New York City’s fiscal history encompasses the evolution of the municipal budget, the management of public debt, and the recurring challenges of maintaining economic competitiveness and service delivery. This page covers CBC’s work on budget gaps and fiscal cliffs, the establishment and management of Rainy Day Funds, long-term debt capacity and capital planning, property tax reform, and the lessons learned from the 1975 fiscal crisis.
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 City must keep its fiscal house in order by acknowledging that government cannot do it all and that living within its means helps everyone.
The City must focus on what works most and trim what doesn’t, even if it is popular, to avoid hurting those it should help.
City government needs to deliver a high quality of life, including quality schools and safe streets, to prevent people from leaving.
The City needs civic leadership focused on the good of all New Yorkers, willing to restrain special interests in favor of the greater good.
The City and municipal unions should work together to modernize government to share the financial benefits of more efficient services.
The City should collaborate with nonprofit providers to focus resources on the most effective evidence-based services, scaling those that improve lives while shrinking those that do not.
Key Data
As of 2022, filers with adjusted gross income over $1 million—less than 1% of all filers—paid 40% of New York’s personal income taxes.
Reflecting on the 1975 fiscal crisis, where the City faced a default on $453 million in debt, the CBC noted in October 2025 that the City now spends $120 billion annually.
Between 2018 and 2022, New York City lost more than 100,000 net residents and $13.7 billion in personal income to Florida, according to a June 2025 report.
As of the 2023 fiscal year, the City held $96.9 billion in outstanding debt against a debt limit of $127.5 billion, leaving roughly 24% of its borrowing power remaining.
In April 2022, the CBC warned that a combination of a $3 billion budget gap, $4 billion in employee raises, and a $2 billion fiscal cliff created a $9 billion recipe for fiscal disaster by 2026.
New York City's share of U.S. millionaires fell from 6.5% to 4.2% between 2010 and 2022, a decline that cost the city $2.5 billion in potential personal income tax revenue in 2022 alone. To reverse this trend and maintain fiscal stability, the city must prioritize housing production, public safety, and service efficiency rather than relying on tax increases that risk further eroding the city's economic competitiveness.
Recommendations related to City Fiscal History
Expanding housing production to improve affordability is paramount to ensuring that living in New York remains feasible and attractive for a broad range of residents.
Clean and safe streets are equally vital, providing the order and quality of life that residents, businesses and visitors deserve.
High-quality and efficient public services — from transit to education — support a prosperous city.
Stable public finances preserve services for all New Yorkers.
Focusing on the fundamentals strengthens New York City’s value proposition.
Key Data
40%
— Share of New York’s personal income taxes paid by filers with adjusted gross income over $1 million in 2022.
$18 billion
— Projected revenue from personal income taxes in fiscal year 2026.
35%
— Decline in the share of U.S. millionaires living in New York City between 2010 and 2022.
$2.5 billion
— Additional personal income tax revenue the City would have collected in 2022 if it had maintained its 2010 share of millionaires.
$10.7 billion
— Additional personal income tax revenue the State would have collected in 2022 if it had maintained its 2010 share of millionaires.
14.776%
— Combined top marginal tax rate for the highest earners in New York State and City.
Fifty years ago today New York City came within hours of bankruptcy, one of the most significant events of the Fiscal Crisis. This episode features interviews with two of the era’s heroes—Stephen Berger, who served as Executive Director of the State Emergency Financial Control Board, and Eugene Keilin, Executive Director…
Fifty years after the 1975 fiscal crisis, New York City faces a precarious budget situation that requires a renewed focus on fiscal discipline and efficient service delivery. By prioritizing effective programs and fostering collaborative leadership, the city can overcome current challenges like outmigration and housing affordability to ensure a stable future.
Recommendations related to City Fiscal History
The City must keep its fiscal house in order by acknowledging that government cannot do it all and that living within its means helps everyone.
The City must focus on what works most and trim what doesn’t, even if it is popular, to avoid hurting those it should help.
City government needs to deliver a high quality of life, including quality schools and safe streets, to prevent people from leaving.
The City needs civic leadership focused on the good of all New Yorkers, willing to restrain special interests in favor of the greater good.
The City and municipal unions should work together to modernize government to share the financial benefits of more efficient services.
The City should collaborate with nonprofit providers to focus resources on the most effective evidence-based services, scaling those that improve lives while shrinking those that do not.
Key Data
$453 million
— The amount of debt New York City had to repay 50 years ago, which it could not afford, leading to the Fiscal Crisis.
$120 billion
— The amount New York City currently spends annually, which should be used efficiently to deliver a high quality of life.
New York City faces significant challenges with declining domestic migration, including the loss of 100,000 residents and $13.7 billion in personal income to Florida between 2018 and 2022. To restore competitiveness and fiscal stability, the city must prioritize sustainable spending, tax restraint, and evidence-based management, drawing lessons from the fiscal discipline that helped resolve the 1975 crisis.
Recommendations related to City Fiscal History
Leaders should choose to trim spending to sustainable levels, build up rainy day funds during good times, and negotiate labor deals that balance fair wages with fiscal reality.
Leaders need to choose management systems that deliver results and hold officials accountable.
The city should focus on evidence-based programs in education and mental health and make the hard choice to eliminate ineffective initiatives, regardless of their political popularity.
The city must choose to hold the line on taxes, pull out all the stops to boost housing production, make public spaces vibrant, and use only the tax incentives proven to grow our economy.
