$3 billion
— Average annual operating deficit for H+H in fiscal years 2015 to 2017.
$1.7 billion
— Estimated City support to H+H in fiscal year 2019.
$2.3 billion
— Projected City support to H+H in fiscal year 2023.
$1.3 billion
— Baseline budget gap projected for H+H in 2020.
New York State faces a significant fiscal imbalance, with a projected $6.1 billion budget gap for the upcoming fiscal year and a four-year gap totaling $28.8 billion. To address this, the state should prioritize restraining spending, particularly in Medicaid and economic development, rather than increasing taxes, which could harm economic competitiveness.
Recommendations related to Budget Gaps
Reconstitute the Medicaid Redesign Team to identify savings, including policies to address high long-term care costs and reform supplemental payments.
The Executive and Legislature should exercise powers granted under the Medicaid global cap to prevent Medicaid spending from exceeding budgeted amounts.
Focus education aid on needy districts to ensure they can fully fund a sound basic education.
Reduce unproductive economic development program spending, as there is little evidence that many of these investments produce results.
Consider reforms to retiree health benefits that were proposed in recent Executive Budgets to significantly reduce post-employment benefit costs.
Key Data
$6.1 billion
— The projected budget gap for the next fiscal year.
$28.8 billion
— The total four-year budget gap, which is understated in official reporting.
$12.5 billion
— The amount of previously unbudgeted Medicaid spending contributing to the four-year state budget gap.
$4.4 billion
— The amount New York spends annually on economic development programs with little evidence of results.
$35 billion
— The potential revenue shortfall that could be added to identified budget gaps in the event of a recession.
$1.6 billion
— The amount of state school aid provided to wealthy districts that already have sufficient local resources to provide a sound basic education.
New York's education funding formula is flawed, leading to inequitable distribution where wealthy districts receive excess aid while some districts lack resources to provide a sound basic education. With state budget pressures mounting due to Medicaid overspending and potential economic downturns, reforming these formulas to better target aid is essential for fiscal sustainability.
Recommendations related to Budget Gaps
The State should revamp the Foundation Aid formula and other education aid formulas to properly account for local wealth and actual local funding.
The State should eliminate hold-harmless provisions and guaranteed minimum funding increases to ensure aid is distributed based on need.
The State should use the most up to date data available when calculating aid distributions.
Expense-based aids and other types of education aid, such as high tax aid, should be redirected towards those districts without the resources to provide a sound basic education.
Key Data
$13.6 billion
— Amount spent more than necessary to fund a sound basic education statewide in school year 2017-2018.
$4 billion
— Amount Medicaid spending is over budget in the current year, creating pressure on other spending programs.
$3 billion
— Amount Medicaid spending is forecast to be over budget next year.
$1.8 billion
— Amount the wealthiest decile of districts spent more than needed to fund a sound basic education in school year 2017-2018.
$724 million
— State revenues received by the wealthiest decile of districts in school year 2017-2018.
$60 million
— Additional Foundation Aid the formula calculates the wealthiest decile of districts are due.
WFXV Eyewitness News A mid-year New York State budget update shows a $6.1 billion gap estimated in Fiscal Year 2021 and even higher deficits projected in the following years.
The Metropolitan Transportation Authority faces a cumulative cash shortfall of $637 million by 2023, a figure that relies on optimistic assumptions regarding economic growth, fare collections, and labor negotiations. Failure to meet these financial targets risks service cuts or the need for increased revenue to address the deepening fiscal instability.
Recommendations related to Budget Gaps
The MTA must move forward aggressively with the Transformation and Budget Reduction Plans to improve the efficiency and effectiveness of operations.
The MTA must negotiate a labor settlement focused on increased productivity with the TWU, since labor costs represent three-fifths of operating costs.
Any raises negotiated in the settlement should be offset by savings from productivity gains and in health and welfare benefit costs so that there is a “net zero” impact on the MTA’s bottom line.
Key Data
$637 million
— cumulative cash shortfall projected by 2023
$740 million
— shortfall projected in the July forecast
2 percent
— annual raises included in the labor settlement assumptions
$361 million
— expected savings from renegotiating paratransit agreements with New York City
$451 million
— reduction in projected savings for the Budget Reduction and Transformation Plans
$200 million
— growth in real estate-related tax revenue projections
$15 billion is the CBC's estimate of the three-year revenue shortfall for New York City government in a recession. First Deputy Mayor Dean Fuleihan joined CBC President Andrew Rein for a wide-ranging discussion about the City's budget, closing Rikers, access to hydropower, NYC's competitiveness, and more.
New York State's financial plan has obscured a significant Medicaid budget shortfall by delaying payments and failing to account for the program's full costs. To ensure fiscal transparency, the state must accurately reflect these costs in its financial plan and implement concrete, multiyear strategies to reduce spending rather than relying on payment delays.
Recommendations related to Budget Gaps
The Mid-Year Update should identify multiyear savings targets, approaches to make programmatic changes, and programs to target.
The Fiscal Year 2021 Executive Budget should not delay payments to forestall a more serious reckoning.
The budget should include the cost of the delayed fiscal year 2019 payment and a full year of Medicaid payments for fiscal year 2020.
Fiscal year 2020 spending should not be “reduced” by delaying payment until fiscal year 2021.
Absent any programmatic action to reduce spending, the financial plan should reflect increased annual spending and concurrent increases to out-year deficits over the previous financial plan.
Key Data
$9 billion
— Cumulative understatement of Medicaid costs in the four-year financial plan.
$1.7 billion
— Medicaid payments delayed from fiscal year 2019 into fiscal year 2020.
$3 billion to $4 billion
— Estimated State share gap in fiscal year 2020.
$2.0 billion
— Expected savings in fiscal year 2020 from adjusting the timing of payments.
$3.5 billion
— Amount added to State Operating Funds spending in fiscal year 2020 to reflect the true cost of the Medicaid program.
Establishing a rainy day fund would allow New York City to save during prosperous times, helping to avoid service cuts and tax increases during potential recessions that could cause at least $15 billion in revenue shortfalls. Voters are encouraged to approve Ballot Question 4 to implement this savings mechanism and strengthen the city's budgeting processes.
Recommendations related to Budget Gaps
Voters should vote yes to approve the creation of a rainy day fund via Ballot Question 4.
Voters should vote yes on Ballot Question 4 to create a rainy day fund to protect New Yorkers when they need it most by strengthening the city’s budgeting processes.
Key Data
$15 billion
— The potential multi-year revenue shortfall that could result from a recession.
The Metropolitan Transportation Authority faces a dire financial situation with forecasted deficits, yet plans to hire 581 new police officers at a significant cost. Before proceeding with these hires, the agency must identify how to cover the expenditure without further increasing its operating deficit.
Recommendations related to Budget Gaps
The MTA Board must identify how it will cover the cost of hiring 581 new officers without increasing the MTA’s operating deficit.
The MTA should work with the NYPD and its own officers to establish clear goals and expectations to maximize the effectiveness of existing policing before spending scarce transit operating dollars.
Key Data
$56.1 million
— The cost of increasing the MTA police force with 500 new officers and 81 supervisors in year one.
$119.9 million
— The cost of increasing the MTA police force with 500 new officers and 81 supervisors in year ten.
$260 million
— The cost of the new officers over the 2020-2023 financial plan.
$740 million
— The MTA's current projected operating budget deficit.
$1 billion
— The MTA's projected operating budget deficit after accounting for the cost of new officers.
$40 million
— The amount the Manhattan DA announced it would give the MTA over four years to reduce fare evasion.
Amending the New York City Charter to establish a Rainy Day Fund would allow the city to set aside revenue during periods of economic growth to mitigate the impact of future budget gaps during downturns. This mechanism provides a necessary fiscal tool to prevent severe service cuts and tax increases when the economy faces recession or emergency.
Recommendations related to Budget Gaps
CBC urges New York City voters to support Ballot Question 4 to amend the New York City Charter to allow the City to create and use a Rainy Day Fund (RDF).
It is imperative these changes limit use of the RDF to times of economic recession and severe emergency, which would ensure the RDF is not used during periods of economic growth.
The City should use the Rainy Day Fund to stave off the most devastating service cuts and tax increases during an economic downturn or severe emergency.
The State's financial plan understates Medicaid costs by billions of dollars due to payment deferrals, which obscures the true fiscal situation and increases projected budget gaps. To address this, the State must align its budget with actual costs by reducing Medicaid spending, cutting wasteful economic development spending, and better targeting school aid.
Recommendations related to Budget Gaps
The State should align the budget with actual costs to avoid obscuring financial plan spending obligations.
State leaders should reduce spending for Medicaid to bring it in line with budgeted amounts, as re-based projections exceed the State share by more than $3.4 billion in fiscal year 2020.
The State should reinvigorate the previously successful Medicaid Redesign Team to achieve significant reductions in per-enrollee costs.
State leaders should slow the rapid growth in school aid by better targeting aid to needy districts.
The State should cut wasteful economic development spending to help offset unrecognized rising Medicaid costs.
Key Data
$1.7 billion
— The amount of State funds deferred from March 2019 to fiscal year 2020 to adhere to the Medicaid Global Cap.
$9 billion
— The cumulative total by which the State's financial plan understates Medicaid costs.
$3.5 billion
— The projected budget gap in fiscal year 2020 after accounting for deferred payments and re-based Medicaid costs.
$6.6 billion
— The projected budget gap in fiscal year 2023 after accounting for deferred payments and re-based Medicaid costs.
$12.8 billion
— The originally reported four-year financial plan cumulative shortfall.
$21.8 billion
— The adjusted four-year financial plan cumulative shortfall after accounting for true Medicaid costs.
The Metropolitan Transportation Authority's 2020-2023 financial plan projects cumulative cash deficits reaching $740 million by 2023. These financial gaps could widen further if anticipated savings from the Budget Reduction Program and the Transformation Plan fail to materialize.
Key Data
$740 million
— Cumulative cash deficit projected for the Metropolitan Transportation Authority by 2023.
The Metropolitan Transportation Authority faces a bleak financial outlook with cumulative cash deficits projected to reach over $700 million by 2023. To address these gaps, the Authority must realistically detail its Transformation Plan, refine its Budget Reduction Program without harming service, and pursue zero-cost wage settlements.
Recommendations related to Budget Gaps
MTA leaders should focus on developing and detailing the Transformation Plan, realistically assessing its savings potential and pursuing the changes on which it depends.
The MTA should focus on specifying the elements of the Budget Reduction Program and integrating them with the Transformation Plan without causing a negative impact on service.
MTA leaders should prioritize seeking zero-cost wage settlements in current collective bargaining.
The MTA should focus on monitoring economic developments to adjust as needed to potential downturns.
The MTA should carefully consider its implementation of budget reduction measures that will have a negative impact on service.
Key Data
$740 million
— Cumulative cash deficit projected for the MTA in 2023.
$1.7 billion
— Estimated revenue loss across a four-year financial plan if a recession occurs.
$538 million
— Annual savings the Transformation Plan counts on for 2023.
$6 million
— MTA cash deficit projected for 2020.
$433 million
— MTA cash deficit projected for 2023.
$230 million
— Annual savings the Transformation Plan counts on for 2020.
Establishing a Rainy Day Fund would allow the city to accumulate resources during periods of economic growth to mitigate the need for spending cuts or tax increases during downturns. This proposal includes specific charter amendments to codify deposit and withdrawal rules while ensuring the fund's use complies with existing balanced budget requirements.
Recommendations related to Budget Gaps
The City should establish a Rainy Day Fund to accumulate resources during periods of economic expansion and revenue growth.
The City should codify rules regarding deposits and withdrawals to the Rainy Day Fund in City law.
The City should permit the use of the Rainy Day Fund without violating the City Charter and the State Financial Emergency Act for the City of New York balanced budget requirements.
The Charter Revision Commission should have the proposed language reviewed and modified by those with deep expertise in drafting legislation.
Key Data
$100 Million
— Minimum amount required for the general reserve at the beginning of any fiscal year.
New York City's spending in fiscal year 2019 exceeded collected revenues by $255 million, a shortfall masked by the practice of using surplus funds from previous years to prepay future expenses. With city-funded expenditures growing by 5.7 percent in 2019 and projected to rise further, the current level of spending appears unsustainable even during periods of economic strength.
Recommendations related to Budget Gaps
The Mayor and Council Speaker should continue to identify opportunities to restrain spending much more, particularly in ways that improve productivity so that priority services are preserved.
Key Data
$255 million
— The net difference between spending obligations and revenues collected in fiscal year 2019.
$4.576 billion
— The amount the City prepaid at the end of fiscal year 2018 for fiscal year 2019 expenses.
$4.221 billion
— The amount of expenses rolled out in fiscal year 2019.
5.7 percent
— The growth rate of city-funded expenditures in fiscal year 2019.
5.3 percent
— The projected growth rate of city-funded expenditures in fiscal year 2020.
333,433
— The number of authorized city workforce positions projected for fiscal year 2020.
New York City faces potential revenue shortfalls of $15 billion to $20 billion during a recession, yet current reserves of $1.25 billion are insufficient to cover such gaps. Establishing a well-structured Rainy Day Fund, funded by 75 percent of tax revenue growth above 3 percent, would provide a necessary fiscal cushion to maintain essential services during economic downturns.
Recommendations related to Budget Gaps
The charter commission should leave the charter’s budgeting and financial management framework intact except to seize the opportunity to improve the charter by allowing an RDF, well structured to preserve both long- and short-term stability.
The city should target 17 percent of tax revenues as the size of the Rainy Day Fund to mitigate a recession or emergency’s most damaging impacts.
The city should require regular deposits during economic expansions, specifically annual deposits of 75 percent of all tax revenues in excess of 3 percent growth.
Withdrawals from the Rainy Day Fund should be limited to periods of recession or emergency.
Economic triggers for withdrawals should be defined in law and RDF funds should not all be used in one year.
Key Data
$1.25 billion
— Amount included annually for reserves in the current financial plan.
$15 billion to $20 billion
— Projected three-year revenue shortfall from a recession comparable to the past two.
17 percent
— Target size of tax revenues for a Rainy Day Fund to mitigate a recession or emergency’s most damaging impacts.
75 percent
— Recommended annual deposits of all tax revenues in excess of 3 percent growth.
3 percent
— Growth threshold for tax revenues above which deposits into the Rainy Day Fund should be made.
$9 billion
— Amount the city would have in its Rainy Day Fund had the recommended deposit structure been in place during the current record-long recovery.
New York City faces significant fiscal risks, with potential tax revenue shortfalls ranging from $15.4 billion to $20.4 billion in the event of a recession similar to those in 2001 or 2008. To mitigate these vulnerabilities, the city maintains $1.25 billion in annual budget reserves alongside $257.3 billion in long-term liabilities.
Key Data
$20.4 Billion
— Potential tax revenue shortfall based on 2008 recession.
$15.4 Billion
— Potential tax revenue shortfall based on 2001 recession.
$1.25 Billion
— Annual City Budget Reserves.
$4.5 Billion
— Retiree Health Benefits Trust.
$257.3 Billion
— Largest long-term liabilities in FY 2018.
$111.0 Billion
— Bonded debt portion of long-term liabilities.
New York faces significant infrastructure funding shortfalls, with approximately $2.1 billion in necessary annual road and bridge repairs currently deferred. To address these budget gaps and the decoupling of fuel consumption from road use, the state should implement a vehicle-miles traveled (VMT) fee as a sustainable, long-term revenue source.
Recommendations related to Budget Gaps
Phase in implementation in order to allow the public sector to build expertise in a new area of revenue generation.
Maintain flexibility to accommodate new technology by remaining technologically agnostic and not committing to a single, proprietary platform.
Establish rates that vary by type of vehicle and location to align revenue with the costs of urban congestion, air pollution, and noise pollution.
Execute a clear and transparent rate-setting process so that motorists understand the rules and can make informed travel decisions.
Use the VMT fee as an addition to existing sources to remedy the mismatch between available highway and transit revenues and needed annual expenditures.
Key Data
$5.7 billion
— Annual investment required for the State to achieve a state of good repair on its assets.
$2.1 billion
— Amount of necessary repair work that is currently deferred, representing 37 percent of the total.
51 percent
— Reduction in the inflation-adjusted per-mile direct cost to motorists who travel on State roadways since 1993.
$1 billion
— Potential annual revenue yield from an average per-mile fee of 1 cent based on 2016 travel estimates.
15,000 miles
— Total miles of roads maintained by the New York State Department of Transportation.
96,000 miles
— Total miles of roads owned by local governments throughout New York State.
New York City faces potential cumulative tax revenue shortfalls of $15 billion to $20 billion during a recession, yet current laws prevent the use of a Rainy Day Fund to manage these fiscal gaps. Establishing a structured Rainy Day Fund would allow the city to weather economic downturns without resorting to harmful service cuts or counterproductive tax increases.
Recommendations related to Budget Gaps
The City and State should authorize the City to use an RDF by codifying its parameters and amending State law and the City Charter to permit it.
Legislation to establish the RDF should specify the target size, required deposits, and permitted withdrawals.
The target size of the RDF should be set at 17.2 percent of the pre-recession year tax revenue to cover two years of recessionary tax revenue reductions.
Minimum required deposits should capture at least 75 percent of the annual tax revenue growth in excess of 3 percent to ensure sufficient revenue to fund City services.
Withdrawals should be permitted during an economic contraction or a severe emergency with specific criteria to ensure the fund is used appropriately.
Key Data
$15 billion to $20 billion
— Cumulative tax revenue shortfalls over three years in a recession comparable to the last two.
17.2 percent
— Target size of the RDF relative to pre-recession year tax revenue.
$10.8 billion
— Recommended RDF target size in fiscal year 2020.
75 percent
— Minimum portion of annual tax revenue growth in excess of 3 percent that should be deposited.
$8.5 billion
— Balance the RDF would have reached if the deposit requirement had been in place during the current nine-year expansion.
New York City has implemented a Program to Eliminate the Gap (PEG) to generate $750 million in annual savings through expense reductions and revenue enhancements. This initiative aims to improve operational efficiency and prepare the city for potential economic downturns that could expand out-year budget gaps to between $10 and $12 billion annually.
Recommendations related to Budget Gaps
OMB should set agency targets that generate savings in excess of the $750 million annual goal.
Savings from the PEG should be derived exclusively from agencies and should focus on increasing efficiency in operations and service delivery.
Cost reductions should be informed by clear priorities and data that compare the savings achieved to the reduction in service levels, quality, or relevant outcomes.
The City should continue to seek savings from re-estimates and debt service, but these should be above and beyond the $750 million recurring PEG target.
Agency executives, managers, and front line staff should take the lead on identifying savings.
Key Data
$750 million
— The Mayor’s stated annual PEG target.
$10 to $12 billion
— Potential out-year budget gaps per year if a recession occurs.
$155 million
— Average annual efficiency initiative savings in the five-year savings plans for fiscal years 2016, 2017, 2018, and 2019.
0.25%
— Percentage of the City funds budget represented by efficiency initiatives.
1%
— Percentage of the City funds budget equal to the $750 million PEG target.
