City budget reserves are financial cushions, including the Rainy Day Fund and General Reserve, that New York City maintains to protect essential services during economic downturns or unexpected fiscal shocks. This page covers CBC’s work on reserve target sizes, mandatory deposit requirements, withdrawal policies, the use of one-shot resources, and the management of the Retiree Health Benefits Trust.
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..
The Commission on Government Efficiency should modify its proposed Charter language to allow withdrawals from the Revenue Stabilization Fund only during a rainy day.
The Commission on Government Efficiency should apply the target size only to the Revenue Stabilization Fund.
The Commission on Government Efficiency should require deposits to the Revenue Stabilization Fund based on revenue strength.
The Commission on Government Efficiency should increase the target size of the Revenue Stabilization Fund to 16 percent of tax revenues.
The Commission on Government Efficiency should require the City Comptroller to publish an opinion as to the reasonableness and appropriateness of the Revenue Stabilization Fund implementation policy.
The Commission on Government Efficiency should set the Rainy Day Fund's implementation rules and definitions in law, rather than policy.
Key Data
In September 2026, the CBCNY reported that despite years of strong revenue growth, the City's Rainy Day Fund balance was $2 billion, whereas it should have nearly $14 billion to cover two years of a recession.
In July 2026, the CBCNY emphasized that the Retiree Health Benefits Trust (RHBT) should be reserved for its intended purpose of offsetting the City's $100-billion-plus liability for retiree health insurance, rather than being used as a de facto rainy day fund.
In June 2026, the CBCNY noted that the FY 2027 Executive Budget reduced budgetary reserves by $1.35 billion to the statutory minimum of $100 million, leaving the City with virtually no cushion for unexpected costs.
New York City's Rainy Day Fund currently holds only $2 Billion instead of the $14 Billion needed to survive a two-year recession, yet the proposed Ballot Question 5 would enshrine this inadequate status quo by potentially capping the fund at just 6% of tax revenues. To truly protect city services, leaders should reject the ballot measure and instead establish a robust policy that mandates deposits during strong economic times and grows the reserve to 16% of tax revenues.
Recommendations related to City Budget Reserves
New Yorkers should vote NO on Ballot Question 5 that would amend the City Charter's Rainy Day Fund provision.
The City should develop a robust Rainy Day Fund policy, without any Charter change.
A strong Rainy Day Fund policy should require deposits when revenues are strong by defining a growth threshold above which specific deposits are mandated.
A strong Rainy Day Fund policy should restrict withdrawals to a recession or severe, time-limited emergency, and define criteria for a recession and the unexpected temporary spending increases or revenue decreases that characterize a severe emergency.
A strong Rainy Day Fund policy should grow the fund to 16 percent of tax revenues to cover two years of recessionary tax revenue losses.
Key Data
$2 Billion
— The current balance of New York City's Rainy Day Fund after making only a single deposit.
$14 Billion
— The estimated amount the Rainy Day Fund should have to cover two years of a recession.
6%
— The level of tax revenues at which the proposed Charter amendment could essentially cap the Rainy Day Fund.
16%
— The recommended target size of the Rainy Day Fund relative to tax revenues to cover two years of recessionary losses.
eight months
— The duration of a recession that would be covered by the proposed 6% cap.
one-third
— The portion of needed recession coverage provided by the proposed 6% cap.
Although COGE prioritized the rainy day fund, the proposed framework fails to protect New York City from service cuts and layoffs during recessions by allowing withdrawals for almost any reason and failing to mandate deposits during strong economic times. To safeguard the city's financial future, the administration must establish a robust reserve policy that requires deposits during prosperous periods and restricts withdrawals to actual emergencies.
Recommendations related to City Budget Reserves
The administration should adopt a strong rainy day fund policy that requires adequate deposits during good economic times and permits withdrawals only during a recession or severe emergency.
Proposed changes to the City's Charter aim to strengthen the Revenue Stabilization Fund by restricting withdrawals to recessions or severe emergencies and increasing the target size to 16% of tax revenues. Additionally, deposit rules should be based strictly on revenue strength, and other reserves like the Retiree Health Benefits Trust should be excluded from the target size calculation.
Recommendations related to City Budget Reserves
The Commission on Government Efficiency should modify its proposed Charter language to allow withdrawals from the Revenue Stabilization Fund only during a rainy day.
The Commission on Government Efficiency should apply the target size only to the Revenue Stabilization Fund.
The Commission on Government Efficiency should require deposits to the Revenue Stabilization Fund based on revenue strength.
The Commission on Government Efficiency should increase the target size of the Revenue Stabilization Fund to 16 percent of tax revenues.
The Commission on Government Efficiency should require the City Comptroller to publish an opinion as to the reasonableness and appropriateness of the Revenue Stabilization Fund implementation policy.
The Commission on Government Efficiency should set the Rainy Day Fund's implementation rules and definitions in law, rather than policy.
Key Data
50%
— The portion of the Revenue Stabilization Fund that the proposed amendment would allow to be used for any reason.
1%
— The threshold of City funds that revenue losses or increased expenditures must exceed to qualify as a severe emergency for fund withdrawals.
$100-Billion-Plus
— The City's liability for retiree health insurance that the Retiree Health Benefits Trust is intended to offset.
3%
— The tax revenue growth rate suggested as a deposit trigger to improve the growth of the Revenue Stabilization Fund.
12%
— The target size of tax revenue in the preceding year set by the proposed language, which is considered too small based on history.
16%
— The recommended target size of tax revenues for the Revenue Stabilization Fund to cover two years' worth of recessionary tax revenue losses.
To protect New York City from service cuts during recessions, the City Charter should establish strict rules for its Rainy Day Fund, including mandatory deposits when tax revenue growth exceeds 3% or inflation. Additionally, withdrawals should be restricted to recessions or emergencies exceeding 2% of City funds, with a target fund size set at 16% of tax revenues.
Recommendations related to City Budget Reserves
The Citizens Budget Commission recommends that the City Charter include only the basic guardrails—the framework requiring deposits, governing withdrawals, and setting a target size for the Rainy Day Fund.
The City Charter should further require the detailed formulas and definitions for the budget reserves be established in local law, subject to the City Comptroller’s review.
The City Charter should require mandatory formula-driven deposits into the budget reserves when tax revenue growth exceeds the greater of 3 percent or inflation, leaving the precise formula to law.
Withdrawals from the Rainy Day Fund should be permitted only during a recession, based on economic indicators established in law, or during a temporary emergency that leads to a revenue decrease or expenditure increase exceeding two percent of City funds.
Annual withdrawals should be limited to two-thirds of the budget reserves, preserving some reserves for the future while providing immediate relief and time for other actions or aid.
The City Charter should establish a target size of 16 percent of tax revenues for the Rainy Day Fund.
Key Data
3%
— Tax revenue growth threshold above which the City Charter should require mandatory formula-driven deposits into the Rainy Day Fund.
2%
— The minimum percentage of City funds that a revenue decrease or expenditure increase must exceed during a temporary emergency to permit withdrawals.
16%
— The recommended target size of the Rainy Day Fund as a percentage of tax revenues.
1
— The number of voluntary Rainy Day Fund deposits the City made despite several years of exceptionally strong revenues.
New York City's fiscal year 2027 budget relies heavily on one-time actions and lacks sufficient reserves, with the General Reserve at a statutory minimum of $100 million and the Rainy Day Fund at $2 billion. To ensure long-term fiscal stability and protect against economic volatility, the city must prioritize increasing these reserves and implementing recurring savings rather than relying on short-term fixes.
Recommendations related to City Budget Reserves
The City should increase its rainy day reserves to protect New Yorkers from the next recession.
The City should increase the fiscal year 2027 General Reserve to $500 million to protect against economic volatility and unexpected spending shocks.
The City should be depositing money into its Rainy Day Fund to ensure fiscal stability.
Key Data
$100 million
— The current statutory minimum balance of the City's General Reserve.
$2 billion
— The current balance of the City's Rainy Day Fund.
$15 billion
— The potential revenue shortfall from a typical recession over two years.
The New York City Fiscal Year 2027 Executive Budget relies on short-term strategies and a $1.2 billion accrual sweep to close fiscal gaps, while City-funded spending is projected to grow by $24.4 billion, or 28 percent, between fiscal years 2025 and 2030. Although the budget avoids a property tax increase and reserve drawdown, it leaves outyear budget gaps swelling to nearly $10 billion by 2030.
New York City faces significant economic headwinds, including anemic job growth, rising rents, and outmigration, which threaten the city's competitiveness and fiscal stability. Leaders are urged to adopt a sound budget that improves service efficiency and avoids tapping into reserves, which would leave the city vulnerable to a recession.
The city's preliminary budget relies on drawing down $1.21 billion from the rainy day fund and Retiree Health Benefits Trust, alongside $1.35 billion from budgetary reserves, to close a $9.4 billion gap. These actions leave the city with only $100 million in in-year reserves, a dangerously low level that fails to provide a sufficient cushion against a potential $15 billion two-year recession loss.
Recommendations related to City Budget Reserves
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.
The City should strengthen the Revenue Stabilization Fund by requiring mandatory deposits when the economy is growing and limiting withdrawals to a recession or severe emergency.
The City should protect reserves by maintaining the rainy day fund and RHBT and including $1 billion of in-year reserves to protect New Yorkers from economic downturns and unexpected fiscal shocks.
Key Data
$1.21 billion
— The amount drawn from the rainy day fund and the Retiree Health Benefits Trust to close the budget gap.
$1.35 billion
— The amount drawn from budgetary reserves to close the budget gap.
$15 billion
— The estimated revenue needed to cover a two-year recession loss, which the current rainy day fund is too small to mitigate.
$100 million
— The statutory minimum reserve level for the upcoming year, which the preliminary budget has been reduced to.
The fiscal year 2027 preliminary budget relies on depleting $1.2 billion from the Rainy Day Fund and Retiree Health Benefits Trust, while reducing in-year reserves to $100 million, creating a precarious fiscal cliff. This strategy leaves the city with virtually no budget cushion to manage potential economic downturns or federal funding cuts in the coming year.
Recommendations related to City Budget Reserves
The Administration should avoid using one-shot resources like the Rainy Day Fund and the Retiree Health Benefits Trust to balance the budget, as this creates a new fiscal cliff.
The City should redouble its efforts to find more substantial savings by the Executive Budget to avoid depleting funds that should be saved for a recession.
The Mayor should ensure that every one of the people’s $127 billion is used well before relying on reserves or tax increases.
Key Data
$1.2 billion
— Amount pulled from the Rainy Day Fund and the Retiree Health Benefits Trust to balance the City budget.
$100 million
— The reduced level of in-year reserves, leaving the City with virtually no budget cushion.
$6.7 billion
— The projected budget gap in fiscal year 2028, making the reliance on reserves a tenuous gamble.
$127 billion
— The total amount of the City's budget that the Mayor should ensure is used well.
Mayor-elect Mamdani faces a budget gap of $5 billion to $8 billion, requiring a strategy that balances spending growth with the need to set aside reserves for potential federal cuts and economic downturns. The current budget plan continues to underfund at least $4 billion in annual planned spending, including significant shortfalls for CityFHEPS and homeless shelters.
Recommendations related to City Budget Reserves
The Mamdani Administration should rein in spending growth by shrinking low impact services.
The Mamdani Administration should improve efficiency by managing better and collaborating with labor as the best way to balance the budget and deliver on priorities.
The Mamdani Administration should end the City’s practice of underbudgeting for known spending, which distorts the fiscal picture and undermines smart choices.
The Mamdani 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 estimated budget gap that Mayor-elect Mamdani’s first budget proposal will have to close.
$4 billion
— The amount of annual planned spending in future years that the budget continues to underfund.
$1 billion
— The amount of annual planned spending for CityFHEPS that is currently underfunded.
$600 million
— The amount of annual planned spending for homeless shelters that is currently underfunded.
New York City faces significant fiscal risks and needs to bolster its financial reserves to prepare for inevitable economic downturns and federal funding cuts. By establishing legal requirements for Rainy Day Fund deposits and increasing general reserves, the City can better protect essential services during future recessions.
Recommendations related to City Budget Reserves
The City should work with the City Council to pass a Local Law to strengthen the Revenue Stabilization Fund by requiring deposits during economic expansions, restricting withdrawals to a recession or severe emergency, and setting the fund’s target size.
The City should increase the General Reserve by $1 billion a year, from $1.25 billion to $2.25 billion, to strengthen the City’s ability to absorb the initial impact of unexpected cuts or delays in federal aid.
The City should set a target size for the Rainy Day Fund of 17.2 percent of tax revenues, based on revenue losses following the 2001 and 2008 recessions.
The City should mandate deposits equal to 75 percent of any tax revenue growth above 3 percent into the Rainy Day Fund.
The City should restrict rainy day fund use to a recession and not to temporarily backfill recurring federal cuts.
Key Data
$2.0 billion
— Current balance of the Revenue Stabilization Fund, also known as the Rainy Day Fund.
$14.0 billion
— Estimated amount needed to cover two years of tax revenue declines based on the 2001 and 2008 recessions.
$15 billion to $20 billion
— Estimated revenue loss over three years during a typical recession.
17.2 percent
— Recommended target size for the Rainy Day Fund as a percentage of tax revenues.
75 percent
— Proposed mandatory deposit rate for the Rainy Day Fund from tax revenue growth above 3 percent.
$1 billion
— Recommended annual increase for the General Reserve to strengthen the City's ability to absorb unexpected federal aid cuts.
