Out-year city budget gaps represent the projected shortfalls between New York City’s anticipated revenues and the cost of maintaining current service levels in future fiscal years. This page covers CBC’s work on structural spending growth, the impact of underbudgeting, the use of short-term budget maneuvers, productivity-driven savings, and strategies for long-term fiscal stability.
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 Mayor should comb through City programs to identify and protect those that deliver significant positive impact and shrink those that do not.
The City should leverage technology, modernize outdated operations, and work with labor to boost productivity.
The spending plan should reflect the reported $1 billion in savings from rebidding the City’s health insurance plan.
The administration should lay out a multi-year effort to restructure City government to be more efficient and results driven.
The State should repeal the class size mandate, which restricts the Mayor’s flexibility and drives higher spending that widens the budget gap.
Key Data
In May 2026, the CBC reported that despite efforts to rein in spending, out-year budget gaps are projected to swell to nearly $10 billion by fiscal year 2030, driven by City-funded spending growing 28% between fiscal years 2025 and 2030.
In November 2025, the CBC highlighted that the City's budget underfunds at least $4 billion of annual planned spending in future years, including at least $1 billion for CityFHEPS and $600 million for homeless shelters, which artificially masks the true size of out-year gaps.
In March 2025, the CBC noted that complying with the State's Class Size Reduction mandate is estimated to cost $450 million next year, $900 million in fiscal year 2027, and $1.4 billion a year in fiscal year 2028 and beyond, none of which was reflected in the budget.
In March 2025, the CBC warned that the City's rolled surplus funds, used to balance budgets, are quickly depleting, declining from a high of $6.1 billion in fiscal year 2022 to an estimated $3 billion at the end of fiscal year 2025, leaving the City vulnerable to future shortfalls.
In July 2024, the CBC reported that implementing the eligibility expansion for CityFHEPS may increase out-year budget gaps to $11.5 billion in fiscal year 2026 and $16 billion in fiscal year 2028.
The budgets are in. Now find out what matters. With the Fiscal Year 2027 New York State and New York City budgets finalized, CBC invites you to a timely briefing with our research staff on what the budgets mean for New York's fiscal outlook. We'll highlight the most significant policy…
New York City faces a significant structural budget problem, with future gaps likely understated because they exclude the full costs of the Mayor's agenda and potential labor contracts. While the city has taken steps to increase reserves and reduce spending growth, it remains unprepared for a potential economic slowdown or recession.
Recommendations related to Out-Year City Budget Gaps
The Chief Savings Officers’ work should continue, and savings should ramp up over time to address structural budget gaps.
The City must take steps to manage CityFHEPS’ growth or it will continue to be a budget buster.
The City should provide an accounting on how much spending has increased and how big the out-year gaps are.
Key Data
$350 million
— The amount by which the General Reserve is being increased to provide a cushion against spending increases or softening revenues.
15 percent
— The projected annual increase for the CityFHEPS program, which threatens fiscal sustainability.
200 percent
— The threshold of the Federal Poverty Level for the Fair Fares expansion.
The enacted New York State budget provides $2.4 billion in support for New York City, including $780 million in recurring aid, while failing to hold the city accountable for its own financial stability. Furthermore, the budget includes a pension gimmick that unfairly defers the costs of closing near-term city budget gaps to taxpayers in fiscal years 2033 through 2037.
Recommendations related to Out-Year City Budget Gaps
The State should hold the City accountable for shoring up its own finances to prevent future requests for massive aid or tax increases.
The Governor should continue to resist calls to increase personal income and corporate taxes in the coming year.
The State should avoid using gimmicks that shift the cost of closing near-term City budget gaps to taxpayers in future fiscal years.
Key Data
$2.4 billion
— Total support provided by the State for New York City.
$780 million
— Amount of recurring aid included in the State's support for New York City.
$547 million
— Cost of increasing Tier 6 pension benefits, which pressures local governments and school districts.
New York City's fiscal year 2027 executive budget relies on short-term strategies and pension gimmicks to close gaps, while city-funded spending is projected to grow by 28 percent, or $24.4 billion, between fiscal years 2025 and 2030. These maneuvers fail to address the underlying fiscal issues, leaving outyear budget gaps to swell to nearly $10 billion by fiscal year 2030.
Recommendations related to Out-Year City Budget Gaps
The City should pursue a full-scale effort to shrink spending that does not deliver for New Yorkers rather than relying on short-term strategies.
The City should prioritize holistic transformation to achieve excellence in government rather than relying on maneuvers seen in the past.
The City should avoid pension gimmicks and temporary plugs that exacerbate fiscal problems rather than solving them.
The City should avoid raising already nation-leading taxes which risks competitiveness.
Key Data
28 percent
— Growth in City-funded spending between fiscal years 2025 and 2030.
$24.4 billion
— Total increase in City-funded spending between fiscal years 2025 and 2030.
nearly $10 billion
— Projected outyear budget gaps by fiscal year 2030.
$1.2 billion
— Value of the accrual sweep used as a one-shot budget fix.
New York City faces significant fiscal challenges, including a projected $3.5 billion deficit this year and looming budget gaps that threaten the city's economic competitiveness. To address these issues, leaders must prioritize efficiency, such as aligning school budgets with enrollment and reforming procurement, rather than raising taxes or depleting reserves.
Recommendations related to Out-Year City Budget Gaps
The mayor and City Council should adopt a sound budget that improves services, expands effective programs, eliminates ineffective ones, enhances affordability and holds the line on taxes.
Relief from Albany’s class size mandate could unlock $1.2 billion while preserving smaller classes where they matter most.
Aligning school budgets with declining enrollment could save $400 million.
Fixing procurement could yield $700 million.
Maintaining current city-funded housing vouchers would save $330 million.
The Chief Savings Officers must dig deeper to eliminate spending that isn’t serving people well.
Key Data
$3.5 billion
— The amount the city projects it will spend more than it received this year.
$1.2 billion
— Potential savings from relief from Albany’s class size mandate.
$400 million
— Potential savings from aligning school budgets with declining enrollment.
$700 million
— Potential savings from fixing procurement.
$330 million
— Potential savings from maintaining current city-funded housing vouchers.
$1.1 billion
— The mayor's recurring savings target, which is described as woefully insufficient.
New York City's fiscal challenges stem from excessive spending growth, which has consistently outpaced inflation over the last decade. To address budget gaps, the city should prioritize operational improvements, productivity-driven savings, and capital planning reform rather than raising taxes.
Recommendations related to Out-Year City Budget Gaps
The City should ensure the budget plan supports a multi-year improvement strategy that emphasizes recurring savings driven by productivity, service redesign, and evidence-based impact.
Agencies should identify efficiencies by aligning staffing and workload, streamlining administrative functions, and leveraging technology to automate manual processes.
The City should augment current efforts with a citywide, data-driven management framework that supports continuous improvement.
The City should expand operational flexibility, modernize job titles, and pursue gainsharing arrangements that allow employees and residents to benefit from greater productivity.
The City should prioritize careful capital planning and project delivery reform to control capital costs and moderate debt service.
The City should seek greater flexibility from Albany, including relief from the class-size mandate that constrains local decision-making.
Key Data
$2.3 billion
— Amount the City spent more than it received over the past three years.
$15 billion
— Amount the City would be spending less today had spending merely kept pace with inflation over the last decade.
New York City faces a significant fiscal challenge with a projected fiscal year 2027 budget gap approaching $8 billion, a figure that would be $14.5 billion lower had spending tracked inflation. Addressing this deficit requires a comprehensive restructuring of city government, including the repeal of the class size mandate and the implementation of operational efficiencies like rebidding health insurance plans.
Recommendations related to Out-Year City Budget Gaps
The Mayor should comb through City programs to identify and protect those that deliver significant positive impact and shrink those that do not.
The City should leverage technology, modernize outdated operations, and work with labor to boost productivity.
The spending plan should reflect the reported $1 billion in savings from rebidding the City’s health insurance plan.
The administration should lay out a multi-year effort to restructure City government to be more efficient and results driven.
The State should repeal the class size mandate, which restricts the Mayor’s flexibility and drives higher spending that widens the budget gap.
Key Data
$8 billion
— Estimate of the City’s fiscal year 2027 budget gap.
$14.5 billion
— Amount City spending would be lower today if it had tracked inflation.
$1 billion
— Reported savings from rebidding the City’s health insurance plan.
Mayor-elect Mamdani faces a projected budget gap of $5 billion to $8 billion, while the current financial plan continues to underfund essential services by at least $4 billion annually. To address these fiscal challenges, the incoming administration must prioritize efficiency, end the practice of underbudgeting for known costs, and prepare for potential federal funding cuts and economic downturns.
Recommendations related to Out-Year City Budget Gaps
The Mamdani Administration should rein in spending growth by shrinking low impact services.
The 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 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 need 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.
The incoming administration faces a projected $6 billion to $8 billion budget gap, exacerbated by chronic underbudgeting and a lack of preparation for economic downturns or federal funding cuts. To restore fiscal stability, the city must implement disciplined financial management, including accurate revenue forecasting, performance-based budgeting, and structural reforms to spending and hiring.
Recommendations related to Out-Year City Budget Gaps
The next administration should work with the Office of Management and Budget to identify the City’s total spending obligations, how much revenue is available, and the risks.
The Mamdani Administration should immediately launch a Program to Eliminate the Gap (PEG) focused on streamlining operations, reducing duplication, phasing out lower-impact programs, leveraging technology to automate manual processes, and increasing productivity in collaboration with labor unions.
The new administration should shift vacant positions across agencies and units based on needs and eliminate excess vacancies rather than manage vacancies within siloed agencies.
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 incoming administration should work with the City Council to pass a Local Law to strengthen the Revenue Stabilization Fund (RSF) by requiring deposits during economic expansions, restricting withdrawals to a recession or severe emergency, and setting the fund’s target size.
Key Data
$6 billion to $8 billion
— Projected budget gap the incoming administration must close.
$4.5 billion
— Amount by which the City's projections understate fiscal year 2027 spending.
$2.3 billion
— Amount by which annual expenses exceeded annual revenues over the past three fiscal years.
$14.0 billion
— Amount needed to cover two years of tax revenue declines during a recession.
$2.0 billion
— Current balance of the Revenue Stabilization Fund (Rainy Day Fund).
19,302
— Number of full-time and full-time equivalent vacant positions as of June 2025.
Download the Presentation The New York State and New York City budgets are unaffordable and unprepared both for a recession and for federal budget cuts that will start hitting this fiscal year and grow in the future. Check out CBC’s New York State and New York City Fiscal…
New York City's fiscal year 2026 budget faces significant long-term challenges, with projected future budget gaps reaching between $8 billion and $10 billion due to systemic underbudgeting of essential programs. The current financial plan relies on past revenue surpluses to cover spending that exceeds current income, while failing to set aside funds for the Rainy Day Fund or potential federal cuts.
Recommendations related to Out-Year City Budget Gaps
The City should deposit at least $2 billion into the Rainy Day Fund to help preserve services and stability during the next recession.
Key Data
$8 billion to $10 billion
— The size of future budget gaps, once adjusted for underbudgeted programs.
Over $3 billion
— The amount the fiscal year 2026 budget is short to pay for likely expenses and planned programs.
$122.7 billion
— The total fiscal year 2026 spending obligation once adjusted for prepayment of fiscal year 2026 obligations and underbudgeted programs and expenses.
7.6 percent
— The City-funded spending increase from fiscal year 2025 to fiscal year 2026, once adjusted for prepayments and underbudgeted expenses.
$610 million
— The amount that fiscal year 2025 spending obligations exceeded fiscal year 2025 revenues.