Watch the original segment here . A day after Mayor Bill de Blasio ordered city agencies to cut from their own budgets , Errol Louis spoke with two experts — Ronnie Lowenstein, the director of the New York City Independent Budget Office, and Andrew Rein, the president of the Citizens…
New York State faces a $3.1 billion budget gap in fiscal year 2020 and a $16.1 billion cumulative gap through fiscal year 2022, necessitating a strategy that prioritizes fiscal responsibility and economic competitiveness. To address these deficits, the state should avoid using one-time revenues for recurring expenses, build rainy day reserves, and implement targeted spending reforms across education, housing, and health care.
Recommendations related to Budget Gaps
The State should build reserves to prepare for economic and fiscal uncertainty, as it has not made deposits to its rainy day funds since fiscal year 2015.
The State should not use one-time revenues to fund recurring spending, as the current budget relies on financial settlements and the Fidelis conversion to fund operations.
The State should maintain responsible spending growth without using gimmicks by keeping spending growth to 2 percent.
The State should reallocate education aid to the highest need districts rather than increasing total aid, as a sound, basic education can be funded with a 2 percent increase.
The State should provide the New York City Housing Authority (NYCHA) with funding and design-build authorization to help address its $32 billion capital needs.
Key Data
$3.1 billion
— The projected budget gap for New York State in fiscal year 2020.
$16.1 billion
— The cumulative budget gap projected through fiscal year 2022.
$44 billion
— The estimated increase in budget gaps over three years if a recession occurs.
$1.8 billion
— The amount currently held in the state's rainy day funds.
$32 billion
— The total capital needs of the New York City Housing Authority (NYCHA).
The City's new health insurance savings agreement with the Municipal Labor Committee sets lower targets than the previous deal and relies on questionable accounting practices, such as counting savings against conservative budget projections rather than actual cost reductions. To address fiscal challenges, the City should prioritize structural reforms, including addressing the inefficient provision of prescription drug, vision, and dental care via welfare funds and the costly provision of health insurance to retirees.
Recommendations related to Budget Gaps
The City should maintain higher health insurance savings targets to stimulate greater cooperation and movement on reforms.
Any recurrent savings from the prior agreement should be returned to the general fund rather than attributed to new targets.
The City should use savings against high budget projections for general operating needs, rather than claiming them as savings against labor costs.
The City must address the fragmented and inefficient provision of prescription drug, vision, and dental care via welfare funds.
The City should reform the antiquated and wasteful Health Insurance Stabilization Fund.
The City should address the costly provision of health insurance to retirees with no contribution to the cost of care.
Key Data
$8.1 billion
— Total health benefit expenditures in fiscal year 2019.
$3.4 billion
— Health insurance savings target set in the agreement spanning fiscal years 2015 to 2018.
$1.9 billion
— Health savings claimed from accounting decisions in the previous agreement.
$1.1 billion
— Target savings in the new agreement spanning fiscal years 2019 to 2021.
$658 million
— Projected savings from lower-than-anticipated premium increases, representing 60 percent of the agreement target.
$211 million
— Estimated savings from the prior agreement that are being inappropriately attributed to the new targets.
The Metropolitan Transportation Authority faces growing financial pressure as expense growth outpaces revenue, leading to forecasted cash deficits of $262 million in 2020, $424 million in 2021, and $634 million in 2022. These projected gaps, which are the largest noted at this point in the budget cycle since 2009, rely on the successful implementation of 4 percent fare and toll increases and the achievement of specific savings targets.
Key Data
$262 million
— forecasted cash deficit for 2020
$424 million
— forecasted cash deficit for 2021
$634 million
— forecasted cash deficit for 2022
4 percent
— planned fare and toll increases in 2019 and 2021
$376 million
— amount removed from the four-year financial plan due to lower fare revenue estimates
$550 million
— reduction in fare revenue estimates over the 2018 to 2021 period
The MTA faces a $9 billion cost to modernize its subway car fleet, with only $1.2 billion currently authorized, leaving an $8 billion funding gap to be addressed in future capital plans. To restore reliability, leadership must secure significant funding for the Fast Forward program in the 2020-2024 capital budget.
Recommendations related to Budget Gaps
MTA leadership should increase significantly its commitment to subway cars in the 2020-2024 capital program to make the Fast Forward proposal a reality.
The Fast Forward plan must be funded in future capital plans and administered effectively to achieve anticipated results.
MTA leaders should be prepared to make significant commitments to subway cars in the 2020-2024 capital program if it expects to return car reliability to its previous highpoint.
Key Data
$9 billion
— Estimated cost relating to subway cars, of which only $1.2 billion is authorized in the current capital plan.
$8 billion
— Amount of funding for subway cars that remains to be financed in future capital plans.
$40 billion
— Initial estimates of the entire Fast Forward program costs.
$5.5 billion
— Additional funding required to implement the Fast Forward plan to restore the subway fleet.
New York State has received over $11 billion in litigation settlements since fiscal year 2014-2015, yet none of these funds have been used to bolster rainy day reserves, with $652 million used to close operating budget gaps in fiscal year 2019 alone. Instead of allocating these funds to economic development or operating expenses, the state should reappropriate remaining unused settlement funds to increase its rainy day reserves to the recommended 10% of general fund tax revenues.
Recommendations related to Budget Gaps
A better use of these settlements would have been to bolster the State’s rainy day funds to the recommended level of 10% of general fund tax revenues.
Where practical these funds should be reappropriated to the State’s reserves.
At a minimum, the recently realized $205 million, and $76 million that remains unallocated, should be deposited directly into the State’s rainy day fund.
Key Data
$11 billion
— Total litigation settlements received by New York State since fiscal year 2014-2015.
$652 million
— Amount used to close the operating budget gap in the fiscal year 2019 budget.
$5 billion
— Unused settlement funds remaining at the end of fiscal year 2018.
$205 million
— Settlement with Deutsche Bank announced on June 20.
$850 million
— Repayment of one-time expenses by the Office for People with Development Disabilities.
$1.1 billion
— Allocation to the Thruway Authority for the new Governor Mario M. Cuomo Bridge.
New York City's spending on homeless services has surged to $3.0 billion in fiscal year 2018, more than double the amount spent in 2014, while the city's adopted budgets have consistently underestimated these shelter costs. The administration must develop a clear and specific plan to control these rising expenditures, as current strategies have failed to reduce the number of people in shelters.
Recommendations related to Budget Gaps
The Administration must provide a clear and specific plan to control the costs of homeless services.
The City should eliminate the use of commercial hotels and cluster sites to reduce costs and improve shelter quality.
The Administration should ensure that annual spending for homeless services aligns with the budget initially approved by the Mayor and Council.
Key Data
$3.0 billion
— Total projected spending for homeless services in fiscal year 2018.
$1.3 billion
— Total spending for homeless services in fiscal year 2014.
$471.3 million
— Increased funding required in fiscal year 2018 due to the City's consistent underestimation of shelter costs.
$364 million
— Annual spending on commercial hotels for homeless individuals.
$100 million
— Estimated annual savings if the City were able to eliminate the use of hotels and shift to Tier II shelters.
Mayor de Blasio's Citywide Savings Program relies heavily on re-estimates and funding shifts, with efficiency savings accounting for only 16% of the total $4,670 million in proposed savings. To achieve lasting fiscal improvements, the city must set more ambitious goals for efficiency, which currently represent only 0.2% of total spending over the five-year period.
Recommendations related to Budget Gaps
Mayor de Blasio must set higher goals for more effective use of city resources to achieve lasting savings in city operations.
There must be more ambitious goals for efficiency savings to address budget gaps.
The city should prioritize getting more efficient to generate lasting budget savings that will increase in size over time.
Key Data
$4,670 million
— Total savings proposed in the Fiscal Year 2019 Citywide Savings Program.
0.2%
— Efficiency savings as a percentage of total spending proposed during the five-year period.
16%
— Share of total savings attributed to efficiency under Mayor de Blasio's plan.
20%
— Minimum share of total savings attributed to efficiency under Mayor Bloomberg's plans.
New York City faces a nearly $1 billion increase in operating and capital expenditures for fiscal year 2019 due to state-mandated costs and prior budget actions. To manage these financial pressures alongside other anticipated shortfalls and spending priorities, the city must exercise fiscal restraint.
Recommendations related to Budget Gaps
The City will need to exercise restraint in other areas to manage the nearly $1 billion in additional operating and capital expenditures.
The City's budget should retain flexibility to address City Council priorities, such as the $212 million Fair Fares initiative.
Key Data
$1.0 billion
— Total additional operating and capital expenditures the City is expected to fund in fiscal year 2019.
$418 million
— The City's required funding share for the Metropolitan Transportation Authority Subway Action Plan.
$121 million
— The shortfall in education funding the City is facing compared to the Preliminary Budget forecast.
$200 million
— The estimated annual cost for the State's Raise the Age initiative.
$150 million
— The remaining amount of sales tax revenue to be intercepted by the State in fiscal year 2019.
$212 million
— The cost of the Fair Fares initiative to provide half-cost MetroCards to New Yorkers below the federal poverty line.
Participation in citywide budget savings programs, known as Programs to Eliminate the Gap, has fluctuated across various municipal agencies between fiscal years 2012 and 2019. This tracking of agency involvement highlights the inconsistent application of efficiency measures intended to address fiscal shortfalls.
New York City's historical gap-closing initiatives, including Programs to Eliminate the Gap (PEGs) and Citywide Savings Programs (CSPs), have been tracked since 1982 to monitor budgetary savings. This updated resource provides a comprehensive view of these fiscal measures through the de Blasio administration.
Watch the original program here . Citizens Budget Commission President Carol Kellerman sat down with Errol Louis to share some of her concerns over Mayor de Blasio’s proposed budget.
The federal tax overhaul passed last month may have enormous impacts in New York and could upend the relationship between the federal government and the states. CBC and the CUNY Graduate School of Journalism gathered experts to assess the impact and potential city and state responses in a special half-day…
New York City's fiscal monitors have provided generally optimistic budget assessments, though these projections face significant uncertainty due to potential federal and state policy changes. The city's projected budget gaps of $3.2 billion, $2.3 billion, and $1.6 billion for fiscal years 2019 through 2021 may be understated, as monitors identify various revenue and expenditure risks that could alter the city's fiscal health.
Key Data
$3.2 billion
— OMB projected budget gap for fiscal year 2019.
$2.3 billion
— OMB projected budget gap for fiscal year 2020.
$1.6 billion
— OMB projected budget gap for fiscal year 2021.
$75 million to $150 million
— Amount by which monitors believe overtime is underestimated.
$125 million to $142 million
— Forecasted cost increase for homeless services.
$165 million
— Potential loss in reimbursement for fringe benefits and judgments and claims for New York City Health + Hospital.
The Metropolitan Transportation Authority's 2018 budget faces significant uncertainty, as it relies on unidentified funding sources to cover the Subway Action Plan, which would otherwise turn a projected surplus into a $498 million deficit. Furthermore, the agency's long-term financial plan shows growing budget gaps, reaching $643 million by 2021, despite the use of reserve funds to mask these shortfalls.
Recommendations related to Budget Gaps
The board should reject the 2018 budget as proposed without any new funding.
If the MTA intends to scale back the Subway Action Plan to match available funding, specific details need to be provided to enable the board to make an informed decision.
In the event a portion of the expected funding is realized, those elements critical to improving the subway system’s infrastructure—and not initiatives primarily geared toward station appearances and customer communications—should be prioritized.
The board should not advance a budget without either funding sources identified to support the Subway Action Plan or commensurate reductions in other areas to maintain a cash balance.
Draining reserve funds and eschewing PAYGO capital for more debt should be avoided.
Key Data
$498 million
— The projected end-of-year deficit in 2018 if the Subway Action Plan is implemented without additional revenues.
$30 million
— The expected 2018 end-of-year cash surplus that would be eliminated without additional funding.
$352 million
— The forecasted budget deficit for 2020.
$643 million
— The forecasted budget deficit for 2021.
$1.5 billion
— The total cost of the five-year Subway Action Plan.
$679 million
— The amount held in the Bridges and Tunnels Necessary Reconstruction Fund and the MTA Retiree Welfare Benefits Trust.
This episode's datapoint is "60+," as in the combined years of professional experience of special guests Renee Boicourt and Kent Hiteshew in matters of public finance. Listen to a live recording from CBC's recent event, "Fiscal Crises," where our expert guests discussed lessons learned from the bankruptcy of Detroit and…
Uniformed overtime spending has consistently exceeded the City's adopted budget, creating a significant fiscal challenge that requires systemic reform. To address these recurring budget gaps, the City should establish a labor-management committee to negotiate work policy changes, such as capping sick leave and overtime earnings.
Recommendations related to Budget Gaps
The City should establish a uniformed labor-management committee as part of the next round of collective bargaining in order to reduce uniformed overtime spending.
Adopting a system in which routine sick leave usage is accrued and capped (as for NYC civilian employees).
Changing certain work rules, such as eliminating overtime for travel to alternate work locations, and guaranteed minimum overtime hours.
Instituting a per employee cap on overtime hours or overtime earnings, as exists for civilian employees.
Capping or eliminating overtime earnings in calculating final average salary for pensions.
Key Data
$1.4 billion
— The City increased overtime expense in the Adopted Fiscal Year 2018 budget to this amount.
$1.8 billion
— As of June 2017, overtime spending for fiscal year 2017 was projected to be this amount.
$1.7 billion
— Fiscal year 2016 overtime spending.
$509 million
— Current projections put the fiscal year 2017 overtime budget this much over the adopted amount.
$125 million and $169 million
— Estimated amount the fiscal year 2018 uniformed overtime budget is too low.
42 percent
— Average amount overtime has exceeded the adopted budget in each of the past nine years.
New York City's fiscal year 2018 budget includes a $1.5 billion savings program to mitigate economic and intergovernmental risks, yet many agencies contribute little to these efficiency efforts. If all city agencies achieved efficiency savings equal to just 1 percent of their city-funded expenditures, the city could generate $378 million in additional savings.
Recommendations related to Budget Gaps
City agencies should review their operations to enhance productivity and reduce expenses.
The City should reinstate mandatory savings requirements for agencies to ensure broader participation in efficiency programs.
The City should continue to put substantial effort into reducing expenses to address budget risks from the federal government and a slowing economy.
Key Data
$1.5 billion
— Total value of the Citywide Savings Program in fiscal year 2017.
$1.3 billion
— Total value of the Citywide Savings Program in fiscal year 2018.
$331 million
— Four-year total savings projected from the 11 initiatives identified by the Office of Management and Budget's Savings Unit.
$378 million
— Potential savings that could be generated in fiscal year 2018 if all agencies achieved efficiencies worth 1 percent of their city-funded expenditures.
$295 million
— Savings achieved in fiscal year 2017 through active management of debt service.
$421 million
— Savings achieved in fiscal year 2018 through active management of debt service.
The Metropolitan Transportation Authority's February 2017 financial plan reveals a worsening fiscal outlook driven by increased labor costs and reduced state subsidies, resulting in a projected $372 million cash deficit by 2020. To avoid serious financial instability, the agency must identify new policy actions or utilize general reserves to offset these revenue reductions and rising expenses.
Recommendations related to Budget Gaps
The MTA should utilize a 1 percent annual general reserve, which could provide $650 million over the plan period if not needed each year.
Absent the availability of reserve funds, new policy actions will be required to keep the agency from serious red ink.
Key Data
$271 million
— Total reduced revenues over the financial plan due to lower dedicated subsidies and taxes.
$116 million
— Unfavorable impact of the labor contract and reduced health benefit savings during the plan.
$372 million
— Projected negative cash balance in 2020.
$650 million
— Potential funds provided by a 1 percent annual general reserve over the plan period.
$175 million
— Total favorable impact of unspecified operating expense efficiencies.
$100 million
— One-time insurance recovery from Superstorm Sandy claims.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
Spending on homeless services in New York City has surged by 77 percent since fiscal year 2014, reaching $2.3 billion in fiscal year 2017, a growth rate that far exceeds other municipal services. Despite optimistic budget projections suggesting a decrease in future costs, historical trends in caseload growth indicate that spending will likely continue to rise, necessitating clear milestones for achieving sustainable fiscal levels.
Recommendations related to Budget Gaps
The Administration's new strategy on homelessness should address how much more growth in the homeless population served is actually anticipated and provide milestones against which to measure progress towards more sustainable spending.
Any new strategy for service redesign or expansion in this area should be accompanied by milestones for reducing spending to sustainable levels.
Key Data
$2.3 billion
— Total spending on homeless services by all New York City agencies in fiscal year 2017.
77%
— Increase in total homeless services spending since fiscal year 2014.
$560.5 million
— Growth in spending on shelters between fiscal year 2014 and fiscal year 2017.
23%
— Growth in the shelter census since the beginning of fiscal year 2014.
18.4%
— Increase in the average cost of shelter per day for families between fiscal years 2014 and 2016.
The de Blasio Administration's Citywide Savings Program identifies $3.8 billion in savings through 2021, yet only 10 percent of these savings stem from operational efficiency, with the remainder relying on debt service savings and re-estimates. To better hedge against economic uncertainty and potential budget risks, the City must prioritize recurring productivity improvements over one-time funding shifts when identifying the next $500 million in required savings.
Recommendations related to Budget Gaps
To serve as a meaningful hedge against budget risks, all of the $500 million in additional savings should come from improving government productivity in ways that generate recurring savings.
City agencies should be required to identify efficiency improvements to generate the next $500 million in savings promised by the Administration.
The creation of a Savings Unit should not absolve city agencies of responsibility for initiating their own efforts to operate more efficiently.
Key Data
$3.8 billion
— Total savings identified in the Preliminary Budget for Fiscal Year 2018 to be achieved in fiscal years 2017 to 2021.
$500 million
— Additional savings the Office of Management and Budget has committed to finding for the Executive Budget in April.
$366 million
— Total efficiency savings identified in the Citywide Savings Program, comprising less than 10 percent of the total.
$967 million
— Total debt service savings identified in the Citywide Savings Program, representing 26 percent of the total.
$1.2 billion
— Savings occurring in the current fiscal year, representing 32 percent of the total savings.
New York State's mid-year financial update reveals that tax revenue projections have declined by $1.4 billion from the adopted budget, while out-year budget gaps continue to widen significantly. Specifically, the projected budget gap for fiscal year 2020 has grown to $8.9 billion, driven by factors including increased personnel costs and rising expenses for minimum wage requirements in state contracts.
Key Data
$1.4 billion
— Total drop in All Funds tax revenue projections for fiscal year 2017 from the adopted budget.
$775 million
— Decrease in personal income tax revenue estimates for fiscal year 2017 from the first quarter update.
$3.5 billion
— Total projected budget gap for fiscal year 2018 following a $295 million increase.
$7.1 billion
— Total projected budget gap for fiscal year 2019 following an increase of almost $1 billion.
$8.9 billion
— Total projected budget gap for fiscal year 2020 following an increase of almost $1.4 billion.
$427 million
— Increase in minimum wage costs related to State contracts for fiscal year 2020 above the first quarter update.