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 executive budget fails to adequately prepare for potential economic downturns or federal funding reductions by neglecting to bolster essential financial safety nets. Instead of increasing the General Reserve and Rainy Day Fund, the city is expanding spending to unsustainable levels that could exacerbate future budget gaps.
Recommendations related to City Budget Reserves
The City should add $1 billion to the General Reserve and $2 billion to the Rainy Day Fund to soften the impact of federal cuts and a possible recession.
The Mayor and City Council should set aside money to address the next recession and likely reductions in federal funding rather than adding unaffordable spending during negotiations.
Key Data
$1 billion
— Amount that should be added to the General Reserve to soften the first blows of federal cuts.
$2 billion
— Amount that should be added to the Rainy Day Fund to prepare for economic threats.
$121 billion
— Fiscal year 2026 proposed costs, adjusted for prepaid expenses and expected unfunded costs.
$8 billion to $10 billion
— Range of future budget gaps once underbudgeted expenses are added.
New York City must proactively manage its fiscal health by bolstering reserves and restraining spending growth to prepare for potential federal funding reductions that threaten critical services. To ensure long-term stability, the city should abandon budget gimmickry and align spending with accurate revenue estimates rather than relying on underbudgeting that obscures future deficits.
Recommendations related to City Budget Reserves
The City should hold the line on new spending in the Executive and Adopted Budgets.
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, not 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
$1 billion
— Amount recommended to buttress the General Reserve in fiscal year 2026 to help absorb the immediate blow of federal cuts.
$500 million
— Amount recommended to deposit into the Rainy Day Fund to prepare for short-term emergencies like a recession.
$4 billion
— The current annual amount of underbudgeting, which understates future budget gaps.
$1.1 billion
— The amount the City spent more on fiscal year 2024 obligations than it received.
$7.4 billion
— The total federal aid included in the City's Fiscal Year 2026 Preliminary Budget.
$91 billion
— The amount the State expects to receive in federal aid for fiscal year 2026.
To prepare for potential federal budget cuts that threaten vital services, the city must prioritize fiscal discipline by increasing the fiscal year 2026 General Reserve by at least $1 billion and adding $500 million to the Rainy Day Fund. These proactive measures are essential to build resilience against economic shocks and ensure the city can maintain critical services without relying on unsustainable budget practices.
Recommendations related to City Budget Reserves
Buttress the fiscal year 2026 General Reserve by adding at least $1 billion to help absorb the immediate blow of federal cuts.
Strengthen the Rainy Day Fund by adding $500 million, ensuring the fund is reserved for a short-term emergency like a recession, not to temporarily mitigate recurring federal cuts.
Key Data
$1 billion
— Recommended addition to the fiscal year 2026 General Reserve to help absorb the immediate blow of federal cuts.
$500 million
— Recommended addition to the Rainy Day Fund to ensure resources are available for short-term emergencies like a recession.
$4 billion
— Amount of annual underbudgeting that obscures the true size of future budget gaps.
$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 City's budget is currently precarious due to rapid spending growth and persistent underbudgeting, leaving the city ill-prepared for potential federal aid cuts or economic downturns. To ensure long-term fiscal stability, the city must adopt more accurate budgeting practices, implement spending controls, and significantly bolster its financial reserves.
Recommendations related to City Budget Reserves
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
$1.0 billion
— The minimum amount recommended to be added to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
$2.0 billion
— The amount currently held in the Revenue Stabilization Funds, which is insufficient to cover the revenue loss of an average recession.
$11.0 billion
— The estimated revenue loss an average recession would cause over two years, demonstrating the inadequacy of current reserves.
$3.6 billion
— The amount the fiscal year 2026 preliminary budget is short to provide planned services.
$4.0 billion
— The amount by which current services are underbudgeted annually.
$6.1 billion
— The high point of rolled surplus funds reached in fiscal year 2022.
New York City's current $2.0 billion in the Revenue Stabilization Fund is insufficient to withstand an average recession, which would likely sap $11 billion in revenue over two years. To improve fiscal stability, the city should implement mandatory deposits into this rainy day fund, with estimates suggesting contributions between $635 million and $1.7 billion for fiscal year 2025.
Recommendations related to City Budget Reserves
The City should implement mandatory deposits to the Revenue Stabilization Fund in fiscal year 2025, estimated at $635 million or $1.7 billion depending on the tax forecast used.
New programs and initiatives must be paid for with higher revenues or offsetting savings to avoid widening future budget gaps.
The City should proactively assess potential risks and opportunities regarding federal changes without taking pre-emptive actions.
Key Data
$2.0 billion
— The amount currently held in the Revenue Stabilization Fund, also referred to as the Rainy Day Fund.
$11 billion
— The estimated revenue loss over two years during an average recession.
$635 million
— The recommended mandatory deposit to the Revenue Stabilization Fund based on the current OMB tax forecast.
$1.7 billion
— The recommended mandatory deposit to the Revenue Stabilization Fund based on the City Comptroller’s tax forecast.
$1.45 billion
— The amount of in-year budgetary reserves available in fiscal year 2025 to help close future budget gaps.
New York City established its Rainy Day Fund in June 2020, with the first and only deposit of $1,450 million occurring in fiscal year 2022. This fund serves as a financial buffer, though no additional deposits were recorded in the fiscal years 2020, 2021, 2023, or 2024.
Key Data
$1,450 million
— The amount deposited into the City's Rainy Day Fund in fiscal year 2022, which was the first deposit made since the fund's establishment in June 2020.
$0
— The amount deposited into the City's Rainy Day Fund in fiscal years 2020, 2021, 2023, and 2024.
New York City should codify rules for its Revenue Stabilization Fund, also known as the Rainy Day Fund, to ensure it maintains a target size of at least 16 percent of tax revenue and restricts withdrawals to specific economic emergencies. These reforms would mandate deposits when tax revenue growth exceeds 3 percent and require the City Comptroller to review the reasonableness of the fund's policies before they are enacted.
Recommendations related to City Budget Reserves
Require the Mayor and City Council to enact a local law that details the City’s RDF deposit, withdrawal, and target size policy, with withdrawals from the RSF prohibited until such a law is in effect.
Identify the minimum target size that is 16 percent or more of tax revenue.
Require deposits when tax revenue growth is at least 3 percent, year-over-year, on a common rate and base, and define the formula to be used to calculate the minimum deposit.
Limit withdrawals to a recession or severe emergency.
Define a severe emergency as one that is temporary and causes an increase in expenditures or decrease in revenues equal to or greater than 2 percent of total City funds.
Limit the first withdrawal following the occurrence of a recession or severe emergency to two-thirds of the balance of the fund.
Require the City Comptroller to issue, prior to vote, an opinion on the proposed law as to the reasonableness and appropriateness of the target size, mandatory deposit, permitted withdrawal, and definitions of a recession and a severe emergency.
Key Data
16 percent
— Minimum target size of tax revenue for the Rainy Day Fund.
3 percent
— Year-over-year tax revenue growth threshold that triggers mandatory deposits into the Rainy Day Fund.
2 percent
— Threshold of total City funds for revenue loss or expenditure increase to define a severe emergency.
two-thirds
— Limit on the first withdrawal from the Rainy Day Fund following a recession or severe emergency.
The New York City fiscal year 2025 budget agreement fails to prioritize long-term fiscal stability by neglecting to deposit funds into the Rainy Day Fund despite strong revenues. This decision risks necessitating severe budget cuts during future economic downturns and relies on potentially inaccurate budget estimates that may leave critical services underfunded.
Recommendations related to City Budget Reserves
The City should deposit money into the Rainy Day Fund to avoid unnecessarily severe cuts during the next recession.
New York City needs to bolster its fiscal resilience by depositing at least $1 billion into the Rainy Day Fund over the current and upcoming fiscal years to prepare for potential economic downturns. With the current reserve fund holding less than $2 billion—far below the $11 billion typically lost during a recession—strengthening these savings is essential to protect essential services.
Recommendations related to City Budget Reserves
The City should deposit at least $500 million in the Rainy Day Fund in fiscal year 2024.
The City should budget to deposit at least $553 million in fiscal year 2025.
The City should deposit more into the Rainy Day Fund if revenues are higher than projected in the Executive Budget.
The City should include a deposit of at least $1 Billion into the Rainy Day Fund over this and next year.
Key Data
$1 Billion
— The minimum amount the City should deposit into the Rainy Day Fund over the current and next fiscal year.
$500 million
— The minimum amount the City should deposit into the Rainy Day Fund in fiscal year 2024.
$553 million
— The minimum amount the City should budget to deposit into the Rainy Day Fund in fiscal year 2025.
$2 billion
— The current balance of the Rainy Day Fund, which is less than this amount.
$11 billion
— The amount of revenue that an average recession would sap over two years.
The New York City Charter should be revised to mandate specific rules for Rainy Day Fund deposits, withdrawals, and target sizes to ensure fiscal stability. Additionally, the Retiree Health Benefits Trust should be formally established within the Charter to prevent its inappropriate use as a de-facto rainy day fund.
Recommendations related to City Budget Reserves
The Charter should require mandatory deposits, withdrawals limited to a recession or severe emergency, and a target size for the Rainy Day Fund.
The Charter should establish the Retiree Health Benefits Trust to ensure it is available to accumulate resources to pay for the City’s long-term liability for retiree benefits and should not allow the Retiree Health Benefits Trust to be used as a de-facto rainy day fund.
The City Charter should be revised to establish clear, mandatory rules for the Revenue Stabilization Fund to ensure it functions as a true rainy day fund, rather than being subject to discretionary use. Additionally, the Charter should formalize the Retiree Health Benefits Trust with mandatory deposit requirements to protect the City's long-term fiscal health and prevent the fund from being used as a de-facto rainy day account.
Recommendations related to City Budget Reserves
The Charter should include clearly defined rules governing the Rainy Day Fund, including mandatory deposits, withdrawals limited to a recession or severe emergency, and a target size.
The Charter should be revised to establish the Retiree Health Benefits Trust, ensuring there is a fund to accumulate resources to pay for the City’s long-term OPEB liability.
The Charter should require annual deposits into the Retiree Health Benefits Trust of at least the PAYGO amount, plus some additional deposit, or the normal cost, whichever is less.
The Charter should limit withdrawals from the Retiree Health Benefits Trust to the amount needed to pay for the current-year cost of the retiree health benefits.
Key Data
17.2%
— The recommended target size for the Rainy Day Fund as a percentage of pre-recession tax revenue.
75%
— The recommended mandatory deposit rate of tax revenue growth that exceeds 3 percent annually for the Rainy Day Fund.
$100.3 Billion
— The total amount of the City's long-term OPEB liability.
$4.8 Billion
— The current balance of the Retiree Health Benefits Trust, which covers just 4.8 percent of the total OPEB liability.
$3.7 Billion
— The annual additional deposit required to fund the normal cost of retiree health benefits.
Using state reserves to replace congestion pricing revenue would undermine the ability to respond to future economic downturns or emergencies. Maintaining these funds is essential for protecting the state's financial stability against unforeseen crises.
Recommendations related to City Budget Reserves
The State should not raid reserves, as doing so would weaken the capacity to protect New Yorkers from the next recession or severe emergency.
Policymakers should be aware that depleting the State’s precious reserves to replace congestion pricing would come with real consequences.
New York City needs to strengthen its fiscal health by depositing at least $500 million into its Rainy Day Fund for fiscal year 2024 and $553 million for fiscal year 2025. Ultimately, the City should build its reserves to $12.7 billion to cover two years of recessionary tax revenue losses and allow for stable spending growth.
Recommendations related to City Budget Reserves
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.
This deposit should be included in the adopted budget and increased by 75 percent of any additional tax revenues recognized in the adopted budget or subsequent modifications.
A $500 million catch-up deposit this year is reasonable given that the City did not make a discretionary RDF deposit in fiscal year 2023.
Key Data
$500 million
— Recommended deposit into the Rainy Day Fund in fiscal year 2024.
$553 million
— Recommended deposit into the Rainy Day Fund in fiscal year 2025.
$2.0 billion
— Current balance of the Rainy Day Fund.
$12.7 billion
— Target size for the City's reserves to cover two years of recessionary tax revenue losses.
2 percent
— Annual spending growth permitted by the target reserve level.
$1.3 billion
— Amount the Rainy Day Fund deposit would have yielded in fiscal year 2023 if the recommended formula had been followed.
New York City's fiscal stability is threatened by understated spending projections and overly conservative revenue estimates, which could lead to significant budget gaps in future years. To ensure long-term stability, the city must adopt more accurate budget estimates, prioritize essential programs, and bolster the Rainy Day Fund for future economic downturns.
Recommendations related to City Budget Reserves
Include reasonable estimates of costs of all planned programs in the budget to ensure a clear and realistic view of the City’s fiscal picture.
Provide accurate, but reasonably conservative revenue estimates.
Allocate funded vacancies to where they are most needed to provide critical services.
Allow agencies to hire into funded positions and spend their budgets on needed programs.
Reduce future budget gaps by prioritizing spending to fund what is 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
$1.45 billion
— The amount the City has increased in-year budget reserves, including the general reserve and the capital stabilization reserve.
$17.4 billion
— The potential budget gap by fiscal year 2028 if risks like class size mandates, FHEPS expansion, and asylum seeker costs are included.
$8.0 billion
— The amount future budget gaps could exceed annually, even without implementing the State class size reduction mandate, expanding the FHEPS housing voucher program, or possible future costs to serve migrants and asylum seekers.