The city needs to first choose to get our roads, bridges, and buildings into good shape or we will have no foundation on which to build our future economy.
The city should choose standardized over customized designs to save money.
Key Data
11%
— Percentage of New Yorkers who believe the city is wisely spending its $115 billion annual budget.
$115 billion
— The city's total annual budget.
100,000
— Number of net residents lost to Florida between 2018 and 2022.
$13.7 billion
— Amount of personal income lost to Florida between 2018 and 2022 due to resident migration.
one-third
— Portion of New Yorkers who rate the city's quality of life positively.
half a million
— Number of residents lost during the peak of the pandemic.
$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 current approach to managing its debt limit through ad-hoc, lump-sum increases is fiscally unsound and fails to provide long-term predictability for capital planning. Instead, the City should adopt a holistic framework that indexes debt limits to economic capacity, such as total personal income, and formalizes strict debt service limits to ensure long-term fiscal sustainability.
Recommendations related to City Fiscal History
The City and State should index the TFA Statutory limit to 2.5 percent of total personal income to ensure the City’s debt capacity grows with its underlying economic capacity.
The City should formalize its long-standing practice of keeping annual debt service costs below 15 percent of tax revenue to protect its operating budget and credit ratings.
The State should amend the Constitutional debt limit to be more holistic by creating a single limit based on an appropriate economic metric that covers all City debt repaid with tax revenues.
The City should continuously and comprehensively improve how it makes capital investments, including prioritizing projects, reducing costs, and streamlining project delivery.
Key Data
$18.5 billion
— The amount the City requested to increase the TFA Statutory limit.
$12 billion
— The amount the Governor proposed to increase the TFA Statutory limit over two years.
$152.2 billion
— The total cost of the current City-funded capital plan over 10 years.
$13.5 billion
— The TFA Statutory limit as of fiscal year 2023.
15 percent
— The threshold the City should formally adopt for annual debt service as a percent of tax revenue.
$17 billion
— The amount of additional projects the City identified but did not include in its current capital plan.
New York City faces a potential $9 billion fiscal disaster by 2026 due to a combination of budget gaps, employee raises, and fiscal cliffs, compounded by the risk of a $17 billion revenue shortfall in a future recession. To avoid service cuts or tax increases, the city must prioritize efficiency, build up the Rainy Day Fund, and address the reliance on nonrecurring federal funds for ongoing programs.
Recommendations related to City Fiscal History
The mayor and council must resist the temptation to use additional tax revenue to expand services.
The city should schedule $500 million annual deposits to the Rainy Day Fund, which could come from the budgeted General and Capital Stabilization Reserves.
The executive budget should address the budget’s fiscal cliffs where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
The city must lower costs, ideally by improving efficiency or by reducing lower impact programs.
The city should use this next round of collective bargaining contracts to further increase productivity, which would generate savings to fund raises and stabilize the budget.
Key Data
$9 billion
— The combined total of the existing budget gap, employee raises, and fiscal cliff that creates a recipe for fiscal disaster by 2026.
$17 billion
— The potential three-year revenue shortfall the city could face if another recession occurs.
$4.3 billion
— The cost of 3% annual raises for city employees in the third year.
$1.5 billion
— The annual savings that would be generated by a 3% Program to Eliminate the Gap for Productivity.
$2 billion
— The fiscal cliff amount the city faces by fiscal year 2026.
The next New York City Comptroller will play a critical role not only in holding the next Administration and agencies accountable, investing and managing five pension funds with $248 billion in assets, and partnering in $13 billion City debt issuance, but also in spotlighting and promoting New York City’s fiscal…
New York City's 2020 fiscal crisis, characterized by a budget $2 billion higher than 2018 levels, requires rigorous management and labor partnerships rather than borrowing to avoid the near-bankruptcy scenarios experienced in the 1970s. Instead of layoffs or debt, the city should pursue agency efficiencies, attrition, and health insurance savings to ensure long-term fiscal stability.
Recommendations related to City Fiscal History
Commissioners should comb their agencies to increase efficiency of city services, or reduce spending on lower priorities.
The city should use attrition; a stricter hiring freeze could reduce the workforce by 7,000 employees a year, while still allowing the city to fill two-thirds of its vacancies.
The administration should reinvigorate the successful labor-management committee established in 2014 to reduce health insurance spending.
If borrowing does become justified, authorization should come with significant conditions and oversight.
The Financial Control Board should have to certify and oversee the plan and borrowing, reestablishing a control period.
Key Data
$1 billion
— Amount of labor savings committed to in the budget that had no identified savings to fulfill.
7,000
— Number of employees the city could reduce per year through a stricter hiring freeze.
$2 billion
— Amount by which the current city budget, adjusted for inflation, is higher than what the city spent in 2018.
14,000
— Number of additional workers the city has compared to the highest point before the last recession.
$5 billion
— Amount the city would borrow, which would require paying back $7 billion.
$7 billion
— Amount the city would have to pay back if it borrowed $5 billion.
The FY2021 New York City budget was precariously balanced using reserves, federal aid, and questionable savings, failing to address long-term fiscal gaps. Without implementing recurring efficiency savings and aggressive attrition, the city faces significant risks of drastic service reductions and layoffs.
Recommendations related to City Fiscal History
City leaders should focus their management on actions that reduce the yawning multiyear budget gaps presented by the fiscal crisis.
The City must implement a program of recurring efficiency savings and aggressive attrition to avoid drastic service reductions and layoffs.