The Metropolitan Transportation Authority faces significant long-term financial risks, including projected deficits and the depletion of cash reserves by 2020, which threaten the sustainability of its capital investment plans. To address these fiscal challenges, the agency must identify new revenue sources, such as increased tolls or vehicle-miles traveled fees, while intensifying efforts to implement operational efficiencies and manage rising labor and benefit costs.
Recommendations related to Budget Gaps
The MTA should prepare a plan to fund PAYGO capital contributions without exhausting cash balances.
The agency should adjust financial projections to better reflect foreseeable risks.
The MTA should set aside additional resources for the agency’s OPEB trust fund.
New revenue should come primarily from cross-subsidies from motor vehicle users with desirable options including higher tolls, gasoline taxes, and license and registration fees, as well as a new vehicle-miles traveled fee.
MTA leadership should continue and intensify its efforts to identify and implement efficiencies.
Key Data
$15.5 billion
— The total amount the MTA expects to spend in its 2017 Preliminary Budget.
$1.1 billion
— The amount of pay-as-you-go (PAYGO) capital investments the MTA plans to make using projected surpluses and cash balances.
$113 million
— The projected adjusted cash deficit for the MTA in 2020.
$14 billion
— The total OPEB liability for the MTA as of March 31, 2016.
$371 million
— The projected negative cash balance for the MTA in 2020 if it continues to fund $200 million annually in PAYGO capital.
$730 million
— The 8.5 percent increase in labor spending for the MTA in 2017.
New York City's legacy costs, including debt service, pensions, and retiree health benefits, are projected to grow to over $20 billion by fiscal year 2020, consuming a significant and expanding portion of the budget. Implementing reforms such as requiring retiree premium contributions, consolidating union welfare funds, and eliminating Medicare Part B reimbursements could generate up to $1.6 billion in savings.
Recommendations related to Budget Gaps
Retirees should share in the cost of health premiums.
Reform of union welfare funds is needed by consolidating supplementary health care benefits under the City’s health plan.
Medicare Part B premium reimbursements should be eliminated.
Key Data
20 percent
— The portion of the city budget currently exceeded by legacy costs.
$20 billion
— The amount of annual spending on legacy costs projected by fiscal year 2020.
$17.4 billion to $20.9 billion
— The projected increase in legacy costs.
11 percent
— The projected growth rate of non-legacy spending.
$1.6 billion
— The total savings achievable by fiscal year 2020 through proposed reforms.
Tony Guida sits down with the CBC's Vice President, Maria Doulis, to discuss why New York City's mega-projects run over budget and how the public sector can build better.
New York's Medicaid program has successfully slowed expenditure growth through the Medicaid Redesign Team's strategies, including managed care expansion and new delivery mechanisms, which have helped reduce per-enrollee costs. Despite these improvements, the state faces ongoing challenges in fully implementing these reforms and achieving projected annual savings of $1.3 billion to $1.9 billion by fiscal year 2020.
Recommendations related to Budget Gaps
New efforts should be made to work with federal officials to develop procedures that encourage and perhaps require enrollment in managed care plans and Health Homes in the future.
Continued strong monitoring of the evolution of Performing Provider Systems and their action plans is essential, as their ability to achieve measureable improvements is still to be tested.
More aggressive savings goals exceeding 3 percent might be appropriate for the Medicaid redesign strategies.
Key Data
$1.3 billion to $1.9 billion
— The annual savings target for state fiscal year 2020.
$8.0 billion
— The amount of federal funds provided over five years to plan and establish Performing Provider Systems.
$1.1 billion
— The additional amount authorized by the State in 2015 for Performing Provider Systems.
$10,432 to $8,620
— The decline in average annual cost per enrollee from 2010 to 2014.
$53.8 billion
— Total State Medicaid program spending in federal fiscal year 2011.
New York City faces projected budget gaps ranging from $2.2 billion to nearly $3.0 billion after fiscal year 2017 as surplus funds are exhausted and revenue growth slows. To maintain balance, the city must address speculative savings in its Citywide Savings Program and resolve the ongoing fiscal crisis at Health + Hospitals, which faces deficits growing to $1.8 billion by 2020.
Recommendations related to Budget Gaps
The city must ensure that the Citywide Savings Program is not based on speculative savings to prevent future budget gaps from mushrooming.
The city needs to implement a viable financial plan for Health + Hospitals to address the agency's growing deficits.
The city must move quickly to stop the bleeding of cash at Health + Hospitals to keep the budget balanced in the coming years.
Key Data
$2.2 billion to $3.0 billion
— The range of projected budget gaps the city faces after fiscal year 2017.
$300 million
— The amount of annual savings in the Citywide Savings Program that depends on speculative Medicaid savings.
$1.8 billion
— The projected deficit for the Health + Hospitals system by 2020.
$497 million
— The amount of emergency support provided to the Health + Hospitals system in the current fiscal year.
$3.4 billion
— The amount of the surplus roll from previous years that will be exhausted by fiscal year 2018.
$2.5 billion
— The amount by which city-funded spending in fiscal year 2017 will exceed spending in fiscal year 2016.
The dispute over $600 million in sales tax revenue generated by the Sales Tax Asset Receivable Corporation (STARC) refunding should be resolved by using the funds to pay down long-term debt rather than being claimed by either the City or State. This approach would provide lasting relief to taxpayers by reducing future debt service obligations instead of supporting short-term operating budgets.
Recommendations related to Budget Gaps
The best outcome of this dispute would be to return the contested money to City and State taxpayers in the form of long-term savings.
The resolution of the current controversy should be neither in favor of State’s or City’s claim to the contested $600 million, nor a “splitting of the baby” to give half to each.
The money should be put to a use that yields longer term savings for taxpayers, an appropriate goal of a bond refunding.
This can be achieved by paying off outstanding debt that requires debt service payments over a period longer than three years and closer to the duration of the STARC bonds.
A negotiated division between the City and State should be reached, to give relief to city and state taxpayers over the longer term.
Key Data
$600 million
— Amount of New York City sales tax revenue the Governor’s Executive Budget proposes to divert to the State.
$2.5 billion
— Amount of Municipal Assistance Corporation (MAC) debt outstanding in 2003.
$500 million
— Annual debt service burden for the City that was eliminated over five years.
$170 million
— Annual amount the State guaranteed to repay the STARC debt.
$2.7 billion
— Amount borrowed in October 2004 to repay the City for MAC debt service, pay off remaining MAC bonds, and cover other costs.
$637 million
— Amount the City borrowed in excess of what was needed to pay off outstanding bonds during the 2014 STARC refunding.
General fund budget gaps are projected to grow from $1.1 billion to $3.6 billion between fiscal years 2018 and 2020 without specified savings. To address these fiscal challenges, the state should implement stricter spending discipline and reject proposals that shift costs to local governments or expand economic development spending without proven returns.
Recommendations related to Budget Gaps
The State’s current year $2.5 billion in one-time financial settlements should not be used to support ongoing operating expenses; these funds should be used to provide long-term benefits such as pay-as-you-go capital investments that replace borrowing, enhanced reserves, or accelerated debt payments.
The entire funding increase for school aid should go to foundation aid, which targets aid to districts with the highest need and least ability to pay.
Arbitrators should account for the full cost of a decision, including retroactive pay and the impact on fringe benefits, without increasing taxes, making service cuts, or employing fiscal gimmicks.
A moratorium should be declared on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
The goal of the Private Activity Bond Allocation Act should be to subject the use of such bonds for economic development to statewide oversight; accordingly, the PACB review should be limited to bonds for that purpose.
Key Data
$1.1 billion
— Projected general fund budget gap in fiscal year 2018.
$3.6 billion
— Projected general fund budget gap in fiscal year 2020.
$2.5 billion
— Amount of one-time financial settlements in the current year.
$2.3 billion
— Total expenses shifted from the State to New York City over three years.
$10 million
— Savings to the State from retiree health insurance proposals in fiscal year 2017.
$40 million
— Savings to the State from retiree health insurance proposals in fiscal year 2020.
The fiscal year 2017 Citywide Savings Program is insufficient to offset new spending or build necessary reserves against potential economic downturns, as it relies heavily on one-time savings rather than long-term operational efficiencies. A more robust savings plan is required to ensure financial stability and avoid drastic measures like tax hikes or service cuts when the economy eventually slows.
Recommendations related to Budget Gaps
The Mayor should ask agencies to identify operational efficiencies that provide recurring savings to increase the budget cushion and guard against economic uncertainty.
The expanded Citywide Savings Program in the Executive Budget should include much more in the way of agency savings from initiatives that improve operations and provide recurring savings.
The City should exercise spending restraint and build reserves regularly and well in advance of a potential downturn.
Key Data
$2.7 billion
— The increase in city-funded spending in the fiscal year 2017 budget proposal.
$1.9 billion
— The total value of new savings initiatives proposed in the fiscal year 2017 Citywide Savings Program over fiscal years 2016 to 2020.
0.6 percent
— The amount of savings as a share of city-funded spending during the fiscal year 2016 to 2020 period.
$7.9 million
— The total value of initiatives to make agencies more efficient in fiscal year 2016.
45 percent
— The drop in the Chinese stock market since its peak in June.
70 percent
— The drop in the price of a barrel of oil since June 2014.
The Citywide Savings Program, designed to address budget gaps, is criticized for being too small and relying heavily on one-time adjustments rather than recurring operational efficiencies. To improve fiscal health, the administration should set more ambitious savings targets and require broader agency participation in efficiency initiatives.
Recommendations related to Budget Gaps
The Mayor should set a higher goal for the Citywide Savings Program in his Executive Budget.
The administration should expand the Citywide Savings Program in the upcoming Executive Budget.
Agencies should be required to participate in the savings program, as several have not, including the Fire Department and the Department of Environmental Protection.
There should be more of the "really good stuff" that achieves recurring savings by making agency operations more efficient.
Higher savings goals should be set to better address projected future deficits.
Key Data
$804 million
— Initiatives yielding savings in fiscal year 2016.
$1.9 billion
— Planned savings over fiscal years 2016 to 2019.
0.6 percent
— The portion of total city-funded spending represented by the planned savings over fiscal years 2016 to 2019.
$270 million
— The amount of initiatives in the Citywide Savings Program that achieve recurring savings by making agency operations more efficient.
$876 million
— Debt service savings resulting from lower interest rates.
$1.2 billion
— Spending re-estimates and funding shifts that substitute federal or state grants for local resources.
New York City's $82 billion preliminary budget increases spending by 4.5 percent without a corresponding serious savings plan or boost to reserves, which remain static at $1.5 billion. To ensure long-term financial stability, agencies must aggressively pursue efficiencies and restructure operations to offset the costs of new programs.
Recommendations related to Budget Gaps
Agencies should aggressively seek efficiencies to create savings that offset the costs of new programs.
Operations should be reviewed vigorously, with programs restructured or eliminated when necessary and opportunities for leveraging city dollars identified.
The mayor suggested that the Executive Budget will include a larger savings program, and this program should, indeed, go much further.
Additional deposits to the retiree health benefits trust fund should be made this year as well.
The city’s savings should not remain static in a dynamic economic and political climate.
Key Data
$82 billion
— The size of the preliminary budget unveiled by the mayor.
4.5 percent
— The increase in city-funded spending, including budget reserves and after adjusting for debt prepayments.
$400 million
— The amount of agency savings included in the fiscal year 2016 budget.
$269 million
— The amount of agency savings included in the fiscal year 2017 budget.
5 percent
— The target for agency savings called for by City Council members.
$1.5 billion
— The current level of budget reserves.
The Metropolitan Transportation Authority's financial plan relies on optimistic economic growth projections, potentially leaving the agency vulnerable to a revenue shortfall of up to $1.5 billion during a recession. To mitigate these risks, the agency should adopt more conservative revenue forecasting, establish a substantial rainy day fund, and limit the reallocation of capital and retiree benefit funds to cover operating expenses.
Recommendations related to Budget Gaps
More cautious economic and revenue assumptions seem appropriate.
New policies regarding reserves would be a constructive step.
Accumulation of general reserves should be permitted, and an explicit rainy day fund established covering a larger share of total expenses before releasing future reserves to reduce other long-term liabilities.
Greater restrictions on diversion of OPEB funding and a firmer commitment to PAYGO capital allocations would reduce the risks associated with reallocation of those items.
Continuing to increase planned efficiency gains beyond current targets for future years would help bring expenditures in line with the revenues available when a downturn occurs.
Key Data
$1.5 billion
— Cumulative shortfall of revenue over a four-year period in an illustrative case recession.
$616 million
— Revenue loss in Year Three of the illustrative case recession scenario.
$15 billion
— Estimated revenue for 2015, marking a recovery to previous highs for most sources.
$4.6 billion
— Revenue shortfall over the financial plan based on the 2007 recession experience.
$1.3 billion
— Annual savings achieved by the MTA's expenditure growth curbing initiative in 2015.
$20 billion
— Current unfunded OPEB liability of the MTA.
The 2015 New York City budget was shaped by concerns over potential recession risks and the necessity of a citywide savings plan. These fiscal strategies were designed to maintain municipal financial stability during that period.
CBC compares the Mayor’s FY2016 budget savings agenda, called the Citywide Savings Program, or CSP, with the Program to Eliminate the Gap (PEG) in fiscal years 2010 to 2015.
The Metropolitan Transportation Authority faces a $2.6 billion capital funding gap, which could be addressed by expanding and reforming taxes on New York City's taxi and for-hire vehicle industry. Implementing these tax changes, such as applying per-ride taxes to black cars or reforming the transportation sales tax, could generate between $34 million and $225 million annually to help service the debt required to close this shortfall.
Recommendations related to Budget Gaps
By this logic, all TLC service trips—not solely taxicab trips—should be considered for this tax.
If the new tax applied to black cars including DSPs were set at a rate equal to that applied to taxicabs, rather than a flat 50 cents, then the tax would be 3.95 percent of the fare.
Another option is to lower the burden on black cars and dedicate the entire sales tax to the MTA.
The new rate could be set sufficient to close the MTA funding gap, at approximately 5.75 percent or at a higher 7.75 percent.
Key Data
$2.6 billion
— Remaining MTA capital funding gap
$250 million
— Estimated tax revenue from TLC services in 2015
74 percent
— Increase in tax collections from 2011 to 2015
$33 million
— Additional revenue from expanding per-ride tax to black cars in 2015
$225 million
— Potential increase in MTA revenues from reformed sales tax in 2019
3.9 percent
— Increase in NYC population from 2010 to 2014
The MTA faces significant revenue challenges and capital funding shortfalls, making the proposed expansion of free transfers to two per ride financially irresponsible. Reducing fare revenue by $40 million annually would hinder the agency's ability to support debt service for $500 million in critical capital investments.
Recommendations related to Budget Gaps
The Governor should veto S3228/A2607, a bill mandating an increase from one to two free transfers for persons purchasing a ride on Metropolitan Transportation Authority (MTA) subways and buses.
Policymakers should avoid depriving the agency of fare revenue that can support debt service for capital investments to benefit a limited number of riders already paying relatively low fares.
Key Data
$40 million
— Estimated annual revenue reduction for the MTA if the bill mandating an increase to two free transfers is enacted.
$500 million
— Amount of capital investments that could be supported by fare revenue currently at risk of being deprived.
$1.21
— Average fare revenue per ride in 1993.
$2.05
— Equivalent sum of the 1993 average fare if it had grown with overall inflation by 2014.
20 percent
— Amount by which the inflation-adjusted 1993 fare would be higher than the actual 2014 average revenue per ride.
The fiscal year 2016 adopted budget increases spending by approximately $200 million for police, social services, and other programs. While current revenue covers these costs, the additions threaten long-term fiscal health by exacerbating projected budget gaps and leaving the city vulnerable to future economic downturns.
Key Data
$200 million
— spending added in the fiscal year 2016 adopted budget for additional police, social service providers, and other programs
The New York City Housing Authority faces significant financial instability, with operating deficits projected to reach $194 million by 2019 due to high per-unit costs and low rent collection rates. To address these gaps, the agency's 10-year roadmap proposes strategies such as increasing rent collection to 95 percent, streamlining management, and generating revenue through residential infill development.
Recommendations related to Budget Gaps
NYCHA should increase rent collection rates to HUD's 95 percent target to generate an estimated $39 million in 2015.
The Authority can generate more non-rental income by increasing parking fees closer to market rate, increasing monthly fees for appliances, expanding commercial activities, and raising rent collections from nonprofit tenants.
Streamlining management to curtail the scope of responsibility for borough offices to non-redundant functions would save $33 million annually by 2019.
Eliminating responsibility for community and senior centers would save $19 million annually and rely on service provision by better-equipped City agencies and nonprofits.
NYCHA can improve productivity by increasing use of Job Order Contracting, which streamlines and shortens the process to perform more routine maintenance.
The Authority should negotiate work rule changes in collective bargaining to limit overtime compensation for work performed in the evenings and on weekends.
NYCHA should pursue cost savings through private property management companies in the long term.
Key Data
$194 million
— Projected operating deficit for the New York City Housing Authority in 2019.
77 percent
— The average rent collection rate for the New York City Housing Authority.
$320
— The amount by which monthly operating costs per unit exceed those of a private rent-stabilized unit.
$39 million
— Estimated revenue generated in 2015 by increasing rent collection rates to HUD's 95 percent target.
$33 million
— Annual savings by 2019 achieved by streamlining management to curtail the scope of responsibility for borough offices.
$400 million to $800 million
— Potential revenue generated over 10 years through two types of residential infill development.
New York City faces projected budget gaps exceeding $1.0 billion in fiscal year 2017 and approaching $2.1 billion in fiscal year 2019, yet the current administration has declined to implement a formal program to eliminate these deficits. Establishing efficiency targets is necessary to ensure fiscal stability and prepare for potential economic downturns, as the current economic expansion is already six years old.
Recommendations related to Budget Gaps
Mayor de Blasio should begin planning now for how to close the projected gaps and cope with any unexpected adverse conditions.
The administration should implement a Program to Eliminate the Gap (PEG) in anticipation of projected and possibly growing deficits.
Good management should include a continuous search for ways to achieve savings by making service delivery more efficient to address potential budget gaps.
Key Data
$1.0 billion
— Projected budget gap for fiscal year 2017.
$2.1 billion
— Projected budget gap for fiscal year 2019.
New York City faces projected budget gaps exceeding $1.0 billion in fiscal year 2017 and approaching $2.1 billion in fiscal year 2019, necessitating a proactive strategy to maintain fiscal balance. Implementing a structured program to identify savings and improve service delivery efficiency is essential for long-term financial stability, regardless of the specific name given to such a policy.
Recommendations related to Budget Gaps
Mayor de Blasio should begin planning for how to close these gaps and cope with any unexpected adverse conditions as well as new needs that may emerge.
Even in the absence of budget gaps, good management should include a continuous search for ways to achieve savings by making service delivery more efficient.
Mayor de Blasio’s next financial plan should be creative both in naming his strategy to reflect a progressive spirit and in identifying ways to keep the budget balanced and make service delivery more efficient in the future.
Key Data
$1.0 billion
— Projected budget gap in fiscal year 2017.
$2.1 billion
— Projected budget gap in fiscal year 2019.