$3.6 billion
— The amount the Fiscal Year 2025 Preliminary Budget was short of what would be needed to continue current services.
New York City's fiscal year 2025 preliminary budget faces a $3.6 billion shortfall, with projected budget gaps reaching up to $9.7 billion in subsequent years if current service levels are maintained. To ensure fiscal stability, the administration must implement additional spending reductions and provide greater transparency regarding which programs will be fully funded versus those that will be scaled back or eliminated.
Recommendations related to City Budget Reserves
The City should implement an additional PEG in the Executive Budget and shrink or eliminate programs that the available resources cannot fully support.
Substantially more transparency is needed to show which programs are not fully funded and whether the City plans to shrink or end those programs.
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 Administration should continue with its original plan to implement a PEG in the Fiscal Year 2025 Executive Budget.
The budget should include funding for all planned programs and acknowledge that under- and un-funded programs will shrink or end.
Key Data
$3.6 billion
— The funding shortfall in the fiscal year 2025 preliminary budget needed to maintain current service levels.
$8.8 billion to $9.7 billion
— The estimated budget gaps for fiscal years 2026 through 2028 if current services and plans are fully funded.
$2.5 billion
— The amount added to the fiscal year 2024 budget to fund fiscal cliff programs and underbudgeted expenses.
$2.2 billion
— The total City-funds fiscal cliff identified in the fiscal year 2025 preliminary budget.
$800 million
— The amount attributed to chronic underbudgeting, including uniformed overtime and mandated MTA subsidies.
$194.9 million
— The total value of PEG restorations for fiscal years 2024 and 2025.
New York City and State face significant fiscal challenges driven by years of unsustainable spending growth, necessitating a shift toward stricter fiscal discipline rather than depleting financial reserves. Maintaining these reserves is critical to ensuring the government retains the capacity to support residents during future economic downturns.
Recommendations related to City Budget Reserves
Leaders should ignore calls to increase taxes and deplete reserves to ensure the government can help New Yorkers during the next recession.
Both the City and State must align recurring expenditures for all programs with revenues to avoid a looming fiscal reckoning.
Smart spending restraint should focus on prioritizing the programs that produce the most significant effects while shrinking or eliminating those that are ineffective.
Government leaders should focus on increasing efficiency by leveraging technology and streamlining processes to improve productivity.
Labor and management should work together to improve productivity by ensuring uniformed employees are deployed effectively and not filling jobs that could be done by civilian employees.
Key Data
$15 billion
— The structural gap in the State budget when accounting for non-recurring revenue.
$8 billion to $9 billion
— The estimated outyear budget gaps for the City.
$3.6 billion
— The additional expenses in fiscal year 2025 to serve migrants.
$233 billion
— The State's total budget for fiscal year 2025.
$33 billion
— The increase in State Operating Funds spending between fiscal years 2020 and 2025.
$9.9 billion
— The State budget gap on paper in fiscal year 2028.
New York City faces significant budget shortfalls, with projected gaps reaching up to $10.6 billion for fiscal year 2025, necessitating difficult management decisions rather than tax increases or the depletion of financial reserves. To maintain fiscal health, the city must prioritize essential services, improve operational efficiency, and negotiate labor reforms rather than relying on savings accounts intended for economic downturns.
Recommendations related to City Budget Reserves
Reserves should be protected for when the city is faced with a recession, rather than being used to avoid solving problems caused by unaffordable spending and underbudgeting.
The city should not spend down the city’s savings accounts to address current budget gaps.
The city must prioritize key services, relentlessly manage them to get results, and operate effectively and efficiently to grow financially stronger.
The city should seek agreed-upon changes to work rules, job titles, health insurance and other benefit structures to deliver services efficiently.
The mayor’s directive to identify savings in agency budgets is the correct approach to addressing the fiscal shortfall.
Key Data
$7.1 billion
— The projected budget gap for fiscal year 2025 according to the city's financial plan.
$10.6 billion
— The potential budget gap for fiscal year 2025 when including fiscal cliffs and areas the city regularly underbudgets.
$5.8 billion
— The fiscal year 2025 budget gap estimated by the city comptroller.
$12.2 billion
— The projected budget gap for fiscal year 2027 estimated by the city comptroller.
5.3%
— The decline in New York City's population from 2020 to 2022.
20%
— The portion of savings in the most recent Program to Eliminate the Gap that will touch current services.
New York City faces a precarious fiscal situation with a $10.6 billion budget gap, necessitating strategic prioritization of services rather than relying on tax increases or reserve depletion. Using the city's financial reserves to cover current spending would only delay necessary structural fixes and leave the city vulnerable to future economic downturns.
Recommendations related to City Budget Reserves
The City should avoid dipping into its precious reserves, as this would delay fixing underlying problems and leave the city vulnerable to future economic downturns.
The City should prioritize services with significant impact and increase efficiency rather than expanding services or raising taxes.
The City must engage labor in collaborative discussions to implement changes to work rules, job titles, and benefit administration structures to deliver services efficiently.
The Council should focus on data to make hard choices that minimize the impact on New Yorkers.
Key Data
$10.6 billion
— The more accurate estimate of the City's budget gap for fiscal year 2025, including fiscal cliffs and underbudgeted areas.
$7.1 billion
— The initial budget gap for fiscal year 2025 shown in the City's financial plan.
$16 billion
— The added costs through 2027 resulting from recent collective bargaining agreements that lacked offsetting productivity increases.
92 percent
— The portion of savings measures from previous programs that did not directly affect program services.
20 percent
— The portion of savings in the most recent program to eliminate gaps (PEG) that will affect current programs.
New York City faces substantial budget gaps reaching over 12.5 percent of City-funded spending, necessitating hard choices regarding service prioritization and government efficiency. To achieve structural stability, the City must address fiscal cliffs, rising asylum seeker costs, and underbudgeted expenses while managing its reserves effectively.
Recommendations related to City Budget Reserves
The City should 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 prioritization—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.
Key Data
$1,450 Million
— General and Capital Stabilization Reserves available for fiscal year 2024.
$11.3 Billion
— The fiscal year 2025 budget gap the City will have to close.
$839 Million
— The potential shortfall in fiscal year 2024 to fund planned services.
12.5%
— The portion of City-funded spending that the City's budget gaps have reached.
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
The New York City Housing Authority faces a widening structural budget gap driven by rising operating costs and declining rent collections, forcing it to rely on non-recurring revenue and dwindling reserves to fund basic operations. To achieve long-term solvency, the authority must implement structural reforms, including comprehensive building renovations, improved management efficiency, collective bargaining savings, and an overhauled rent collection process.
Recommendations related to City Budget Reserves
Fix or replace deteriorating buildings with Permanent Affordability Commitment Together (PACT) and the Preservation Trust.
Improve management effectiveness and efficiency, and publicly track progress and impacts.
Negotiate savings and increase productivity through collective bargaining.
Overhaul the rent collection process.
Key Data
$789 million
— The 2022 structural budget gap between NYCHA's operating revenue and public housing operating expenses.
$100 million
— The amount NYCHA was forced to withdraw from its operating reserves at the end of 2022 to balance its budget.
$211 million
— The amount remaining in NYCHA's reserves at the end of 2022, equal to less than one month of expenses in cash on hand.
$152 million
— The amount spent on overtime in 2022, which increased 3 percent despite efforts to reduce it.
$1,481
— The monthly per-unit operating cost for NYCHA in 2022.
$65 million
— The amount NYCHA anticipates withdrawing from its already dwindling reserves in 2023 to cover its projected shortfall.
New York City's executive budget fails to allocate additional revenue to the Rainy Day Fund, missing a critical opportunity to prepare for future fiscal risks. Despite widening budget gaps and significant fiscal cliffs, the city continues to add new positions and spending rather than prioritizing long-term stability.
Recommendations related to City Budget Reserves
The City should direct higher revenue to the Rainy Day Fund to prepare for very real downside risks.
The City should immediately start to prioritize essential programs, increase its operational efficiency, speed up critical hiring, and shrink lower impact programs to avoid substantial service cuts.
The City should make every effort to include additional savings in the Adopted Budget to address future fiscal gaps.
The City should be shifting existing vacancies to where they are needed, rather than adding new positions, to improve fiscal stability.
Key Data
$6.8 billion
— The projected future shortfall in fiscal year 2025, including costs of underbudgeted programs and fiscal cliffs.
$10.0 billion
— The projected future shortfall by fiscal year 2027, including costs of underbudgeted programs and fiscal cliffs.
$4.2 billion
— The projected budget gap in fiscal year 2025, which grows to $7.0 billion by fiscal year 2027.
$900 million
— The amount saved annually by the agency Program to Eliminate the Gap (PEG).
23,000
— The number of existing vacancies in the City, despite which the budget adds new positions.
$600 million
— The amount of federal aid for asylum seekers that the fiscal year 2024 budget relies upon.
The New York City Housing Authority faces a structural budget gap, forcing it to rely on non-recurring revenue and local subsidies while depleting its reserves to just $211 million, or less than one month of expenses. To achieve long-term solvency, the authority must implement structural reforms rather than relying on one-time bailouts to balance its budget.
Recommendations related to City Budget Reserves
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.
NYCHA should seek to appropriately enforce tenant obligations to pay rent.
Key Data
$789 million
— The amount of non-operating sources used to balance the 2022 budget.
28 percent
— The portion of the total revenue budget comprised of non-operating sources.
$100 million
— The amount withdrawn from operating and replacement reserves to balance the budget.
$211 million
— The total reserves remaining at the end of 2022.
less than one month of expenses
— The amount of cash on hand represented by the remaining reserves.
New York City's fiscal year 2024 preliminary budget maintains $1.8 billion in stabilization reserves but fails to add to the Rainy Day Fund despite significant future budget gaps of $5.0 billion in 2026 and $6.5 billion in 2027. To better prepare for economic uncertainty and potential fiscal cliffs, the city should prioritize depositing $1.0 billion into the Rainy Day Fund.
Recommendations related to City Budget Reserves
The Administration’s planning for its Executive Budget should deposit $1.0 billion in the Rainy Day Fund to better prepare for the uncertainty facing the City.
Sufficient funds should be available to deposit $1 billion to the Rainy Day Fund.
Key Data
$1.8 billion
— The amount maintained in the fiscal year 2023 General and Capital Stabilization Reserves.
$1.0 billion
— The amount that should be deposited into the Rainy Day Fund to prepare for future uncertainty.
$1 billion
— The total value of risks from fiscal cliffs, including the expiration of federal aid.
$5.0 billion
— The projected budget gap for fiscal year 2026.
$6.5 billion
— The projected budget gap for fiscal year 2027.
New York City faces a manageable short-term fiscal outlook, but long-term stability requires addressing significant budget gaps and underfunded costs. To maintain fiscal health, the city should prioritize replenishing its reserves, specifically by depositing at least $1 billion into the Rainy Day Fund.
Recommendations related to City Budget Reserves
The City should deposit at least $1 billion into the Rainy Day Fund this year to prepare for a rocky economic outlook.
The City should reduce the General Reserve to $300 million and the Capital Stabilization Reserve to $0 to free up $1.5 billion to close the fiscal year 2024 gap.
Key Data
$1,555 million
— Current amount in the General Reserve for fiscal year 2023.
$250 million
— Current amount in the Capital Stabilization Reserve for fiscal year 2023.
$1 billion
— Recommended minimum deposit into the Rainy Day Fund for the current year.
$1.5 billion
— Amount freed up to close the fiscal year 2024 gap by drawing down reserves.
New York City faces significant long-term fiscal challenges, with projected budget gaps reaching $5.9 billion by fiscal year 2026, exacerbated by pension costs and potential economic risks. To address these gaps, the City may utilize $1.5 billion from its General and Capital Stabilization Reserves, though more transformative operational changes are necessary to ensure future stability.
Recommendations related to City Budget Reserves
The City should start taking action immediately to restrain spending over the long run to reduce the future gaps.
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 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
$1.5 billion
— Amount the City may roll from the fiscal year 2023 General and Capital Stabilization Reserves into fiscal year 2024 to reduce the gap.
$4.6 billion
— Projected budget gap in fiscal year 2025.
$5.9 billion
— Projected budget gap in fiscal year 2026.
$2.9 billion
— Reduced fiscal year 2024 budget gap.
$350 million
— Expected annual savings from the elimination of roughly 5,000 vacant civilian positions.
New York City's fiscal year 2023 budget obligations total $104.7 billion after accounting adjustments, though this figure rises to $106.5 billion when including General and Capital Stabilization Reserves. These reserves, which function as budgeted contingency funds, are often rolled into the following year if not allocated to specific purposes.
Key Data
$106.5 billion
— Total All Funds fiscal year 2023 budget obligations including funds in the General and Capital Stabilization Reserves.
$79.4 billion
— Total City Funds fiscal year 2023 budget obligations including funds in the General and Capital Stabilization Reserves.
$1,805 million
— Funds in the General Reserve and Capital Stabilization Reserve for fiscal year 2023.
$1,305 million
— Funds in the General Reserve and Capital Stabilization Reserve in the Executive Budget.
$104.7 billion
— All Funds fiscal year 2023 budget obligations after adjusting for prepayments, deposits into reserves, and other accounting changes.
$77.6 billion
— City Funds fiscal year 2023 budget obligations after adjustments.
The fiscal year 2023 budget agreement increases spending by $1.15 billion, missing an opportunity to deposit a substantially higher amount into the Rainy Day Fund to better prepare for future economic downturns. While the budget includes some prudent measures like funding the Retiree Health Benefits Trust and increasing the General Reserve, it fails to secure necessary recurring efficiency savings to ensure long-term fiscal sustainability.