$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 fiscal outlook is precarious, with the Fiscal Year 2026 preliminary budget facing a $3.6 billion shortfall and projected out-year budget gaps reaching as high as $10.1 billion. The city's reliance on depleting surplus funds to cover recurring expenses, combined with underbudgeting for essential services, leaves it ill-prepared for potential federal aid cuts or economic downturns.
Recommendations related to Out-Year City Budget Gaps
End the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter, in the Fiscal Year 2026 Executive Budget.
Implement a Program to Eliminate the Gap (PEG) to reduce spending growth by streamlining administrative operations, increasing program efficiency, and scaling back or eliminating programs that deliver the least value to residents.
Not fund any new or expanded programs in the Executive Budget or during adoption.
Add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
Key Data
$3.6 billion
— The amount the fiscal year 2026 preliminary budget is short to provide planned services.
$7.8 billion
— The projected budget gap for fiscal year 2027 when underbudgeting and other costs are included.
$10.1 billion
— The projected budget gap for fiscal year 2028 when underbudgeting and other costs are included.
$9.6 billion
— The projected budget gap for fiscal year 2029 when underbudgeting and other costs are included.
$4.0 billion
— The amount of annual underbudgeting for current services.
$6.1 billion
— The high point of accumulated surplus funds reached in fiscal year 2022.
New spending commitments of $5 billion secured in the recent housing agreement must be offset by spending reductions elsewhere to avoid exacerbating existing fiscal challenges. The city faces a fiscal year 2026 budget gap exceeding $8 billion when accounting for underbudgeted services, necessitating careful financial management.
Recommendations related to Out-Year City Budget Gaps
The new operating budget spending must be paid for with reduced spending elsewhere or it will widen already huge budget gaps, potentially driving budget cuts.
The $5 billion in commitments secured as part of the compromise should be reflected in January’s Preliminary Budget.
Key Data
$5 billion
— Commitments secured as part of the housing compromise that must be reflected in the upcoming Preliminary Budget.
$8 billion
— The fiscal year 2026 budget gap that the city faces when underbudgeted services are taken into account.
New York City faces future budget gaps exceeding $8 billion annually, significantly higher than the $5.5 billion reported by the City, due to the underestimation of spending for ongoing programs. To address these shortfalls, the Administration must prioritize critical programs, improve efficiency, and reduce spending on lower-impact initiatives starting with the upcoming Preliminary Budget.
Recommendations related to Out-Year City Budget Gaps
The Administration should start taking steps now to close next year’s gap in January’s Preliminary Budget.
To balance the budget and serve New Yorkers, the Administration should prioritize critical programs, increase efficiency, and shrink spending on lower-impact programs.
Key Data
$3 billion
— Annual amount by which the budget continues to low-ball spending for ongoing programs in future years.
$8 billion
— Annual amount that future budget gaps are expected to exceed.
$5.5 billion
— Annual amount of future budget gaps reported by the City.
$1 billion
— Amount of newly identified resources used to fund predictable shortfalls in the current year.
3 is the number of current and former Comptrollers who sat down to discuss the City and State's finances, economy, population loss and more. While jobs and tourism have recovered, New York continues to face challenges with hybrid work affecting downtowns and the office market, housing affordability, future budget gaps,…
CBC's Ana Champeny and Patrick Orecki delivered a briefing on the fiscal year 2025 budgets of New York State and New York City, including basic fiscal overviews and the risks facing the State and the City.
New York City's projected budget gaps are significantly understated and likely exceed $9 billion annually, driven by structural underbudgeting and the omission of costs like class size mandates and housing voucher expansions. These fiscal challenges are compounded by the reliance on prior-year revenues to cover current obligations, masking the true extent of the city's financial instability.
Key Data
$4.7 Billion
— The projected budget gap for fiscal year 2025 if the Program to Eliminate the Gap (PEG) savings had not been implemented.
$3.3 Billion
— The amount the budget is short in each future year to support current service levels due to underbudgeting.
$9.3 Billion
— The projected expected spending gap for fiscal year 2026.
$9.7 Billion
— The projected expected spending gap for fiscal year 2027.
$11.1 Billion
— The projected expected spending gap for fiscal year 2028.
$16.0 Billion
— The potential budget gap in fiscal year 2028 if the eligibility expansion for the CityFHEPS housing voucher program is implemented.
New York City's adopted budget for fiscal year 2025 increases City-funded spending by $6.1 billion, yet fails to fully account for recurring costs like overtime and special education, creating an illusion that future budget gaps are smaller than they truly are. Furthermore, the city has not made necessary deposits into its $2.0 billion Rainy Day Fund, leaving it ill-prepared for potential economic downturns.
Recommendations related to Out-Year City Budget Gaps
The City should adopt a transparent, accurate budget that fully funds planned services and identifies those that will shrink to avoid the illusion that future gaps are not so large.
The City should ensure that spending added during budget adoption is offset by savings elsewhere to avoid future budget gaps.
The City should deposit at least $1 billion into the Rainy Day Fund over this and next year to protect against future economic downturns.
Key Data
$1.3 billion
— The amount by which the All Funds adopted budget is larger than the Mayor’s Executive proposal.
$1.1 billion
— The amount by which fiscal year 2024 spending obligations exceeded that year’s revenues.
$6.1 billion
— The increase in City-funded spending in the fiscal year 2025 adopted budget over fiscal year 2024.
$17.8 billion
— The total growth in City-funded spending from fiscal year 2020 to fiscal year 2025.
$2.0 billion
— The current balance of the Rainy Day Fund, which is considered insufficient to protect against recession-related cuts.
$116.1 billion
— The total All Funds fiscal year 2025 spending, adjusted for prepayments and excluding interfund agreements.
The New York City fiscal year 2025 budget agreement fails to prioritize long-term fiscal stability by neglecting to set aside funds for the Rainy Day Fund despite strong revenues. This approach risks creating future budget gaps by underestimating costs for critical services like overtime, class size reduction, and housing vouchers.
Recommendations related to Out-Year City Budget Gaps
City leaders should use stronger revenues to prioritize programs, make government more efficient, shrink lower impact activities, and save for a rainy day.
All programs should be budgeted at expected service levels and costs.
The Administration and City Council should become much more transparent and accurate to ensure the long-run budget is not short money for overtime, class size reduction, and housing vouchers.
New York City's fiscal stability is threatened by the practice of underbudgeting, which artificially masks the true size of future budget gaps by failing to fully fund current programs. To ensure long-term sustainability and protect against economic downturns, the city must accurately reflect program costs, offset new spending with recurring savings, and significantly increase deposits into the Rainy Day Fund.
Recommendations related to Out-Year City Budget Gaps
The budget should be transparent and accurately reflect the costs of planned programs and additional expenses that are currently underbudgeted.
If the City chooses not to fully fund a program, it should be clear that it will be trimmed or cut.
Added spending should be budgeted on a recurring basis and offset with recurring reductions from efficiencies or shrinking of lower impact or underutilized programs.
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 the Rainy Day Fund in fiscal year 2025.
Key Data
$1 Billion
— Minimum amount to be deposited into the Rainy Day Fund over the current and next fiscal year.
$500 million
— Minimum amount the City should deposit in the Rainy Day Fund in fiscal year 2024.
$553 million
— Minimum amount the City should budget to deposit in the Rainy Day Fund in fiscal year 2025.
$2 billion
— Current balance of the Rainy Day Fund.
$11 billion
— Estimated revenue loss over two years during an average recession.
New York City's Fiscal Year 2025 Executive Budget relies on underbudgeted expenditures, masking the true scale of future fiscal gaps that range from $5.5 billion to $5.7 billion between 2026 and 2028. To avoid a looming fiscal wall, city leaders must prioritize high-impact programs and base negotiations on realistic spending estimates rather than continuing to add unaffordable costs.
Recommendations related to Out-Year City Budget Gaps
The Mayor and City Council should base their budget negotiations and decisions on reasonable and realistic spending and revenue estimates.
Their decisions should narrow future budget gaps and break the habit of adding more unaffordable spending.
City leaders should prioritize high-impact programs and shrink or end less effective ones.
Key Data
$5.5 billion to $5.7 billion
— Reported budget gaps between fiscal years 2026 and 2028.
$2 billion
— Amount of services annually underbudgeted in the out-years.
6.3 percent
— Increase in City-funded spending in Fiscal Year 2025.
$200 million
— Amount of FHEPS housing vouchers that appear low or fall off a cliff in out-year projections.
New York City's long-term fiscal stability is threatened by understated spending projections and inaccurate revenue estimates that mask significant future budget gaps. To address these risks, the City must adopt more realistic budget estimates, prioritize essential programs, and implement productivity-focused savings plans to avoid severe service cuts.
Recommendations related to Out-Year City Budget Gaps
The Executive Budget should include reasonable estimates of costs of all planned programs in the budget.
The Executive Budget should provide accurate, but reasonably conservative revenue estimates.
The City should allocate funded vacancies to where they are most needed to provide critical services.
The City should allow agencies to hire into funded positions and spend their budgets on needed programs.
The City should reduce future budget gaps by prioritizing spending to fund what is needed and proven to work.
The City should implement additional savings plans, focused on increasing productivity and shrinking lower impact and priority programs.
The City should 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
$3.0 billion and $3.9 billion
— The range by which the fiscal year 2025 financial plan understates the cost of continuing current programs.
$8.0 billion
— The amount future annual budget gaps could exceed, even without implementing the class size reduction mandate, FHEPS expansion, or potential asylum seeker costs.
$17.4 billion
— The potential budget gap by fiscal year 2028 when including costs for the class size mandate, FHEPS expansion, and asylum seekers.
$7.0 billion to $8.6 billion
— The range of future annual budget gaps based on reasonable estimates.
$6.3 billion
— The amount by which budget gaps could expand by fiscal year 2028 if the City implements the class size reduction law and fully funds the expansion of City FHEPS housing vouchers.
$1.5 billion
— The additional cost for services for migrants and asylum seekers in fiscal year 2026.
New York City faces significant fiscal challenges, with projected out-year budget gaps reaching as high as $9.7 billion by fiscal year 2028. To address these shortfalls and stabilize the city's finances, officials must prioritize transparency regarding program costs and take decisive action to slow spending growth.
Recommendations related to Out-Year City Budget Gaps
Additional actions are needed to slow spending growth and close gaps.
The budget should be more transparent by showing the full costs of programs and identifying which will be shrunk or eliminated.
The City should take action to put the City on solid fiscal footing.
The cancellation of the April 2024 PEG makes it even more critical that the City clearly and transparently show which programs are funded and which will be shrunk or eliminated.
Key Data
$9.1 billion, $8.8 billion, and $9.7 billion
— Projected out-year budget gaps for fiscal years 2026 to 2028, respectively.
$3.6 billion to $3.9 billion
— Annual shortfall in the Fiscal Year 2025 Preliminary Budget needed to continue programs at the current services level.
$2.3 billion
— Proposed increase in City-funded spending in fiscal year 2025.
$8.6 billion
— Projected growth in City-funded spending between fiscal year 2025 and fiscal year 2028.
$19.7 billion
— Increase in City-funded spending between 2012 and 2019.
$11.2 billion
— Increase in City-funded spending between fiscal years 2021 and 2023.
New York City's fiscal year 2025 preliminary budget faces a $3.6 billion shortfall, with projected budget gaps for 2026 through 2028 potentially reaching between $8.8 billion and $9.7 billion if current service levels are fully funded. To achieve fiscal stability, the city must implement additional savings plans, fully fund or explicitly eliminate underbudgeted programs, and maintain transparency regarding its financial commitments.
Recommendations related to Out-Year City Budget Gaps
The City should implement an additional PEG in the Executive Budget and shrink or eliminate programs that the available resources cannot fully support.
To be fully transparent, the budget should include funding for all planned programs and acknowledge that under- and un-funded programs will shrink or end.