$6.5 billion
— Savings in fiscal year 2014 attributed to PEGs implemented from fiscal years 2008 to 2013.
$4.8 billion
— The unprecedented PEG in Year 1 of Mayor Bloomberg’s first financial plan following the recession and September 11, 2001 terrorist attacks.
Optimistic revenue forecasting creates significant risks for New York City, as relying on overly high projections can lead to unsustainable spending and severe budget shortfalls during economic downturns. Maintaining fiscal discipline through cautious, rigorous forecasting is essential to ensure the city can withstand potential revenue losses that could range from $2 billion to $4 billion in the first year of a recession.
Recommendations related to Budget Gaps
Fiscal discipline requires tax revenue forecasts that are not only rigorous but cautious because of ‘asymmetric risk’.
Key Data
$7.2 billion
— Forecasted tax revenue growth for the City over the fiscal years 2015-2019.
$15.8 billion
— Cumulative tax revenue shortfall relative to the Office of Management and Budget's forecast if the 2001 recession were to repeat.
$24.1 billion
— Cumulative tax revenue shortfall relative to the Independent Budget Office's forecast if the 2001 recession were to repeat.
$750 million
— The current size of the City's general reserve fund.
$2 billion to $4 billion
— Likely revenue losses in the first year of a recession that current reserves would not cover.
32 percent
— Peak-to-trough decline in corporate and banking taxes during the past decade.
NY1 Drivers could be paying more to help fund mass transit if one non-profit group gets its way. The Citizens Budget Commission is proposing a number of fees on cars and trucks to help the MTA close a $1 billion gap in its capital investment program.
The Port Authority’s maritime business line has consistently operated at a deficit, with losses projected to reach $107 million by 2029 if current trends continue. To achieve fiscal sustainability, the agency should close underperforming facilities like Brooklyn and Red Hook while renegotiating labor agreements to reduce staffing costs and container royalties.
Recommendations related to Budget Gaps
The Port Authority should identify excess capacity at facilities with low productivity and convert them to higher uses to improve financial viability.
The agency should close and repurpose obsolete and underperforming facilities, specifically Brooklyn and Red Hook, to reduce annual deficits.
The Port Authority should support changes in collective bargaining agreements to lower costs driven by staffing arrangements for groups of workers known as "gangs."
The agency should lower container royalties paid by shippers to the workers’ union to fund payments and benefits beyond those funded in their contracts.
The Port Authority should increase potential revenue from terminal leases as they come up for renewal by supporting terminal operators in efforts to increase productivity.
Key Data
$107 million
— Projected annual deficit for Port Commerce in 2029.
$82 million
— Total loss incurred by Port Commerce in 2013.
$29 million
— Projected annual savings by 2029 from closing the Brooklyn and Red Hook facilities.
$300 million
— Potential cost savings from eliminating cash payments and port-specific container assessments.
$354 million
— Estimated amount carriers paid in container royalties for New York-New Jersey terminals in 2013.
$205,718
— Loss per acre generated by the Brooklyn facility in 2013.
The Metropolitan Transportation Authority faces a $15 billion funding gap for its $32 billion capital plan, which requires a new approach to revenue generation. A proposed "25-50-25" funding model suggests balancing costs through tax subsidies, user fees, and increased cross-subsidies from motor vehicle users to ensure the system's long-term viability.
Recommendations related to Budget Gaps
The MTA should prioritize better planning and greater transparency before committing to new expansion projects.
The MTA should implement modest fare increases to bring revenue closer to the 50 percent target for user fees.
The MTA should increase the motor vehicle users' cross-subsidy through mechanisms like tolls, license and registration fees, or a vehicle-miles-traveled tax to reach the 25 percent funding target.
Key Data
$15 billion
— The funding gap identified in the MTA's $32 billion capital plan.
$32 billion
— The total investment amount called for in the MTA's capital plan.
$5.5 billion
— The amount allocated in the proposed plan for projects that would expand the network.
$2.6 billion
— The cost overruns associated with the East Side Access project.
$1.6 billion
— The annual increase in funding from the payroll mobility tax authorized in 2009.
$167 to $293
— The range of increased annual costs motorists would face under proposed cross-subsidy mechanisms.
The New York City Health and Hospitals Corporation faces a worsening financial outlook, with deficits projected to reach $1.7 billion by fiscal year 2018 and cash reserves expected to be exhausted by 2016. To ensure long-term sustainability, the organization must implement aggressive expenditure controls, optimize its MetroPlus managed care plan, and establish a more stable funding relationship with the City.
Recommendations related to Budget Gaps
HHC will need to intensify its efforts to make service delivery more efficient and reduce unneeded hospital capacity to realize necessary savings.
MetroPlus should seek to retain more of its members' utilization at HHC facilities by attracting patients to in-house providers.
HHC should advocate for available state tax exemptions and funding sources conditioned on greater participation by voluntary hospitals in caring for the uninsured.
HHC and municipal leaders should develop more rational and stable guidelines for funding HHC to improve financial stability.
State and local leaders should make restructuring services to stabilize HHC's financial condition a top priority.
Key Data
$668 million
— The deficit run by the Health and Hospitals Corporation in fiscal year 2013.
$645 million
— The estimated deficit for the Health and Hospitals Corporation in fiscal year 2014.
$702 million
— The projected imbalance between revenues and expenditures for fiscal year 2015.
$1.7 billion
— The projected imbalance between revenues and expenditures for fiscal year 2018.
$2.2 billion
— The annual revenues of the MetroPlus managed care plan operated by HHC.
467,823
— The number of MetroPlus enrollees in 2014.
The New York City Health and Hospitals Corporation faces a worsening financial outlook, with projected budget gaps expanding from $702 million in fiscal year 2015 to $1.7 billion by fiscal year 2018. To address these challenges, municipal leaders should establish more stable funding guidelines, including potential capitated payments for uninsured care and incentives for cost-effective service delivery.
Recommendations related to Budget Gaps
Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
The new approach should seek to improve HHC’s financial stability, its ability to engage in long-term financial planning, and its incentives for cost-effective service delivery.
City leaders should begin a dialogue with HHC and other national health care experts about the best way to rationalize the financial relationship.
HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
The new approach should include capitated payments for the uninsured that reflect the actuarially-based cost of providing care to them.
Key Data
$702 million
— Projected budget gap for the New York City Health and Hospitals Corporation in fiscal year 2015.
$1.7 billion
— Projected budget gap for the New York City Health and Hospitals Corporation in fiscal year 2018.
$3.2 billion
— Accumulated cash shortfall projected for the New York City Health and Hospitals Corporation by fiscal year 2018.
$4.8 billion
— Accumulated GAAP deficit projected for the New York City Health and Hospitals Corporation by fiscal year 2018.
$668 million
— Deficit run by the New York City Health and Hospitals Corporation in fiscal year 2013.
$645 million
— Estimated deficit for the New York City Health and Hospitals Corporation in fiscal year 2014.
The PATH transit system faces growing annual deficits, projected to reach $487 million by 2018, which are currently covered by cross-subsidies from bridge and tunnel tolls. To address this, the system should adopt a more equitable financing model that shares costs among passengers, taxpayers, and motorists, potentially including a shift in governance to New Jersey Transit.
Recommendations related to Budget Gaps
The '50-25-25' approach draws 50 percent of the needed revenue from fares, and 25 percent each from tax subsidies and cross-subsidies from motor vehicle users.
An 'equal shares' approach would draw one-third of the needed revenues from each of the three sources.
PATH operations could be transferred from PANYNJ to NJT, a New Jersey public transit agency.
PATH could pursue other changes to make the fare system more equitable, such as a distance-based fare system.
A second modification is peak pricing, which charges a premium for users during peak periods most commonly associated with work-related commutes.
Key Data
$487 million
— Projected annual deficit for PATH in 2018.
$383 million
— PATH's annual deficit in 2013.
$3.9 billion
— Estimated cost of the new terminal and related amenities.
$1.5 billion
— Expected cost of the extension to Newark Airport.
$2.2 billion
— Total value of damage from Superstorm Sandy to PANYNJ facilities.
$1.2 billion
— Annual government subsidies for NJT.
Proposed legislation to provide additional grants for school transportation employees would undermine the integrity of the city's competitive bidding process and require cuts to other municipal services. These payments would exceed the terms of existing, legally binding contracts without providing any additional services to the city.
Recommendations related to Budget Gaps
The City Council should reject proposed legislation that would provide grants to pay higher wages and benefits to certain school transportation service employees, as this would require reducing funding for other municipal services to pay for the new payments.
The City should reject the proposed grants because they constitute supplementary payments to City contractors over and above the terms of legally binding, competitively bid contracts in exchange for no additional services.
New York State's $4 billion windfall from financial institution settlements offers a unique opportunity to improve long-term fiscal health rather than funding short-term expenses. By prioritizing debt reduction, capital investments, and reserve fund contributions, the state can avoid future budget gaps and mitigate the impact of economic downturns.
Recommendations related to Budget Gaps
New York should reduce long-term debt to save on interest payments and improve the state's fundamental finances.
The state should increase pay-as-you-go capital investments to avoid borrowing costs and accelerate state-of-good-repair projects.
New York should reduce other long-term liabilities, such as unfunded pension obligations and retiree health insurance costs, to improve fiscal stability.
The state should increase the Rainy-Day Reserve Fund to help prevent drastic service cuts and tax hikes during future economic downturns.
New York should make one-time investments that provide multiyear benefits, such as information-technology systems or revolving-loan funds, to generate recurring savings.
Key Data
$52.2 billion
— Total amount of New York state's long-term debt.
$174 billion
— Total capital needs across 47 state agencies and public authorities identified in the 10-year statewide capital plan.
$118 billion
— Portion of the 10-year capital plan dedicated to state-of-good-repair projects.
$66.5 billion
— New York's estimated other-post-employment-benefit (OPEB) liability.
$2.2 billion
— Current amount in New York's rainy-day and other reserve funds.
$350 million
— Amount currently in the Rainy Day Reserve Fund restricted for use during economic downturns.
New York State faces growing budget gaps reaching $3.4 billion by fiscal year 2018, yet the current budget relies on unrealistic 'future savings' placeholders to meet a self-imposed 2 percent spending cap. To achieve fiscal sustainability, the state must replace these accounting devices with concrete savings plans and reform reimbursement formulas for school aid.
Recommendations related to Budget Gaps
The State must close projected budget gaps with concrete savings plans rather than relying on unspecified future savings.
New York should reform overly rich reimbursement formulas for school aid functions like transportation and capital construction to achieve baseline reductions.
Policymakers should better target school aid resources to the neediest districts to help manage spending.
The State should return to a straightforward and transparent financial plan that clearly displays baseline budget gaps resulting from current budget actions.
Key Data
$3.4 billion
— The projected size of the State's budget gap by fiscal year 2018.
$4.9 billion
— The amount of unspecified 'future savings' plugged into the fiscal year 2018 budget to meet the spending cap.
42 percent
— The portion of the state operating fund budget comprised of Medicaid and school aid.
$7.6 billion
— The amount of new bond authorizations included in the adopted budget that will increase debt service costs.
The total cost of the teachers' contract agreement reaches $17.7 billion, contributing to a significant increase in the fiscal year 2018 budget gap from $370 million to $3.2 billion. Relying on uncertain health insurance savings and deferring back pay costs creates a problematic precedent that violates standard public finance principles.
Recommendations related to Budget Gaps
The City should ensure that health insurance savings are certain rather than speculative.
The City should avoid extended time frames for paying back pay as it conflicts with principles of public finance.
The City should adhere to the principle that this year's taxes should pay for this year's services.
Key Data
$13.4 billion
— Cost of applying the teachers' deal pattern to all workers and giving back pay in the next four years.
$4.3 billion
— Cost of subsequent payments for the teachers' deal.
$17.7 billion
— Total cost of the teachers' deal.
$3.4 billion
— Savings in health insurance costs committed by the unions.
$1 billion
— Amount of tax dollars from a fund used to help pay for raises.
$370 million
— The projected budget gap in fiscal year 2018 as of February.
The PATH rail system faces growing operating deficits that drain resources from the Port Authority, necessitating a shift in funding and management. Implementing a new tax subsidy model and transferring operations to New Jersey Transit would help close these fiscal gaps and improve regional transportation efficiency.
Recommendations related to Budget Gaps
Responsibility for running the PATH rail system should be shifted to New Jersey Transit to improve coordination and reduce the fiscal burden on the Port Authority.
The PATH system should adopt a '50-25-25' funding approach that draws 50 percent of the needed revenue from fares, and 25 percent each from tax subsidies and cross-subsidies from motor vehicle users.
Alternatively, an 'equal shares' approach should be implemented, which would draw one-third of the needed revenue from each of the three sources (fares, tax subsidies, and cross-subsidies).
To support these new funding models, the system should implement higher fares than those currently planned under existing policies.
Key Data
$383 million
— The PATH system's operating deficit in 2013.
$387 million
— The projected operating deficit for the PATH system in 2014.
$1.96
— The average fare revenue per ride for the PATH system in 2013.
$8.45
— The full cost of a single ride on the PATH system.
$175 million
— The subsidy required in 2018 under the proposed '50-25-25' funding formula.
$233 million
— The subsidy required in 2018 under the proposed 'equal shares' funding approach.
The PATH transit system faces growing annual deficits, projected to reach $487 million by 2018, which are currently covered by cross-subsidies from bridge and tunnel tolls. To improve fiscal sustainability, the system should adopt a more equitable financing model that shares costs among passengers, taxpayers, and motorists, potentially including a transfer of operations to New Jersey Transit.
Recommendations related to Budget Gaps
PATH should adopt a consistent funding structure that shares the cost of operating the transit system among all who benefit.
Auto user fees should pay for the facilities available to drivers, meaning the cost of bridge and tunnel facilities should be funded entirely through tolls and fees paid by the motorists who use them.
Motorists’ tolls and fees should also generate a surplus large enough to cover a share of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover a share of the cost of those services.
State and local tax subsidies to mass transit should cover a share of the cost of those services.
Consideration should be given to altering PATH's governance in order to facilitate collection of a tax subsidy and improve coordination with other bi-state transit operations.
PATH operations could be transferred from PANYNJ to NJT, a New Jersey public transit agency.
Key Data
$487 million
— Projected annual deficit for the PATH system in 2018.
$383 million
— PATH's annual deficit in 2013.
$3.7 billion
— Accumulated annual losses for PATH from 2004 to 2013.
$1.5 billion
— Expected cost of the project to extend PATH to Newark Airport.
$2.2 billion
— Estimated total value of damage to facilities from Superstorm Sandy.
$1.2 billion
— Annual government subsidies received by New Jersey Transit (NJT) in 2013.
New York City's health insurance costs for employees and retirees have more than doubled in the last decade, becoming a primary driver of projected budget gaps. Implementing premium-sharing requirements for employees and retirees, along with eliminating Medicare Part B reimbursements, would generate significant recurring savings to help balance the city's long-term finances.
Recommendations related to Budget Gaps
The City should implement premium-sharing by employees to align with private sector and other government standards.
The City should require premium-sharing by retirees to reduce the city's long-term financial obligations.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses.
Key Data
$1.8 billion
— Total savings in fiscal year 2014 if the proposed health insurance premium-sharing and reimbursement reforms are adopted.
$2.2 billion
— Total savings in fiscal year 2016 if the proposed health insurance premium-sharing and reimbursement reforms are adopted.
$6.6 billion
— Projected health insurance costs for the City in fiscal year 2016.
$83 billion
— The estimated unfunded liability for retiree health insurance and other post-employment benefits.
$280 million
— Savings from eliminating Medicare Part B reimbursement entirely.
$768 million
— Savings from a 50 percent contribution by retirees in fiscal year 2014.
New York City's fiscal year 2014 budget relies on $2.8 billion in prior-year surplus funds and a $1 billion withdrawal from the Retiree Health Benefits Trust Fund to achieve balance. This depletion of reserves leaves the city without resources to address its $85 billion unfunded liability for retiree health benefits.
Key Data
$2.8 billion
— surplus funds from fiscal year 2013 used to balance the 2014 budget
$1 billion
— withdrawn from the Retiree Health Benefits Trust Fund to balance the 2014 budget
$85 billion
— unfunded liability for retiree health benefits (OPEB)
The Port Authority of New York and New Jersey needs to adopt more transparent and rigorous budget practices, including the implementation of multi-year financial plans to identify and address potential deficits. By aligning its procedures with those of other major public entities, the agency can better ensure long-term financial viability and public accountability for its infrastructure investments.
Recommendations related to Budget Gaps
The PANYNJ should have a detailed annual operating budget and a four-year financial plan.
The operating budget should be adopted only after opportunities for public review and should be revised and updated during the fiscal year.
The PANYNJ’s capital budgeting should be guided by a long-term (a period of 10 to 20 years) capital strategy that is revised every four years.
The capital budget should include an annual and a four-year commitment plan revised annually.
Regular and frequent (quarterly) reports should be made to the Board and the public on the status of each capital project relative to the scheduled milestones and planned costs for the project.
Performance measures of activities and accomplishments should be specified for each major agency activity, and regular and frequent (quarterly) reports should be presented to the Board and the public comparing actual and targeted performance.
The city faces a significant fiscal challenge as expired municipal labor contracts and the potential for retroactive pay raises threaten to create a massive budget gap. Without adequate reserves, covering these costs would necessitate sharp tax increases and significant spending cuts.
Recommendations related to Budget Gaps
Taxpayers should pay attention to how candidates handle their courtship of union members' votes regarding the fiscal implications of labor contracts.
New Yorkers should take the time to understand the issue of municipal labor contract negotiations, as they will be paying the bill.
Key Data
$72 billion
— The total size of the city's budget, of which personnel costs make up more than half.
$7 billion
— The potential one-time cost of granting retroactive pay for past years.
10 percent
— The portion of the fiscal year 2014 operating budget that would be consumed by the one-time cost of retroactive pay.
$3 billion
— The future recurring annual costs associated with the potential labor contract settlements.
The current binding arbitration process for public unions often results in generous wage awards that strain municipal budgets, as arbitrators frequently fail to adequately consider a locality's fiscal condition. Reforming these rules to include stricter decision criteria and clear definitions of a municipality's ability to pay is essential to ensure labor contracts do not force tax increases or service cuts.
Recommendations related to Budget Gaps
Revise the binding arbitration law to strengthen localities' position and incentivize union leaders to negotiate.
Include time limits and deadlines in arbitration to avoid the uncertainties and risks arising from delayed, retroactive wage awards.
Establish new, more specific decision criteria that place greater emphasis on the fiscal condition of local governments.
Define 'ability to pay' as the capacity of a locality to pay all costs of the imposed contract from recurring resources without increasing taxes, making service cuts, or employing fiscal gimmicks.
Key Data
4.5%
— Wage increase awarded to New York City police officers for the 2004-2006 contract.
5%
— Wage increase awarded to New York City police officers for the 2004-2006 contract.
2%
— Proposed annual raise limit for localities that meet a definition of 'fiscally distressed'.