Key Data
$300 million
— The amount by which the city aimed to reduce police overtime, which was deemed highly unlikely given the weak history of overtime management.
$1 billion
— The amount of unspecified savings the city aimed to produce by working with municipal labor unions.
The proposed legislation to establish a Rainy Day Fund for New York City lacks necessary safeguards, potentially allowing the fund to be used as a slush fund rather than a reserve for emergencies. To ensure fiscal responsibility, the fund's usage should be strictly limited to defined periods of economic recession or severe emergency, rather than allowing withdrawals at the discretion of city officials.
Recommendations related to City Fiscal History
Any withdrawal from the Rainy Day Fund should be limited only to times of economic recession or severe emergency, which should be defined in law.
A recession should be defined as 2 successive quarters of economic contraction as indicated by declines in real gross city product or employment.
A severe emergency should be defined as an event accompanied by revenue losses or increased expenditures of at least 1% of city-funded spending.
The Governor should negotiate a chapter amendment with bill sponsors to require that any withdrawal be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
Key Data
50%
— The maximum portion of the Rainy Day Fund balance that could be withdrawn to balance the budget without requiring an explanation.
1%
— The minimum threshold of revenue losses or increased expenditures required to define a severe emergency for the purpose of accessing the Rainy Day Fund.
2
— The number of successive quarters of economic contraction required to define a recession for the purpose of accessing the Rainy Day Fund.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
1975 is the year NYC found itself on the verge of municipal bankruptcy. How did the City turn around its fortunes? We present CBC's special panel discussion, "Sages of the Ages." Five New York fiscal experts--Steve Berger, Stan Brezenoff, Gene Keilin, Dick Ravitch, and Alair Townsend-- describe how they helped…
New York City needs to establish a well-designed Rainy Day Fund to protect against economic downturns, as current reserve levels are insufficient to cover projected revenue shortfalls. Implementing mandatory deposit rules and strict withdrawal limits, while amending the Financial Emergency Act, would ensure the fund remains a stable resource rather than a discretionary slush fund.
Recommendations related to City Fiscal History
The State should amend the Financial Emergency Act to allow an exception for a Rainy Day Fund.
State law should define a recession as two successive quarters of economic decline as indicated by private employment or gross city product.
An emergency should be defined as severe when it is accompanied by a revenue shortfall or expenditure increase equal to or greater than 1 percent of the budget.
Withdrawals from the Rainy Day Fund should be limited to no more than two-thirds of the fund balance in any year, to ensure funds are available for the second year of a recession or emergency.
The City should implement mandatory deposits equal to 75 percent of the tax revenue growth above 3 percent to ensure sufficient funds are accumulated.
The City should set a target size of 17.2 percent of tax revenue, which can serve as a cap on the size of the Rainy Day Fund.
Key Data
$1.25 billion
— Amount set aside in reserves 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 if a recession similar to those in the recent past occurs.
$9 billion
— Reserves that would have been netted if the recommended Rainy Day Fund strategy had been followed over the last 10 years.
71%
— Percentage of voters who approved the ballot measure to create a Rainy Day Fund.
17.2%
— Recommended target size of tax revenue for the Rainy Day Fund.
New Yorkers approved Ballot Question 4 in 2019, allowing the city to establish a Rainy Day Fund to manage economic downturns. This measure enables the city to save money during periods of economic growth to mitigate the impact of future recessions or emergencies.
Between fiscal year 2014 and 2019, the New York City budget grew by $19 billion, reaching a total of $96 billion. This increase was driven largely by rising costs in education, health, social services, and public safety, with four specific agencies accounting for $10 billion of the $15 billion growth in agency budgets.
Key Data
$19 billion
— Total growth in the New York City budget from fiscal year 2014 to fiscal year 2019.
4.5%
— Average annual growth rate of the New York City budget between fiscal year 2014 and fiscal year 2019.
$15 billion
— Increase in spending by City agencies during the period from fiscal year 2014 to fiscal year 2019.
$10 billion
— Amount of the $15 billion agency budget increase accounted for by four agencies: Education, Social Services, Homeless Services, and Police.
$6.2 billion
— Increase in education spending since fiscal year 2014.
$1.1 billion
— Increase in spending for both Homeless Services and Police since fiscal year 2014.
The Budget Navigator is an interactive tool that allows users to explore New York City and New York State revenue and expense trends dating back to fiscal year 2008. This resource enables users to compare long-term fiscal data and visualize changes in government spending and income over time.
The current City Charter provides a strong budgeting framework that has produced nearly 40 balanced budgets, but the City should establish a Rainy Day Fund and properly structure the Retiree Health Benefits Trust to improve long-term fiscal management. The Charter Revision Commission should avoid altering existing budgetary powers, such as revenue estimation timelines and the Mayor's impoundment authority, while ensuring capital asset inventories are comprehensive and ballot questions are presented as discrete proposals.
Recommendations related to City Fiscal History
Create and permit the use of a Rainy Day Fund (RDF) to improve the City's Charter-defined financial management framework.
Amend the Charter to properly structure the Retiree Health Benefits Trust (RHBT) to prevent its use as a de facto Rainy Day Fund.
The Commission should not propose to modify the process and timeline for estimating non-property tax revenues, as the current framework reduces the risk of overestimation.
The Commission should not propose to create independent or formula budgets for certain offices, as this would undercut the City Council and Mayor's role in setting budgetary priorities.