The Administration should continue with its original plan to implement a PEG in the Fiscal Year 2025 Executive Budget.
The City Council should ensure that its proposals for added or modified spending are affordable based on fully funding or reducing the current set of planned programs.
The City should prioritize and fund effective and impactful programs, shrink or eliminate less critical and effective programs, and increase efficiency.
Key Data
$3.6 billion
— The amount of the funding shortfall in the fiscal year 2025 preliminary budget.
$8.8 billion to $9.7 billion
— The estimated range of budget gaps for fiscal years 2026 through 2028 if current service levels are fully funded.
$2.5 billion
— The amount of new spending added to the fiscal year 2024 budget to support current programs.
$2.2 billion
— The total City-funds fiscal cliff amount identified in the fiscal year 2025 budget.
$675 million
— The total federal-funds fiscal cliff amount identified in the fiscal year 2025 budget.
$800 million
— The amount attributed to chronic underbudgeting of uniformed overtime and MTA subsidies.
Future budget gaps ranging from $5 to $6 billion understate the city's fiscal problem, as the current plan continues to underbudget overtime and fails to fund recurring programs, creating large fiscal cliffs. To address these challenges, the city must transparently budget for all program costs, prioritize spending, and increase efficiency to align recurring expenditures.
Recommendations related to Out-Year City Budget Gaps
The City should do much more to transparently budget for the projected costs of all programs, or explicitly shrink or sunset them.
The City should detail the sources of savings on asylum seekers and migrants and the underlying projections, so that New Yorkers understand what services are being provided, for how long, and to how many households.
The City should further restrain spending by prioritizing programs and increasing efficiency to close outyear gaps.
The City must align recurring expenditures for all programs to close outyear gaps, including the fiscal cliffs.
Key Data
$5 to $6 billion
— The range of future budget gaps that understate the magnitude of the City’s remaining fiscal problem.
nearly $2.5 billion
— The mid-year addition in fiscal year 2024 spending resulting from fiscal cliffs and underbudgeting.
upward of $800 million
— The cost of the current (non-expanded) FHEPS housing voucher program in the current year.
2.9 percent ($2.3 billion)
— The increase in adjusted fiscal year 2025 City-funded spending from fiscal year 2024.
21.5 percent ($15.0 billion)
— The increase in adjusted fiscal year 2025 City-funded spending compared to fiscal year 2020.
$1.2 billion
— The amount of agency PEG savings in the January round for fiscal years 2024 and 2025.
New York City faces significant budget shortfalls, with projections indicating a $7.1 billion gap for fiscal year 2025 that could rise to $10.6 billion when accounting for underbudgeted areas. To address these fiscal challenges, the city must prioritize cost-effective services and implement management efficiencies rather than raising taxes or depleting financial reserves.
Recommendations related to Out-Year City Budget Gaps
New York City’s leaders should make some tough choices to close the fast-approaching budget gaps and not take the easy but unwise route of raising taxes.
Reserves should be protected for when we’re faced with a recession, not to avoid solving a problem partly the result of the choice to add unaffordable spending and underbudget ongoing programs.
The city can grow financially stronger as it confronts budget challenges if it prioritizes key services, relentlessly manages them to get results and operates effectively and efficiently.
The city will not identify and be able to deliver services efficiently without the input of labor and without agreed-upon changes to work rules, job titles, health insurance and other benefit structures.
The clear focus should be to maximize efficiency and minimize the impact on New Yorkers.
Key Data
$7.1 billion
— The city's financial plan shows this budget gap for fiscal year 2025.
$10.6 billion
— The possible budget gap when including fiscal cliffs and areas the city regularly underbudgets.
$5.8 billion
— The comptroller's estimate for the fiscal year 2025 budget gap.
$12.2 billion
— The comptroller's estimate for the fiscal year 2027 budget gap.
5.3%
— The decline in New York City's population from 2020 to 2022.
92%
— The portion of savings measures in previous programs that did not directly affect program services.
New York City faces a massive $10.6 billion budget gap for fiscal year 2025 when accounting for the fiscal cliff and program underbudgeting. To address this, the city must conduct a comprehensive review of program efficiency and collaborate with labor unions to reduce costs while maintaining critical services.
Recommendations related to Out-Year City Budget Gaps
The City needs a citywide look at program impact and efficiency to identify all opportunities to reduce costs without cutting critical services.
The City should consolidate welfare benefit funds, which could save $150 million without cutting actual benefits.
Services will be best preserved if the City works with labor, making changes as needed to work rules and job titles, with a focus on maintaining high-quality critical services while reducing costs.
The federal government should share a fair portion of the costs associated with serving asylum seekers and migrants.
New York State should provide a greater share of the costs associated with serving asylum seekers and migrants.
The City should efficiently provide only the most critical services to asylum seekers and migrants to reduce high costs.
Key Data
$7.1 billion
— The fiscal year 2025 budget gap, widened from a previously estimated $5.1 billion.
$2.4 billion
— The cost of the fiscal cliff excluded from the primary gap estimate.
$1.1 billion
— The amount of program underbudgeting excluded from the primary gap estimate.
$10.6 billion
— The total fiscal year 2025 budget gap when including the fiscal cliff and program underbudgeting.
$150 million
— Potential savings from consolidating welfare benefit funds.
$10 billion
— The amount the City increased projected spending on asylum seekers and migrants over four years.
New York City faces substantial budget gaps reaching over 12.5 percent of City-funded spending, with the fiscal year 2025 gap projected at $11.3 billion even after planned savings. Achieving long-term structural stability will require the City to make difficult decisions regarding which services to continue, scale back, or eliminate, alongside improvements in government efficiency.
Recommendations related to Out-Year City Budget Gaps
The City must make hard choices about soon-to-be-unfunded programs to achieve structural stability.
The City should increase government efficiency and focus on getting the basics right to achieve structural stability.
The City should prioritize effective programs and shift other funds to support them, while eliminating or scaling back those that are less impactful.
Key Data
$11.3 billion
— Projected fiscal year 2025 budget gap after accounting for planned savings.
$11.4 billion
— Projected fiscal year 2026 budget gap if current programs are fully funded.
$11.8 billion
— Projected fiscal year 2027 budget gap if current programs are fully funded.
$14.9 billion
— Projected fiscal year 2026 budget gap including the expansion of housing voucher eligibility.
$16.6 billion
— Projected fiscal year 2027 budget gap including the expansion of housing voucher eligibility.
$839 million
— Estimated shortfall in fiscal year 2024 to fund planned services.
New York City faces a looming fiscal cliff with projected budget gaps reaching up to $13.8 billion next year, driven by years of expanded programs funded by temporary revenue and rising city-funded spending. To address this, the city must prioritize impactful programs, improve operational efficiency, and manage headcount strategically to ensure long-term fiscal stability.
Recommendations related to Out-Year City Budget Gaps
To stabilize the budget and minimize any pain from cuts, the city should prioritize the most impactful programs first, allowing it to end temporary initiatives and consolidate duplicative efforts.
The city must greatly improve its data on program efficiency and effectiveness and implement a performance management and accountability process.
Agencies should implement changes to deliver services more efficiently by collaborating with labor to change processes and enhance worker skills.
The city should examine how it uses space and vehicles and identify savings through centralized procurement.
The mayor’s office should take a hard look at staffing and performance to ensure city government functions well with leaner teams where appropriate.
Strong consideration should be given to reviving the Program to Eliminate the Gap (PEG) monitoring function that the New York State Financial Control Board provided years ago.
Key Data
42 percent
— The portion of the Fiscal Year 2025 budget gap attributed to the cost of caring for new arrivals.
$9.9 billion
— The projected budget gap for next year.
$13.8 billion
— The possible upper estimate for next year's budget gap.
50%
— The increase in city-funded spending over the past decade.
$16 billion
— The amount added to the budget for city worker raises without identified funding sources.
$2.5 billion
— The value of programs funded by federal Covid aid and temporary tax revenue surges.
New York City faces significant future budget gaps that are projected to grow from $8.7 billion in fiscal year 2025 to $11.5 billion by fiscal year 2027 once fiscal cliffs and underbudgeted programs are accounted for. These estimates are likely understated, as they do not include additional costs such as the NYS Nurses Association arbitration award, class size mandates, and asylum seeker expenses.
Key Data
$5.1 billion
— Reported budget gap in fiscal year 2025.
$7.9 billion
— Reported budget gap in fiscal year 2027.
$2.5 billion
— Amount by which budget gaps are understated due to substantial fiscal cliffs.
$1.1 billion
— Amount by which budget gaps are understated due to chronic underbudgeting of certain programs.
$8.7 billion
— Total budget gap projected for next year after accounting for fiscal cliffs and underbudgeted programs.
$11.5 billion
— Total budget gap projected for fiscal year 2027 after accounting for fiscal cliffs and underbudgeted programs.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
New York City faces significant financial challenges, with projected budget gaps expanding from $7.5 billion in fiscal year 2025 to $10.7 billion by fiscal year 2027. To stabilize the city's fiscal outlook, the budget must incorporate realistic spending estimates, avoid funding recurring programs with one-time resources, and prioritize long-term fiscal health over short-term spending.
Recommendations related to Out-Year City Budget Gaps
The City should adopt a budget that narrows future budget gaps.
The City should adopt a budget that reduces future fiscal cliffs by including spending for ongoing programs in the outyears.
The City should adopt a budget that offsets all added spending for recurring activities with savings elsewhere in each year of the financial plan.
The City should adopt a budget that includes realistic annual spending estimates for all functions, including uniformed overtime and special education.
The City should adopt a budget that deposits at least half of any additional fiscal year 2023 resources into the Rainy Day Fund.
Key Data
$7.5 billion
— The projected budget gap for fiscal year 2025.
$10.7 billion
— The projected budget gap for fiscal year 2027.
$400 million
— The cost to maintain the current FHEPS rental voucher program.
$4.3 billion is the Adams' Administration's estimate of the cost to house and provide services to asylum seekers this and next year. But that is only a small portion of the City's fiscal challenges. NYC Budget Director Jacques Jiha joined the CBC to discuss the fiscal year 2024 Executive Budget,…
New York City's budget gaps have widened significantly, reaching projected deficits of $10.7 billion by fiscal year 2027 due to various fiscal cliffs and underbudgeting. To address these gaps while preserving essential services, the city must prioritize operational restructuring and efficiency initiatives rather than relying on vacancy reductions or illusory savings.
Recommendations related to Out-Year City Budget Gaps
Future actions should focus much more on prioritizing impactful programs and restructuring operations to preserve services, lest the City balance its budget by reducing critical services unnecessarily.
The City has sufficient vacancies and should not be adding new positions; instead, it should shift vacancies to where they are most needed and take steps to aggressively reform how it hires, especially for critical functions.
The best strategy to narrow budget gaps significantly while preserving services is to implement additional PEGs that focus on improving efficiency—reducing costs without reducing services.
Key Data
$10.7 billion
— Projected budget gap for fiscal year 2027.
$3.0 billion
— Amount the City could have to identify to balance the fiscal year 2024 budget.
$4.1 billion
— Cumulative recurring savings from PEGs and vacancy reduction initiatives.
$7.5 billion
— Projected budget gap for fiscal year 2025.
New York City faces significant future budget gaps projected to reach $10.7 billion by fiscal year 2027, while the current fiscal year 2024 budget is likely $3.0 billion short due to fiscal cliffs and underbudgeting. To achieve fiscal sustainability, the administration must implement additional savings plans focused on productivity and prioritizing high-impact programs rather than relying on unsustainable one-time funding.
Recommendations related to Out-Year City Budget Gaps
The Adams Administration should implement additional PEGs focused on productivity and prioritization of higher impact programs to ensure the City’s budget is on a fiscally sustainable path.