Rising health insurance costs for city employees and retirees are projected to grow by 40 percent, eventually accounting for 80 percent of the city's projected budget deficit. Implementing premium-sharing requirements for employees and retirees, alongside eliminating Medicare Part B reimbursements, could generate $1.7 billion in annual savings to help address this fiscal challenge.
Recommendations related to Budget Gaps
The city should require contributions of up to 25 percent from employees and 50 percent from retirees to help close the budget gap caused by rising health insurance costs.
The city should eliminate the Medicare Part B reimbursement to reduce the city's fiscal burden and address the projected budget deficit.
The city must implement premium-sharing for health insurance to control the rising costs that are projected to equal 80 percent of the city's budget deficit.
Key Data
40 percent
— Projected growth of health insurance costs between fiscal years 2013 and 2017.
80 percent
— Portion of the city's projected budget deficit that health insurance costs will equal in 2016.
$1.7 billion
— Estimated annual savings achievable by requiring employee and retiree contributions and eliminating Medicare Part B reimbursements.
$7 billion
— Projected cost of health insurance in 2016.
90 percent
— Portion of the city's workforce enrolled in health plans requiring no employee contribution.
New York State's fiscal year 2013-14 budget increased school aid by $1.1 billion, or 5.3%, exceeding the established cap tied to personal income growth. This distribution of funds, which includes $20.8 billion in formula-based aid, lacks sufficient targeting toward high-need districts and risks exacerbating future budget gaps.
Recommendations related to Budget Gaps
New York State should ensure that school aid allocations are more disciplined next year to improve its fiscal footing.
The state should prioritize highly targeted, substantial increases for the less affluent districts to meet pressing needs without supersizing the out-year budget gaps.
Key Data
$20.8 billion
— The amount allocated in formula-based aid for school year 2013-14.
$1.1 billion
— The total school aid increase for school year 2013-14.
5.3%
— The total percentage increase in school aid for school year 2013-14.
$7,760
— The average formula aid per pupil for school year 2013-14.
New York's proposal to allow local governments to pay fixed pension contribution rates instead of actuarially required amounts threatens the long-term financial health of pension funds by deferring necessary payments. This strategy risks creating future budget gaps that taxpayers will eventually have to cover, as it fails to provide meaningful, long-term fiscal relief.
Recommendations related to Budget Gaps
The New York State Teachers’ Retirement System Board should reject the Governor's proposal to allow local governments to opt into a “fixed rate” contribution plan to fund public employee pension obligations.
Local governments should pay pension benefit obligations when they are due rather than utilizing fixed rate plans that defer costs.
Key Data
94 percent
— The portion of pension liabilities covered by assets in 2010.
97 percent
— The TRS funded ratio in 2011, which declined from 100 percent in 2010.
6.6 percent
— The ten-year earnings average for pension investments.
1.1 percent
— The average five-year returns on pension investments.
12 percent
— The proposed fixed pension payment rate for members of the Employees’ Retirement System.
12.5 percent
— The proposed fixed pension payment rate for members of the Teachers’ Retirement System.
New York City's health insurance costs for public employees and retirees are projected to rise to nearly $7 billion annually by 2016, accounting for $1.5 billion of the city's projected $1.9 billion budget deficit. Implementing standard premium-sharing practices for employees and retirees could generate substantial savings, totaling $1.8 billion in fiscal year 2014 and rising to $2.2 billion by fiscal year 2016.
Recommendations related to Budget Gaps
City employees should contribute 10% for individual and 25% for family coverage to implement premium-sharing.
Retirees should pay for 50% of the premium to address unsustainable retiree health benefit costs.
Reimbursement for Medicare Part B should be phased out to reduce the city's fiscal burden.
Key Data
40%
— Projected growth of health insurance costs for New York City public employees and retirees by 2016.
$7 billion
— Projected annual cost of health insurance for New York City public employees and retirees by 2016.
$1.5 billion
— Portion of the 2016 budget deficit attributed to the growth in health insurance costs.
$1.9 billion
— Total projected budget deficit for New York City in 2016.
90%
— Percentage of the city's workforce enrolled in health plans that require no employee contribution.
$1.8 billion
— Potential savings from implementing premium-sharing in fiscal year 2014.
New York City's health insurance costs for employees and retirees are a major driver of projected budget gaps, with costs expected to grow by 39 percent to $6.6 billion by fiscal year 2016. Implementing premium-sharing for employees and retirees, along with eliminating Medicare Part B reimbursements, could generate up to $2.2 billion in annual savings by 2016 to help close these gaps.
Recommendations related to Budget Gaps
The City should implement premium-sharing for employees to align with private sector and other municipal government standards.
The City should require premium-sharing by retirees to reduce the taxpayer burden and address long-term financial obligations.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses to align with common practices among other public employers.
Key Data
$2.6 billion
— Projected budget gap for fiscal year 2016.
$1.8 billion
— Projected savings in fiscal year 2014 if premium-sharing and Medicare Part B reimbursement elimination recommendations are adopted.
$2.2 billion
— Projected savings in fiscal year 2016 if premium-sharing and Medicare Part B reimbursement elimination recommendations are adopted.
$280 million
— Potential annual savings from eliminating Medicare Part B reimbursement entirely.
$768 million
— Potential savings in fiscal year 2014 from a 50 percent contribution requirement by retirees.
The November 2012 program to eliminate the gap (PEG) aims to save $1.5 billion over two years to address structural budget deficits, yet relies heavily on non-recurring resources and fails to address escalating health insurance and debt service costs. With significant risks like potential labor settlements and hurricane recovery costs, additional rounds of budget cuts are likely necessary to close future gaps.
Key Data
$1.5 billion
— Total savings generated by the November 2012 program to eliminate the gap (PEG) over two years.
$4 billion
— Amount of non-recurring 'one-shot' resources used to close the $4.6 billion fiscal year 2013 budget gap.
$2.5 billion
— The projected budget gap for fiscal year 2014 that the Mayor's PEG aims to begin addressing.
$8.0 billion
— The cost of pension contributions, one of the large and growing expenditure items driving budget gaps.
$6.3 billion
— The cost of Medicaid, a major expenditure item contributing to the structural budget deficit.
$6.2 billion
— The cost of debt service, which continues to outpace revenue growth.
The Metropolitan Transportation Authority faces persistent budget deficits, necessitating a shift in revenue strategy to better align fare and toll income with operating costs. Implementing multi-year fare and toll increases, alongside structural changes to discount programs and pricing models, is essential to ensure long-term financial stability and service reliability.
Recommendations related to Budget Gaps
The MTA should ensure fare and toll decisions are made on a multi-year basis to provide predictability for system revenues and passengers.
Toll increases should be larger than currently proposed to ensure motor vehicle users pay a fair share of the system's costs.
Transit fares should yield a revenue increase greater than 7.5 percent annually in 2013 and greater than 15 percent in 2015 to address rising operating costs and deficits.
The MTA should "cap" the number of allowed rides for weekly and monthly passes to protect against fraudulent abuse.
The MTA should begin a more limited senior citizen discount policy and explore its eventual elimination to better target financial assistance.
Key Data
42 percent
— Current reliance on fare revenue.
13 percent
— Current reliance on cross subsidies from motor vehicle use.
7.5 percent
— Revenue increase called for in the 2013 financial plan.
50 cent
— Proposed increase for EZ Pass users on major bridges and tunnels.
25 percent
— Suggested discount percentage for senior citizens.
The Metropolitan Transportation Authority faces significant financial instability characterized by recurring operating deficits and a heavy reliance on borrowing for capital needs, which has led to a projected $3.6 billion deficit by 2016. To address these budget gaps, a "25-50-25" funding formula is proposed, allocating costs among motorists, transit riders, and taxpayers to ensure fiscal stability and adequate capital investment.
Recommendations related to Budget Gaps
The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
Motorists’ tolls and fees should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
The MTA should stop running large deficits and lower its future debt burden by funding regular replacement needs with operating revenues rather than borrowing.
Key Data
$17.1 billion
— Annual operating and financing expenditures of the MTA in 2012.
$3.6 billion
— Projected deficit in 2016.
$17.8 billion
— Cumulative unfunded OPEB liability as of the end of 2011.
$32 billion
— MTA debt outstanding in 2011.
$39 billion
— Projected MTA debt outstanding in 2015.
$2.6 billion
— Additional annual revenue provided by the 25-50-25 policy by 2016.
The Metropolitan Transportation Authority faces severe financial instability, with an estimated $2.7 billion deficit this year and even larger projected shortfalls in the coming years. To address these ongoing fiscal challenges, the agency must implement regular fare increases and continue cost-cutting measures, such as service adjustments, rather than relying on unsustainable accounting practices.
Recommendations related to Budget Gaps
Everyone—commuters, MTA employees, city and suburban residents, and elected officials—must face reality and contribute in some way to a long-term solution to the MTA's fiscal problems.
Periodic, predictable fare increases along with continued belt-tightening, including a trimmed service schedule, are unavoidable elements of a sensible solution.
The $29.5 million going for service restorations should be better justified.
Adjustments can be made to deploy buses in accord with shifting usage patterns.
Key Data
$2.7 billion
— Estimated deficit for the current year based on audited financial statements.
$1.8 billion
— Potential annual revenue loss if the court-invalidated payroll mobility tax decision is sustained.
$2.5 billion
— Annual deficit amount exceeded from 2008 to 2011.
16%
— Minimum percentage of annual expenses that deficits equaled from 2008 to 2011.
$136 million
— Combined loss to the 2013 and 2015 budgets caused by delaying planned fare hikes.
$47 million
— Unexpected cash surplus in 2012 based on immediate cash needs accounting.
The potential invalidation of the Payroll Mobility Tax in suburban counties would create a $459 million budget gap for the Metropolitan Transportation Authority, forcing a choice between significant service cuts or substantial fare increases for commuters. Maintaining current service levels on the Long Island Rail Road and Metro-North Railroad requires consistent funding, as passenger fares cover less than half of their operating expenses.
Key Data
$459 million
— The hole in the MTA budget in 2012 if the Payroll Mobility Tax is not collected in suburban counties.
$1.4 billion
— The amount raised for the MTA by the Payroll Mobility Tax in 2011.
$1.6 billion
— The cost to operate the Long Island Rail Road in 2012.
$1.3 billion
— The expenses for the Metro-North Railroad in 2012.
16%
— The expenditure cuts required for the Long Island Rail Road to address the lost revenue.
15%
— The expenditure cuts required for the Metro-North Railroad to address the lost revenue.
Local governments in New York are increasingly resorting to borrowing to cover separation costs like accrued sick leave and vacation days, a practice that threatens long-term fiscal health by creating unfunded liabilities. To address these budget gaps and prevent future shortfalls, municipalities should be required to fund these obligations and establish reserves rather than relying on ad hoc debt.
Recommendations related to Budget Gaps
State officials should develop alternatives to borrowing to cope with the underlying problem of accrued liabilities for separation costs.
Localities should implement preventive policies, such as not allowing the lifetime accrual of vacation days.
Localities should implement tighter limits on the amount of unused sick leave that can be converted to cash payments.
Towns, cities, and villages should be required to fund at least partially their accrued liabilities for separation costs.
The Legislature should allow borrowing only on the condition of future requirements to build adequate reserves.
The State should establish standards for funding more adequately future separation costs and OPEB liabilities among all localities and the State itself.
Key Data
$1.8 million
— Separation costs generated by the retirement of six police officers in the city of Glen Cove.
4%
— Portion of Glen Cove's $46.6 million annual budget consumed by separation costs for six retiring police officers.
$3.9 billion
— New York City's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$83.9 billion
— New York City's other post-employment benefits (OPEB) liability at the end of the 2011 fiscal year.
$1.2 billion
— New York State's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$10.6 billion
— New York State's other post-employment benefits (OPEB) liability at the end of the 2011 fiscal year.
NY1 For the past five years, City Hall has cut from the budget because it says it can't afford those programs. Those cuts are based on complicated revenue forecasts done by City Hall and others.
The New York City Health and Hospitals Corporation faces significant fiscal instability as expenses outpace revenues and anticipated Medicaid funding remains uncertain. Despite existing cost-cutting measures, the corporation projects large operating deficits through 2016, necessitating more efficient service delivery or potential service reductions to address the widening budget gap.
Recommendations related to Budget Gaps
The Health and Hospitals Corporation must redouble its efforts at delivering services more efficiently to avoid a dramatic reduction in services for needy residents.
HHC should prepare for steeper expenditure reductions and layoffs if the current gap-closing plan fails to achieve its savings goals.
HHC must develop a more realistic plan because the current strategy does not fully close the projected budget gaps.
Key Data
$1.6 billion
— Annual revenues expected from special Medicaid supplementary payments that may be in jeopardy.
$1.7 billion
— Projected operating deficit for the fiscal year 2016.
$218 million
— Reduction in personal service expenditures achieved by trimming the full-time employee headcount.
2,500
— Number of full-time employees cut from the headcount between 2009 and early 2012.
$911 million
— Projected cash-defined operating deficit in fiscal year 2016 if unspecified gap-closing items fail to materialize.
New York City faces a new fiscal reality where the era of large, unanticipated tax revenue surpluses has ended, forcing reliance on temporary one-shot resources to balance the budget. To address future deficits, the city must move beyond short-term fixes and consider structural changes, such as reforming generous health insurance policies for municipal employees and retirees.
Recommendations related to Budget Gaps
The Mayor and the City Council should tackle spending arrangements that drive budget growth and out-year deficits.
The City should reform the generous health insurance policies for municipal employees and retirees, as this may be unavoidable if revenue surpluses disappear.
The City should avoid relying on temporary, non-recurring resources to balance the budget, as these are only temporary solutions.
Key Data
$5.3 billion
— Unanticipated tax revenues reached this high in fiscal year 2007.
$114 million
— Fiscal year 2012 tax collections are running this amount above the initially budgeted sum.
$42.2 billion
— Total tax revenues for fiscal year 2012.
$7 billion
— Wall Street profits are running this amount below what was assumed when the budget was adopted.
$1 billion
— Revenue from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— Revenue from the retiree health insurance trust fund used to balance the fiscal year 2013 budget.
New York City's historical reliance on unanticipated tax revenue surpluses to balance its budget has ended, as recent collections are now on target rather than exceeding expectations. To address this shift and manage the budget, the city is increasingly relying on temporary, one-shot resources like asset sales and trust fund transfers rather than recurring revenue.
Recommendations related to Budget Gaps
The Mayor and the City Council must consider fundamental changes in the City’s budget if large unanticipated tax revenues are no longer a recurring part of the annual budget process.
Key Data
$5.3 billion
— The high of unanticipated tax revenues reached in fiscal year 2007.
$114 million
— The amount fiscal year 2012 tax collections are running above the initially budgeted sum.
$7 billion
— The amount Wall Street profits are running below what was assumed when the budget was adopted.
$1 billion
— Revenues from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— Revenues from the retiree health insurance trust fund used to balance the fiscal year 2013 budget.
The Metropolitan Transportation Authority faces significant budget gaps and must balance the need for fair worker compensation with the financial reality of its precarious fiscal position. To avoid further fare hikes or service cuts, any wage increases for transit workers should be limited to a "net-zero" approach, funded by productivity-enhancing work rule changes and increased employee contributions to health care costs.
Recommendations related to Budget Gaps
Awarding “net-zero” wage increases is fair and appropriate given the current economic climate, the fiscal outlook of the MTA, the burdens recently placed upon riders, and the high relative and overall compensation level of TWU employees.
The award should include work rules changes that will produce savings that allow for enhanced maternity benefits and the accelerated installation of clear partitions for buses.
A more ambitious award could provide for small wage increases, not to exceed inflation, funded by additional productivity concessions or added employee responsibility for health insurance costs.
A greater priority should be placed on the safety of TWU employees and on accelerating the installation of the clear bus partitions.
Key Data
$720 million
— Projected savings from the MTA's wide-scale efficiency program in 2012.
$42 million
— Estimated cost increase for each one-point wage increase awarded to the TWU.
$92.4 million
— Projected budget gap in 2012 if wage increases are granted in line with inflation.
$1.4 billion
— Total revenue expected to be raised from fare increases by 2015.
New York's public pension costs are among the highest in the nation, creating significant fiscal pressure that threatens the long-term sustainability of public services. Implementing reforms such as increasing the retirement age, barring overtime from pension calculations, and offering 401(k)-style plans could save taxpayers an estimated $123 billion over the next 30 years.
Recommendations related to Budget Gaps
The state should reform and modernize pension benefits for new employees by offering a 401(k)-style option.
Future employees who opt for the traditional defined benefit plan should contribute between 3% and 6% of their paychecks toward their pensions.
The retirement age for new employees should rise from 62 to 65 to be consistent with national trends.
Overtime should be barred from pension calculations for new employees.
New employees should be given the opportunity to enroll in a 401(k)-style plan as an alternative to traditional pensions.
Key Data
$574
— Amount New Yorkers pay per person per year in taxes for public employee pensions, which is more than twice the national average.
$2.4 billion
— New York City's pension costs in FY 2004, which are expected to reach $8.6 billion by FY 2014.
$314 million
— MTA pension costs in FY 2004, which are projected to rise to $1 billion by FY 2014.
30%
— Percentage of the MTA payroll that pension costs will total by FY 2014 without reform.
19%
— Percentage of fare and toll revenue that pension costs will total by FY 2014 without reform.
$123 billion
— Estimated savings for taxpayers throughout New York State over the next 30 years if proposed pension changes are implemented.
New York City utilizes multiple, conflicting accounting standards to define a balanced budget, which obscures the city's true financial health and allows for reported surpluses of $5 million while masking actual deficits of $9.6 billion under more rigorous GAAP standards. Adopting a more comprehensive accounting framework is necessary to ensure that current spending does not unfairly burden future generations with debt and unfunded liabilities.
Recommendations related to Budget Gaps
New York City should abandon its unique set of accounting rules that allow operating expenses to be labeled as capital investments paid for with borrowed funds.
New Yorkers should give much more attention to the financial results disclosed under the new GAAP rules to better understand the city's true financial condition.
Municipal leaders should adopt a new standard for local financial management, similar to the seven-year timeline used during the 1970s fiscal crisis, to move toward a more meaningful balanced budget.
The city should utilize the GAAP-based definition of a balanced budget as the appropriate framework for determining whether current residents are imposing a burden on future New Yorkers.
Key Data
$9.6 billion
— The deficit reported in fiscal year 2011 under the new GAAP standard.
$282 million
— The deficit the city would have faced in fiscal year 2011 if GAAP were strictly applied.
$5 million
— The surplus reported in the General Fund for fiscal year 2011 based on the city's special exemption.
$53.3 billion
— The added expense recognized in fiscal year 2006 when the accumulated liability for retiree health insurance was first reported.
$881.7 million
— The operating deficit reported in the fiscal year 2000 Statement of Activities.
Municipal union agreements intended to prevent layoffs have largely relied on one-time revenue sources and risky budget maneuvers rather than structural concessions, leaving the city vulnerable to future fiscal instability. Implementing long-term reforms, such as eliminating the Absent Teacher Reserve and requiring employee health insurance premium contributions, is necessary to achieve recurring savings and address persistent budget gaps.