The Commission should not propose to narrow the Mayor's power to impound funds, as this power is rarely an impediment to good financial management.
The Commission should present proposed amendments as discrete groups of like proposals rather than as a single ballot question so voters can consider the worthiness of each.
The Commission should expand the Charter-defined components of the capital asset inventory to include all assets that meet capital financing eligibility criteria owned by an agency or authority that the City controls.
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.
$35,000
— The current capital financing eligibility criteria for assets included in the capital asset inventory.
New York City's property tax system suffers from significant inequities and a lack of transparency, with commercial and rental properties often taxed at rates four to five times higher than owner-occupied homes. A comprehensive redesign is necessary, including moving cooperatives and condominiums into Class 1, adopting a market-value-based assessment system, and implementing income-based circuit breaker rebates to protect lower-income homeowners.
Recommendations related to City Fiscal History
Move cooperatives and residential condominiums to Class 1 to align their tax treatment with one-, two-, and three-family homes.
Eliminate the existing class share system to remove distortions that result in substantially higher effective tax rates for commercial and rental properties.
Adopt a market value-based assessment system where changes in market value across all properties and classes are phased in over three years.
Provide rebates of owner-occupied residential property taxes based on household income when tax bills exceed a set share of income to replace existing tax reduction programs.
Transition to the new property tax system over a five-year period to temper the impact of the redistribution of the tax levy.
Key Data
4 to 5 times
— The effective tax rates of commercial and rental properties are 4 to 5 times those of owner-occupied homes.
2.25 times
— In 46 of 53 cities, effective tax rates on commercial properties are no greater than 2.25 times that of owner-occupied homes.
10 percent
— The Constitutional debt limit sets the maximum outstanding debt for New York City at 10 percent of the five-year average of market value.
2.5 percent
— The maximum property tax revenue that can be raised and used for operating expenses is set at 2.5 percent of the five-year average of market value.
20 percent
— The current cap on assessed value growth for Class 1 homes is 20 percent over five years.
$31.8 billion is the amount required to repair NYCHA's public housing units over the next five years. CBC Senior Research Associate Sean Campion discuss the findings and recommendations of CBC's recent report on NYCHA's capital needs and explains how NYCHA got into such a deep hole and and how it…
In 2018, numerous legislative proposals aimed at expanding public employee retirement and disability benefits were vetoed, preventing significant long-term fiscal liabilities. These measures, which included enhancements to death benefits and accidental disability payouts, would have imposed millions of dollars in immediate and recurring costs on the public pension system.
Key Data
$13.20 Million
— One-time past service cost for enhancing in-service death benefits for state correction officers.
$2.42 Million
— Increased annual contributions and immediate past service cost for accidental disability retirement for law enforcement and forest rangers.
$4.70 Million
— Past service and first-year costs for removing the limit on overtime pay for calculating final average salary for Tier 6 New York City Transit Authority employees.
$1.50 Million
— Annual and one-time retroactive costs for allowing Tier 6 uniformed court or peace officers to retire without early age reduction.
This week's datapoint is 2008 - the year in which NYC's economy entered the Great Recession. Special guest John Breit, former chief risk advisor to Merrill Lynch, shares with us his unique perspective on the recession and on the risks of the City's investments in the pension funds.
The New York City Housing Authority has improved its financial position through increased city and federal support, allowing it to achieve a small surplus in 2016. However, the agency's budget remains precarious due to potential federal funding cuts, necessitating more aggressive implementation of management reforms to ensure long-term stability.
Recommendations related to City Fiscal History
The Authority should ease work rule restrictions in the upcoming collective bargaining negotiations.
NYCHA should come to an agreement for rent payment by non-profit tenants in NYCHA buildings.
The agency should support the proposal to raise parking fees to market rates.
NYCHA must lobby the federal government against onerous changes to public housing operating and capital subsidies.
The Authority should raise operating revenues by increasing the collection rate from 77 percent to the Authority’s 95 percent target.
Key Data
$171.8 million
— The surplus recorded by NYCHA's public housing operations in 2015.
$36 million
— The surplus recorded by NYCHA's public housing operations in 2016.
45 percent
— The amount by which NYCHA's monthly per-unit operating costs, excluding property taxes, are higher than comparable rent-stabilized properties.
$122 million
— The growth in rent paid by NYCHA tenants between 2013 and 2016.
65 percent
— The rent collection rate in February 2017, down from 77 percent in December 2013.
$43 million
— The one-time revenue brought to NYCHA by the first PACT transaction completed in 2016.
The Sales Tax Asset Receivable Corporation (STARC) was created in 2003 to help New York City manage debt, but a 2014 refunding transaction led to a dispute over $600 million in sales tax revenue between the City and the State. Rather than splitting these funds, the contested money should be utilized to pay off outstanding long-term debt to provide lasting relief for taxpayers.
Recommendations related to City Fiscal History
The best outcome of this dispute would be to return the contested money to City and State taxpayers in the form of long-term savings.
The resolution of the current controversy should be neither in favor of State’s or City’s claim to the contested $600 million, nor a “splitting of the baby” to give half to each.
Instead the money should be put to a use that yields longer term savings for taxpayers, an appropriate goal of a bond refunding.
This can be achieved by paying off outstanding debt that requires debt service payments over a period longer than three years and closer to the duration of the STARC bonds.
A negotiated division between the City and State should be reached, to give relief to city and state taxpayers over the longer term.