Recommendations related to City Budget Reserves
The City should have added another $1.5 billion to the Rainy Day Fund to significantly strengthen the City’s ability to weather the next recession or emergency.
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.
Key Data
$4.5 billion
— Amount available to allocate in the budget.
$750 million
— Amount the Rainy Day Fund deposit was increased.
17 percent
— Portion of the extra money available that was deposited into the Rainy Day Fund.
$1.15 billion
— Amount by which the budget deal increases spending over the Executive Budget.
8 percent
— Projected fiscal year 2023 City-funded spending growth.
New York City faces economic uncertainty from inflation and global instability, necessitating a significant increase in the city's rainy day fund to protect essential services. Officials propose depositing at least $2.5 billion into reserves immediately and establishing a formal, long-term structure for future annual contributions.
Recommendations related to City Budget Reserves
The mayor and the city council should put a serious sum into our city’s rainy day fund as they conclude budget negotiations this month.
The city should add at least $2.5 billion to our rainy day fund this year.
The city should adopt a steady formula for future deposits into the rainy day fund.
The city should set a target size, mandate deposits and specify criteria for when these funds can be withdrawn.
The city should adopt an annual deposit structure that would set aside a portion of the city’s revenue growth toward long-term reserves in years when the economy is growing.
Key Data
$2.5 billion
— Amount proposed to be added to the city's rainy day fund this year.
$3.3 billion
— Additional tax revenue available in fiscal year 2022 ending on June 30.
$1.5 billion
— Additional tax revenue available for the next fiscal year.
New York City has identified $4.5 billion in additional revenue for fiscal years 2022 and 2023, which should be used to bolster the Rainy Day Fund and labor reserves rather than funding recurring programs. Strengthening these reserves is essential to protect city services from the projected $13 billion to $19 billion revenue shortfall expected during the next recession.
Recommendations related to City Budget Reserves
Deposit half of the newly identified resources, $2.3 billion, into the Rainy Day Fund (RDF).
Add $1.7 billion to the labor reserve over the financial plan.
Use the remaining resources for non-recurring actions to avoid increasing fiscal cliffs.
Shift between $250 million and $500 million annually from the general and capital stabilization reserves to the Rainy Day Fund (RDF).
Commit to setting rules to govern the RDF in Local Law, including enacting legislation to set a target size, mandate deposits, and specify withdrawal criteria.
Key Data
$13 billion to $19 billion
— The potential revenue shortfall the City could face over three years in the next recession.
$4.5 billion
— The amount of additional revenue available in fiscal years 2022 and 2023 compared to the Executive Budget projection.
$2.3 billion
— The recommended deposit into the Rainy Day Fund.
$12 billion
— The recommended total balance for the Rainy Day Fund.
$1.7 billion
— The amount to be added to the labor reserve.
New York City's fiscal plan for 2023 increases spending by $2.3 billion while failing to implement sufficient efficiency savings, potentially leaving the city vulnerable to future economic downturns. To mitigate these risks, the city should prioritize growing its rainy day reserves to over $8 billion by the end of the financial plan.
Recommendations related to City Budget Reserves
The City should grow rainy day reserves to over $8 billion by the end of the financial plan.
Key Data
$8 billion
— The amount the City should grow rainy day reserves to by the end of the financial plan.
$3.8 billion
— The amount spending would increase annually by fiscal year 2026 if annual three percent raises are provided.
$2 billion
— The size of the fiscal cliff in fiscal year 2026 that requires action.
$2.3 billion
— The increase in City-funded fiscal year 2023 spending.
New York City faces a potential $9 billion fiscal disaster by 2026 due to budget gaps, employee raises, and fiscal cliffs, necessitating a disciplined approach to spending. To prepare for future economic downturns, the city must prioritize saving for a rainy day, improve service efficiency, and avoid using temporary federal aid to fund ongoing programs.
Recommendations related to City Budget Reserves
The mayor and council should deposit additional tax revenue into the Rainy Day Fund (RDF) to prepare for the next recession and refill the city’s labor reserve.
The city should schedule $500 million annual deposits to the Rainy Day Fund, which could be sourced from the budgeted General and Capital Stabilization Reserves.
The city must prioritize saving for a rainy day to balance the important needs of New Yorkers today and in the future when the city faces the inevitable next recession or emergency.
Key Data
$500 million
— The amount the city should schedule for annual deposits to the Rainy Day Fund.
$9 billion
— The total projected recipe for fiscal disaster by 2026, including budget gaps, employee raises, and fiscal cliffs.
$17 billion
— The potential three-year revenue shortfall the city could face in the event of another recession.
$2 billion
— The total of fiscal cliffs by fiscal year 2026 where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
The New York City Housing Authority faces significant financial instability, with operating costs outpacing revenues and a reliance on dwindling reserves that have fallen to just $330 million. To address these challenges, the authority must secure approval for the Preservation Trust and implement labor productivity reforms to align operating costs with industry standards.
Recommendations related to City Budget Reserves
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, 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.
Labor productivity increases would bring operating costs in line with industry benchmarks and maximize the potential benefits of the Preservation Trust.
Key Data
$330 million
— The amount to which NYCHA's operating reserves have been reduced, representing just 1.3 months of operating costs.
35 percent
— The reduction in NYCHA's operating reserves due to actual and planned use in 2021 and 2022.
1.3 months
— The amount of operating costs that NYCHA's remaining $330 million in reserves can cover.
$1.2 billion
— The amount spent in operating funds since 2018 on various action plans mandated under the HUD settlement agreement.
New York City's current reserves of $6.1 billion remain well below the recommended $11 to $12 billion level, leaving the city vulnerable without a clear plan for future increases. To ensure fiscal stability, the city should commit to annual deposits of at least $500 million into the Rainy Day Fund and enact legislation to mandate these deposits while establishing stricter controls for fund usage.
Recommendations related to City Budget Reserves
The Executive Budget should include planned deposits of at least $500 million annually in each year of the financial plan to bolster the Rainy Day Fund.
The Mayor and City Council should advance legislation to mandate deposits into the Rainy Day Fund to ensure consistent growth.
The Mayor and City Council should establish stricter controls for the use of the Rainy Day Fund to ensure it is managed responsibly.
Key Data
$11 to $12 billion
— Recommended level of reserves for the City.
$6.1 billion
— Current level of reserves held by the City.
8.3 percent
— Current reserves as a percentage of City-funded expenditures.
$1 billion
— Current balance of the Rainy Day Fund.
$500 million
— Planned deposit into the Rainy Day Fund for the current year.
$3.8 billion
— Amount held in the Retiree Health Benefits Trust, which is not considered a reserve.
New York City's adopted fiscal year 2023 budget includes $104.7 billion in spending obligations after accounting for prepayments and deposits into reserves. These reserves, including the General and Capital Stabilization Reserves, function as contingency funds that can be rolled into subsequent years if not allocated to specific purposes.
Key Data
$106.5 billion
— Total All Funds fiscal year 2023 budget obligations including funds in the General and Capital Stabilization Reserves.
$79.4 billion
— Total City Funds fiscal year 2023 budget obligations including funds in the General and Capital Stabilization Reserves.
$1,805 million
— Amount in the General Reserve and Capital Stabilization Reserve for fiscal year 2023.
$20 million
— Amount in the General Reserve and Capital Stabilization Reserve for fiscal year 2022.
Although the city reports record reserves, the current financial plan fails to include additional deposits into the Rainy Day Fund. To prepare for future economic downturns or emergencies, the city should commit to annual deposits of at least $500 million into the fund.
Recommendations related to City Budget Reserves
The financial plan should include annual deposits of at least $500 million to the City’s Rainy Day Fund to help the City weather the inevitable future recession or severe emergency.
Key Data
$500 million
— The recommended annual deposit amount for the City’s Rainy Day Fund to help weather future recessions or emergencies.
New York City should prioritize increasing its reserves to prepare for future economic downturns, as the city has historically experienced a recession on average every six years since the 1970s. Despite this need, annual deposits into the Rainy Day Fund are not currently scheduled for fiscal year 2023 or later, leaving the city vulnerable to future emergencies.
Recommendations related to City Budget Reserves
The City should be building reserves to be prepared for the next economic downturn.
The Administration should identify recurring revenues for programs currently facing a fiscal cliff or eliminate them to maintain fiscal balance.
The City should remove illusory labor savings from the financial plan or identify specific actions to achieve them to ensure accurate budget gap reporting.
Agencies should leverage technology to improve service delivery and increase efficiency to support the City's fiscal health.
NYCHA and H+H should implement reforms to achieve fiscal stability and reduce reliance on unsustainable City subsidies.
Key Data
$500 million
— Amount Mayor de Blasio committed to deposit into the Rainy Day Fund for the year.
$653 million
— City-funded fiscal cliff starting in fiscal year 2023.
$2.9 billion
— Budget gap reported for fiscal year 2023 in the November 2021 financial plan.
$2.7 billion
— Budget gap reported for fiscal year 2024 in the November 2021 financial plan.
$2.1 billion
— Budget gap reported for fiscal year 2025 in the November 2021 financial plan.
6
— Average number of years between recessions in New York since the 1970s.
The November 2021 Financial Plan includes a $500 million deposit to the Rainy Day Fund, which serves as a necessary initial step toward fiscal preparedness. Future financial planning must prioritize consistent annual deposits into these reserves to ensure the city is adequately positioned for potential economic downturns.
Recommendations related to City Budget Reserves
The City’s financial plan should include annual deposits to the Rainy Day Fund, which are crucial to preparing for the next recession.
Key Data
$500 million
— The amount committed for deposit into the Rainy Day Fund in fiscal year 2022.
New York City's fiscal year 2022 budget plan reported expenditures of $98.7 billion, though the actual expenditure obligation is $103.3 billion when accounting for prepayments and reserve adjustments. This discrepancy highlights the impact of fiscal management tools, including the $500 million deposit to the Rainy Day Fund and the $300 million General Reserve, on the city's reported spending.
Key Data
$500 million
— The amount deposited to the Rainy Day Fund, which is treated as a saving account rather than spending.
$300 million
— The amount in the General Reserve, which functions as a budgeted contingency fund that may be rolled into the following year.
The fiscal year 2022 adopted budget includes an initial $500 million deposit into the city's new Rainy Day Fund, a positive step toward financial stability. To adequately prepare for future economic downturns, the city must establish a policy of annual, mandatory contributions to reach the estimated $11 billion required to weather a recession.
Recommendations related to City Budget Reserves
The City should follow the initial $500 million deposit into the Rainy Day Fund with annual deposits into the fund.
The City should enact legislation that sets minimum mandatory deposits to build the Rainy Day Fund to the estimated $11 billion needed to weather a recession.
Key Data
$500 million
— The amount deposited into the new Rainy Day Fund in the fiscal year 2022 adopted budget.
$11 billion
— The estimated amount of resources the city should have in its reserves to weather a recession.
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…
The City's Executive Budget for Fiscal Year 2022 fails to utilize available federal aid and tax revenue to stabilize long-term fiscal health, leaving significant budget gaps of roughly $5 billion annually. While the budget includes a positive $200 million increase to the general reserve, it lacks a concrete plan for recurring savings and fails to commit to regular deposits into the newly established Rainy Day Fund.
Recommendations related to City Budget Reserves
The City should be budgeting regular deposits into its newly established Rainy Day Fund.
The City should be implementing a regular, reasonably sized Program to Eliminate the Gap (PEG) to help prioritize programs, improve quality, and identify savings.
Key Data
$200 million
— The amount by which the City is increasing its general reserve in fiscal year 2022.
$5 billion
— The approximate annual budget gap in fiscal years 2023 to 2025 when unspecified labor savings are removed.
$1.6 billion
— The amount the City reversed its plan to use from the Retiree Health Benefits Trust to balance the budget.
$15 billion
— The amount of additional federal aid available to the City.
$1 billion
— The amount of annual labor savings the City continues to carry in fiscal years 2023 through 2025.
To ensure long-term fiscal stability, the city must prioritize rebuilding its financial safety nets by increasing the general reserve to $500 million and replenishing the Retiree Health Benefits Trust Fund. Additionally, establishing consistent annual deposits into the Rainy Day Fund will help the city better prepare for future economic crises.
Recommendations related to City Budget Reserves
The City should increase the fiscal year 2022 general reserve to $500 million to bolster its immediate financial cushion.
The City should replenish the $2.6 billion of the Retiree Health Benefits Trust Fund that was utilized during fiscal years 2020 and 2021 by the end of fiscal year 2025.
The Executive Budget should include $500 million annual deposits to the Rainy Day Fund, or 75 percent of the annual tax revenue growth above 3 percent, whichever is greater, to ensure long-term preparedness.
Key Data
$500 million
— The target amount for the fiscal year 2022 general reserve.
$2.6 billion
— The amount of the Retiree Health Benefits Trust Fund used in fiscal years 2020 and 2021 that needs to be replenished.
$500 million
— The recommended annual deposit amount for the Rainy Day Fund.
$4.6 billion
— The pre-pandemic balance of the Retiree Health Benefits Trust Fund that the city aims to return to by fiscal year 2025.
$3 billion
— The target balance for the Rainy Day Fund by the end of fiscal year 2025.
$493 million
— The current balance of the Rainy Day Fund.
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 closed significant budget gaps in fiscal years 2020 and 2021 by utilizing $4 billion in reserve funds and the Retiree Health Benefits Trust Fund, alongside federal aid and expenditure reductions. However, these short-term solutions leave the city vulnerable to future deficits, necessitating a more aggressive strategy to identify recurring savings and reduce the workforce through attrition.