Recommendations related to Budget Gaps
The city should eliminate the Absent Teacher Reserve (ATR) altogether to achieve recurring savings.
The city should revise employee health insurance arrangements by requiring all employees to make premium co-payments of 10 percent for individual and 25 percent for family health coverage.
Key Data
$315 million
— Budgeted savings from 4,600 teacher layoffs.
$60 million
— Savings generated from UFT concessions.
$255 million
— Funding from City resources used to prevent teacher layoffs.
$16 million
— Reported savings from the District Council 37 agreement.
$29 million
— Previously budgeted savings from eliminating 665 positions.
$625 million
— Potential savings from health insurance premium co-payments in fiscal year 2012.
New York City's fiscal plan for 2012 avoids immediate service cuts but fails to address the structural spending growth in health insurance, pensions, and debt service that drives recurring budget deficits. Consequently, the city faces a projected $4.8 billion budget gap for 2013 and will continue to experience service reductions and layoffs unless these long-term cost drivers are reformed.
Recommendations related to Budget Gaps
The City’s leaders must work with the Municipal Labor Committee to reform health insurance arrangements to lower taxpayer costs and give workers a stake in containing future premium increases.
Adopting a premium-sharing arrangement similar to that of most New York State employees—10 percent for individual and 25 percent for family coverage—would produce $625 million in savings beginning in 2012.
Requiring retirees under age 65 to pay 50 percent of their health insurance premium would generate about $700 million in savings.
Eliminating the Medicare Part B reimbursement for retirees over age 65 would save an additional $250 million.
The City Council should join the Mayor in backing the pension reform bill that has been introduced by the Governor to adjust eligibility and benefits for future employees.
The Mayor and City Council should make slowing the growth of debt service a higher priority by downsizing the capital budget to focus on essential infrastructure.
Key Data
$4.8 billion
— Projected budget gap for fiscal year 2013.
$23.1 billion
— Projected spending on health insurance, pension contributions, and debt service in 2015.
$30 billion
— Total savings from pension reform over the next 30 years.
$5.4 billion
— Projected spending reduced by agencies since 2008.
9,450
— Number of positions included in the Executive Budget proposal for elimination.
$521 million
— Net spending added in the final budget agreement.
New York City can avoid proposed layoffs and service cuts in the fiscal year 2012 budget by reforming health insurance arrangements for employees and retirees. Implementing premium sharing for current employees, requiring retiree contributions, and ending Medicare Part B premium reimbursements could generate over $1.5 billion in savings.
Recommendations related to Budget Gaps
Institute health insurance premium sharing for current employees at 10 percent for individual coverage and 25 percent for family coverage.
Require retirees to pay 50 percent of their premium cost.
End reimbursement of Medicare Part B premiums.
Key Data
$1.5 billion
— Total potential savings for the City in fiscal year 2012 from proposed health insurance reforms.
$600 million
— Savings in fiscal year 2012 from adopting premium sharing requirements for current employees.
$700 million
— Savings in fiscal year 2012 from requiring a 50 percent premium contribution by retirees.
$250 million
— Savings in fiscal year 2012 from ending the reimbursement of Medicare Part B premiums for retirees.
New York's pension costs have quadrupled in New York City since 2002, creating significant fiscal pressure that forces difficult choices regarding layoffs and funding for other essential services. Structural reforms to the pension system, including increasing the retirement age and adjusting contribution requirements, are necessary to ensure long-term fiscal sustainability and protect the solvency of pension funds.
Recommendations related to Budget Gaps
The state should increase the retirement age to 65 to align with Medicare eligibility and reduce the length and cost of benefit payouts.
The state should raise required employee contributions to 6 percent for their entire length of service to bring them closer to national norms.
Pension benefits should be calculated based on the highest five years of earnings rather than the highest three years.
The state should cap maximum eligible wages at $179,000 for the purpose of calculating pension benefits.
The state should exclude overtime pay from the earnings used to calculate pension benefits to prevent pension padding.
The state should implement an "anti-spiking cap" to exclude extraordinary increases in income in any single year from pension calculations.
Key Data
$1.5 billion
— The cost of pension contributions in New York City in 2002.
$7 billion
— The cost of pension contributions in New York City in 2011.
$8.7 billion
— The projected cost of pension contributions in New York City in 2015.
$93 billion
— The projected savings for state and local governments over 30 years from the proposed pension changes.
$30 billion
— The projected savings for New York City over 30 years from the proposed pension changes.
9 to 1
— The ratio of employer contributions to employee contributions in the current pension system.
New York City faces a $4.7 billion budget gap that threatens essential services like education and fire protection, yet the city could avoid these cuts by reforming its unusually costly retiree health insurance benefits. By ending Medicare Part B reimbursements, increasing vesting requirements, and implementing premium-sharing for retirees, the city could generate $950 million in savings to preserve the Retiree Health Insurance Trust and protect city services.
Recommendations related to Budget Gaps
The city should end reimbursement for Medicare Part B premiums to bring its policies in line with the public-sector norm.
The city should increase vesting requirements for the rest of the city workforce, similar to the change made for teachers in 2009.
The city should require retirees to share in the cost of their premiums, as New York state has required since the 1980s.
Key Data
$4.7 billion
— The size of the lingering budget gap facing the city.
$70 billion
— The amount of the city's existing unfunded retiree health-insurance liability.
$1.2 billion
— The total amount of withdrawals elected officials have already made from the Retiree Health Insurance Trust to help close budget deficits.
$950 million
— The combined value of savings from proposed retiree health insurance reforms.
$250 million
— The savings generated in fiscal year 2012 by ending reimbursement for Medicare Part B premiums.
$700 million
— The savings generated in 2012 if retirees paid half of their health insurance premiums.
The Metropolitan Transportation Authority faced significant fiscal challenges, including a 2009 operating deficit of over $300 million and projected budget gaps reaching nearly $1.2 billion by 2013. To address these shortfalls, the agency implemented service cuts and efficiency measures, such as a "net-zero" wage policy, aimed at achieving total recurring savings of $935 million by 2014.
Recommendations related to Budget Gaps
The MTA should conform to practices for direct state government employees with respect to a new pension tier.
The MTA should conform to practices for direct state government employees with respect to cost sharing for health insurance premiums.
The MTA should explore practices in Chicago to identify new efficiency initiatives for subways.
The MTA should prioritize efficiency improvements for its two large bus systems.
The MTA should prioritize efficiency improvements for its two commuter railroads.
The MTA should focus on non-vehicle operations in the subway system as a substantial area for improvement.
Key Data
$300 million
— The operating budget deficit the MTA ended with in 2009.
$400 million
— The projected budget gap for the MTA at the beginning of 2010.
$1.2 billion
— The projected budget gap for the MTA in 2013.
$100 million
— The projected annualized savings from service cuts that took effect in June 2010.
$525 million
— The expected recurring savings from efficiency measures and service cuts.
$935 million
— The total savings identified for the MTA in 2014.
New York State's budget, which includes a $10 billion gap-closing measure, implemented school aid cuts that disproportionately favored wealthier districts over those with greater needs. Lawmakers should re-examine school aid distribution formulas to ensure future allocations are sustainable and equitable.
Recommendations related to Budget Gaps
The State should reopen the basic formulas by which school aid is distributed to improve their targeting if it can no longer keep promises made in 2007.
Lawmakers should undertake a serious examination of how best to achieve sustainable and equitable allocations of school aid going forward.
Key Data
$10 billion
— The size of the budget gap that necessitated school aid cuts.
$1.5 billion
— The amount of school year to school year cuts proposed by the Governor.
$608 million
— The amount of federal aid not included in the enacted budget school aid totals, which lowered the starting point for cuts.
$67
— The average restoration of school aid per pupil statewide.
2.3 percent
— The percentage of State aid restored to the top wealthiest decile of school districts.
0.7 percent
— The percentage of State aid restored to the poorest decile of school districts.
New York City faces a budget gap for fiscal year 2012 that relies on $600 million in state aid, prompting calls to withdraw funds from the retiree health insurance trust fund to cover deficits. Instead of depleting this reserve, the city should implement structural reforms like eliminating Medicare Part B reimbursements and requiring retiree premium sharing to generate recurring savings.
Recommendations related to Budget Gaps
The City should eliminate reimbursement of Medicare Part B premiums to generate recurring savings.
The City should pursue more general reform of retiree health insurance by increasing vesting requirements and instituting premium sharing.
The trust fund should be protected from any further drawdowns, including the ones already scheduled for the current and subsequent fiscal years.
The City should require retirees to share the cost of their premiums to generate greater savings.
Key Data
$600 million
— State action required to close the budget gap for fiscal year 2012.
$1.2 billion
— Amount the City is planning to withdraw from the retiree health insurance trust fund for general budget relief.
$70 billion
— The unfunded accrued liability for retiree health benefits.
$240 million
— Savings generated in the current year by eliminating reimbursement of Medicare Part B premiums.
$620 million
— Savings in the current year if retirees paid for half the cost of their premiums.
$975 million
— Combined value of savings in fiscal year 2012 from eliminating Medicare Part B reimbursement and implementing premium sharing.
New York's Medicaid Redesign Team has proposed a package of reforms, including a program-wide spending cap and provider payment reductions, aimed at achieving $2.85 billion in savings to help address projected budget gaps. These measures seek to control long-term cost growth while maintaining care quality, though long-term success depends on further structural reforms to provider payment methods and utilization controls.
Recommendations related to Budget Gaps
The state should ensure the effective savings measures are implemented speedily to help close budget gaps.
The state should test the new program-wide spending cap carefully in the coming year to ensure it effectively controls Medicaid expenditures.
Policymakers should pursue future efforts to reverse the new assessments that increase the cost of care.
Future savings strategies will require broad changes in the way providers are paid to align with the spending cap.
The state must undertake greater efforts to limit excessive utilization through managed care and other new controls to achieve long-term savings.
Key Data
$2.85 billion
— Total savings target for the Medicaid Redesign Team package.
$440 million
— Combined savings in the next fiscal year from cutting base rates by 2 percent.
$178 million
— Combined savings from two proposals that reduce premium rates for managed care organizations.
$100 million
— Savings in fiscal year 2011-12 from limiting payments to Certified Home Health Agencies.
$57 million
— Estimated annual savings from restricting personal care services in New York City.
$39 million
— Estimated savings in fiscal year 2011-12 from the Medicaid Inspector General assuming responsibility for estate recovery.
New York State and City could address significant budget gaps by eliminating the reimbursement of Medicare Part B premiums for retirees, a costly fringe benefit rarely offered by other public or private employers. New York City alone spent $213 million on these reimbursements in fiscal year 2010, with costs projected to rise to $312 million by 2014.
Recommendations related to Budget Gaps
Eliminate the public employee fringe benefit of reimbursement for Medicare Part B premiums to offer immediate and meaningful budget savings.
Increase premiums for retiree health insurance by both the State and the City to 50 percent of the cost to relieve the burdens of rampant cost escalations.
Key Data
$20 million
— Minor relief provided by the State's limitation of reimbursements to 90 percent for individual coverage and 75 percent for family coverage.
$140 million
— Total costs of Medicare Part B reimbursements in New York State in fiscal year 2010.
$213 million
— Total costs of Medicare Part B reimbursements in New York City in fiscal year 2010.
$312 million
— Projected cost of Medicare Part B reimbursements in New York City by 2014.
New York City's reliance on one-time revenue sources and funding shifts to close the fiscal year 2011 budget gap delays necessary structural changes, leaving the city vulnerable to deeper service cuts in the future. Without implementing reforms to address rising employee health insurance and pension costs, the city faces a projected $1 billion gap in fiscal year 2012 that will likely require significant headcount reductions and service cuts.
Recommendations related to Budget Gaps
The City must implement reforms to reduce employee health insurance costs to avoid harmful service cuts in future budget gaps.
The City must implement reforms to reduce pension costs to avoid harmful service cuts in future budget gaps.
Key Data
$4.5 billion
— The looming fiscal year 2012 budget gap that the city is attempting to close.
$585 million
— The total value of the fiscal year 2011 program to eliminate the gap (PEG).
$369 million
— The amount of the fiscal year 2011 PEG derived from revenue actions, representing 63 percent of the total.
$1 billion
— The proposed total program to eliminate the gap for fiscal year 2012.
$350 million
— The amount of expenditure cuts to education included in the fiscal year 2012 budget plan.
8,264
— The total headcount reduction projected for fiscal year 2012.
New York faces a $9 billion projected budget deficit, driven in part by rapidly rising public employee retirement costs that have grown from $100 million to nearly $1.5 billion in a decade. To protect the ability to provide essential public services, the state must control these retirement benefit costs, which include significant taxpayer-funded health insurance liabilities and pension calculations that include overtime.
Key Data
$9 billion
— Projected budget deficit for New York state for the upcoming year.
$1.5 billion
— Current annual cost of state pension contributions.
$56 billion
— Unfunded liability for state retiree health insurance benefits.
$33,100
— Average pension received by newly retired employees.
$61,295
— Average pension received by police and firefighters who retired in 2009.
$25,440
— Average pension received by regular civilian employees who retired in 2009.
New York faces a $9 billion projected state budget gap, driven largely by Medicaid spending that is the highest in the nation. To address this, the state must restructure the Medicaid system to lower costs and improve outcomes, specifically targeting exorbitant care costs rather than just fraud or limited services.
Recommendations related to Budget Gaps
Gov. Cuomo should create a multiyear plan that addresses the problem of excessive spending on Medicaid by restructuring the system to provide better health-care outcomes and lower costs.
The state needs to bring down the cost of care where it is exorbitant to meet its obligations to the neediest New Yorkers without slashing other public services.
New York should use rates and utilization as the levers to bring its Medicaid costs under control.
The state should address the number of people enrolled, the payment rates to providers, and the extent to which the services are utilized in order to contain costs.
Key Data
$9 billion
— Projected gap in the state budget when the governor takes office.
$50 billion
— Annual cost of Medicaid in New York.
$2,283 vs. $1,026
— New York's per-capita Medicaid spending compared to the national average.
14 percent
— Portion of all Medicaid spending in the nation that occurs in New York.
72 percent
— Portion of Medicaid dollars consumed by elderly or disabled enrollees.
$12.5 billion
— Annual cost of long-term care for the elderly and disabled.
New York faces an $8 billion budget gap for the upcoming fiscal year, prompting a proposal to lay off 898 state workers and leave 1,102 positions unfilled. Rather than layoffs, the state could achieve equivalent savings by increasing employee premium sharing for family health insurance plans from 25 to 30 percent, which would save $79 million annually.
Recommendations related to Budget Gaps
Reducing the cost of health insurance and retiree benefits is a preferable option to layoffs to address the budget gap, as it would save money and prevent further deterioration of state services.
Increasing employee premium sharing for family health insurance plans from 25 to 30 percent would save $79 million annually, providing the equivalent savings of laying off 898 workers.
Key Data
$8 billion
— The projected budget gap for the new fiscal year beginning April 1, 2011.
$79 million
— The annual savings from increasing employee premium sharing for family health insurance plans from 25 to 30 percent.
898
— The number of state workers Governor Paterson announced plans to lay off.
29 percent
— The growth in full-time equivalent employment at SUNY, CUNY, and the Judiciary since the end of fiscal year 1989-90.
New York City's municipal union welfare funds receive $1 billion in annual taxpayer contributions, yet suffer from poor management, insolvency risks, and inefficient administrative structures. Consolidating these benefits under the City's health insurance program and implementing a centralized cafeteria plan for non-health benefits could generate approximately $146 million in annual savings.
Recommendations related to Budget Gaps
Consolidate supplementary health care benefits under the City's health insurance plan to replace inefficient, multiple welfare funds with a standard set of benefits.
Provide non-health-related benefits through a centralized cafeteria plan to achieve meaningful economies of scale.
Improve accountability for any remaining union welfare fund expenditures by expanding the Comptroller's authority to oversee and sanction funds that do not meet performance standards.
Key Data
$146 million
— Estimated annual savings from consolidating supplementary health care benefits under the City's health insurance program.
$1 billion
— Annual taxpayer contributions to municipal union welfare funds.
8 to 16 percent
— Portion of current welfare fund expenditures that go toward non-health-related benefits.
4 to 7 percent
— Average annual increase in payments to municipal union welfare funds, which has far exceeded inflation.
48
— Number of the 70 analyzed funds cited for excessive administrative costs, high reserve levels, or signs of insolvency.
Granting formula budgets to city agencies restricts fiscal flexibility, making it harder to manage spending during periods of revenue decline. Maintaining annual budgetary discretion allows elected officials to allocate funds based on current needs rather than locking in expenditures that complicate efforts to achieve budget balance.
Recommendations related to Budget Gaps
The Charter Revision Commission should reject establishing formula budgets for any City agencies or offices besides the Independent Budget Office (IBO) to maintain fiscal prudence and an open budget process.
The City should maintain the current budgetary discretion exercised annually by the mayor and the council to ensure funding levels are based on specific needs in a given year.
Key Data
10%
— Minimum annual budget allocation guaranteed to the Independent Budget Office (IBO) from the approved budget of the Office of Management and Budget (OMB).
12.5%
— Increased formula budget allocation for the IBO following state legislation regarding mayoral control of public schools.
two-thirds
— Estimated portion of California’s general fund revenues earmarked for specific purposes according to a 2002 report.
one-third
— Portion of the California budget over which the state actually has discretionary control due to mandatory spending definitions.
New York City spends $1 billion annually on union welfare funds, which suffer from limited accountability and inefficient management. Consolidating these benefits under the City's health insurance plan and implementing a centralized cafeteria plan could generate significant annual savings to help close the City's budget gaps.
Recommendations related to Budget Gaps
The City should consolidate supplementary health care benefits under the City’s health insurance plan to achieve economies of scale and reduce administrative costs.
The City should provide non-health related benefits through a centralized cafeteria plan to allow for individual selection and achieve economies of scale.
The City should improve accountability for any remaining union welfare fund expenditures by setting new standards for administrative costs and reserve requirements.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$146 million
— Total estimated annual gain from consolidating benefits and administrative savings.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$90 million
— Estimated savings from using formularies for pharmaceutical benefits.
$135 million
— Total annual benefits savings.
$117 million
— One-time payment from the Health Stabilization Fund in fiscal year 2010.
New York City's capital planning process often fails to account for the full cost of maintaining infrastructure, resulting in a $2.8 billion funding gap for achieving a state of good repair. To address these fiscal challenges, the City should implement systematic replacement cycles funded through the operating budget and prioritize capital projects based on rigorous economic analysis.
Recommendations related to Budget Gaps
All agencies would benefit from a plan for maintaining and improving infrastructure that reflects the long-term strategic perspective embodied by PlaNYC.
The City should develop a systematic plan to eliminate deferred maintenance and bring all its capital assets and infrastructure systems to a state of good repair.
The City should place all its capital assets on regular replacement cycles according to their useful lives.
The City should also allocate funds in its operating budget for regular replacement.
New, large capital projects should be selected based on a clear set of priorities rooted in the ability to provide a higher or more efficient level of service, or in terms of providing a high rate of return on the investment of public funds.