The City must avoid the alternative of slashing services or raising taxes, which would drive away residents and businesses of all types.
Key Data
$7.5 billion
— Projected budget gap for fiscal year 2025.
$9.7 billion
— Projected budget gap for fiscal year 2026.
$10.7 billion
— Projected budget gap for fiscal year 2027.
$3.0 billion
— Estimated shortfall in the fiscal year 2024 budget due to fiscal cliffs, underbudgeting, and asylum seeker aid assumptions.
$600.0 million
— Amount of federal aid for asylum seekers assumed in the fiscal year 2024 budget.
The New York City Housing Authority faces a widening structural budget gap that reached $789 million in 2022, driven by rising costs and declining rent collections. Because the City faces budget gaps approaching $11 billion in the coming years, increasing subsidies to cover these deficits would require diverting funds from other essential services.
Recommendations related to Out-Year City Budget Gaps
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 operating revenue shortfall for NYCHA's public housing portfolio.
$11 billion
— The approximate size of the City's budget gaps in the coming years.
$1,481
— The monthly per-unit operating cost for NYCHA in 2022.
$152 million
— The amount spent on overtime by NYCHA in 2022.
$466 million
— The amount of unpaid rent accrued by NYCHA households as of December 2022.
$35 million
— The anticipated shortfall for 2023 even after efficiency measures.
New York City's rental assistance programs face a significant fiscal cliff, with costs rising from $16 million in 2015 to a projected $636 million in 2023 while future funding remains largely unbudgeted. To address these growing expenses and broader budget shortfalls reaching $10 billion by 2027, the City must ground its financial planning in realistic cost estimates and secure appropriate funding from federal and state partners.
Recommendations related to Out-Year City Budget Gaps
Budget amounts and allocation decisions, including any expansion to CityFHEPS, should be grounded in realistic utilization and cost estimates for the current program, most of which is unfunded in the future.
Any proposed expansion to CityFHEPS should include a fiscal impact statement that shows how much it would increase costs and identifies recurring revenues to pay for it.
The City should provide realistic estimates of the program’s cost and reflect those in the City budget.
Consideration of the three pending bills that would expand eligibility for CityFHEPS should be based on their impact on City spending and from where the resources would come, including what other program spending may be reduced.
An effective, holistic strategy should include appropriate voucher funding from the federal and State governments.
Key Data
$636 million
— Anticipated cost of rental assistance programs in fiscal year 2023.
$450 million
— The size of the fiscal cliff in fiscal year 2024 for rental assistance programs.
$6.8 billion
— Total budget shortfalls facing the City in fiscal year 2025.
$10.0 billion
— Projected budget shortfalls in fiscal year 2027.
$16 million
— Cost of rental assistance programs in fiscal year 2015.
$380 million
— Amount spent on rental assistance in fiscal year 2022.
New York City faces significant fiscal challenges, with projected budget gaps reaching $9.7 billion in fiscal year 2025 and $14.5 billion in fiscal year 2027, exacerbated by $17 billion in new labor costs. To address these shortfalls, the city must prioritize restructuring operations, streamlining bureaucracy, and increasing productivity in areas like sanitation to achieve necessary savings without slashing critical services.
Recommendations related to Out-Year City Budget Gaps
The city must thoughtfully rein in its spending by restructuring and prioritizing high impact services, not by slashing programs or pruning low hanging fruit.
The city should consolidate welfare-benefit funds to save $150 million from efficiency and purchasing power.
The city should reorganize operations, streamline bureaucracy, and leverage technology to achieve most of its savings.
The city should increase sanitation productivity to save $100 million annually.
The city should implement overtime caps and ambulance staffing changes to achieve additional savings across government.
Key Data
$9.7 billion
— Projected budget gap in fiscal year 2025.
$14.5 billion
— Projected budget gap in fiscal year 2027.
$17 billion
— Cost of employee raises agreed to over five years.
$150 million
— Potential savings from consolidating welfare-benefit funds.
$100 million
— Potential annual savings from increasing sanitation productivity.
$200 million
— Annual savings from prior plans that may affect actual services.
New York City faces significant fiscal challenges, with budget gaps projected to reach $6.5 billion by fiscal year 2027 and potentially exceeding $14.0 billion when accounting for additional costs. To address these shortfalls, the city must prioritize operational efficiency and utilize its 23,000 vacant positions to meet savings targets without resorting to layoffs.
Recommendations related to Out-Year City Budget Gaps
The City should continue to initiate a Program to Eliminate the Gap (PEG) for the Executive Budget to avoid massive future cuts.
Agencies should utilize the 23,000 citywide vacancies to meet savings targets and hire critical positions rather than resorting to layoffs.
The City should focus on improving operational efficiency as the best approach to preserving services.
The City should make work rules and job titles more flexible to increase operating efficiency and reduce ongoing costs.
Key Data
$6.5 billion
— The reported budget gap by fiscal year 2027, excluding additional costs like labor contracts and asylum seeker services.
$8.8 billion
— The amount the City may need this year and next, which stronger revenues and reserves will not fully cover.
$14.0 billion
— The potential size of future budget gaps by fiscal year 2027.
23,000
— The number of citywide vacancies available to help agencies meet savings targets.
4 percent
— The size of the PEG savings program initiated for the Executive Budget.
New York City faces a precarious long-term fiscal outlook with projected budget gaps reaching $4.6 billion in fiscal year 2025 and $5.9 billion in fiscal year 2026. To ensure future stability and preserve essential services, the city must immediately restrain spending and implement transformative changes to improve the quality and efficiency of government operations.
Recommendations related to Out-Year City Budget Gaps
The City should start taking action immediately to restrain spending over the long run to reduce the future gaps.
The City can and should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The City and agencies should have flexibility to shift vacant positions across and within agencies to units and titles that have critical staffing needs.
The City must improve the quality and efficiency of the City’s operations today to preserve services for New Yorkers.
The City must pursue more transformative changes to ensure future stability.
Key Data
$4.6 billion
— Projected budget gap in fiscal year 2025.
$5.9 billion
— Projected budget gap in fiscal year 2026.
$8 billion
— Potential budget gap in fiscal year 2025 absent a recession.
$10 billion
— Potential budget gap in fiscal year 2026 absent a recession.
$4.3 billion
— Potential revenue shortfall in the first year of a recession.
$10 billion and $16 billion
— Potential revenue shortfall over 3 years of a recession.
The Metropolitan Transportation Authority faces a structural operating deficit exceeding $2.5 billion annually, with federal aid expected to run out by 2024. To address these gaps, the agency must implement efficiency-focused operating reforms, restructure long-term debt, and secure new revenue sources from the state to avoid a fiscal cliff.
Recommendations related to Out-Year City Budget Gaps
The MTA should seize the opportunity and runway created by federal aid to implement efficiency-focused operating reforms to improve fiscal and operational stability.
The MTA should restructure its long-term debt to reduce its structural deficit before the region’s critical transit system risks falling off the fiscal cliff.
New York State should identify a new revenue source to provide $800 million in 2023 and $1.6 billion in 2024 and beyond to close the remaining budget gaps.
The MTA should increase efficiency and productivity to cover a portion of the structural deficit, ideally through a multi-year phase-in plan starting with management-led efficiencies.
Key Data
$2.5 billion
— The amount of the MTA's recurring annual structural deficit.
$7.0 billion
— The amount of American Rescue Plan Act (ARPA) federal stimulus funds the MTA proposed using to cover deficits through 2024.
$700 million
— The amount of Federal Emergency Management Agency (FEMA) reimbursement funds the MTA proposed using to cover deficits through 2024.
$3.9 billion
— The amount of savings generated from 2024 through 2028 by restructuring and defeasing long-term debt.
$2.0 billion
— The potential annual fiscal risk from a recession, collective bargaining costs, and other factors.
$1.6 billion
— The amount of annual revenue the state would need to provide beginning in 2024 to close the remaining budget gaps.
New York City faces significant out-year budget gaps, initially reported at $4.2 billion for fiscal year 2024, $3.7 billion for 2025, and $4.0 billion for 2026. These figures do not account for substantial budgetary risks, including pension fund investment losses and recurring programs currently lacking future funding, which could push potential gaps toward $10 billion.
Key Data
$4.2 billion
— Reported budget gap in fiscal year 2024.
$3.7 billion
— Reported budget gap in fiscal year 2025.
$4.0 billion
— Reported budget gap in fiscal year 2026.
$10 billion
— Potential future budget gaps warned by City and State Comptrollers.
$1.1 billion
— Total value of fiscal cliffs in 2024 that are not in the baseline.
$2.5 billion
— Total value of fiscal cliffs in fiscal year 2026 that are not in the baseline.
New York City faces a looming fiscal cliff of at least $1 billion in fiscal year 2026 due to the unsustainable practice of funding recurring programs with one-time federal COVID-19 relief aid. If these programs are continued without reallocating existing resources, the city's budget gaps are projected to widen significantly, growing from $3.7 billion to $4.1 billion in fiscal year 2025 and from $4.0 billion to $5.1 billion in fiscal year 2026.
Recommendations related to Out-Year City Budget Gaps
The City should clearly state that these programs will end when the federal aid is depleted, or that they will continue and either widen the City’s budget gap or be supported with identified revenues or other program reductions.
If the City intends to continue these programs with City dollars, it should include them in baseline spending in the financial plan and either widen budget gaps or fund them with resources reallocated from existing programs.
The City’s budget gaps should be accurate and complete; continuing fiscal cliff programs without reallocation of City funds would increase the fiscal year 2025 gap from $3.7 billion to $4.1 billion and the fiscal year 2026 gap from $4.0 billion to $5.1 billion.
Key Data
$3.7 billion
— The baseline fiscal year 2025 budget gap before accounting for the continuation of federally funded programs.
$4.1 billion
— The projected fiscal year 2025 budget gap if fiscal cliff programs are continued without reallocation of City funds.
$4.0 billion
— The baseline fiscal year 2026 budget gap before accounting for the continuation of federally funded programs.
$5.1 billion
— The projected fiscal year 2026 budget gap if fiscal cliff programs are continued without reallocation of City funds.
at least $1 billion
— The estimated federal funding fiscal cliff facing the City in fiscal year 2026.
$1.1 billion
— The projected fiscal year 2026 federal fiscal cliff according to the Office of the State Comptroller's tracker.
New York City faces significant future budget gaps that could reach $10 billion, necessitating immediate action to restrain spending and improve operational efficiency. By restructuring government operations, eliminating unneeded vacancies, and modernizing labor contracts, the city can close these gaps while maintaining essential services.
Recommendations related to Out-Year City Budget Gaps
The city needs to both restrain spending and better manage vacancies and hiring.
Reorganizing operations, streamlining bureaucratic approvals, leveraging technology and fundamentally changing ways of doing business can boost productivity.
The city should modernize contracts to reduce recurring costs, fund workers’ raises and narrow budget gaps.
The city should eliminate many thousands of unneeded vacant positions to improve fiscal health.
Key Data
$10 billion
— The amount that annual budget gaps will actually approach in the near future, according to projections.
$2 billion to $3 billion
— The amount by which annual pension contributions will exceed budgeted levels due to poor stock-market performance.
28,000
— The number of current city job vacancies that exist, providing an opportunity for strategic hiring and position elimination.
$27 billion
— The growth in the city-funded portion of the budget since 2013.
12%
— The rate at which private-sector productivity has risen over the past decade, highlighting the potential for city efficiency gains.
$1 billion to $1.5 billion
— The potential annual funding gap for collective-bargaining agreements if the city agrees to 3% raises.