Key Data
$600 million
— Amount of New York City’s sales tax revenue the Governor’s Executive Budget proposed to divert to the State.
$2.5 billion
— Amount of Municipal Assistance Corporation (MAC) debt outstanding in 2003.
$500 million
— Annual debt service burden for the City that the STARC deal aimed to eliminate over five years.
$170 million
— Annual amount the State guaranteed to repay the STARC debt.
$2.7 billion
— Amount borrowed in October 2004 to repay the City for MAC debt service, pay off remaining MAC bonds, and cover other costs.
$637 million
— Amount the City borrowed in the 2014 STARC refunding beyond what was needed to pay off outstanding bonds.
New York City's property tax system is riddled with inequities, including disparate effective tax rates across property classes and within classes due to assessment caps and phase-ins. The report outlines three reform options to raise $2 billion in additional revenue, ranging from proportional rate increases to structural changes that would eliminate assessment caps and revalue co-ops and condos.
Recommendations related to City Fiscal History
If city officials are concerned with protecting homeowners who do not have sufficient cash incomes to cover comfortably their property taxes, caps on increases in assessments should be means-tested.
Smoothing property tax liability over time need not be implemented in a way that confers a tax reduction at the same time; for example, the foregone revenue for each year in which a property’s assessment is capped might be viewed as a loan, secured by a lien that attaches to the property and accrues interest until paid off.
Option 2 eliminates all disparities among homeowners by assessing and taxing both categories of property in the same way.
Option 3 would collect the greatest share of the $2 billion from those properties that benefit the most from caps and phase-ins by eliminating the caps and phase-in provisions for all properties.
The first option raises $2 billion in additional revenue proportionally from each category of property.
Key Data
$21.1 billion
— Estimated baseline property tax levy in fiscal year 2015.
$4.5 billion
— Estimated revenue foregone due to the cap and phase-in rules in fiscal year 2015.
$2 billion
— Target amount of additional revenue to be raised by the proposed reform options.
1.21 percent
— Assessment ratio for a two-family home in Park Slope/Carroll Gardens in fiscal year 2013.
45 percent
— Assessment ratio for commercial property in East New York/Starrett City in fiscal year 2013.
The FDNY's primary workload has shifted to medical emergencies, yet the department remains heavily structured around traditional firefighting, leading to inefficiencies and redundant costs. To address this, the department should modernize its staffing models, increase medical training for firefighters, and fundamentally reorganize its service delivery to better align resources with actual demand.
Recommendations related to City Fiscal History
The FDNY should apply again to the NYC-REMSCO to change ALS ambulance staffing to one paramedic and one EMT, a change that would yield about $5 million in savings.
The FDNY should increase the medical training of firefighters so they can handle more situations without reliance on a separate ambulance and its staff.
Over the long term, it may be preferable to require EMT qualifications for new applicants for firefighter jobs, which would also effectively create a career ladder for advancement among the EMS staff.
The relationships between the two services should be redefined, and the financial and human resources provided for each type of service should be rebalanced.
Key Data
$3.8 billion
— The FDNY's total budget in fiscal year 2015.
$500 million
— The annual funding for EMS operations, representing just 13 percent of the total budget.
$5 million
— Estimated savings from changing ALS ambulance staffing to one paramedic and one EMT.
$1,200
— The cost to subsidize EMT training for each current firefighter.
$6.8 million
— The estimated average annual cost of operating an engine company in fiscal year 2015.
$8.6 million
— The estimated average annual cost of operating a ladder company in fiscal year 2015.
New York City's history of fiscal management, established following the 1970s crisis, relied on the Program to Eliminate the Gap (PEG) to maintain balanced budgets through successive administrations. By abandoning this practice of setting efficiency targets, the current administration risks future financial instability should economic conditions worsen or unexpected expenses arise.
Recommendations related to City Fiscal History
Mayor de Blasio should begin planning now for how to close the projected gaps and cope with any unexpected adverse conditions.
Good management should include a continuous search for ways to achieve savings by making service delivery more efficient.
Key Data
$1.0 billion
— Projected budget gap in fiscal year 2017.
$2.1 billion
— Projected budget gap in fiscal year 2019.
6 years
— Time it took for the city to achieve a balanced budget after the 1975 fiscal crisis.
New York City's historical budget process, known as the Program to Eliminate the Gap (PEG), has been used by mayors since the 1975 fiscal crisis to manage deficits and maintain balanced budgets. Despite current fiscal stability, future financial plans should incorporate similar strategies to ensure long-term efficiency and address projected budget gaps exceeding $1 billion.
Recommendations related to City Fiscal History
Mayor de Blasio should begin planning for how to close future budget gaps and cope with any unexpected adverse conditions as well as new needs that may emerge.
The Mayor's next financial plan should identify ways to keep the budget balanced and make service delivery more efficient in the future.
Key Data
$4.8 billion
— The unprecedented PEG in Year 1 of Mayor Bloomberg’s first financial plan following the September 11, 2001 terrorist attacks.
$6.5 billion
— The amount of savings in fiscal year 2014 attributed to PEGs implemented from fiscal years 2008 to 2013.
$2.1 billion
— The projected budget gap in fiscal year 2019 identified in the February 2015 preliminary financial plan.
$1.0 billion
— The projected budget gap in fiscal year 2017 identified in the February 2015 preliminary financial plan.
$2.1 billion
— The amount of the PEG in the final year of the Dinkins administration.
$1.4 billion
— The PEG required in 2001 due to the recession.