Key Data
$2.8 billion
— The funding gap for achieving a state of good repair for assets covered by the Asset Information Management System.
$3.0 billion
— The depreciation of the City's major assets in fiscal year 2007 based on historical cost.
$4.9 billion
— The estimated depreciation of the City's major assets in fiscal year 2007 when based on replacement cost.
$6.5 billion
— The amount of unanticipated revenues the City had in fiscal year 2007 above those budgeted in its financial plan.
$24 billion
— The total value of new capital investments to be pursued by the City in the next ten years.
New York City's fiscal year 2011 budget relies on $3.6 billion in surplus funds to achieve balance, masking the reality that expenditures are growing and will exceed revenues by $4.6 billion in fiscal year 2012. To address looming budget gaps, the city must move beyond cutting agency programs and instead reform public employee fringe benefits and scale back the $43.5 billion capital commitment plan.
Recommendations related to Budget Gaps
The City should require employee contributions to health care premiums of 10 percent for individuals, 25 percent for families and 50 percent for retirees to save over $1 billion annually.
The City should reform public employee health care and retirement benefits to bring them more in line with the private sector.
The City should scale back the capital commitment plan to focus on key priorities like state-of-good-repair work on aging infrastructure rather than less urgent development projects.
Key Data
$4.6 billion
— Projected gap in fiscal year 2012 where expenditures will exceed revenues.
$3.6 billion
— Surplus from fiscal year 2010 used to balance the fiscal year 2011 budget.
$43.5 billion
— Total capital commitment plan for fiscal years 2010-2014.
$13.4 billion
— Record-high capital commitments in fiscal year 2010.
$1 billion
— Recurring savings achieved in agency spending in the fiscal year 2011 budget.
$231.7 million
— Amount of proposed budget cuts restored by the City Council.
New York City's long-standing requirement to maintain a balanced budget according to Generally Accepted Accounting Principles (GAAP) should be upheld, with any requested deferrals for new accounting standards limited to a single year. The city must prioritize addressing remediation expenditures within its existing budget process rather than seeking exemptions that undermine financial transparency and sound management practices.
Recommendations related to Budget Gaps
The Board should make clear on the public record that any deferral of accounting standards will be temporary and not a permanent or long-term exemption.
The Board should explicitly state that the Financial Control Board supports the application of all current GAAP requirements.
Any deferral granted for compliance should be as brief as is necessary and practical, specifically limited to one year.
The City and the Financial Control Board should continue to accept GASB rules as the basis for defining a balanced budget.
The City should use its budget process to address the difficult tradeoffs among multiple services to taxpayers rather than avoiding compliance with accounting standards.
New York City faces a challenging fiscal landscape requiring structural reforms to public employee benefits and a reduction in the capital program to manage debt service costs. By implementing higher employee health insurance contributions and pension reforms, the City could generate significant savings to address deficits and avoid service reductions.
Recommendations related to Budget Gaps
The Council should support the Mayor’s efforts to bargain with municipal labor unions for contributions to health insurance premiums.
The Council should lobby the State Legislature for pension reform.
The City should reject the depletion of the retiree health insurance trust fund, reserving those funds for their original purpose.
The City should downsize the capital program to lower debt service costs.
The Council should support reforming the pension package for new employees to require greater employee contributions and a longer vesting period.
Key Data
$1.3 billion
— Recurring expenditure savings included in the program to eliminate the budget gap.
$3.8 billion
— The projected deficit in fiscal year 2012.
$65 billion
— The accrued future liability associated with retiree health benefits.
$43.5 billion
— The total capital commitment plan for fiscal years 2010-2014.
815 percent
— The growth in pension costs between fiscal years 2000 and 2009.
$13.4 billion
— The record high capital commitments for the current year.
New York State faces significant fiscal challenges, with legislative budget proposals relying on speculative revenue and excessive borrowing rather than necessary spending cuts. To avoid catastrophic future deficits, state leaders must prioritize achieving the $5.1 billion in spending reductions proposed in the Executive Budget and reject overly optimistic revenue claims.
Recommendations related to Budget Gaps
State leaders must achieve the full $5.1 billion worth of spending reductions in the Executive Budget.
The final budget deal must drop the overly optimistic claims regarding high fraud recoveries and tax collection on Indian Reservations.
The state must reduce the borrowing total for the year to well under the Ravitch Plan's $2 billion maximum.
The Governor must ensure that reforms in the Ravitch Plan, specifically a balanced budget requirement and better accounting, accompany any agreed-upon borrowing.
State leaders should include school aid and health care as part of the solution for balancing the budget.
Key Data
$5.1 billion
— The total amount of spending reductions in the Executive Budget that should be achieved.
$3.3 billion
— The projected increase in employee compensation over the four-year term of the financial plan.
$2 billion
— The amount of deficit financing proposed in the Lt. Governor's five-year fiscal plan.
10 percent
— The increase in all funds spending that occurred last year.
2 percent
— The reduction in per pupil spending proposed in the Executive Budget.
New York City can avoid laying off 18,000 employees by implementing five policy changes, including adjusting health insurance contributions, increasing work hours for civilian staff, and reforming pension and overtime management. These measures would generate nearly $2 billion in annual savings, preventing service reductions despite state funding cuts.
Recommendations related to Budget Gaps
The city should share costs for health insurance premiums by requiring 10% contributions from workers, 25% from dependents, and 50% from retirees.
The city should adopt a 40-hour workweek for the 70,000 civilian municipal employees currently working fewer hours.
The city should create a new pension tier for future workers to reduce long-term costs.
The city should better manage overtime by replacing reliance on overtime with workers on regular schedules.
The city should stop paying teachers who do not teach by speeding up the review process for those in the Absent Teacher Reserve.
Key Data
$2 billion
— Total annual savings from the five proposed policy changes.
18,000
— Number of city employees, including teachers, police, and firefighters, facing potential layoffs.
$3.4 billion
— Annual health insurance bill for taxpayers.
$7.1 billion
— Amount the city must contribute to pension funds next year.
$1 billion
— Amount spent on overtime by the city last year.
$100 million
— Annual cost of paying roughly 2,000 teachers who are not assigned to a classroom.
Mayor Bloomberg's preliminary budget for fiscal years 2010 through 2014 addresses a $4.1 billion gap primarily through a combination of revenue increases, agency spending cuts, and union contract negotiations. While the plan avoids broad tax increases, it relies on optimistic revenue projections and raises concerns regarding the realism of state aid assumptions, the exemption of the Department of Education from cuts, and the continued diversion of funds from the Retiree Health Benefits Trust.
Recommendations related to Budget Gaps
The City needs to develop a realistic plan for how to deal with inevitable cuts in State aid rather than relying on contingency plans that assume no aid reduction.
The City should reconsider the decision to divert money from the Retiree Health Benefits Trust and instead adopt a policy that links withdrawals to growth in the current year liability for retiree health insurance premiums.
The City should evaluate whether the Department of Education's exemption from staff reductions is justified given the current difficult fiscal situation.
Key Data
$4.1 billion
— The size of the budget gap for fiscal year 2010-11 that the City must close.
$1.3 billion
— The estimated fiscal year 2011 impact of the Executive Budget loss in State aid.
$1,149 million
— The total amount scheduled to be diverted from the Retiree Health Benefits Trust to balance operating budgets in fiscal years 2010 through 2012.
4,286
— The number of jobs to be eliminated by the end of fiscal year 2011 under the Agency Program.
New York State faces a $6.7 billion budget deficit for the 2010-11 fiscal year, which is projected to grow to $12.2 billion by 2013-14 without further action. The Governor's proposal attempts to address this through spending controls and revenue initiatives, though more structural reforms are necessary to achieve long-term fiscal balance.
Recommendations related to Budget Gaps
The Legislature should move the State's finances toward structural balance by embracing the Governor's proposal for real and recurring spending reductions.
The State must address unsustainable growth in school aid and Medicaid spending, which comprise 40 percent of State operating funds.
Policymakers should avoid relying on nonrecurring gap-closing measures, such as one-shots, to solve long-term fiscal problems.
Key Data
$6.7 billion
— The size of the budget hole facing the State in the 2010-11 fiscal year.
$12.2 billion
— The projected budget gap for fiscal year 2013-14 even if all of the Governor's proposals are adopted.
$4.6 billion
— The amount of spending control initiatives proposed by the Governor to fill the budget hole.
$565 million
— The amount of one-shots proposed in the executive budget to close 8.4 percent of the budget gap.
New York City's projected $4.1 billion budget gap may be smaller than expected due to higher tax revenues, but the budget relies on risky one-shot measures and fails to account for $200 million in new pollution-remediation expenses. The city must prioritize structural cost-cutting rather than using temporary revenue gains to avoid necessary fiscal discipline.
Recommendations related to Budget Gaps
The city should avoid one-shot measures such as the $395 million drawdown from a retiree health insurance trust fund.
The city must not use additional tax revenue as an excuse to avoid needed cost-cutting.
The city should recognize mandated items such as the $200 million in new pollution-remediation operating expenses previously capitalized.
Key Data
$4.1 billion
— The currently projected budget gap for New York City.
$395 million
— The amount of the drawdown from a retiree health insurance trust fund used as a one-shot measure.
$200 million
— The amount of new pollution-remediation operating expenses that the budget fails to recognize.
$500 million
— The amount of future concessions from labor unions assumed in the mayor's plan.
New York City must address its fiscal crisis by controlling the escalating costs of municipal payroll and reducing the burden of debt service. Implementing wage restraint, reforming fringe benefits, and prioritizing maintenance over new capital projects are essential steps to ensure the city's long-term financial health.
Recommendations related to Budget Gaps
Wage increases must be kept below inflation to reverse the trend of escalating municipal payroll costs.
Fringe benefits must be reformed to be more in line with those of other public and private-sector entities.
Every employee should contribute to his or her health insurance premiums.
The retirement age should be increased for new employees, and they should contribute more to their pensions.
The City must shift from a 35- to a 40-hour workweek to do as much or more with fewer workers.
The City needs to borrow less money and reduce the amount of debt service paid out of its operating budget.
A smarter capital budget will focus on better use and maintenance of existing assets rather than ambitious plans for expansion.
Key Data
$15 billion
— The increase in the cost of compensating City employees, including pension and fringe benefits, from fiscal year 2000 to 2009.
80 percent
— The percentage increase in the cost of compensating City employees from fiscal year 2000 to 2009.
$100,000
— The average compensation of a New York City municipal worker.
20 percent
— The reduction in the number of City workers achieved through layoffs and attrition during the fiscal crisis of the 1970s.
6,838
— The increase in the number of full-time municipal workers from 2000 to 2009.
2.5 percent
— The percentage growth in the number of full-time municipal workers from 2000 to 2009.
New York City faces a $5 billion budget gap, necessitating that the upcoming teachers' contract prioritize fiscal responsibility through union concessions and reforms to staffing practices. The city should implement pension and health insurance reforms, replace seniority-based pay with merit-based rewards, and end indefinite payments to teachers who are not actively teaching.
Recommendations related to Budget Gaps
Salary increases should be funded with value-generating concessions to offset the $5 billion budget gap.
Pension and health insurance reforms should be implemented to reduce the city's rising benefit costs and help close the budget gap.
Merit pay should replace seniority rewards to save $285 million annually that can be redirected to fund a merit program.
Compensation for teachers who are not teaching should end to stop the $74 million annual cost of the Absent Teacher Reserve.
Unsatisfactory teachers should be terminated quickly to reduce the $60 million annual cost of paying teachers in reassignment centers.
The new contract should include modifications to seniority rules to allow principals to consider job performance during layoffs.
Financial incentives should be provided to teachers in shortage areas to attract staff to hard-to-staff schools.
Key Data
$5 billion
— Projected budget gap for the next fiscal year.
$655 million
— Annual cost of two 4 percent raises included in the Mayor's budget.
$285 million
— Potential annual savings from ending seniority pay increases after ten years.
$74 million
— Annual cost of the Absent Teacher Reserve.
$60 million
— Annual cost of paying teachers in reassignment centers.
$100 million
— Projected annual savings from pension changes for the next 20 years.
New York faces a growing fiscal crisis with a projected budget gap of at least $4.6 billion next year, which is expected to balloon to $18.2 billion by 2012-13. To address this, the state must implement aggressive spending cuts in major areas like Medicaid, personnel, and education rather than relying on tax increases, borrowing, or shifting costs to local governments.
Recommendations related to Budget Gaps
New York must cut spending to address the state's budget crisis.
The state must make aggressive reductions now to avoid more painful across-the-board cuts in the future.
Key Data
$4.6 billion
— The projected budget gap for next year.
$18.2 billion
— The projected budget gap by 2012-13.
22%
— The decline in personal income tax revenue from last year.
36%
— The expected growth in Medicaid spending over the next three years.
24%
— The expected growth in state employee compensation expenses over the next three years.
$58 billion
— The amount of outstanding state-supported debt planned by 2013-14.
New York faces a potential $3 billion budget gap as tax receipts have fallen 8% short of expectations in the first quarter of the fiscal year. To address this crisis, the state must reform unsustainable Medicaid spending, eliminate $600 million in aid to wealthy school districts, and implement pension reforms for new public employees.
Recommendations related to Budget Gaps
The Legislature should adopt the less costly but still comprehensive package of pension benefits for future employees immediately to begin providing fiscal relief.
The new pension package should apply not just to civilian employees but to police and firefighters as well.
New York needs to reform the Medicaid program, which is unsustainable.
The state should eliminate the $600 million in school aid that it continues to send to the wealthiest school districts in the state.
The Metropolitan Transportation Authority needs to be put on a firmer fiscal footing to address its debt and budget gaps.
Key Data
8%
— Tax receipts fell approximately this amount short of expectations in the first quarter of the fiscal year.
$3 billion
— The potential current-year budget gap if revenue projections continue to fall short.
79%
— The amount by which New York's Medicaid program spends more per beneficiary than the national average.
$600 million
— The amount of school aid that New York continues to send to the wealthiest school districts in the state.
New York City faces unprecedented budget gaps, projected to grow from $6.6 billion in fiscal year 2010 to $9.6 billion by fiscal year 2013 due to the economic downturn. To address this structural imbalance, the city must implement a fiscal strategy focused on reducing operating costs through pension and health insurance reforms, wage freezes, and better targeting of capital investments rather than relying on tax increases or non-recurring revenues.
Recommendations related to Budget Gaps
CBC proposes a 25 percent contribution by current employees and a 50 percent contribution by retirees toward their health insurance premiums to bring the City more in line with other public and private sector employers.
The City should re-examine and eliminate expansion projects that do not have clearly demonstrated economic benefits to lower future debt service burdens.
The City should implement a one-year wage freeze for public employees, which would produce $1.2 billion in recurring savings.
The City should adopt a policy for the Retiree Health Insurance Trust Fund that links withdrawals to growth in the current year liability for retiree health insurance premiums.
The City should establish a savings target of 2 percent a year from productivity measures to lower costs while maintaining services.
The City should avoid new or higher taxes that harm prospects for economic recovery and growth.
The City should reduce operating expenditures in ways that lower the cost of producing services rather than cut the availability of services.
The City should target capital investments to support existing facilities and lower future debt service burdens.
The City should not rely on inappropriate non-recurring revenues to balance the budget.
The Mayor’s proposal for a fifth tier in the pension system is urgently needed to achieve long-run savings.
Key Data
$6.6 billion
— The projected budget gap for fiscal year 2010.
$9.6 billion
— The projected budget gap for fiscal year 2013.
$1.2 billion
— The recurring savings that would be produced by a one-year wage freeze for city employees.
$3 billion
— The potential annual savings starting in fiscal year 2010 from changing work rules and compensation.
$1 billion
— The annual savings generated by proposed health insurance premium sharing for employees and retirees.
$13 billion
— The record level of capital commitments reached in the current year.
The New York State fiscal year 2009-10 budget was adopted with a $17.9 billion gap, which was addressed through a combination of tax increases and reliance on federal stimulus funds rather than significant spending cuts. This approach creates a risk of future fiscal instability, with a projected budget gap of $13.7 billion expected in three years once federal aid expires.
Recommendations related to Budget Gaps
The $7.4 billion in federal stabilization aid should have been used primarily as a substitute for tax and fee increases, not as a substitute for the kinds of spending changes that will be needed when the funds run out.
Key Data
$17.9 billion
— Budget gap of unprecedented size created by existing gaps and severe revenue losses.
$131.9 billion
— Total expected All Funds spending in fiscal year 2009-10.
$13.7 billion
— Projected budget gap to address in three years due to disappearing federal aid and the expiration of the personal income tax surcharge.
$3.9 billion
— Estimated revenue raised from the increase in rates for higher income brackets under the personal income tax.
$24.6 billion
— Total federal stimulus package for New York expected over 27 months.
$3.2 billion
— Total spending reductions in the budget from baseline estimates.
New York can address its budget gaps by eliminating ineffective programs like the Empire Zones and reducing excessive Medicaid payment rates. By implementing structural reforms such as closing unneeded correctional facilities, adjusting state employee work weeks, and eliminating aid to wealthy school districts, the state can achieve substantial annual savings without reducing public services.
Recommendations related to Budget Gaps
The Empire Zones program should be axed, for annual savings of $582 million.
Unneeded correctional facilities should be closed, for annual savings of about $310 million, while successful alternatives to incarceration could save another $100 million a year.
The creation of a new 'tier' for future employees would address the issue of excessive health-insurance and retirement packages and eventually save $216 million annually.
The state should eliminate state aid to the wealthiest school districts, saving $389 million annually.
The state should increase the work week for state employees to 40 hours from the 37.5 hours now required of most state workers, saving $227 million.
The state should scale back the Centers of Excellence high-tech-promotion program, which would save taxpayers $244 million annually.
Key Data
$582 million
— Annual savings from axing the Empire Zones program.
$389 million
— Annual savings from eliminating state aid to the wealthiest school districts.
$310 million
— Annual savings from closing unneeded correctional facilities.
$244 million
— Annual savings from scaling back the Centers of Excellence high-tech-promotion program.
$227 million
— Annual savings from increasing the work week for state employees to 40 hours.
$216 million
— Annual savings from creating a new pension tier for future employees.
New York faces a projected $5.1 billion budget gap, which could be partially addressed by rightsizing the state's prison infrastructure to match a declining inmate population. By closing underutilized facilities and investing in alternatives to incarceration for drug offenders, the state could generate nearly $400 million in annual savings.
Recommendations related to Budget Gaps
Unneeded facilities should be closed and used for other purposes.
The number of correctional officers can be reduced.
The prison system should be built around correctional needs, not local employment.
New York can save nearly $300 million a year by fitting the size of the prison infrastructure to the population it serves.
An additional $100 million a year could be had from developing more effective and appropriate alternatives to incarceration for drug offenders.
Key Data
$5.1 billion
— The projected budget gap New York faces in the coming fiscal year.
$3.6 billion
— The annual operating cost of the entire prison system.
$57,000
— The annual cost of keeping one person in the custody of the prison system, including debt service and fringe benefits.
$300 million
— The estimated annual savings from fitting the size of the prison infrastructure to the population it serves.