New York City's implementation of a Program to Eliminate the Gap (PEG) is a necessary step to address future budget gaps driven by rising costs like pension contributions and collective bargaining agreements. By identifying savings of 3 percent this year, growing to 4.75 percent in future years, the City can restructure operations and leverage its 28,000 vacancies to maintain essential services while ensuring fiscal stability.
Recommendations related to Out-Year City Budget Gaps
The City should implement the directive to identify savings of 3 percent this year, growing to 4.75 percent in future years, to restructure programs and operations to achieve the PEG targets.
The City should change work rules and other contractual components to increase efficiency and provide PEG savings as the best way to raise employee salaries without creating an unsustainable fiscal burden.
The City should leverage its current 28,000 vacancies to hire critical service-providing positions while still meeting PEG targets.
Key Data
3 percent
— The directive to identify savings of this amount in the current year to help close budget gaps.
4.75 percent
— The directive to identify savings of this amount in future years to help close budget gaps.
28,000
— The number of current City vacancies that should allow for hiring critical service-providing positions while meeting PEG targets.
New York City should bolster its financial resilience by depositing at least $2.5 billion into its rainy day fund this year to prepare for potential economic downturns. Implementing a mandatory, formula-based annual deposit structure would further protect essential city services from future revenue shortfalls and fiscal instability.
Recommendations related to Out-Year City Budget Gaps
The city should add at least $2.5 billion to the rainy day fund this year to prepare for future economic instability.
The city should adopt a steady, formula-based structure for future annual deposits into the rainy day fund.
The city should set a target size, mandate deposits, and specify criteria for when reserve funds can be withdrawn.
The city should set aside a portion of revenue growth toward long-term reserves during years of economic expansion.
Key Data
$2.5 billion
— The minimum amount proposed to be added to the city's rainy day fund this year.
$3.3 billion
— The amount of additional revenue available in fiscal year 2022.
$1.5 billion
— The amount of additional revenue projected for the following year.
New York City has an opportunity to utilize $4.5 billion in unexpected revenue to bolster the Rainy Day Fund and restore labor reserves, thereby increasing fiscal stability against future recessions. By avoiding recurring spending and instead focusing on one-time actions and legislative rules for reserves, the City can better manage potential revenue shortfalls and address future budget gaps.
Recommendations related to Out-Year City Budget Gaps
Deposit half of the newly identified resources, $2.3 billion, into the Rainy Day Fund.
Add $1.7 billion to the labor reserve over the financial plan to fully restore the reduction and reduce fiscal risk.
Use the remaining resources for non-recurring actions rather than funding recurring programs or driving spending to unsustainable levels.
Shift between $250 million and $500 million annually from the general and capital stabilization reserves to the Rainy Day Fund.
Commit to setting rules to govern the Rainy Day Fund in Local Law to ensure resources are available during a recession or severe emergency.
Key Data
$13 billion to $19 billion
— Potential revenue shortfall the City could face over three years in the next recession.
$4.5 billion
— More in revenues available in fiscal years 2022 and 2023 than was projected in the Executive Budget.
$3 billion
— Fiscal year 2022 tax revenues identified by New York City Comptroller Brad Lander.
$1.5 billion
— Fiscal year 2023 revenue identified in the Mayor’s May 25th Revenue Letter to the City Council.
$2.3 billion
— Recommended deposit of newly identified resources into the Rainy Day Fund.
$1.7 billion
— Amount to be added to the labor reserve over the financial plan to fully restore the reduction.
New York City faces a potential $9 billion fiscal disaster by 2026 due to existing budget gaps, looming fiscal cliffs, and the cost of future labor contracts. To avoid service cuts or tax increases, the city must prioritize spending, increase service efficiency, and deposit surplus revenue into the Rainy Day Fund.
Recommendations related to Out-Year City Budget Gaps
The mayor and council must resist the temptation to use additional tax revenue to expand services and instead deposit this money into the Rainy Day Fund for the next recession.
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 currently funded with nonrecurring city and federal COVID-19 funds.
The city must lower costs by improving efficiency or by reducing lower impact programs, such as implementing a 3% Program to Eliminate the Gap for Productivity.
The city should use the 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 total recipe for fiscal disaster by 2026, combining the existing budget gap, employee raises, and the fiscal cliff.
$17 billion
— The potential three-year revenue shortfall if the city experiences another recession.
$2 billion
— The amount of the fiscal cliff by fiscal year 2026.
$1.5 billion
— The annual savings that would be generated by a 3% Program to Eliminate the Gap for Productivity.
$4.3 billion
— The cost of 3% annual raises for city employees in the third year.
$1.4 billion
— The typical amount by which the adopted budget exceeds the preliminary budget.
New York City faces significant fiscal challenges in the coming years, with projected budget gaps of $2.7 billion, $2.2 billion, and $3.0 billion between fiscal years 2024 and 2026. To address these gaps and looming fiscal cliffs, the city must implement more rigorous efficiency programs, transition recurring programs currently funded by temporary federal aid to permanent funding, and establish consistent annual deposits into the Rainy Day Fund.
Recommendations related to Out-Year City Budget Gaps
The Executive Budget should include another Program to Eliminate the Gap (PEG) focused on increasing agency and central service efficiency.
The Executive Budget should build on this start and include a PEG targeting 3 percent in fiscal year 2023 and each year thereafter, focused on strategies that increase efficiency and reduce unit costs.
In addition, the Executive Budget should include efficiency savings from centrally managed services like space and fleet.
City agencies should have clear plans for how to taper federal funds over the next few years, while the Executive Budget should propose a plan to start to transition recurring programs to recurring funding.
The Executive Budget should include planned deposits of at least $500 million annually in each year of the financial plan.
The Mayor and City Council should also advance legislation to mandate deposits and establish stricter controls for use of the RDF.
Key Data
$2.7 billion
— Projected budget gap for fiscal year 2024.
$2.2 billion
— Projected budget gap for fiscal year 2025.
$3.0 billion
— Projected budget gap for fiscal year 2026.
$650 million
— Recurring programs funded in fiscal year 2022 that lacked fiscal year 2023 funding as of November 2021.
$1.3 billion
— Recurring programs that will lose federal funding in fiscal year 2026.
$500 million
— Planned annual deposit amount recommended for the Rainy Day Fund.
New York City faces significant fiscal challenges, including projected budget gaps reaching $3.0 billion by fiscal year 2026 and a $653 million fiscal cliff in 2023. To ensure long-term stability, the city must implement efficiency savings, address expiring federal funding, and commit to annual deposits of at least $500 million into the Rainy Day Fund.
Recommendations related to Out-Year City Budget Gaps
The City should take significant additional actions in the Executive and Adopted Budgets to make government more efficient, stave off the looming fiscal cliffs, and save for the inevitable next downturn.
The Administration should review federal COVID-related spending to ensure resources strategically support the City’s recovery without creating unsustainably-funded programs.
The Administration should identify additional agency and central function efficiency savings to include in the Executive Budget.
The Administration should work with its municipal unions to identify and implement efficiency savings and rationalize benefit levels and administration during collective bargaining negotiations.
The financial plan should include annual deposits of at least $500 million to the Rainy Day Fund to help the City weather the inevitable future recession or severe emergency.
Key Data
$2.7 billion, $2.2 billion, and $3.0 billion
— Projected budget gaps in fiscal years 2024, 2025, and 2026, respectively.
$653 million
— Fiscal year 2023 fiscal cliff caused by programs like housing voucher rent increases and shelter security wages that were only funded for fiscal year 2022.
$1.3 billion
— Amount of programs funded with federal monies, such as 3K expansion and increased overhead for non-profits, that will dry up in fiscal year 2026.
$500 million
— Recommended annual deposit amount to the City’s Rainy Day Fund to help weather future recessions.
$866 million
— Savings delivered in fiscal year 2022 by the Program to Eliminate the Gap (PEG).
$1.1 billion
— Annually recurring savings delivered by the PEG in fiscal year 2023 and beyond.
New York City faces significant out-year budget gaps, with projected shortfalls of $2.9 billion in fiscal year 2023, $2.7 billion in 2024, and $2.1 billion in 2025. To address these gaps and other fiscal challenges like the $653 million City-funded fiscal cliff, the administration must identify recurring revenues, implement efficiency savings, and avoid relying on illusory labor savings.
Recommendations related to Out-Year City Budget Gaps
The fiscally responsible action would be to either remove these unspecified labor and attrition savings or identify specific actions to achieve them.
Any future collective bargaining increases would need to be fully funded with new resources or by implementing efficiencies that offset the costs.
The Adams Administration will need to identify recurring revenues for programs currently facing a fiscal cliff or eliminate them.
Agencies should leverage technology to improve service delivery.
Agencies should reduce spending on low impact programs, work with labor to change work rules to increase efficiency, streamline work processes, and consolidate like functions across agencies.
The City should be building reserves to be prepared for the next downturn.
NYCHA and H+H should implement reforms to achieve fiscal stability.
Key Data
$2.9 billion
— Reported budget gap for fiscal year 2023.
$2.7 billion
— Reported budget gap for fiscal year 2024.
$2.1 billion
— Reported budget gap for fiscal year 2025.
$653 million
— City-funded fiscal cliff starting in fiscal year 2023.
$1.7 billion
— Total annual savings from agency Program to Eliminate the Gap (PEG) proposals.
$500 million
— Unspecified labor savings included in the November 2021 Financial Plan.
New York City's financial plan faces significant out-year budget gaps, exacerbated by reliance on non-recurring funds and unfunded labor costs that could reach $2.2 billion by fiscal year 2025. To ensure fiscal sustainability, the incoming administration must proactively manage these gaps through measures like a 3 percent to 5 percent Program to Eliminate the Gap and by leveraging collective bargaining to improve productivity.
Recommendations related to Out-Year City Budget Gaps
Mayor-elect Adams should actively manage these budget gaps starting on day one.
The City’s plan should include annual deposits to the Rainy Day Fund crucial to preparing for the next recession.
Mayor-Elect Adams should proactively take steps to restructure the City’s budget and workforce to be fiscally sustainable with recurring City revenues.
The current and incoming Administrations should work together to have a 3 percent to 5 percent Program to Eliminate the Gap (PEG) options ready by January 1st for the Preliminary Budget.
Mayor-elect Adams should work with municipal unions to leverage the next round of collective bargaining agreements to make changes allowing the City to be more productive, use those savings to fund raises, and close budget gaps.
Key Data
$2.9 billion
— Budget gap for the next year.
$2.2 billion
— Cost of 2 percent annual raises for City employees by fiscal year 2025.
$1.3 billion to $4 billion
— Annual federal fiscal cliff starting in fiscal year 2025 due to the depletion of federal COVID-aid.
$750 million
— Amount by which budget gaps are higher annually because the plan includes illusionary labor and attrition savings.
$500 million
— Commitment to a deposit to the Rainy Day Fund in fiscal year 2022.
New York City faces annual budget gaps estimated between $3.9 billion and $4.8 billion starting in fiscal year 2023, necessitating strategic fiscal management. To address these challenges, the incoming administration should prioritize sustainable spending, utilize federal aid wisely, and establish a robust Rainy-Day Fund.
Recommendations related to Out-Year City Budget Gaps
The incoming Administration should deploy a regular, periodic Program to Eliminate the Gap (PEG) that identifies and implements recurring savings and continued, modest workforce reduction through attrition.
To narrow these gaps, the City should use federal aid wisely, restrain spending and the workforce to fiscally sustainable levels, and make deposits into its Rainy-Day Fund.
The City should bring health and welfare benefit costs to sustainable levels, which requires negotiating changes with municipal labor unions.
The incoming Administration should deposit funds regularly into the Rainy-Day Fund and improve its legal framework to prepare for future economic downturns.
The City should enact a local law to limit Rainy-Day Fund withdrawals to a recession or severe emergency, both of which should be legally defined.