Recommendations related to City Budget Reserves
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.
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures; borrowing should be a last resort.
The City should consolidate union welfare funds, phase in employee health insurance premium contributions, change work rules to improve productivity, and shrink the workforce through attrition to generate necessary savings.
Key Data
$4 billion
— The amount of reserve funds and Retiree Health Benefits Trust Fund (RHBT) assets used to close budget gaps in fiscal years 2020 and 2021.
$2.6 billion
— The amount drawn down from the Retiree Health Benefits Trust Fund (RHBT) to help close budget gaps.
$1.25 billion
— The amount maintained annually in the General Reserve and Capital Stabilization Reserve for fiscal years 2022 through 2024.
$100 million
— The remaining balance in the fiscal year 2021 general reserve, which is the minimum required by the City Charter and Financial Emergency Act.
The FY2021 New York City budget is balanced using reserves, federal aid, and uncertain savings, including $300 million in questionable police overtime reductions and $1 billion in unspecified labor savings. This approach fails to address the city's long-term fiscal challenges, leaving its financial foundation precarious due to a lack of structural changes to close multiyear budget gaps.
The City should reduce its current $1 billion general reserve to $250 million, which would release $750 million annually to help close budget gaps. Additionally, the entire $250 million capital stabilization reserve should be released to provide further fiscal relief during the current crisis.
Recommendations related to City Budget Reserves
The current budgeted general reserve of $1 billion should be reduced to $250 million, releasing $750 million per year for gap closing.
The entire $250 million capital stabilization reserve should be released in fiscal years 2022 to 2024.
Key Data
$1.25 billion
— Annual contingency reserve funds included in the budget for fiscal years 2022 to 2024.
$100 million
— Minimum general reserve the City is required to maintain.
$1 billion
— Current budgeted general reserve that should be reduced.
$750 million
— Amount released per year for gap closing by reducing the general reserve.
$250 million
— Capital stabilization reserve that should be released in fiscal years 2022 to 2024.
$2.6 billion
— Amount the City plans to use of the $4.7 billion in the Retiree Health Benefits Trust.
The Economic Development Corporation has faced increasing financial strain due to rising operating costs, particularly from the NYC Ferry system, leading to an operating loss in 2019. To address these fiscal pressures and preserve its role as a financial buffer, the agency must implement further efficiencies, such as adjusting ferry fares and scaling back planned expansions.
Recommendations related to City Budget Reserves
The Economic Development Corporation should implement dynamic fare pricing to improve the efficiency of its ferry operations.
The Economic Development Corporation should delay the launch of costly planned expansions to generate recurring savings.
The NYC Ferry system should charge higher fares on weekends and for noncommuters to reduce the need for high subsidies.
The NYC Ferry system should not run or expand routes to Coney Island and Ferry Point that require extraordinarily high subsidies.
Key Data
$263 million
— The amount of unrestricted net assets held by the Economic Development Corporation at the end of fiscal year 2019.
$116 million
— The amount of unrestricted cash and investments held by the Economic Development Corporation at the end of fiscal year 2019.
$53 million
— The amount spent by the Economic Development Corporation to subsidize NYC Ferry operations in 2019.
$1.8 million
— The operating loss recorded by the Economic Development Corporation in 2019.
$10 million
— The estimated reduction in operating costs for fiscal year 2021 resulting from recent service changes.
$130 million
— The average annual operating surplus of the Economic Development Corporation between 2012 and 2014.
The proposed legislation to establish a Rainy Day Fund for New York City lacks necessary safeguards, as it currently allows for withdrawals at the discretion of the Mayor and City Council without defined triggers. To ensure the fund functions as intended, the bill must be amended to restrict withdrawals strictly to periods of economic recession or severe emergency.
Recommendations related to City Budget Reserves
The bill S.8400/A.9789A should be amended to place 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 limit withdrawals to times of recession or severe emergency, the bill should be held.
Governments facing fiscal stress should limit the use of rainy day funds to no more than two-thirds of the total in the first year to ensure resources remain available for future needs. Reserves serve as a temporary bridge during economic downturns, but they do not provide ongoing budget relief and must be balanced with other fiscal strategies.
Recommendations related to City Budget Reserves
Governments should use no more than two-thirds of any rainy day fund in the first year of an emergency.
New York City is relying on $4.0 billion in reserves and trust fund resources to manage a projected tax revenue shortfall in the fiscal year 2021 budget. However, this short-term strategy leaves the city with only $100 million in general reserves to hedge against future risks, while facing significant budget gaps of $5.0 billion in fiscal year 2022.
Recommendations related to City Budget Reserves
The City must identify a long-term solution to the fiscal crisis rather than relying on short-term measures like tapping reserves.
Given the precarious fiscal situation and limited reserves, the City may need to implement additional spending cuts to hedge against risks.
The City will need to address significant outyear budget gaps as it faces a future with fewer available reserves.
Key Data
$4.0 billion
— Amount of reserves and Retirement Health Benefit Trust Fund resources used to support the fiscal year 2021 budget.
$100 million
— Amount in the general reserve available to hedge against fiscal risks.
$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.
The Fiscal Year 2021 Executive Budget relies on diverting $2.6 billion from the Retiree Health Benefits Trust and $1.4 billion from other reserves to address the fiscal crisis, but these short-term measures leave a $5.0 billion gap in fiscal year 2022. To better prepare for the economic downturn, the city needs a larger, more sustainable savings plan that focuses on identifying non-core services and operational efficiencies rather than relying on one-time budget maneuvers.
Recommendations related to City Budget Reserves
The City should implement a larger savings plan with more recurring value to address the fiscal crisis.
Working with its labor partners, the City should identify non-core services and subsidies to reduce or suspend, while seeking additional efficiencies in agency operations, employee benefits, contracts, leased space, and fleet operations.
Spending reductions should be focused on paring down to efficiently provide core needed services to strengthen the City’s ability to weather the economic downturn.
Key Data
$2.7 billion
— The total value of the two-year savings program.
2%
— The portion of the budget covered by the two-year savings program.
$2.6 billion
— The amount diverted from the Retiree Health Benefits Trust (RHBT) to balance the budget.
$1.4 billion
— The amount of other reserves used to balance the budget.
$5.0 billion
— The projected budget gap for fiscal year 2022.
7.4%
— The assumed tax revenue growth for fiscal year 2022.
New York City needs a well-designed Rainy Day Fund to protect against economic downturns, as current savings are insufficient to cover projected revenue losses. State and city leaders must amend the Financial Emergency Act and establish strict rules for deposits and withdrawals to ensure the fund remains a stable resource rather than a political slush fund.
Recommendations related to City Budget Reserves
The State should empower the City to enact legislation that defines a framework and rules for the RDF, specifically ensuring that conditions on withdrawals set in State statute should be mirrored in City law.
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.
Any amendments to the Financial Emergency Act should be as narrow as possible, specifying that the only two permissible uses for an RDF are a recession or severe emergency.
Existing legislative proposals should be amended to restrict use of an RDF to periods of economic contraction or severe emergency.
Key Data
$1.25 billion
— Amount of reserves set aside by New York City for the upcoming year.
$6 billion
— Near-term revenue loss estimated by the Office of the New York City Comptroller.
$20 billion
— Three-year shortfall estimated by the Citizens Budget Commission if a recession occurs.
$9 billion
— Reserves that would have been netted if the recommended strategy had been followed over the last 10 years.
1 percent
— Threshold for defining a severe emergency based on revenue shortfall or expenditure increase.
17.2 percent
— Target size of the Rainy Day Fund as a percentage of tax revenue.
New York City faces significant fiscal challenges due to the pandemic, with potential revenue shortfalls estimated at $6 billion for fiscal years 2020 and 2021, and up to $20 billion over three years. To address this, the city must move beyond a $1.3 billion savings target and implement a more ambitious plan that includes controlling non-critical spending and generating recurring savings through improved efficiency.
Recommendations related to City Budget Reserves
The City should control all non-critical spending in the current year and increase the target size of next year’s savings program to $3 billion.
To meet the imminent challenges, the savings plan should be significantly larger and explicitly focused on generating recurring savings in spending.
Agencies should be charged with generating a menu of options for spending reductions that are rooted in improving efficiency, streamlining operations, and supporting more cost-effective operations.
The City will have to update its fiscal management strategy, work with municipal unions on workforce savings, and potentially enact more far-reaching measures, such as hiring freezes, layoffs, or service cuts.
Key Data
$1.3 billion
— The savings target announced for the Executive Budget for Fiscal Year 2021.
$20 billion
— Potential revenue shortfalls over three fiscal years based on analysis of prior recessions.
$6 billion
— Estimated revenue shortfall in fiscal years 2020 and 2021.
$3 billion
— Recommended target size for next year's savings program.
0.23 percent
— Average efficiency savings previously achieved as a share of City-funded spending.
0.91 percent
— The $1.3 billion savings target announced for the Executive Budget for Fiscal Year 2021 as a share of city-funded spending.
New York City and State face significant revenue shortfalls in the event of a recession, yet currently hold only a small fraction of the necessary funds in reserve. To improve fiscal preparedness, leaders should restrain recurring spending, reallocate excess revenues into rainy day funds, and enact legislation to strictly govern the use of these reserves during emergencies.
Recommendations related to City Budget Reserves
State leaders should close state budget gaps by restraining recurring spending without relying on tax increases or fiscal gimmicks.
The state should save any revenues coming in above current projections in its rainy day funds.
The state should stop increasing school aid to wealthy districts and instead 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.
The City Council should identify savings and not add funds to support new or expanded programs.
Both the mayor and Council should commit to putting all funds above projections into reserves.
The state must pass legislation enabling the use of the rainy day fund with a requirement that it only be used during an economic recession or severe emergency.
Key Data
$34 billion
— Estimated three-year revenue shortfall for the state in the event of an average recession.
$15-20 billion
— Estimated three-year revenue shortfall for the city in the event of an average recession.
6-16%
— Percentage of the projected recession revenue shortfall that the city and state currently have in reserve.
$700 million
— Amount of revenue the state has already identified above current projections that should be saved.
1%
— Minimum percentage of city-funded expenditures the mayor should target for productivity-based savings.
The fiscal year 2021 preliminary budget fails to allocate additional funds to existing reserves despite a public mandate for a "Rainy Day Fund." To improve fiscal preparedness against potential state aid cuts and economic risks, new revenues should be prioritized for deposit into the city's reserves rather than new spending initiatives.
Recommendations related to City Budget Reserves
The City should make additional contributions to the reserves the City already has.
The City Council should ensure that new revenues are deposited in the City’s reserves.
Key Data
6%
— Annual growth in city-funded spending during fiscal years 2018 and 2019.
4.0%
— Projected city-funded spending growth in fiscal year 2020.
1.7%
— Projected city-funded spending growth in fiscal year 2021.
0.4%
— Fiscal year 2021 savings as a percentage of city-funded expenditures.
$1.5 billion to $2.0 billion
— Amount added to the budget between the Preliminary and Adopted budgets over the last two years.
New York City's budget has grown rapidly, with spending outpacing revenue and insufficient efforts to build a financial cushion for potential economic downturns. To better prepare for a recession, the city should restrain spending growth, maintain current staffing levels, and dedicate surplus revenue to bolstering its budget reserves.
Recommendations related to City Budget Reserves
The Administration and the City Council should restrain spending growth, maintain or decrease headcount, set ambitious savings targets for agencies, and dedicate revenue above the current forecast amount to bolstering the reserves.
The City should restrain city-funded spending growth by offsetting new expenses with recurring savings elsewhere in the budget.
The City should keep headcount flat, as current projections show an additional 11,085 positions by fiscal year 2022, and total city headcount should be held flat, if not reduced.
The Mayor should require all agencies to identify and implement budget savings from improved operational efficiency equal to at least 1 percent of an agency’s city-funded budget.
The City should use any additional revenue above the current financial plan to increase the surplus roll, which can then increase the budgetary reserves.
Key Data
$1.4 billion
— The amount set aside in annual budget reserves in fiscal year 2020.
$4.7 billion
— The record balance reached by the Retiree Health Benefits Trust.
$20 billion
— The potential tax revenue shortfall over three years during a recession based on prior analysis.
$714 million
— The amount of annual recurring savings that would be produced by 1 percent efficiency savings.
$300 million
— The amount set aside in annual budget reserves when the administration came into office.
New York City voters approved Ballot Question 4, amending the City Charter to establish a Rainy Day Fund that allows the city to save money during economic growth for use during recessions or emergencies. This change addresses a previous weakness in the city's financial management framework by providing a mechanism to mitigate service cuts and tax increases during difficult economic times.
Spectrum News NY1 CBC President Andrew Rein explains the importance of voting "yes" on ballot question #4, which would allow for the creation of a “rainy day fund” and let the city save money during prosperous times.
New York City should amend its Charter to establish a Rainy Day Fund that allows the city to save resources during economic growth to mitigate spending cuts and tax increases during downturns. This proposal includes specific legal language to ensure the fund can be used without violating existing balanced budget requirements or the State Financial Emergency Act.
Recommendations related to City Budget Reserves
The City should establish a Rainy Day Fund within the general fund to accumulate resources during periods of economic expansion.
The City should codify rules regarding deposits and withdrawals for the Rainy Day Fund in the New York City Administrative Code.
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.