New York City's fiscal year 2014 budget was balanced using $2.8 Billion in surplus funds from the previous year and a $1 Billion withdrawal from the Retiree Health Benefits Trust Fund. This depletion of the trust fund leaves the city without reserves 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
New York City's legacy costs, including pensions, retiree health benefits, and debt service, are projected to consume 25 percent of the budget by fiscal year 2015. These expenses, which are largely determined by past commitments, will more than double to $17.8 billon over the decade ending in 2015, significantly outpacing the growth of other city spending.
Key Data
$17.8 billon
— The total cost of legacy expenses in fiscal year 2015, more than double the $8.5 billion spent in 2005.
$8.2 billion
— The projected annual pension contribution cost by fiscal year 2015, up from $3.2 billion in 2005.
$2.4 billion
— The annual cost of retiree health benefits by fiscal year 2015, doubling the $1.2 billion spent in 2005.
$7.2 billion
— The projected debt service cost for major obligations by 2015, increasing from $4.2 billion in 2005.
$8.5 billion
— The total cost of legacy expenses in fiscal year 2005.
$3.2 billion
— The annual pension contribution cost in fiscal year 2005.
The November 2012 Program to Eliminate the Gap (PEG) aimed to save $1.5 billion over two years, but relied heavily on temporary one-shot resources rather than addressing structural issues like rising health insurance and debt service costs. With significant fiscal risks remaining from unresolved labor contracts and potential revenue shortfalls, the city faces a structural deficit that will likely require further, more substantial expenditure cuts.
Recommendations related to City Fiscal History
The City should prioritize rightsizing capital investment to reduce the long-term trajectory of rising costs.
The City must pursue reforming health insurance premium arrangements to address the structural budget deficit.
The City should adopt more enduring, if politically tougher, solutions to address structural budget problems instead of relying on temporary one-shot resources.
The City should implement larger recurring expenditure cuts to manage the budget gap before the end of the fiscal year.
Key Data
$1.5 billion
— Total savings generated by the November 2012 Program to Eliminate the Gap (PEG) over two years.
$8.0 billion
— Annual cost of pension contributions, one of the big-ticket items driving expenditure growth.
$4 billion
— Amount of non-recurring 'one-shot' resources used to close the $4.6 billion fiscal year 2013 budget gap.
$2.5 billion
— The projected budget gap for fiscal year 2014 that the City needs to address.
$72.3 billion
— The projected total budget for fiscal year 2013, an increase of 19.8 percent since 2008.
$60.6 billion
— The total budget in fiscal year 2008, before any Programs to Eliminate the Gap were adopted.
New York City's decade-long reliance on large, unanticipated tax revenue surpluses to balance the budget has ended, forcing a shift toward temporary, one-shot resources to cover fiscal gaps. To ensure long-term stability, the city must move beyond these stopgap measures and address structural spending drivers, particularly the generous health insurance policies provided to municipal employees and retirees.
Recommendations related to City Fiscal History
The Mayor and the City Council should tackle spending arrangements that drive budget growth and out-year deficits.
The City should reform the generous health insurance policies for municipal employees and retirees to address long-term fiscal challenges.
The City should avoid relying on non-recurring resources like one-shot revenue sales to balance the budget.
Key Data
$5.3 billion
— Unanticipated tax revenues reached this high in fiscal year 2007.
$114 million
— Fiscal year 2012 tax collections were running only this amount above the initially budgeted sum.
$42.2 billion
— Total tax revenues for fiscal year 2012.
$7 billion
— Wall Street profits are running this amount below what was assumed when the budget was adopted.
$1 billion
— Revenues from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— Funds drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
New York City's budget accounting methods have historically masked significant deficits by relying on outdated standards that exclude long-term liabilities like retiree health benefits and asset depreciation. Adopting more comprehensive accounting standards is essential to accurately assess the city's financial health and prevent current spending from unfairly burdening future generations.
Recommendations related to City Fiscal History
New Yorkers should be giving much more attention to the financial results disclosed under the new GAAP rules.
Municipal leaders should move from the current self-deluding standard for a balanced budget to a more meaningful one.
New York City should not have its own unique set of accounting rules, a version that allows what the rest of the world views as an operating expense to be labeled a capital investment and paid for with borrowed funds that our children will repay.
A time frame of approximately seven years might be appropriate for recognizing that times have changed and a new standard is needed for local financial management.
Key Data
$5 million
— The reported surplus in the City's General Fund for the 2010-11 fiscal year.
$282 million
— The deficit the City would have faced in fiscal year 2011 if GAAP were strictly applied.
$9.6 billion
— The deficit reported for fiscal year 2011 under the new, more comprehensive GAAP standard.
$53.3 billion
— The added expense recognized in fiscal year 2006 when the accumulated liability for retiree health insurance was first reported.
$11.7 billion
— The amount of red ink under the new GAAP standard in fiscal year 2010.
$881.7 million
— The operating deficit for New York City in fiscal year 2000 based on the Statement of Activities.
New York City's municipal union welfare funds, which receive $1 billion in annual city payments, suffer from limited accountability, poor financial management, and inefficient benefit delivery. Reforming these funds by consolidating health benefits under the city's insurance plan and centralizing non-health benefits could save taxpayers approximately $146 million annually.
Recommendations related to City Fiscal History
The varying and inefficient package of drug, dental and optical benefits provided by the multiple welfare funds should be replaced by a standard set of benefits included under the City’s health insurance program.