$100 million
— The estimated annual savings from developing more effective and appropriate alternatives to incarceration for drug offenders.
1,316
— The number of beds the state plans to shrink the prison system by over several years.
New York City's park system faces significant fiscal challenges, with a need for better strategic planning to manage the maintenance of an expanding network of facilities. The city should implement revenue-sharing incentives and shift routine maintenance costs from the capital budget to the operating budget to ensure long-term fiscal sustainability.
Recommendations related to Budget Gaps
Create a stronger incentive for increasing concessions and other earned revenues by dividing growth in these revenues between the City’s general fund and a new fund dedicated to parks improvements.
Bring all parks to an acceptable condition.
Improve productivity in parks maintenance and operations.
Encourage preventive maintenance and longer periods of usefulness by funding routine repairs and replacements in the operating budget.
Institutionalize responsibility for strategic planning for parks.
Make the relationships between DPR and its nonprofit partner organizations more transparent and consistent with core guidelines.
Key Data
$780 million
— Total City funds for Department of Parks and Recreation facilities in fiscal year 2006.
$288 million
— The Department of Parks and Recreation's operating budget in fiscal year 2006.
$246 million
— Capital expenditures for the Department of Parks and Recreation in fiscal year 2006.
$246 million
— Centrally funded costs attributable to the Department of Parks and Recreation in fiscal year 2006.
$58 million
— Park Conservancy Programmatic Expenditures in fiscal year 2006.
$7 million
— Business Improvement Districts' park-related expenditures in fiscal year 2006.
New York State's debt is projected to reach a record $50 billion, with nearly $12 billion used to cover operating costs rather than capital investments. To address this, the state must stop using debt to fund day-to-day expenses and implement stricter oversight of authority borrowing.
Recommendations related to Budget Gaps
Stop issuing state-funded debt to cover operating deficits.
Make authorities' borrowing part of the state's capital plan.
Institutionalize rigorous financial review of authority borrowing.
Reduce future debt for capital spending.
Key Data
$50 billion
— New York state's debt will hit an historic high of $50 billion during the current fiscal year ending March 31, 2007.
$12 billion
— About 20 percent of state debt, or nearly $12 billion, has gone for operating costs.
$4 billion
— In the past year alone, state leaders have added about $4 billion in debt.
$2.2 billion
— The state ended the year with a $2.2 billion cash surplus.
$2,700
— On a per-capita basis, today's debt load amounts to about $2,700 for every man, woman and child in the state.
New York State faces significant fiscal challenges, including a projected general fund deficit of about $1.6 billion for the current year and a looming budget gap of nearly $4.2 billion for the next fiscal year. To address these issues, the state must improve its financial planning, discontinue the use of debt to cover operating deficits, and increase transparency in the budget process.
Recommendations related to Budget Gaps
Discontinue issuance of State-funded debt to cover operating deficits.
Prepare more extensive multi-year financial plans.
Require that lump-sum appropriations meet specific program criteria and be subject to sunshine provisions.
Publish the Adopted Budget in a format similar to the Executive Budget.
Reduce the State’s future debt by lowering capital spending and/or increasing pay-as-you-go financing.
Key Data
$4.2 billion
— Projected budget gap in the next fiscal year.
$1.6 billion
— Projected general fund deficit for the current year.
$11.5 billion
— Outstanding State supported debt used to pay for operating expenses.
$105.8 billion
— Total debt outstanding at the end of fiscal year 2004–05.
$1.1 billion
— Expenditures added by the Legislature in June 2006.
The Metropolitan Transportation Authority faces a growing fiscal crisis, with projected operating deficits reaching $3.5 billion by 2009 and total debt expected to climb to $32 billion by 2010. To address these shortfalls, the report proposes a new financing model that shifts costs toward motorists through increased tolls and congestion pricing, while requiring riders to cover half of operating expenses and state and local governments to fund the remainder.
Recommendations related to Budget Gaps
The cost of bridge and tunnel facilities should be paid for entirely through user fees paid by motorists.
User fees paid by motorists should also generate a surplus large enough to cover one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover one-half the operating cost of those services.
State and local subsides to mass transit should cover one-quarter of the operating cost of those services and fund 'catch-up' capital investments needed to bring the system to a state of good repair.
Key Data
$3.5 billion
— Projected MTA operating deficit in 2009.
$32 billion
— Projected MTA debt outstanding by 2010.
$1.3 billion
— Required annual increase in cross-subsidy revenue from auto users to close the budget gap.
$1.1 billion
— Amount by which MTA operating deficits exceeded in two of the five years preceding 2006.
New York City faces annual budget gaps of approximately $4 billion, which are exacerbated by the rapid growth of 'non-discretionary' spending items like pensions, health insurance, Medicaid, and debt service. By implementing reforms to these areas, the city could save nearly $2.5 billion annually, helping to close these gaps and avoid painful program reductions.
Recommendations related to Budget Gaps
A new and more affordable pension plan could be established for new workers through State legislation to reduce pension costs.
The City should share the cost of health insurance premiums with workers by requiring 10 percent for individual policies and 20 percent for family policies to align health insurance practices with those of other employers.
Retirees should be required to pay 50 percent of their health insurance premiums, and the City should stop paying for their Medicare Part B premiums to reduce health insurance costs.
The Mayor should join forces with the Governor to secure reforms in the State Legislature to limit eligibility loopholes and contain Medicaid costs.
The City should pay off debt with the large operating surplus it has accumulated in fiscal year 2005 to reduce the debt service burden.
The City should focus on reducing construction costs by advocating for repeal of, or exemption of more projects from, the State’s Wicks Law to lower capital spending and debt service.
Key Data
$4 billion
— Annual budget gaps the City must grapple with over the next three years.
$2.5 billion
— Total annual savings in fiscal year 2009 from the four proposed reforms.
$549 million
— Savings from pension reform by fiscal year 2009.
$1,197 million
— Savings from health insurance reforms in fiscal year 2009.
$454 million
— Savings from Medicaid cost containment in fiscal year 2009.
$290 million
— Savings from debt service reduction in fiscal year 2009.
New York City and State face significant fiscal pressure from rapidly growing retirement benefit costs, which are more generous than those offered by private employers and other public entities. To address these budget gaps, the report recommends shifting to defined contribution plans and reforming existing defined benefit structures, including increasing employee contributions and tightening eligibility for disability and health benefits.
Recommendations related to Budget Gaps
Require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
Stop reimbursing retirees for Medicare Part B premiums.
Increase required employee contributions to pension plans.
Raise the minimum age requirement for retirement.
Base pension benefits on the more standard definition of final average salary.
Define work-related disabilities more rigorously.
Eliminate the variable supplements available to some retired New York City uniformed workers.
Convert from defined benefit to defined contribution plans.
Key Data
$615 million
— Required contributions to NYC pension funds in fiscal year 2000.
$2.3 billion
— Required contributions to NYC pension funds in fiscal year 2004.
$4.7 billion
— Projected required contributions to NYC pension funds by fiscal year 2008.
$1.5 billion
— Combined cost to the City and State for health insurance for retirees in 2004.
$12,000
— Annual variable supplement payment for certain NYC uniformed retirees scheduled for 2007.
$131 million
— Cost to the City for reimbursing retirees for Medicare Part B premiums in 2004.
New York City faces a significant financial challenge to provide a sound basic education to its students, with estimates for necessary annual funding ranging from $2.5 billion to $8.6 billion. To address this, the State should take primary responsibility for raising these funds while implementing structural reforms in school accountability, facility usage, and teacher compensation to ensure resources are used efficiently.
Recommendations related to Budget Gaps
The State, rather than local school districts, should be responsible for raising the additional funds needed for a sound basic education.
A new statewide system of accountability for schools should be established.
The classroom space requirements for a sound basic education should be met through a combination of two measures – redistricting of existing schools and operating existing schools on a year-round schedule.
Teachers should be given financial incentives for better performance.
Financial incentives should be used to overcome shortages in selected teaching job titles.
Key Data
$2.5 billion
— Minimum annual funding estimated by the Zarb Commission to meet acceptable standards statewide.
$8.6 billion
— High end of the range for combined annual operating and capital expenses for a sound basic education.
$1.1 billion
— Estimated state budget deficit for the current fiscal year.
$12 billion
— Savings in capital expenses achievable through rezoning and year-round school scheduling.
$4.3 billion
— Mandated aid to the State for Medicaid paid by New York City in fiscal year 2004.
New York's persistent fiscal dysfunction and late budgets stem from a structural imbalance where the legislature has seized an extra-constitutional role in budgeting without corresponding accountability. To address this, the state should amend its constitution to formalize the legislature's role in the budget process while simultaneously implementing reforms like independent redistricting and public campaign financing to ensure greater legislative accountability.
Recommendations related to Budget Gaps
New York should retain a constitutionally-based executive budget, but New York should also recognize and incorporate in its constitution the legitimate and hard-won role of the state legislature in budgeting.
New York should implement a constitutionally defined staged process in the legislature for considering the executive budget, engaging key committees, with conference committees to resolve differences.
New York should pursue constitutionalization of the beginning of the fiscal year as a first step toward establishing a real budget deadline.
New York should adopt legislative redistricting by commission to enhance fairness and mitigate the appearance of self-interest.
New York should implement public financing of legislative election campaigns, with concomitant limits on direct and indirect private funding.
Key Data
$170 million
— In 2003, a total of $170 million controlled by the leaders of each of the houses was appropriated to fund projects advanced by Senate Republicans and Assembly Democrats.
$1.5 billion
— In the 1998 election year a total of $1.5 billion was available to Governor Pataki, Speaker Silver and Majority Leader Bruno to separately allocate.
$10,750,658
— The proposed budget for legislative fiscal staffs for 2003-2004 was $10,750,658, divided equally between the two houses.
$206,735,159
— The total budget proposed for the legislature for 2003-2004 was $206,735,159, divided equally between the two houses.
$7,506,885
— In 2002, Democrats in the Assembly raised $7,506,885 to defend and extend their majority.
$14,736,106
— The total raised by Republicans in the Senate was $14,736,106.
New York State faces a persistent structural imbalance in its budget, with a $9.3 billion gap in the 2003-04 fiscal year and projected shortfalls of at least $5 billion and $8 billion in the following two years. To address these recurring deficits and improve fiscal stability, the state must adopt more transparent accounting practices, establish independent revenue forecasting, and implement multi-year financial planning.
Recommendations related to Budget Gaps
Require that the adopted budget be balanced in accord with generally accepted accounting principles.
Require a four-year financial plan with quarterly modifications.
Replace the constitutional requirement for voter approval of general obligation debt with a constitutional limit on the amount of all state debt that is set based on relevant, changing economic factors.
Create a professional, non-partisan Legislative Budget Office to provide fiscal information to both houses of the Legislature and to the public.
Require that independently prepared revenue projections be used in the adopted budget, if the Governor and Legislature do not agree on revenue projections in a timely way.
Require a “rainy day” fund larger than the current Tax Stabilization Reserve Fund.
Eliminate the use of “off-budget” accounts.
Change the budget calendar to allow more time for deliberation on the Executive Budget by the Legislature.
Strengthen the committee process of the State Legislature to allow more participation by members in budgetary decisions.
Key Data
$9.3 billion
— The budget gap faced by New York State in the 2003-04 fiscal year.
$5 billion
— The estimated minimum budget gap for fiscal year 2004-05.
$8 billion
— The estimated minimum budget gap for fiscal year 2005-06.
$3.3 billion
— The accumulated deficit New York had by the end of fiscal year 2002-03.
$5.7 billion
— The amount of one-time actions and disappearing revenues the State relied upon to close the 2003-04 budget gap.
$4.2 billion
— The accumulated surplus the State had by fiscal 2000-01 before reserves were exhausted.
New York State faces a severe fiscal crisis with multi-year budget deficits that require a comprehensive plan to align expenditures with recurring revenues rather than relying on short-term borrowing. The proposed solution involves implementing targeted spending cuts, enacting a temporary, phasing-out tax surcharge, and reforming the budget process to ensure greater transparency and accountability.
Recommendations related to Budget Gaps
Bring the budget into balance over three years by reducing expenditures to what the current revenue system supports by making productivity gains and by cutting services in a way that protects the neediest New Yorkers.
Close the gap between spending and revenues in the three-year, interim period by imposing a temporary and declining tax and by avoiding borrowing.
Make these decisions in a more accountable and transparent budget process.
The State should be required to balance its budget based on Generally Accepted Accounting Principles (GAAP) in order to prevent the accumulation of a deficit.
The Division of Budget should be required to prepare a four-year financial plan with quarterly updates.
All off-budget accounts should be brought on budget.
The State should pursue a long-run effort to both lower total Medicaid costs and finance them more from statewide sources.
The State’s long-run agenda should also include school finance reform that helps narrow gaps in per-pupil spending between rich and poor school districts.
Key Data
$4.4 billion
— The deficit incurred by New York State in the fiscal year that ended March 31, 2002.
$5 billion
— The gap between outlays and recurring revenues in the current fiscal year.
$5.6 billion
— The amount of spending cuts proposed in the Governor's Executive Budget for fiscal year 2003-04.
$9.3 billion
— The total gap to be closed in fiscal year 2003-04.
$11 billion
— The projected gap in fiscal year 2005-06 due to baseline spending increases.
$26 billion
— Medicaid spending in New York in federal fiscal year 2000.
New York City faced an $8.8 billion budget gap for fiscal year 2004 due to a combination of $3.1 billion in rising expenditures and $2.4 billion in declining tax revenues following the September 11 attacks and economic downturn. To address this shortfall, the city relied heavily on revenue increases, which accounted for 54% of the gap-closing plan, while actual service cuts totaled only about $600 million.
Key Data
$8.8 billion
— The projected fiscal year 2004 budget gap the City would face without offsetting actions.
$3.1 billion
— The amount by which expenses have risen since June 2001, contributing to the budget gap.
$2.4 billion
— The shortfall in tax revenues expected for fiscal year 2004 compared to previous projections.
$4.8 billion
— The portion of the gap-closing plan accounted for by revenue increases, representing 54% of the total.
$2.8 billion
— The total savings identified by City agencies to help close the budget gap.
$600 million
— The amount of actual cuts in services identified within the agency savings plan.
New York City faces an unprecedented budget gap of $6.4 billion for fiscal year 2003-04, requiring structural changes rather than temporary borrowing or gimmicks. To address this, the city should implement efficiency measures such as a 40-hour work week for civilian employees, streamlined procurement, and restructured special education services to achieve significant annual savings.
Recommendations related to Budget Gaps
Those civilians not working a 40-hour week should be required to do so to achieve $498 million in annual savings.
The City should replace the Mayor’s Office of Contracts with a new procurement entity that offers “one-stop” oversight to streamline the procurement process.
The City should move enough students from the most restrictive settings to less restrictive settings to bring its special education placement pattern into line with the rest of New York State.
The Police Department should reschedule the police officers’ work day to increase time in law enforcement and decrease paid time for changing uniforms.
Responsibility for energy conservation in City agencies should be centralized within the Office of the Mayor to increase efforts to assist agencies in their conservation practices.
Key Data
$6.4 billion
— Projected budget gap for New York City in fiscal year 2003-04.
$1 billion
— Annual savings that could be achieved by implementing the five proposed ways to lower the cost of government.
$498 million
— Annual savings from requiring all civilian employees to work a 40-hour week.
$197 million
— Annual savings from streamlining the City's procurement process.
$267 million
— Annual savings from restructuring special education services.
$251 million
— Annual savings from implementing more rational staffing strategies at the Police Department.
Increasing the workweek for approximately 67,000 non-managerial civilian municipal employees from 35 to 40 hours could generate roughly $498 million in annual savings for the City. This policy change would allow for a reduction of over 8,000 positions, helping to address fiscal challenges without requiring service cuts.
Recommendations related to Budget Gaps
The City should require all civilian employees not currently working a 40-hour week to increase their workweek to 40 hours.
For workers at smaller locations, the shift to a 40-hour week should be accompanied by relocation to more concentrated offices or dividing time among two or more locations.
For workers in job titles with fewer than eight incumbents, the shift to a 40-hour week should be accompanied by sharing work across agencies and combining tasks now limited to narrowly defined job descriptions, known as “broad-banding.”
Key Data
$498 million
— Estimated annual savings to the City from requiring all civilian employees to work a 40-hour week.
8,500
— Number of positions that could be eliminated if all civilian employees worked a 40-hour week.
67,000
— Number of civilian workers currently scheduled for a 35-hour workweek.
$58,000
— Average annual savings per worker, including salary, fringe benefits, and space costs.
New York City faces significant budget gaps, and the outcome of current collective bargaining negotiations with municipal unions will determine whether the government becomes more expensive or more efficient. Proposed strategies include restructuring pay scales, modernizing health insurance, and reforming pension systems to reduce costs and improve service quality.
Recommendations related to Budget Gaps
Set pay levels in response to labor market conditions, with shortage occupations receiving greater wage increases than those occupations where abundant applicants are available.
Change work processes in ways that lower the unit cost of services.
Shift the emphasis in pay scales from longevity to performance by adding a merit pay component to wages.
Modernize the health insurance program for municipal workers and retirees by incorporating changes already prevalent in the private sector.
Streamline the administration of welfare fund benefits and share the savings in administrative costs with the workers.
Restructure the pension system for newly employed workers to provide a defined contribution rather than a defined benefit.
Key Data
$1.1 Billion
— Necessary expenditures for base pay adjustments in fiscal year 2004.
$1.4 Billion
— Net savings to taxpayers from the recommended collective bargaining changes in fiscal year 2004.
$798 Million
— Recurring annual cost of pension enhancements added in 2000 outside of collective bargaining.
$138 Million
— Potential annual savings from five specific changes in the Fire Department.
$500 Million
— Direct annual savings from premium cost-sharing in the health insurance program.
$3.5 Billion
— Total resources available in fiscal year 2004 from the recommended measures and the labor reserve.
New York State and New York City have accumulated significant debt, often circumventing constitutional limits through the use of public authorities and appropriation-backed debt. To ensure long-term fiscal stability, the state and city should establish independent debt policy committees and amend their constitutions to implement more effective, affordability-based debt limits.
Recommendations related to Budget Gaps
New York State's elected leaders should bring the State's debt burden below the danger zone threshold identified in this report, and New York City's leaders should keep their debt below the relevant danger zone threshold.
New York City and New York State should create Debt Policy Committees to recommend long-run debt strategies and annual debt issuance limits.
The State Constitution should be amended to establish new limits on State and City debt that apply to all forms of debt drawing upon tax and other general governmental revenues.
Key Data
$35.8 billion
— State debt at the end of the 1999 fiscal year.
$46.8 billion
— City debt at the end of the 1999 fiscal year.
$26.9 billion
— Outstanding appropriation-backed debt in New York State.
$1.2 billion
— Total cost of annual debt service over 30 years for appropriation-backed debt.
$3.0 billion
— Amount New York State's debt was above the projected threshold at the end of fiscal year 2000.
$2.2 billion
— Amount New York City's actual debt was below the projected danger zone at the end of fiscal year 2000.
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