Key Data
$3.9 billion and $4.8 billion
— The adjusted annual budget gaps beginning in fiscal year 2023 after accounting for non-recurring revenue usage and labor savings.
$1.3 billion to $4.1 billion
— The fiscal cliff created in fiscal years 2025 and 2026 by using non-recurring federal aid to fund recurring programs.
$7.2 billion
— The City's annual cost for employee and retiree health benefits, which has grown an average of 4.2 percent per year since fiscal year 2014.
$21.1 billion
— Total COVID-related federal aid expected by New York City from fiscal year 2020 through fiscal year 2025.
$3.9 billion and $4.1 billion
— Initial estimates of annual budget gaps beginning in fiscal year 2023 by the de Blasio Administration.
$1.3 billion
— The amount of unspecified recurring labor and attrition savings included in the budget.
The Fiscal Year 2022 Adopted Budget temporarily reversed hiring freezes, increasing headcount while deferring the difficult task of reducing staff to the next administration for fiscal years 2023 through 2025. This approach leaves significant attrition savings targets of approximately $283 million annually for the next mayor to manage in the out-years.
Recommendations related to Out-Year City Budget Gaps
The next administration must exercise restraint to manage the budgeted staff reductions planned for fiscal years 2023 to 2025.
The City should adhere to the plan to reduce on-board staff by nearly 4,000 positions in the out-years to achieve necessary savings.
Key Data
$283 million
— Average annual attrition savings for fiscal years 2023 to 2025.
3,987
— Number of positions associated with the average annual attrition savings for fiscal years 2023 to 2025.
$30.4 million
— Fiscal year 2022 attrition savings included in the Adopted Budget.
$364 million
— Projected attrition savings in fiscal year 2025 included in the Preliminary Budget.
337,294
— Authorized headcount for fiscal year 2022, which is nearly the highest ever.
5,342
— Increase in fiscal year 2022 authorized headcount against April's Executive Budget.
The fiscal year 2022 Adopted Budget leaves the City with annual budget gaps of approximately $5 billion from fiscal year 2023 through fiscal year 2025, partly due to the use of temporary federal aid to fund recurring programs. To ensure long-term fiscal stability, the City must address these looming gaps, improve agency efficiency, and establish mandatory deposits for the Rainy Day Fund.
Recommendations related to Out-Year City Budget Gaps
The City should enact legislation that sets minimum mandatory deposits to build the Rainy Day Fund to the $11 billion needed to weather a recession.
The City must address the looming fiscal cliff created by using federal funds for recurring programs.
The City must negotiate the next round of collective bargaining agreements without creating greater fiscal stress.
The City must track federal spending in detail, including metrics for program goals and results.
The City should improve the efficiency of City agencies so that they deliver what New Yorkers need in a fiscally sustainable manner.
Key Data
$5 billion
— The amount of annual budget gaps the City faces in fiscal year 2023 through fiscal year 2025.
$1 billion
— The amount of annual unspecified labor savings included in the budget, which understates the magnitude of the City's gaps.
$1.3 billion and $4.0 billion
— The range of annual funding provided by federal aid for recurring programs, creating a fiscal cliff.
$11 billion
— The estimated resources the City should have in the Rainy Day Fund to weather a recession.
$500 million
— The amount deposited into the Rainy Day Fund in the fiscal year 2022 Adopted Budget.
$15 billion
— The amount of additional federal aid received by the City.
New York City's reliance on temporary federal aid to fund long-term program commitments threatens future fiscal stability and risks creating unnecessary budget stress. Instead of using these one-time funds for recurring expenses, the city should prioritize sustainable tax revenues for baseline priorities and focus federal aid on strategic economic recovery interventions.
Recommendations related to Out-Year City Budget Gaps
The city should not use federal relief monies to expand the city payroll and long-term program commitments, as these should be funded by sustainable city tax revenues not by temporary federal grants.
Federal aid from the American Rescue Plan should be concentrated on strategic interventions designed in partnership with industry and nonprofit groups to restore lost private sector jobs and support recovery.
The administration and City Council should adopt a process for greater transparency and consultation with affected industries regarding how federal funds are invested to leverage the strongest and fastest recovery.
Key Data
$6 billion
— The amount of flexible federal aid provided to New York City to achieve a rapid and equitable recovery.
$98 billion
— The total value of the proposed Executive Budget that requires amendment to ensure strategic use of federal funds.
500,000
— The number of lost private sector jobs that federal aid should be focused on restoring.
New York City faces a potential fiscal gap of between $1.38 billion and $4.07 billion in fiscal year 2026 due to the expiration of temporary federal COVID-related aid. This looming cliff is driven by the reliance on one-time federal funds to support recurring or potentially recurring initiatives, particularly within the Department of Education.
Key Data
$1,382 to $4,070 million
— The total potential fiscal gap for New York City in fiscal year 2026 resulting from the expiration of COVID-related federal aid.
$1,101 to $3,466 million
— The potential fiscal gap specifically within the Department of Education for fiscal year 2026.
$422 to $2,365 million
— The potential fiscal gap for potentially recurring initiatives in fiscal year 2026.
$604.4 million
— The potential fiscal gap for flexible ARP aid initiatives in 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…
Despite receiving $15 billion in federal aid and increased tax revenue, New York City's future budget gaps remain at roughly $5 billion annually for fiscal years 2023 through 2025. The current budget fails to implement necessary structural reforms or identify recurring savings, leaving significant fiscal challenges for the next administration.
Recommendations related to Out-Year City Budget Gaps
The City should be implementing a regular, reasonably sized Program to Eliminate the Gap (PEG) to help prioritize programs, improve quality, and identify savings.
The City should be budgeting regular deposits into its newly established Rainy Day Fund to improve fiscal stability.
The City should identify recurring spending reductions to replace the $1 billion in annual labor savings currently carried in the out-year financial plans.
The City should spread federal money more evenly over a few years to allow time to restructure spending to increase efficiency and preserve services.
Key Data
$15 billion
— Additional federal aid received by the City.
$5 billion
— Estimated annual budget gap in fiscal years 2023 to 2025 when unspecified labor savings are removed.
$1 billion
— Annual labor savings carried in fiscal years 2023 through 2025 without identified recurring spending reductions.
5,000
— Number of additional staff the City plans to add, reversing recent progress in shrinking the workforce.
$1.6 billion
— Amount the City reversed its plan to use from the Retiree Health Benefits Trust to balance the budget.
$200 million
— Increase to the general reserve in fiscal year 2022.
$5.3 billion is the current estimate of the budget gap the next Mayor will have to close in her or his first year. Ben and CBC President Andrew Rein introduce listeners to CBC's mayoral candidates forum "Managing NYC’s Fiscal Crisis" that featured 10-minute conversations with each of eight candidates: Maya…
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
New York City's fiscal outlook faces significant challenges, with a projected $4.3 billion budget gap for fiscal year 2023 that is likely understated by $1 billion due to unrealized labor savings. To address these multiyear shortfalls, the City must implement aggressive spending restraint, including permanent headcount reductions and structural changes to labor costs and benefits.
Recommendations related to Out-Year City Budget Gaps
The City should be taking aggressive steps now to rein in spending by increasing efficiency, prioritizing programs for the most vulnerable, and collaborating with labor to change costly work rules and reduce the cost of benefits for City workers.
Headcount reductions are needed and should be made permanent to help stabilize long-run finances.
The City must embark on significant restructuring and spending restraint to stabilize its long-run finances.
Key Data
$4.3 billion
— The projected budget gap for fiscal year 2023.
$1 billion
— The amount by which the fiscal year 2023 budget gap is likely understated due to unrealized labor savings.
3.2 percent
— The projected increase in City-funded spending between fiscal year 2021 and fiscal year 2022.
New York City faces a $13.2 billion four-year budget gap, and while federal aid is anticipated, it is unlikely to fully resolve the city's fiscal challenges. Leaders must prioritize the development and implementation of credible fiscal stability plans to address these long-term deficits.
Recommendations related to Out-Year City Budget Gaps
State and City leaders should act with urgency to develop and implement credible fiscal stability plans.
Key Data
$73.3 billion
— Total State and City budget gaps over four years.
$13.2 billion
— The projected four-year budget gap for New York City.
$4.8 billion
— The adjusted budget gap for fiscal year 2022 that must be closed by January 2021.
$10.6 billion
— The amount of gap-closing measures the City would need to implement through January 2024 if federal aid provides a similar share of relief as in the Great Recession.
$57 billion
— The total gap-closing actions the State and City would need to implement if federal aid relieves the same portion of gaps as in the Great Recession.
New York City faces a significant fiscal crisis requiring immediate action to close the $3.8 billion budget gap projected for fiscal year 2022. To ensure long-term stability, the city must prioritize recurring savings, reduce headcount through attrition, and align employee benefit contributions with other public agencies rather than relying on non-recurring debt service savings.
Recommendations related to Out-Year City Budget Gaps
The Mayor should immediately ask each agency to identify significant recurring savings, with a focus on improving long run efficiency, for potential inclusion in the Preliminary Budget.
Attrition and the hiring freeze should be used to reduce the City’s headcount over the full term of the four-year financial plan.
The City should continue to work with labor to identify efficiencies and align employee benefit contributions to those of other public agencies.
Spending should be restrained to a level that is sustainable when the economy recovers and federal aid is depleted.
Key Data
$3.8 billion
— The fiscal year 2022 budget gap that the City needs to close in the Preliminary Budget.
60 percent
— The portion of annual savings in the November 2020 Financial Plan that do not recur.
0.35 percent
— The amount of fiscal year 2023 savings as a percentage of City-funded spending.
$1 billion
— The amount of annual labor savings in fiscal years 2022 to 2024 that the administration has made no progress achieving.
New York City faces a fiscal crisis with future budget gaps and should avoid borrowing to balance the current budget, as it would only provide illusory stability while burdening future taxpayers. Any necessary borrowing should be a last resort, authorized only under strict conditions like implementing savings and establishing a control period to ensure long-term fiscal stability.
Recommendations related to Out-Year City Budget Gaps
The City should implement all savings included in this year’s adopted budget and identify and implement an equal or greater amount of savings in future years.
The amount authorized for borrowing should be limited to what is needed to address additional revenue shortfalls in the near term that are not supported by new federal aid to mitigate future budget gaps.
Borrowing should be part of a comprehensive and feasible multiyear plan that leads to fiscal stability to address future budget gaps.
A control period should be established during which the FCB is required to approve and empowered to condition each instance of borrowing to ensure future budget gaps are managed.
City leaders should make additional hard choices that balance the needs of current and future New Yorkers to address future budget gaps.
The City faces a significant fiscal crisis requiring $1 billion in recurring labor savings to avoid layoffs and maintain essential services. Achieving these savings involves rationalizing employee benefits, such as health insurance premium sharing, and modernizing work rules to improve productivity and efficiency.
Recommendations related to Out-Year City Budget Gaps
The City should work with the MLC to consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
The City should seek State legislation to eliminate the VSFs and have the assets transferred to the main pension funds.
The City could reduce overtime for skilled trades and uniformed employees through the implementation of overtime caps.
The City could make four firefighters the standard staffing for engine companies.
The City should be given the flexibility to shift at least half of the ALS ambulances to a one paramedic, one EMT staffing model.
The pay scale for sanitation workers should be revised to establish new productivity targets and compensation structures that would improve collection operations.
The City should implement a new premium-sharing arrangement for employee health insurance to generate significant savings.
The guaranteed return on the fixed return fund should be sharply reduced through State legislation.
Key Data
$1 billion
— Recurring savings target from negotiations with labor unions.
$1.1 billion
— Savings total in fiscal year 2021.
$1.8 billion
— Savings total in fiscal year 2024.