At a fireside chat with CBC President Andrew Rein, NYC Comptroller Scott Stringer discussed City fiscal policy, the need for rainy day reserves, and how to promote New York City’s competitiveness, among other topics.
The Fiscal Year 2020 Adopted Budget increases spending, savings, and reserves, but new spending commitments exceed deposits to the City’s reserves. While the budget adds $150 million to the general reserve and $100 million to the Retiree Health Benefits Trust, most new resources were allocated to service expansion rather than being placed in reserve.
Recommendations related to City Budget Reserves
The most prudent course of action would have been to place the vast majority of these new resources in reserve.
The Mayor and Council Speaker should have gone further to bolster the City’s fiscal standing while the economy continues to thrive in order to protect New Yorkers when the rainy day arrives.
Key Data
$329 million
— New savings recognized in the Fiscal Year 2020 budget agreement.
$45 million
— Creditworthy savings from headcount and Thrive NYC reductions used to support Council spending priorities.
$150 million
— Increase to the City's general reserve in the Fiscal Year 2020 budget.
$100 million
— Increase to the Retiree Health Benefits Trust in the Fiscal Year 2020 budget.
New York City should establish a Rainy Day Fund to protect against economic downturns, as current reserves of $1.25 billion are insufficient to cover projected shortfalls of $15 billion to $20 billion. Implementing a structured savings plan with deposits of 75 percent of tax revenue growth exceeding 3 percent would help ensure fiscal stability during future emergencies.
Recommendations related to City Budget Reserves
The charter commission should approve and advance to voters in November the creation of a Rainy Day Fund (RDF).
The charter commission should leave the charter’s budgeting and financial management framework intact except to improve the charter by allowing an RDF, well structured to preserve both long- and short-term stability.
The city should determine the right size of the fund, targeting 17 percent of tax revenues 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.
The city should limit withdrawals to periods of recession or emergency, with economic triggers defined in law and RDF funds not all used in one year.
Key Data
$1.25 billion
— The amount currently included annually in the financial plan for reserves.
$15 billion to $20 billion
— The estimated projected three-year revenue shortfall from a recession comparable to the past two.
17 percent
— The target size of the Rainy Day Fund based on past revenue trends to mitigate a recession or emergency’s most damaging impacts.
75 percent
— The recommended annual deposit rate of all tax revenues in excess of 3 percent growth.
$9 billion
— The amount the city would have in its Rainy Day Fund if the recommended deposit plan had been in place during the current record-long recovery.
New York City should prioritize adding the projected $800 million surplus to its budget reserves rather than increasing spending, as current reserves are insufficient to cover potential multi-billion dollar revenue shortfalls during a recession. To fund any new initiatives, the city must identify offsetting savings, such as reducing the number of vacant positions and consolidating administrative costs like union welfare funds.
Recommendations related to City Budget Reserves
The city should add all newly identified money to the city’s reserves and offset any added spending with dollar-for-dollar reductions.
The Retiree Health Benefits Trust fund should be saved for its designed purpose—to pay future retiree health costs—and not be considered reserves to be used if the economy contracts.
New initiatives and any the mayor might propose should be funded only if spending offsets can be identified.
The budget should wipe out more of the 4,700 full-time vacancies still remaining to generate savings.
The city should pursue savings by centralizing procurement and consolidating union welfare funds.
Key Data
$800 million
— The amount of money the city could have to play with going into budget adoption.
$15 billion to $20 billion
— The potential three-year revenue shortfall that a recession could cause.
$1.25 billion
— The amount annually budgeted in reserves.
$474 million
— The amount by which personal income tax revenues came in higher than expected through the end of April.
$80 million
— Potential savings identified by centralizing procurement.
$160 million
— Potential savings identified by consolidating and centralizing union welfare funds.
New York City allocates $1.25 billion annually to its budget reserves to help mitigate potential financial instability. These reserves are intended to offset significant revenue losses during economic downturns, which could reach $15.4 billion or $20.4 billion based on historical recession scenarios.
Key Data
$1.25 Billion
— Annual amount allocated to City Budget Reserves.
$15.4 billion
— Potential tax revenue shortfall based on the 2001 recession.
$20.4 billion
— Potential tax revenue shortfall based on the 2008 recession.
New York City should establish a Rainy Day Fund to mitigate the impact of economic downturns, which could otherwise cause cumulative tax revenue shortfalls of $15 billion to $20 billion over three years. Additionally, the Retiree Health Benefits Trust should be restructured to prevent it from being used as an improper substitute for a formal reserve fund.
Recommendations related to City Budget Reserves
Creating and permitting the use of a Rainy Day Fund (RDF) would be a significant improvement to the City’s Charter-defined financial management framework.
The Charter should be amended to exclude from its balanced budget requirements a deficit that is funded by an RDF that adheres to the sound principles laid out in CBC’s recent report To Weather a Storm.
The RDF should have a target size sufficient to ameliorate the most damaging impacts of tax revenue losses due to a recession.
Minimum annual deposits into the RDF should be required during periods of economic growth.
Withdrawals should be allowed only during an economic contraction or a severe emergency, which should be precisely defined.
The Charter should be amended to properly structure the Retiree Health Benefits Trust (RHBT), which is now imprudently considered a de facto RDF.
Establishing the RHBT in the Charter can prevent its use as a de facto RDF by requiring annual deposits of at least the current year cost of the relevant retiree health benefits plus some percentage.
Key Data
$15 billion to $20 billion
— Cumulative tax revenue shortfalls New York City would face over three years during a recession comparable to the prior two.
40
— Number of balanced budgets New York City has produced under the current financial management framework.
$35,000
— Capital financing eligibility criteria for assets included in the capital asset inventory.
5-year
— Useful life requirement for assets included in the capital asset inventory.
The NYC FY 2020 Executive Budget maintains contingency and capital reserve funds at $1.25 billion annually, a level that remains insufficient to address the potential $15 billion to $20 billion revenue shortfall a recession could cause. While the budget includes savings through the Program to Eliminate the Gap, these measures rely heavily on reestimates and funding shifts rather than structural efficiency improvements needed to prepare for economic downturns.
Key Data
$1.25 billion
— Contingency and capital reserve funds are budgeted at $1.25 billion annually.
$15 billion to $20 billion
— A recession could drive a potential $15 billion to $20 billion three-year revenue shortfall, which dwarfs current reserve levels.
New York City faces potential cumulative tax revenue shortfalls of $15 billion to $20 billion over three years during a recession, yet current law prevents the establishment of a formal Rainy Day Fund. Establishing a structured fund with a target size of $10.8 billion in fiscal year 2020 would allow the city to weather economic downturns without resorting to harmful service cuts or tax increases.
Recommendations related to City Budget Reserves
The City and State should authorize the City to use a Rainy Day Fund (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 17.2 percent of the pre-recession year tax revenue to cover two years of recessionary tax revenue reductions.
Minimum required deposits should be set to deposit at least 75 percent of the annual tax revenue growth in excess of 3 percent to capture more revenue in years with faster growth.
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 the event of a recession comparable to the last two.
17.2 percent
— The target size of the Rainy Day Fund relative to pre-recession year tax revenue.
$10.8 billion
— The recommended Rainy Day Fund target size in fiscal year 2020.
75 percent
— The minimum required deposit of annual tax revenue growth in excess of 3 percent.
$8.5 billion
— The potential Rainy Day Fund balance if the deposit requirement had been in place during the current nine-year expansion.
2 percent
— The amount of annual spending growth the Rainy Day Fund target is designed to provide for.
New York City faces potential revenue shortfalls of up to $20 billion over three years in a hypothetical recession, yet current budget reserves are insufficient to cover these gaps. To avoid drastic service cuts and tax increases, the city must immediately reduce spending growth and significantly increase its financial reserves.
Recommendations related to City Budget Reserves
The Executive Budget for Fiscal Year 2020 should reflect constrained spending growth, greater budget reserves, and a substantial increase in recurring savings.
The City should take immediate action to reduce spending growth and increase reserves.
The City needs to implement savings that are substantially larger to forestall drastic service cuts and counterproductive tax increases in the midst of a recession.
Key Data
$1.25 billion
— Existing annual budget reserves that are inadequate to forestall harmful service cuts and tax increases.
$1.0 billion
— Amount included in the General Reserve annually in fiscal years 2020 through 2023.
$250 million
— Amount included in the Capital Stabilization Reserve annually in fiscal years 2020 through 2023.
$4.5 billion
— Current balance of the Retiree Health Benefit Trust (RHBT).
$103.3 billion
— Estimated liability for other postemployment benefits (OPEB) at the end of fiscal year 2018.
$2.5 billion
— Annual expense for retiree health benefits in fiscal year 2019.
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 City's fiscal year 2020 preliminary budget projects a 3.4 percent increase in city-funded spending, but requires greater recurring savings to ensure the city can maintain critical services during economic downturns. To prepare for potential financial instability, the city must limit spending growth to inflation and prioritize increasing its budget reserves.
Recommendations related to City Budget Reserves
Greater recurring savings from making government more efficient are needed to bolster reserves and make certain that the City can provide critical services to New Yorkers in both good times and bad.
Spending growth should be limited to inflation and reserves should be increased.
The Program to Eliminate the Gap (PEG) should be developed with an eye to making operations more efficient and generating recurring savings.
Key Data
3.4 percent
— City-funded spending growth projected for fiscal year 2020.
$104.1 billion
— Total of the Preliminary Ten-Year Capital Strategy for Fiscal Years 2020 to 2029.
8.7 percent
— Increase of the Preliminary Ten-Year Capital Strategy over the prior ten-year strategy.
New York City needs to prepare for potential economic downturns by increasing its budget reserves, which currently stand at $1.375 billion, and addressing long-term liabilities that include nearly $100 billion in unfunded retiree health benefits. Strengthening the city's fiscal position requires directing surplus revenues toward these reserves and debt reduction rather than solely focusing on spending growth.
Recommendations related to City Budget Reserves
When spending growth is contained, surplus revenues should be directed to build reserves needed to weather a recession.
The City should plan for annual deposits to the Retiree Health Benefits Trust at higher levels in each year of the financial plan.
Surplus revenues should be directed to paying off outstanding bonded debt to reduce the City's long-term liabilities.
The City should reduce spending and increase budget reserves to better prepare for a potential recession.
Key Data
$1.375 billion
— General Reserve and Capital Stabilization Reserve in fiscal year 2019.
$16 billion
— Potential revenue shortfall in a recession similar in scope to the previous three.
$4.8 billion
— Record size of the Retiree Health Benefits Trust.
$100 million
— Annual deposits to the Retiree Health Benefits Trust in each of the last two fiscal years.
$100 billion
— Long-term unfunded liability for retiree health insurance and other postemployment benefits.
$257 billion
— Aggregate long-term liabilities at the end of fiscal year 2018.
$89.16 billion is the size of the Adopted Budget for FY 2019. After adjusting for prepayments in prior years and other reserves and spending, the total value of spending is $92 billion. This episode features a panel of fiscal experts hosted by the Association for a Better New York. Listen…
New York City's fiscal year 2019 budget increased spending significantly while making only minor additions to reserves, leaving the General and Capital Stabilization Reserves at just 2 percent of projected spending. Furthermore, the Retiree Health Benefit Trust balance remains less than 5 percent of the city's long-term liability for retiree health insurance, highlighting a lack of adequate balance between spending and saving.
Recommendations related to City Budget Reserves
The City should develop a policy to increase the size of the Retiree Health Benefit Trust to fund its long-term retiree health insurance liability.
The City should require agencies to find recurring efficiency savings equal to 1 percent of their City-funded spending to improve the overall fiscal balance.
The City should utilize current resources as “pay-go capital” instead of borrowing to invest in infrastructure without increasing long-term liabilities.
Key Data
$1.125 billion
— The amount the fiscal year 2019 General Reserve reached after a $125 million increase.
$250 million
— The balance of the Capital Stabilization Reserve, which received no additional funding.
$4.35 billion
— The total balance of the Retiree Health Benefit Trust.
$93 billion
— The City's total liability for providing health insurance to its retirees.
2 percent
— The portion of projected 2019 City-funded spending covered by the General and Capital Stabilization Reserves.
5 percent
— The portion of the long-term retiree health insurance liability covered by the Retiree Health Benefit Trust balance.
$225 billion is the total amount added to reserves and the retiree health benefits trust fund in the recently adopted budget. In contrast, the City added more than $2 billion in new spending, far outpacing what was set aside. NYC Comptroller Scott Stringer joined the podcast to discuss the adequacy…
New York City's fiscal year 2019 budget proposal increases spending by 5.8% while failing to add to the $1.25 billion in annual budget reserves, which are insufficient for long-term fiscal health. Instead of merely maintaining current reserves, the city should prioritize spending restraint and direct surplus revenues toward reducing long-term obligations like the $90 billion retiree health benefit liability.
Recommendations related to City Budget Reserves
The city must recognize that merely maintaining current budget reserves is insufficient for fiscal stewardship and should instead prioritize spending restraint and the prudent use of resources to ease long-term burdens.
Key Data
$1.25 billion
— Total annual budget reserves maintained by the city.
$90 billion
— City's total obligation for the health benefits of public retirees.
$4.25 billion
— Current balance of the Retiree Health Benefits Trust Fund.
$76 billion
— Debt repaid by city tax dollars in the upcoming fiscal year.
$96 billion
— Expected debt repayment amount in four years.
5.8% - the increase in city-funded spending in the New York City Executive Budget for Fiscal Year 2019. Ana Champeny joins Ben and Maria to discuss increased spending, new initiatives, taxes, reserves, and more.