A new centralized plan should be developed to provide non-health related benefits through a centralized cafeteria plan.
New standards should be set for accountability of existing and any new union welfare benefit funds, including limits on administrative expenditures and new enforcement powers for the Comptroller.
The City should place limits on allowable administrative expenditures and establish reserve requirements for union welfare funds.
The Comptroller should be given new enforcement powers to sanction entities that fail to meet standards in an adequate or timely fashion.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$146 million
— Total estimated annual savings from consolidating health and administrative benefits.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$3.7 billion
— Cost to the City for health insurance benefits in fiscal year 2010.
81
— Total number of welfare funds operated by unions.
48
— Number of welfare funds with at least one major financial weakness in 2007.
New York State's economic development programs have historically suffered from fragmented oversight, lack of measurable goals, and poor accountability, leading to ineffective spending. To improve outcomes, the state should consolidate authority over economic resources, implement standardized performance metrics, and create a unified budget to ensure transparency and fiscal responsibility.
Recommendations related to City Fiscal History
To be fully effective, the councils should have responsibility and authority over all state economic development resources, not just a subset of selected programs.
In regions with multiple competing IDAs, a solution may be to consolidate them into one per region and place them within the Regional Councils’ purview.
Performance should be gauged only by new activity created in addition to baseline payroll and/or property value.
The ultimate goal should be the creation of a Unified Economic Development Budget.
All programs should be considered for elimination before the budget for economic development is increased.
Key Data
$6.6 billion
— Annual cost to the State for economic development programs in lost tax revenues, power subsidies, and direct spending.
$554 million
— Cost of the Empire Zone program in lost tax receipts in 2010.
$586 million
— Amount invested by the State to establish the Centers of Excellence program from 1997 to 2006.
$371 million
— Amount spent in grants by NYSTAR to support innovation cluster programs over the 2001 to 2009 period.
Following the 2008 recession, New York City implemented multiple rounds of budget cuts totaling nearly $2.2 billion in expenditure reductions, often relying on revenue-raising measures and funding shifts rather than direct spending cuts. To address future deficits and avoid further reductions to essential services like education, the city must pursue structural reforms to pension fund contributions and employee health insurance premiums.
Recommendations related to City Fiscal History
The city must identify and approve ways to reduce spending for pension fund contributions and health insurance premiums for employees and retirees to avoid substantial new cuts in agency budgets.
The city should implement new initiatives to reduce the “all other” budget category, which consists largely of pension fund contributions and health insurance premiums.
Unions must be willing to accept changes in collective bargaining over health benefits to help address the city's fiscal challenges.
The city must garner wide support to push the State Legislature to authorize changes in future pension benefits.
Key Data
$3.4 billion
— Total value of budget balancing actions proposed in the six Programs to Eliminate the Gap (PEGs) spanning fiscal years 2009 and 2010.
$2.0 billion
— Total agency expenditure reductions yielded from the six PEGs spanning fiscal years 2009 and 2010.
$593 million
— Amount of revenue-raising measures identified in the city's PEG documents.
$2.4 billion
— Deficit the City faced in the fiscal year following the February 2011 report.
274,061
— Number of full-time employees in New York City at the end of fiscal year 2010.
6,588
— Number of fewer full-time employees in fiscal year 2010 compared to June 2008.
New York City's long-standing adherence to Generally Accepted Accounting Principles (GAAP) has been crucial for maintaining sound financial management and credit market reputation since the 1975 fiscal crisis. Consequently, any deferral of the new GASB 49 accounting standards should be strictly temporary and limited to the minimum time necessary to achieve compliance.
Recommendations related to City Fiscal History
The Financial Control Board should make clear that any deferral of GASB 49 standards will be temporary, with no intention to grant permanent or long-term exemptions.
Any deferral granted for compliance with GASB 49 should be as brief as is necessary and practical, specifically limited to one year.
The City and the Financial Control Board should continue to accept GASB rules as the best available standard for defining a balanced budget.
The City should use its budget process to address difficult tradeoffs among services, ensuring that remediation expenditures required by GASB 49 are treated as a priority in budget debates.
The Financial Control Board should ensure that only the minimum necessary delay is granted for the City to comply with GASB 49.
Between fiscal years 2002 and 2009, New York City committed $63.4 billion to capital projects, significantly increasing the value of city-owned assets to $33.9 billion. Despite these investments, a $5.6 billion maintenance backlog persists, with funding for necessary repairs often falling short of requirements.
Key Data
$63.4 billion
— Total capital commitments made by New York City from fiscal year 2002 through the end of fiscal year 2009.
$5.6 billion
— Amount of capital work needed to bring surveyed assets to a state of good repair according to the fiscal year 2011 AIMS report.
$2.3 billion
— Depreciation expense for City-owned assets in fiscal year 2009, representing an accounting adjustment for the declining value of assets over time.
$33.9 billion
— Value of capital assets owned by New York City in fiscal year 2009, compared to $18.7 billion in fiscal year 2002.
$2.8 billion
— Funding allocated for AIMS capital work in the last fiscal year, which was approximately half of the required amount.
56 percent
— Portion of short-term milestones identified in the PLANYC infrastructure and sustainability agenda that have been completed.
Economic research indicates that while local taxes do influence economic growth, the relationship is complex and often overstated, meaning tax cuts that reduce public services may not stimulate the economy as intended. Policymakers should prioritize broad-based tax reform and efficient service delivery over discretionary tax incentives, which are often poorly targeted and ineffective.