$1.2 billion
— Estimated value of the taxpayer-provided guarantee for the TDA annually.
$1.1 billion
— Uniformed overtime in fiscal year 2019.
$43 million
— Estimated cost of the sanitation differential in fiscal year 2018.
The city's fiscal year 2021 budget relies heavily on one-time reserves and federal aid to close gaps, leaving significant long-term financial challenges. Without a thorough review of agency operations and recurring labor savings, the city faces larger-than-forecasted deficits in future years, especially if state aid is reduced or economic recovery slows.
Recommendations related to Out-Year City Budget Gaps
The City should undertake a thorough review of agency programs and operations to identify recurring savings, reduce the City’s workforce through attrition, and implement recurring labor savings.
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures; borrowing should be a last resort.
Shrinking the workforce through attrition is both possible and preferable to layoffs.
Labor savings should be a part of the City’s budget balancing efforts.
The City and labor could identify savings by agreeing to change other collectively bargained benefits, including vacation days, sick leave, work hours, and even contractually agreed upon raises and steps.
Key Data
$10.4 billion
— The tax revenue shortfall and decrease in state aid opened a budget gap in fiscal years 2020 and 2021.
$6 billion
— The tax revenue shortfall and decrease in state aid increased annual budget gaps to at least this amount annually starting in fiscal year 2022.
$1 billion
— The budget includes this amount in recurring savings to be negotiated with the City’s municipal labor unions.
22,000
— The Mayor has said that absent an agreement yielding $1 billion in savings, the City would lay off this many workers beginning in October.
$105 billion
— The City’s liability for retiree benefits, commonly known as other postemployment benefits (OPEB), is this amount.
$1.7 billion
— The gap for fiscal year 2022 is now this amount larger than it was in January.
The fiscal year 2021 budget is precariously balanced and fails to adequately address the significant budget gaps projected for 2022 and beyond. City leaders must implement recurring efficiency savings and aggressive attrition to avoid drastic service reductions and layoffs in the future.
Recommendations related to Out-Year City Budget Gaps
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 placing residents, businesses, and employees at risk of drastic service reductions and layoffs.
Key Data
$300 million
— The amount by which the budget aims to reduce police overtime, which is considered highly unlikely given the weak history of overtime management.
$1 billion
— The amount of savings the budget aims to produce through collaboration with municipal labor unions, for which there is a concerning lack of specific action plans.
New York State and City face significant potential budget gaps in fiscal years 2021 and 2022, necessitating a focus on controlling expenditures rather than raising taxes. High combined corporate and personal income tax rates already threaten economic competitiveness, as evidenced by a declining share of the nation's millionaires and their associated tax revenues.
Recommendations related to Out-Year City Budget Gaps
Improving the fiscal outlook for both the State and the City primarily requires controlling expenditures and advocating for federal aid.
Any consideration of tax increases should include the impact on State and local economic competitiveness.
As New York’s leaders look to close budget gaps, they must be cognizant that combined State and City PIT rates are the second highest in the nation, while combined CFT rates are the highest.
Key Data
$8 billion
— Potential budget gap for New York State in fiscal year 2021.
$15 billion
— Potential budget gap for New York State in fiscal year 2022.
$1.6 billion
— Potential budget gap for New York City in fiscal year 2021.
$6.9 billion
— Potential budget gap for New York City in fiscal year 2022.
16.49 percent
— Effective corporate franchise tax rate on businesses operating in New York City.
12.696 percent
— Top personal income tax rate imposed in New York City.
New York City faces significant multi-billion dollar budget gaps in its four-year financial plan, exacerbated by the economic impact of the pandemic. To address these shortfalls, the city should implement a combination of expenditure reductions, including workforce attrition and health insurance reform, alongside temporary property tax increases and the strategic use of reserves.
Recommendations related to Out-Year City Budget Gaps
The City should implement a temporary property tax increase in fiscal years 2022 and 2023 to help close budget gaps.
The City should reduce the workforce by roughly 9,000 positions, which could be achieved through attrition to avoid layoffs.
The City should implement a health insurance premium-sharing arrangement for employees and retirees to generate significant recurring savings.
The City should centralize procurement at the Department of Citywide Administrative Services to save about $80 million.
The City should resume study of and implement a volume-based fee for refuse to reduce waste generation and generate savings.
The City should evaluate all programs for effectiveness and retool or eliminate those providing limited benefits.
The City should reduce the five-year capital plan by $2.4 billion through operational strategies to reduce planned new school construction.
The City should release the entire $250 million capital stabilization reserve in fiscal years 2022 to 2024.
Key Data
$6.9 billion
— The projected budget gap for fiscal year 2022 after accounting for identified risks.
$6.1 billion
— The projected budget gap for fiscal year 2023 after accounting for identified risks.
$5.8 billion
— The projected budget gap for fiscal year 2024 after accounting for identified risks.
$1.6 billion
— The projected budget gap for fiscal year 2021 after accounting for identified risks.
9,000
— The number of positions by which the City could reduce its headcount through attrition.
$700 million
— The annual savings the City could achieve by implementing health insurance premium-sharing for active employees.
Legislation creating a New York City Rainy Day Fund is currently flawed because it lacks strict limitations on when resources can be withdrawn, risking its use as a slush fund rather than a true fiscal reserve. To ensure the fund effectively addresses future fiscal crises, the Governor should negotiate amendments that restrict withdrawals to specific, legally defined periods of economic recession or severe emergency.
Recommendations related to Out-Year City Budget Gaps
Any withdrawal should be limited only to times of economic recession or severe emergency, which should be defined in law.
Define a recession as two successive quarters of economic contraction as indicated by declines in real gross city product or employment.
Specify that a severe emergency should be accompanied by revenue losses or increased expenditures of at least one percent of city-funded spending.
Negotiate a chapter amendment with the bill sponsors and legislative leaders to require that any withdrawal be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
$7.4 billion -- the two-year tax revenue shortfall for the City of New York revealed when Mayor Bill de Blasio released the Executive Budget for Fiscal Year 2021 last month. In this episode we hear from the person who will help guide NYC through one of its greatest fiscal challenges,…
New York City faces significant fiscal challenges with projected budget gaps of $5.0 billion in fiscal year 2022, followed by $4.5 billion and $4.9 billion in fiscal years 2023 and 2024, respectively. Because current savings measures are largely non-recurring and reserves are limited, the city must identify long-term solutions to address these persistent outyear deficits.
Recommendations related to Out-Year City Budget Gaps
The City will need to address significant outyear gaps with fewer reserves available.
Additional spending cuts may be needed to hedge against risks like lower federal aid and lower-than-expected tax revenues.
The City must identify a long-term solution to the fiscal crisis rather than relying on short-term solutions like tapping reserves.
Key Data
$5.0 billion
— Projected budget gap for fiscal year 2022.
$4.5 billion
— Projected budget gap for fiscal year 2023.
$4.9 billion
— Projected budget gap for fiscal year 2024.
$100 million
— Amount in the general reserve to hedge against fiscal risks.
The Fiscal Year 2021 Executive Budget relies on short-term strategies like reserve diversions and underspending, which fails to generate the recurring savings necessary to address the looming $5.0 billion gap in fiscal year 2022. To better prepare for the economic downturn, the City must implement a larger, more sustainable savings plan that identifies non-core services and improves operational efficiencies across agencies.
Recommendations related to Out-Year City Budget Gaps
The City should implement a savings plan that is larger 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.
The City should seek additional efficiencies in agency operations, employee benefits, contracts, leased space, and fleet operations.
Spending reductions should be focused on paring down to efficiently providing core needed services to strengthen the City's ability to weather the economic downturn.
Key Data
$2.7 billion
— The total value of the two-year savings program included in the budget.
2 percent
— The portion of the budget covered by the two-year savings program.
$2.6 billion
— The amount diverted from the Retiree Health Benefits Trust 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 percent
— The projected tax revenue growth rate for fiscal year 2022.
New York City faces a potential $20 billion revenue shortfall over three fiscal years due to the pandemic, necessitating immediate and significant spending reductions. To address this, the city should increase its savings target to $3 billion and focus on structural efficiency improvements rather than relying on temporary measures.
Recommendations related to Out-Year City Budget Gaps
The savings plan should be significantly larger and explicitly focused on generating recurring savings in spending.
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.
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 work with municipal unions on workforce savings.
The City will have to potentially enact more far-reaching measures, such as hiring freezes, layoffs, or service cuts.
Key Data
$20 billion
— Potential revenue shortfalls over three fiscal years due to a similar recession.
$6 billion
— Estimated revenue shortfall in fiscal years 2020 and 2021.
$3 billion
— Recommended target size for next year's savings program.
$1.3 billion
— Savings target announced for the Executive Budget for Fiscal Year 2021.
0.66 percent
— Two-year savings presented in the Executive Budget for Fiscal Year 2020 as a share of city-funded spending.
0.91 percent
— The $1.3 billion savings target for Fiscal Year 2021 as a share of city-funded spending.
New York City's budget has grown rapidly, with total spending reaching $92.0 billion in fiscal year 2019, while savings efforts have remained inadequate to offset new expenses. To prepare for potential economic downturns, the city must restrain spending growth, maintain a flat headcount, and set more ambitious agency savings targets.
Recommendations related to Out-Year City Budget Gaps
Restrain spending by offsetting new expenses with recurring commensurate savings.
Keep headcount flat to avoid further increases in the municipal workforce.
Substantially increase annual agency savings targets and ensure savings recur.
Increase budgetary reserves or make deposits to the Retiree Health Benefit Trust using additional resources.
Key Data
$92.0 billion
— Total City spending in fiscal year 2019.
326,739
— Full-time and full-time equivalent employees at the end of fiscal year 2019.
$714 million
— Amount of annual recurring efficiency savings that would be produced by a 1 percent agency budget savings target.
$20 billion
— Potential tax revenue shortfall over three years in the event of a recession.
$4.7 billion
— Record balance of the Retiree Health Benefit Trust.
$68.3 billion
— City-funded expenditures in fiscal year 2019.
The Metropolitan Transportation Authority's 2020 financial plan projects significant out-year cash deficits, reaching a cumulative total of $740 million by 2023. These financial challenges are exacerbated by reliance on optimistic savings estimates from a transformation plan, vague budget reduction proposals, and the assumption of continued economic growth.
Recommendations related to Out-Year City Budget Gaps
MTA leaders should focus on developing and detailing the Transformation Plan, realistically assessing its savings potential and pursuing the changes on which it depends.
The Authority should focus on specifying the elements of the Budget Reduction Program (BRP) and integrating them with the Transformation Plan without causing a negative impact on service.
MTA leadership should prioritize seeking zero-cost wage settlements in current collective bargaining to help stabilize finances.
The Authority should focus on monitoring economic developments to adjust as needed to potential downturns.
Key Data
$740 million
— Cumulative cash deficit projected for the MTA in 2023.
$1.7 billion
— Estimated revenue loss across a four-year financial plan if a recession similar to the average of three previous recessions occurs.
$538 million
— Annual savings the financial plan counts on from the Transformation Plan in 2023.
$6 million
— Projected out-year cash deficit for the MTA in 2020.
$433 million
— Projected out-year cash deficit for the MTA in 2023.
$376 million
— Savings from the Budget Reduction Program (BRP) projected for 2023.
New York City's fiscal year 2019 spending exceeded revenues by $255 million when accounting for the "surplus roll" of prepayments, suggesting that current spending levels are unsustainable. With city-funded expenditures growing faster than historical averages and the workforce projected to reach record levels, officials must identify further opportunities to restrain spending and improve productivity.
Recommendations related to Out-Year City Budget Gaps
The Mayor and Council Speaker should continue to identify opportunities to restrain spending much more, particularly in ways that improve productivity so that priority services are preserved.