New York City's Fiscal Year 2019 Executive Budget increases operating spending at more than twice the rate of inflation while failing to adequately bolster financial reserves despite strong tax revenue growth. Additionally, the city's five-year capital commitment plan has expanded to approximately $82 billion, necessitating greater scrutiny and reform of capital planning processes.
Recommendations related to City Budget Reserves
The City should bolster reserves as strong tax revenue growth continues.
New York City's capital commitment plan is consistently front-loaded and overly ambitious, leading to a significant buildup of excess appropriations that are rolled forward into future years. The City's reserve for unattained commitments fails to account for the magnitude of unrealized projects, as agencies frequently commit only about half of their planned capital funding.
Recommendations related to City Budget Reserves
The City should reduce the size of the capital commitment plan to force agencies to identify their capital priorities.
The commitment plan should reflect what agencies can reasonably commit and manage in a given year.
Reducing the size of the plan will prevent the buildup of excess appropriations and allow for better oversight of capital expenditures.
Eliminating the front-loading of planned commitments will allow for more accurate timing of future commitments.
Key Data
$69.6 billion
— Total capital commitments called for in the Fiscal Year 2019 plan from fiscal year 2018 through fiscal year 2021.
$6.0 billion
— The reserve for unattained commitments in the current Preliminary Capital Commitment Plan.
28 percent
— The percentage of the current Preliminary Capital Commitment Plan held in the reserve for unattained commitments.
$1.7 billion
— The amount by which the current commitment plan exceeds the plan proposed one year ago.
$10.9 billion
— Actual capital commitments made during the previous fiscal year.
$4.2 billion
— The amount of unattained commitments beyond the reserve in the previous fiscal year.
New York City's Preliminary Budget for Fiscal Year 2019 fails to make any additions to the City's reserves, continuing a cautious approach that ignores potential federal tax law impacts and budget cuts. To ensure fiscal stability, the City must prioritize building these reserves rather than relying on dwindling debt service savings and state or federal reimbursements.
Recommendations related to City Budget Reserves
Before the going gets tough, the Mayor should get going by limiting spending growth, bolstering the savings plan, and adding to reserves.
The City should build reserves as a key strategy to attain fiscal stability.
The New York City fiscal year 2018 budget includes $1.45 billion in reserves and a $100 million deposit into the Retiree Health Benefit Trust, reflecting a cautious approach to economic uncertainty. While the city has increased these financial cushions, concerns remain regarding the growth of headcount and compensation costs that continue to pressure the budget.
Recommendations related to City Budget Reserves
Regular deposits to the Retiree Health Benefits Trust should be considered, and efforts to grow the fund should be guided by standards for deposits and withdrawals.
Given uncertainty in Washington, D.C. and in the local economy, the City should limit new spending and achieve more savings, tax reductions, and reserves.
Key Data
$1.45 billion
— Total amount of city reserves in fiscal year 2018, which increased by $200 million from the Executive Budget.
$100 million
— Amount deposited into the Retiree Health Benefit Trust, bringing it to its highest balance.
$4.2 billion
— Projected surplus at the end of fiscal year 2017 to be used to prepay fiscal year 2018 expenses.
New York City's current reserve levels of $1.25 billion, representing only 2 percent of city-funded expenditures, are insufficient to weather a potential economic recession. Furthermore, the $4.0 billion in the Retiree Health Benefit Trust should be strictly reserved for retiree health care costs rather than treated as a general rainy day fund.
Recommendations related to City Budget Reserves
The City should move toward cumulative reserves sufficient to weather a recession.
The City should establish guidelines to require annual deposits and limit withdrawals from the Retiree Health Benefit Trust to special circumstances.
There should be a better balance between funding new needs and bolstering reserves.
Key Data
$1.25 billion
— Current annual level of the City's reserves.
2 percent
— Current level of reserves as a percentage of city-funded expenditures, which is considered too low.
$4.0 billion
— Assets currently held in the Retiree Health Benefit Trust.
The Citywide Savings Program relies heavily on debt service savings and re-estimates rather than operational efficiencies, with only 10 percent of savings coming from improved productivity. To better prepare for economic uncertainty and potential federal funding cuts, the administration should prioritize recurring efficiency savings to build more robust budget reserves.
Recommendations related to City Budget Reserves
To serve as a meaningful hedge against budget risks, all of the additional $500 million in 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 between fiscal years 2017 and 2021.
9.7 percent
— Portion of total savings derived from improving the efficiency of government operations.
$500 million
— Additional savings the Office of Management and Budget has committed to finding for the Executive Budget.
$366 million
— Total efficiency savings identified, representing less than 10 percent of the Citywide Savings Program.
The Bond Buyer Maria Doulis of the watchdog Citizens Budget Commission and Howard Cure of Evercore Wealth Management dissect New York City’s $82 billion budget with Bond Buyer Northeast regional editor Paul Burton. They explore efficiencies, debt management, reserves, the economy, the capital budget and Mayor Bill de Blasio’s plan…
Mayor de Blasio's financial plan includes a $17.8 billion increase in total expenditures through fiscal year 2020, with the general reserve being increased to $1.0 billion annually. While this reserve increase represents a positive policy shift, it accounts for only 5 percent of the total planned spending growth, which is primarily driven by rising personal service costs.
Key Data
$1.0 billion
— The amount to which Mayor de Blasio has increased the general reserve annually.
$300 million
— The general reserve amount prior to Mayor Bloomberg's reduction in fiscal year 2014.
$150 million
— The reduced general reserve amount under Mayor Bloomberg in fiscal year 2014.
$850 million
— The total increase in the general reserve.
5 percent
— The portion of the total planned spending increase represented by the $850 million increment to the general reserve.
New York City faces a $70 billion liability for retiree health benefits, yet the dedicated trust fund created to address these costs has historically been used as a reserve fund to cover budget gaps. To ensure long-term fiscal stability, the City should establish explicit guidelines that mandate consistent annual deposits and restrict withdrawals to specific, unexpected circumstances.
Recommendations related to City Budget Reserves
There should be explicit guidelines requiring annual deposits and limiting withdrawals only to special circumstances, such as when there are unexpected spikes in retiree health insurance premiums.
Deposits should be calculated based on a share of the annual cost of retiree health benefits.
Mayor de Blasio and the City Council should adopt explicit guidelines as part of the imminent budget agreement.
Key Data
$70 billion
— The City of New York's total liability for retiree health insurance costs and other post-employment benefits.
$2.2 billion
— The amount the City depleted from the Retiree Health Benefits Trust over the course of four years starting in 2010.
$3.7 billion
— The highest level ever reached by the Retiree Health Benefits Trust balance.
4 percent
— The portion of the outstanding retiree health benefit liability currently covered by the trust fund.
$100 million
— The approximate deposit required in fiscal year 2017 based on a 5 percent contribution rate.
$82 billion
— The size of the City's annual budget.
New York City's fiscal plan relies on a $3.4 billion surplus to fund increased spending and establish a $1 billion annual reserve, yet faces significant future budget gaps ranging from $2.2 billion to nearly $3.0 billion. These long-term financial challenges are exacerbated by speculative savings targets and the ongoing fiscal crisis at Health + Hospitals, which faces projected deficits growing to $1.8 billion by 2020.
Key Data
$3.4 billion
— The amount of surplus funds available to be rolled into the next year to create a reserve and support increased spending.
$1 billion
— The amount of the reserve included in each year of the financial plan to help cope with the fiscal squeeze.
$2.2 billion to nearly $3.0 billion
— The range of projected budget gaps the city faces after fiscal year 2017.
$1.8 billion
— The projected deficit for the Health + Hospitals system in 2020.
The fiscal year 2017 executive budget maintains $1.5 billion in reserves while increasing the Retiree Health Benefits Trust Fund by $250 million to reach a record total balance of $3.7 billion. These financial measures accompany a $2.5 billion increase in city-funded spending, which relies on uncertain savings plans and conservative revenue projections amidst a slowing national economy.
Key Data
$1.5 billion
— The amount of reserves retained in the fiscal year 2017 budget.
$250 million
— The amount added to the Retiree Health Benefits Trust Fund.
$3.7 billion
— The total balance of the Retiree Health Benefits Trust Fund, which is the highest ever.
New York City's fiscal planning for 2017 requires careful scrutiny of whether the administration will adequately increase budget reserves during a period of economic growth. Additionally, the city must determine if its savings plan is robust enough to offset new spending initiatives and improve long-term fiscal stability.
Recommendations related to City Budget Reserves
The city should ensure that budget reserves grow steadily during periods of economic prosperity.
Officials must resist the temptation to raid the Retiree Health Benefits Trust, which currently contains approximately $3.1 billion, to provide budget relief.
The administration should increase the size of the Citywide Savings Plan to meaningfully offset the cost of new initiatives and boost reserves.
Key Data
$1.5 billion
— Total reserves included in the January financial plan for fiscal year 2017, consisting of $1 billion in the general reserve and $500 million in the capital stabilization reserve.
$3.1 billion
— Current balance of the Retiree Health Benefits Trust, which should be protected from being used for budget relief.
$1.85 billion
— Total value of the five-year Citywide Savings Plan for fiscal years 2016 to 2020.
0.6 percent
— Size of the Citywide Savings Plan relative to total city-funded spending.
The fiscal year 2017 Citywide Savings Program is insufficient to offset new spending or adequately prepare for an economic downturn, as it relies heavily on one-time adjustments rather than long-term operational efficiencies. To protect against future fiscal instability, the city must prioritize recurring savings and exercise greater spending restraint to build necessary budget reserves.
Recommendations related to City Budget Reserves
In advance of the Executive Budget proposal, the Mayor should ask agencies to identify operational efficiencies that provide recurring savings to increase its 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
— Increase in city-funded spending in the fiscal year 2017 budget proposal.
$1.9 billion
— Total value of new savings initiatives proposed in the fiscal year 2017 Citywide Savings Program over fiscal years 2016 to 2020.
0.6 percent
— Savings as a share of city-funded spending during the fiscal year 2016 to 2020 period.
45 percent
— Decline in the Chinese stock market from its peak in June.
70 percent
— Drop in the price of a barrel of oil since June 2014.
New York City's preliminary budget increases spending by 4.5 percent without raising tax rates, yet fails to include a serious savings plan or a meaningful boost to the $1.5 billion in existing reserves. To ensure long-term financial stability, the city must aggressively pursue agency efficiencies and increase deposits into the retiree health benefits trust fund.
Recommendations related to City Budget Reserves
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.
A strong savings program will be essential to boost reserves, which currently stand at $1.5 billion.
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
— New York City Mayor Bill de Blasio unveiled his preliminary budget.
4.5 percent
— City-funded spending is increasing, including budget reserves and after adjusting for debt prepayments.
$400 million
— The mayor’s budget includes agency savings in fiscal year 2016.
$269 million
— The mayor’s budget includes agency savings in fiscal year 2017.
$1.5 billion
— City budget reserves currently stand at this amount, the same as last year.
$3.4 billion
— The retiree health benefits trust fund has grown to this amount.
The Metropolitan Transportation Authority faces significant financial risk from potential economic downturns, with an illustrative recession scenario projecting a $1.5 billion revenue shortfall over four years. To mitigate these risks, the agency should adopt more cautious revenue projections, establish an explicit rainy day fund, and restrict the diversion of capital and retiree benefit funds to cover operating deficits.
Recommendations related to City Budget Reserves
More cautious economic and revenue assumptions seem appropriate to anticipate a future recession.
New policies regarding reserves would be a constructive step for the agency.
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
$630 million
— The amount of general reserves available from 2016 to 2019, which is insufficient to cover the projected $1.6 billion shortfall.
$1.5 billion
— The potential cumulative revenue shortfall the MTA could face over a four-year period in an illustrative recession scenario.
$616 million
— The revenue loss in Year Three of the illustrative recession scenario, representing a 3.9 percent shortfall relative to plan assumptions.
$20 billion
— The current unfunded OPEB liability of the MTA, which would grow by about $1.5 billion annually without future funding.
$15.8 billion
— The total expected operating expenses and debt service for the MTA in 2018, the third year of the financial plan.
The fiscal year 2016 executive budget increases reserves for potential adverse developments by $1,030 million, including a $250 million boost to the general reserve and the creation of a $500 million capital program fund. These additions, alongside a $280 million increase in the Retiree Health Benefit Trust, represent a prudent use of unanticipated tax revenues.
Key Data
$1,030 million
— Increase in reserves for potential adverse developments.
$250 million
— Increase in the general reserve.
$1.0 billion
— Total amount of the general reserve.
$500 million
— Amount allocated to the new capital program fund.
$280 million
— Increase in the Retiree Health Benefit Trust.
New York City's current revenue forecasting relies on optimistic projections that could lead to significant budget shortfalls if an economic downturn occurs. Existing reserves of $750 million are insufficient to cover the potential $2 billion to $4 billion in revenue losses that would likely occur in the first year of a recession.
Recommendations related to City Budget Reserves
Fiscal discipline requires that the city utilize tax revenue forecasts that are rigorous and cautious to provide a margin of error against potential revenue shortfalls.
The city must maintain larger budget reserves, as the current $750 million general reserve is inadequate to cover the $2 billion to $4 billion in revenue losses expected in the first year of a recession.
Key Data
$750 million
— The amount of the city's current general reserve.
$2 billion to $4 billion
— The likely revenue losses in the first year of a recession that current reserves would not cover.
$15.8 billion
— The cumulative shortfall relative to the OMB forecast if the 2001 recession were to repeat.