Recommendations related to City Fiscal History
Policymakers must recognize that tax cuts that lead to service reductions will not produce the same economic results as tax cuts maintained without service changes.
Policymakers should be wary of relying on precise estimates of tax impacts, as empirical studies vary widely due to differences in methodology and measurement.
Policymakers should prioritize promoting agglomeration benefits through non-tax policies and providing public services efficiently to compensate for the city's high tax burden.
Policymakers should avoid ad hoc discretionary tax incentives, as they are often poorly targeted and transfer resources from the public to the private sector.
Policymakers should pursue broad-based tax reform rather than relying on discretionary incentives, as sound fiscal policy obviates the need for many tax perks.
Key Data
$8
— Amount of every $100 of taxable resources absorbed by New York City's local taxes in 1997.
18.5%
— The increase in the real property tax implemented by the City during calendar year 2003.
19.1%
— The average long-run change in economic activity resulting from a 10 percent change in property taxes in one locality compared to its neighbors.
1.6%
— The reduction in the city's share of national employment resulting from a 10 percent increase in the city's top income tax rate.
9,727
— The estimated number of jobs lost due to a five percent increase in the income tax rate, according to the 2001 STAMP model.
$11.6 Billion
— Total property tax revenues for New York City in fiscal year 2005.
New York City's public sector compensation, particularly retirement benefits, has become significantly more generous than private sector standards, creating unsustainable fiscal pressure that diverts resources from essential services. To address this, the city should transition toward defined contribution pension plans and require retirees to contribute more toward their health insurance premiums.
Recommendations related to City Fiscal History
The long-run goal of pension reform should be to convert from defined benefit to defined contribution plans.
The New York City systems should require a higher percentage contribution from employees, and not limit it to ten years.
The New York system should adopt similar age thresholds for retirement to the federal Social Security system.
The FAS should be based on five years’ experience and should take into account only base salary, excluding overtime and other supplements.
Provisions for work-related disabilities should be revised to set more rigorous standards.
The City should eliminate the variable supplements available to some retired uniformed workers.
The City should require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
The City should stop reimbursing retirees for Medicare Part B premiums.
Key Data
$3.2 billion
— City contribution to pension funds in fiscal year 2005.
$927 million
— City payments for health insurance for retirees in fiscal year 2005.
$35.16
— Average hourly total compensation cost for public employers in 2004.
$23.90
— Average hourly total compensation cost for private-sector employers in 2004.
43 percent
— Percentage of all retired firefighters in 2002 classified as having a job-related disability.
$12,000
— Amount of variable supplements soon to be paid to some retired uniformed workers.
New York City faced an unprecedented $6.4 billion budget gap in fiscal year 2003-04, leading to calls for structural reforms rather than temporary borrowing or gimmicks. The city's fiscal challenges were exacerbated by inefficient service delivery, particularly in police and fire departments, and a tax structure that discouraged economic growth.
Recommendations related to City Fiscal History
Those civilians not working a 40-hour week should be required to do so to save $498 million annually.
The City should replace the Mayor’s Office of Contracts with a new procurement entity that offers “one-stop” oversight.
The City should implement an advanced e-procurement system to lower transaction costs and vendor prices.
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.
The City should reschedule the police officers’ work day to increase time in law enforcement and decrease paid time for changing uniforms.
The City should reassign police officers from jobs better done by civilians to law enforcement duties.
The City should stop using officers on overtime to perform duties that are predictable and could be scheduled in advance.
Responsibility for energy conservation in City agencies should be centralized within the Office of the Mayor.
Agencies and individuals should be offered incentives to conserve energy.
The annual volume of energy conservation upgrades should be doubled.
Key Data
$6.4 billion
— Projected budget gap in fiscal year 2003-04.
$498 million
— Annual savings from requiring a 40-hour work week for civilian employees.
$197 million
— Annual savings from streamlining procurement.
$267 million
— Annual savings from restructuring special education.
$251 million
— Annual savings from more rational staffing at the Police Department.
$47 million
— Annual savings from energy conservation at municipal agencies.
New York City's collective bargaining process in 2000 faced significant challenges, with nearly all municipal contracts expired and the city facing potential budget gaps. The proposed reforms advocate for restructuring wage policies, modernizing health insurance, and shifting pension systems to defined contribution plans to improve service quality and fiscal stability.
Recommendations related to City Fiscal History
Set pay levels in response to labor market conditions, with shortage occupations receiving greater wage increases than those occupations where abundant applicants are available.
Change work processes in ways that lower the unit cost of services.
Shift the emphasis in pay scales from longevity to performance by adding a merit pay component to wages.
Modernize the health insurance program for municipal workers and retirees.
Streamline the administration of welfare fund benefits.
Restructure the pension system for newly employed workers to provide a defined contribution rather than a defined benefit.
Key Data
$19.2 billion
— Total compensation of municipal workers in fiscal year 2000.
$1.6 billion
— Additional cost of agreements in fiscal year 2004 if wages increased at the projected rate of inflation.
$1.4 billion
— Net savings to taxpayers from the recommended collective bargaining reforms.
$798 million
— Recurring annual cost of pension enhancements added in 2000 outside of collective bargaining.
$150 million
— Estimated cost of well-targeted, one-time catch-up raises for shortage occupations.
$138 million
— Estimated annual savings from five specific initiatives within the Fire Department.
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.