$24.1 billion
— The cumulative shortfall relative to the IBO forecast if the 2001 recession were to repeat.
$6.1 billion
— The amount tax revenue would fall below the OMB financial plan forecast if the 1989 recession were repeated.
$12.6 billion
— The reduction in predicted revenue if the most recent recession were repeated.
New York City's Preliminary Budget for Fiscal Year 2016 utilizes economic growth to address service needs while maintaining a general reserve for potential risks. The city's ten-year capital strategy has increased to $68 billion, prompting a need for careful review of spending commitments and debt burdens.
New York City's fiscal year 2015 budget increases the general operating reserve to $750 million and replenishes the Retiree Health Benefits Trust to approximately $2 billion. Despite these additions, the city faces projected budget gaps of $2.6 billion in 2016, $1.9 billion in 2017, and $3.1 billion in 2018, necessitating a renewed focus on expense reduction and efficiency programs.
Recommendations related to City Budget Reserves
The Mayor and the Council should reduce expenses and continue to enhance the City’s reserves.
The de Blasio Administration should develop guidelines for regular deposits to and potential withdrawals from the Retiree Health Benefits Trust in order to prevent future raids on the fund.
Implementing new priorities in the budget should be coupled with a renewed emphasis on finding efficiencies within agency operations through a Program to Eliminate the Gap (PEG) program.
Key Data
$864 million
— Amount added to the Retiree Health Benefits Trust, bringing the fund’s balance to approximately $2 billion.
$750 million
— The amount the general operating budget reserve was increased to, up from $300 million.
$2.6 billion
— Projected budget gap for fiscal year 2016.
$1.9 billion
— Projected budget gap for fiscal year 2017.
$3.1 billion
— Projected budget gap for fiscal year 2018.
$1 billion
— Amount drawn from the off-budget Health Insurance Stabilization Fund to offset labor agreement costs.
The tentative labor agreement between New York City and the teachers union resolves significant financial uncertainty by providing wage increases over five years, with costs partially covered by existing budget reserves and projected health care savings. While the contract aims to establish a pattern for other city workers, its long-term affordability depends on achieving substantial health care cost reductions.
The Fiscal Year 2015 preliminary budget increases annual future reserves from $300 million to $600 million to mitigate budgetary risks from labor contracts and other financial pressures. Additionally, the city plans to restore $1 billion to the Retiree Health Benefits Trust Fund, though future withdrawals should be restricted until clear usage guidelines are established.
Recommendations related to City Budget Reserves
No further withdrawals from the Retiree Health Benefits Trust Fund should occur unless and until clear guidelines for its use have been established.
Key Data
$1 billion
— Amount restored to the Retiree Health Benefits Trust Fund in the current fiscal year.
$300 million
— Previous annual amount of reserves set aside in future years of the financial plan.
$600 million
— New annual amount of reserves set aside in future years of the financial plan.
$92.5 billion
— The City's total retiree health liability.
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 OPEB liability that the city has no resources to address
The city faces a significant fiscal challenge regarding expired municipal labor contracts, as the lack of set-aside reserves means any retroactive pay raises would require funding from the current operating budget. This potential one-time cost could reach $7 billion, necessitating either sharp tax increases or significant spending cuts to cover the expense.
Recommendations related to City Budget Reserves
Taxpayers should pay attention to how candidates handle their courtship of union members' votes regarding the negotiation of municipal labor contracts.
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 retroactive pay raises.
New York City is facing a shift in its fiscal landscape as the era of consistent, large tax revenue surpluses has ended, forcing the city to rely on one-time resources and reserve drawdowns to balance the budget. To address future deficits, the city must consider structural changes, such as reforming generous municipal employee health insurance policies or implementing tax increases and service cuts.
Recommendations related to City Budget Reserves
The City should tackle spending arrangements that drive budget growth and out-year deficits, particularly the generous health insurance policies for municipal employees and retirees.
The City should consider raising taxes or imposing additional cuts on services and personnel if revenue surpluses no longer materialize.
Key Data
$5.3 billion
— The peak of unanticipated tax revenues reached in fiscal year 2007.
$114 million
— The amount by which fiscal year 2012 tax collections are running above the initially budgeted sum.
$42.2 billion
— The total tax revenue amount for fiscal year 2012.
$7 billion
— The amount by which Wall Street profits are running below what was assumed when the budget was adopted.
$1 billion
— The revenue generated from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— The amount drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
New York City's reliance on unanticipated tax revenues to balance its budget is becoming unsustainable as collections are no longer exceeding expectations. The city is now forced to rely on one-time resources and draw down reserves to cover budget gaps, necessitating a shift toward more fundamental structural changes.
Key Data
$5.3 Billion
— The high of unanticipated tax revenues reached in fiscal year 2007.
$114 Million
— The amount by which fiscal year 2012 tax collections exceeded the initially budgeted sum.
$7 Billion
— The amount by which Wall Street profits are running below what was assumed when the budget was adopted.
$1 Billion
— The revenue generated from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 Billion
— The revenue drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
0.3%
— The percentage increase in total tax revenues of $42.2 Billion for fiscal year 2012.
Diverting money from the Health Insurance Premium Stabilization Fund to balance the fiscal year 2012 budget is a short-term fiscal gimmick that fails to address the underlying structural imbalance where expenses grow faster than revenues. Instead of relying on one-time funds, the city should implement structural reforms like health insurance premium cost sharing, which could generate $625 million in annual savings.
Recommendations related to City Budget Reserves
City and labor leaders should focus their cooperative efforts on meaningful reforms of health insurance instead.
The City’s elected and union leaders should seek large-scale savings that reduce the need for these tough choices in the future.
Following the example of State employees, who contribute 10 percent of the premium for individual coverage and 25 percent for family coverage, would provide annual savings of $625 million – enough to prevent the cuts, keep the budget balanced, and place the City on firmer long-term footing.
Key Data
$500 million
— Amount accumulated in the Health Insurance Premium Stabilization Fund.
$4.7 billion
— Projected budget gap for fiscal year 2013.
$625 million
— Estimated annual savings from implementing health insurance premium cost sharing.
$1 billion
— Annual taxpayer contributions to separate union welfare funds.
$150 million
— Savings implemented in 2009 from increased deductibles for hospital and medical services.
4,300
— Number of teacher layoffs the City Council aimed to prevent in 2012.
New York City faces a budget crisis that could be mitigated by reforming expensive retiree health insurance commitments rather than depleting the Retiree Health Insurance Trust fund. Implementing these reforms, such as ending Medicare Part B premium reimbursements and requiring premium-sharing, would generate significant savings to preserve the trust and avoid service cuts.
Recommendations related to City Budget Reserves
The city should end reimbursement for Medicare Part B premiums to bring the city in line with the public-sector norm.
The city should increase vesting requirements for retiree health insurance for the rest of the city workforce.
The city should require retirees to share in the cost of their premiums to align with New York state requirements.
Key Data
$1.5 billion
— Retiree health insurance cost in the current year.
$2.2 billion
— Projected retiree health insurance cost by 2015.
50 percent
— Growth in retiree health insurance costs in just four years.
$70 billion
— Unfunded liability created by retiree health insurance obligations.
$1.2 billion
— Total withdrawals elected officials have already agreed to make from the trust.
$4.7 billion
— Budget gap lingering for the next year.
New York City's retiree health insurance trust fund, established to address a $70 billion unfunded liability, faces depletion due to planned withdrawals to cover budget deficits. Instead of tapping these reserves, the City should implement structural reforms like eliminating Medicare Part B reimbursements and requiring retiree premium contributions to ensure long-term fiscal stability.
Recommendations related to City Budget Reserves
The City should protect the trust fund from any further drawdowns, including the ones already scheduled for the current and subsequent fiscal years.
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 for the public workforce.
The City should institute premium sharing for retiree health insurance to align with other public employers.
The City should make additional deposits into the trust fund when the City returns to prosperity.
Key Data
$1.2 billion
— Planned withdrawal from the retiree health insurance trust fund for general budget relief.
$70 billion
— The unfunded accrued liability for retiree health benefits.
$3.2 billion
— Total resources in the trust fund by fiscal year 2009.
$240 million
— Savings generated in the current year by eliminating Medicare Part B premium reimbursements.
$620 million
— Savings generated in the current year if retirees paid for half the cost of their premiums.
$975 million
— Combined value of savings in fiscal year 2012 that would be enough to preserve the trust fund.
New York City's fiscal year 2011 budget relies on the final exhaustion of accumulated surpluses from previous years to cover expenditures, leaving the city vulnerable to future gaps. Without these reserves, the city must address unsustainable expenditure growth, particularly in public employee benefits and debt service, to ensure long-term fiscal stability.
Recommendations related to City Budget Reserves
The City should reform health care and retirement benefits for workers by requiring employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees to achieve significant annual savings.
The City should scale back the capital commitment plan to focus on key priorities like state-of-good-repair work on aging infrastructure while trimming less urgent development projects.
The City should create a new pension tier that requires greater employee contributions and a longer vesting period to generate annual savings.
Key Data
$3.6 billion
— The amount of surplus from fiscal year 2010 used to balance the fiscal year 2011 budget.
$4.6 billion
— The projected amount by which expenditures will exceed revenues in fiscal year 2012.
$4.6 billion
— The total accumulated surplus from the boom years by the end of fiscal year 2008.
$13.4 billion
— The record-high capital commitments made in fiscal year 2010.
The city should preserve the $2.5 billion retiree health benefits trust fund for its intended purpose rather than using it as a rainy day fund to balance the budget. With over $3.3 billion in surplus revenues available, the city should avoid drawing down these reserves and instead focus on long-term fiscal stability.
Recommendations related to City Budget Reserves
The City Council should reject the depletion of the retiree health insurance trust fund to ensure it remains available for its original purpose of funding future retiree health benefits.
The City should reserve the funds in the retiree health benefits trust for their intended purpose rather than using them for general budget balancing.
Key Data
$2.5 billion
— Total amount placed in the trust fund created to begin funding costs associated with future health benefits for retirees.
$65 billion
— Accrued future liability associated with retiree health benefits.
$3.3 billion
— Surplus revenues available in the current year.
$82 million
— Amount drawn from the retiree health benefits trust fund in the current fiscal year.
New York City faces significant budget gaps due to the recession, prompting calls to avoid using the $2.5 billion Retiree Health Insurance Trust Fund as a de facto rainy day fund. Instead, the city should establish a policy linking withdrawals from this reserve to the growth in current-year liabilities for retiree health insurance premiums.
Recommendations related to City Budget Reserves
The City should adopt a policy for the future use of the Retiree Health Insurance Trust Fund that links withdrawals to growth in the current year liability for retiree health insurance premiums rather than using it as a de facto rainy day fund.
The City should cease relying on inappropriate non-recurring revenues to balance the budget.
The City should avoid using the Retiree Health Insurance Trust Fund to cover the cost of additional pension fund contributions stemming from investment losses.
Key Data
$2.5 billion
— Amount held in the Retiree Health Insurance Trust Fund.
$1.1 billion
— Amount of the drawdown from the Retiree Health Insurance Trust Fund over three years.
New York City faces unprecedented budget gaps, with projections reaching $6.4 billion for fiscal year 2003-04, necessitating a shift away from borrowing and one-time gimmicks toward structural expenditure reductions. Implementing strategies such as a 40-hour work week for civilian employees, streamlining procurement, and restructuring special education could yield over $1 billion in annual savings.
Recommendations related to City Budget Reserves
The City should not – and probably cannot because of creditor resistance – again borrow to close the coming budget gap.
The City should have a long-run strategy for limiting expenditures, in addition to its historical focus on short-run measures for the current year.
Current efforts to balance the budget should eschew borrowing and other gimmicks that create large future costs.
Those civilians not working a 40-hour week should be required to work a 40-hour week to realize $498 million in annual savings.
The City should move enough students from the most restrictive settings to less restrictive settings to bring its pattern of placements into line with the rest of New York State.
Key Data
$6.4 billion
— The projected budget gap for fiscal year 2003-04.
$1 billion
— The total annual savings from the five proposed ways to lower the cost of government.
$498 million
— The annual savings realized by requiring civilian employees to work a 40-hour week.
$267 million
— The annual savings from restructuring special education services.
$251 million
— The annual savings from implementing more rational staffing at the Police Department.
$197 million
— The annual savings from streamlining the City's procurement process.
The report examines the fiscal impact of municipal collective bargaining, noting that pension fund reserves and contributions are significantly affected by legislative changes made outside of the bargaining process. It recommends restructuring pension systems to defined contribution plans for new hires and modernizing health insurance to ensure long-term fiscal stability for the city.
Recommendations related to City Budget Reserves
The City should use the current round of collective bargaining to achieve two changes in its pension systems, including for current employees, prohibit benefit enhancements outside of collective bargaining.
For newly hired workers, the City should establish a new defined contribution plan to protect itself from fiscal risks and abuses.
The City should modernize the health insurance program by following the premium cost-sharing strategy now widespread among public and private employers.
Key Data
$798 million
— The recurring annual cost of pension enhancements added in 2000 outside of collective bargaining.
$100 billion
— The combined assets of the five pension systems as of June 30, 1999.
4.8 percent
— The City's pension contribution as a percent of payroll in 2000.
9.5 percent
— The projected City pension contribution as a percent of payroll in 2004.
$470 million
— The temporary savings from the health insurance premium freeze over three years.
No results for your current filters. Manually edit your filters, or
clear the filters.
Share Feedback
Give a star rating, write a comment of at least 10 words, or both.