Key Data
$255 million
— The net difference between revenues collected and spending obligations in fiscal year 2019.
$4.576 billion
— The amount the City prepaid at the end of fiscal year 2018 for fiscal year 2019 expenses.
$4.221 billion
— The amount of expenses rolled out in fiscal year 2019 to prepay fiscal year 2020 expenses.
5.7 percent
— The rate at which city-funded expenditures grew in fiscal year 2019.
5.3 percent
— The projected increase in city-funded expenditures for fiscal year 2020.
333,433
— The number of authorized city workforce positions projected for fiscal year 2020.
New York City's executive budget proposal fails to adequately prepare for potential economic downturns, despite the availability of nearly $800 million in additional funds that should be directed toward reserves. To mitigate the risk of future revenue shortfalls, the city must prioritize fiscal restraint by offsetting new spending with identified efficiencies and savings rather than increasing overall expenditures.
Recommendations related to Out-Year City Budget Gaps
The city should add all newly identified money to the city’s reserves and offset any added spending with dollar-for-dollar reductions.
The budget should wipe out more of the 4,700 full-time vacancies still remaining.
The city should pursue a more extensive fleet reduction to save more than the $20 million identified in fiscal year 2020.
The city should centralize procurement to identify $80 million in savings.
The city should consolidate and centralize union welfare funds to identify $160 million in savings.
Key Data
$92.5 billion
— The executive budget proposed by Mayor Bill de Blasio.
$500 million
— Projected fiscal year 2020 savings from the administration's first mandatory savings program.
$800 million
— Available funds going into budget adoption.
$15 billion to $20 billion
— Potential three-year revenue shortfall that a recession could cause.
$80 million
— Potential savings by centralizing procurement.
$160 million
— Potential savings by consolidating and centralizing union welfare funds.
New York City is implementing a Program to Eliminate the Gap (PEG) to address potential fiscal risks, as a recession could significantly increase out-year budget gaps to between $10 and $12 billion annually. To prepare for these economic challenges, the city should prioritize recurring efficiency savings and empower agencies to identify operational improvements rather than relying solely on voluntary savings plans.
Recommendations related to Out-Year City Budget Gaps
The Office of Management and Budget should set agency targets that generate savings in excess of the $750 million annual goal to facilitate priority setting and better position the City to identify additional savings.
Savings from the Program to Eliminate the Gap should be derived exclusively from agencies and should focus on increasing efficiency in operations and service delivery to lower costs while minimizing negative impacts on services.
The City should reevaluate existing fees to ensure they are keeping pace with rising costs for relevant services without reaching economically counterproductive levels.
The City should continue to seek savings from re-estimates and debt service in tandem with savings from efficiency initiatives, provided these are above and beyond the $750 million recurring PEG target.
Agency executives, managers, and front line staff should take the lead on identifying savings to optimize programs, services, and operations.
Key Data
$155 million
— Average annual efficiency initiative savings during the five-year savings plans for fiscal years 2016 through 2019.
0.25 percent
— Portion of the City funds budget represented by average annual efficiency initiatives for fiscal years 2016 through 2019.
$750 million
— The Mayor’s stated annual target for the Program to Eliminate the Gap.
1 percent
— The portion of the City funds budget equal to the Mayor’s stated $750 million annual Program to Eliminate the Gap target.
$10 to $12 billion
— Estimated annual out-year budget gaps if a recession occurs.
A potential recession could cause New York City tax revenue to fall between $15 billion and $20 billion below projections over three years, creating cumulative budget gaps as high as $30 billion. To avoid drastic service cuts and tax increases, the City must immediately reduce spending growth and significantly increase its budget reserves.
Recommendations related to Out-Year City Budget Gaps
The City should take immediate action to reduce spending growth and increase reserves to prepare for a potential economic downturn.
The Executive Budget for Fiscal Year 2020 should reflect constrained spending growth, greater budget reserves, and a substantial increase in recurring savings.
The City must increase recurring savings substantially to forestall drastic service cuts and counterproductive tax increases during a recession.
Key Data
$30 billion
— Cumulative three-year budget gaps under the 2008 recession scenario.
$16.7 billion
— Amount of the budget gap that would need to be closed by other actions if a recession occurs.
$15 billion to $20 billion
— Potential tax revenue shortfall below projections over three years in a recession.
$12 billion
— Potential outyear budget gaps in the second year of a recession.
$1.25 billion
— Existing annual budget reserves available to the City.
$750 million
— Recurring savings announced in the Executive Budget to address potential gaps.
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 alongside a ten-year capital strategy that exceeds $100 billion for the first time. To prepare for potential economic downturns, the city must implement bolder measures to limit spending growth to inflation and generate recurring savings through operational efficiencies.
Recommendations related to Out-Year City Budget Gaps
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.
City spending growth should be limited to inflation and reserves should be increased to ensure the City is prepared for an economic downturn.
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
— Projected increase in City-funded spending for fiscal year 2020.
$104.1 billion
— Total cost of the Preliminary Ten-Year Capital Strategy for Fiscal Years 2020 to 2029.
8.7 percent
— Increase in the ten-year capital strategy compared to the prior ten-year strategy.
The Metropolitan Transportation Authority faces growing financial challenges, with projected cash deficits reaching $634 million by 2022, the largest noted at this point in the budget cycle since 2009. These deficits persist despite planned fare and toll increases and rely on the agency achieving its savings targets to avoid even larger shortfalls.
Key Data
$634 million
— Projected cash deficit for the MTA in 2022.
$424 million
— Projected cash deficit for the MTA in 2021.
$262 million
— Projected cash deficit for the MTA in 2020.
4 percent
— Planned fare and toll increases in 2019 and 2021 assumed in the budget.
$550 million
— Reduction in fare revenue estimates over the 2018 to 2021 period.
The November 2017 Financial Plan modification reflects a cautious approach, with projected revenues decreasing by $187 million in the current year. While out-year budget gaps have been reduced by between $187 million in fiscal year 2018 and $708 million in fiscal year 2021, these improvements stem from technical adjustments rather than efficiency savings.
Key Data
$187 million
— Projected decrease in revenues for the current year.
$187 million
— Decrease in the out-year budget gap for fiscal year 2018.
$708 million
— Decrease in the out-year budget gap for fiscal year 2021.
New York City faces a $95 billion liability for other post-employment benefits (OPEB), which threatens to consume a growing portion of municipal expenditures and divert resources from other essential needs. To address this fiscal burden, the city must significantly reduce the cost of its retiree benefit package to align with other municipalities and implement more systematic prefunding policies.
Recommendations related to Out-Year City Budget Gaps
Require workers who retire before Medicare eligibility to pay 50 percent of their health insurance premium.
No longer reimburse for Medicare Part B premiums.
Reduce to 50 percent the premium payments for Medicare supplemental insurance.
End benefits for spouses of retirees.
Replace the full premium payments on behalf of retirees and spouses with a voucher to be used for purchase of insurance.
Increase the retirement age for police and firefighters to match teachers’ retirement age of 55.
Provide a fixed payment to municipal employee unions and authorize them to provide retiree health benefits.
Key Data
$95 billion
— The total OPEB liability for New York City.
$4.9 billion
— The current annual normal cost for OPEB.
$2.5 billion
— The current annual PAYGO amount for retiree health benefits.
$10.5 billion
— The projected annual PAYGO expenditure for retiree health benefits by 2037.
$150,000
— The average OPEB liability per member (employees and retirees).
$39.4 billion
— The estimated reduction in OPEB liability if the city required 50 percent premium cost sharing on pre-Medicare insurance, Medicare Part B reimbursements, spousal coverage, and Medicare supplemental coverage.
New York City's Access-A-Ride paratransit program is the most expensive in the nation, with costs projected to reach $621 million by 2020 due to high utilization and unit costs. To improve the program's financial outlook and reduce the burden on the MTA's budget, the agency should implement strategies such as shifting ambulatory riders to lower-cost broker car services, increasing the use of fixed-route transit, and securing Medicaid reimbursement for medical trips.
Recommendations related to Out-Year City Budget Gaps
The MTA could shift ambulatory customers to its broker car service (BCS) program, which uses a for-hire vehicle broker to complete trips using black cars and liveries, potentially saving up to $126 million annually.
The MTA could provide service more efficiently by offering a subsidy program that allows paratransit users the opportunity to use the City’s taxicab fleet and Transportation Network Companies (TNC) like Uber and Lyft, which could save up to $28 million annually if replacing trips in the Manhattan hail zone.
The MTA could reduce demand by providing incentives for use of the fixed-route system by paratransit customers, such as redesigning the MetroCard program to limit fraud and encourage wider use, which could save $22 million annually.
The MTA could offer feeder service in a greater number of appropriate situations, as increasing this share to 5 percent of trip requests could save up to $20 million annually.
The MTA could seek Medicaid reimbursement for non-emergency medical transportation (NEMT) trips, which could generate an additional $14 million annually if 1 in 5 eligible trips are reimbursed.
Key Data
$621 million
— Projected total program expenses for Access-A-Ride in 2020.
$461 million
— The cost of the Access-A-Ride program in 2015.
$385 million
— The amount of MTA revenue projected to be used to subsidize Access-A-Ride in 2020.
$126 million
— Potential annual savings from shifting all ambulatory customers to the broker car service program.
$184 million
— Potential annual savings from doubling paratransit fares.
$28 million
— Potential annual savings from replacing trips originating in the Manhattan taxicab hail zone with a subsidy program.
New York City faces projected budget gaps between $2.2 billion and $3.0 billion annually after fiscal year 2017, driven by slowing revenue growth and the exhaustion of surplus funds. To address these deficits, the city must successfully implement the Citywide Savings Program and establish a viable financial plan for the struggling Health + Hospitals system.
Recommendations related to Out-Year City Budget Gaps
The city must achieve all the savings in the Citywide Savings Program to prevent future budget gaps from mushrooming.
The city must implement a viable financial plan for Health + Hospitals to address the agency's projected deficits.
The city must follow up effectively and move quickly to stop the bleeding of cash at Health + Hospitals to keep the city’s budget balanced.
Key Data
$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 Health + Hospitals in 2020.
$300 million
— The amount in annual savings that depends on the city convincing the state to share Medicaid savings.
$3.4 billion
— The surplus roll from good times that will be exhausted beginning in fiscal year 2018.
$1 billion
— The reserve amount included in each year of the financial plan to cope with the budget squeeze.
$497 million
— The amount of emergency support provided to the hospital system in the current fiscal year.
The fiscal year 2017 financial plan relies on uncertain savings, particularly regarding NYC Health + Hospitals, which threatens to expand future budget gaps. While the plan includes $1.25 billion in savings, these are largely dependent on federal Medicaid waivers and re-estimates rather than structural agency initiatives.
Recommendations related to Out-Year City Budget Gaps
The City must secure federal waivers for the NYC Health + Hospitals savings plan to avoid placing additional stress on the City’s coffers.
The City should prioritize implementing expense reductions rather than relying on re-estimates and debt service savings to close budget gaps.
The City must successfully increase MetroPlus revenues to ensure the financial viability of the NYC Health + Hospitals savings plan.
Key Data
$1.25 billion
— Total additional savings included in the financial plan for fiscal years 2016 and 2017.
$2.5 billion
— Increase in City-funded spending in fiscal year 2017 compared to fiscal year 2016.
$3.7 billion
— Total balance of the Retiree Health Benefits Trust Fund, the highest ever.
$1.5 billion
— Reserves retained in the budget.
$1.2 billion
— New agency spending added in fiscal year 2017.
1.9 percent
— Projected growth in tax revenues for fiscal year 2017.
CBC compares the Mayor’s FY2016 budget savings agenda, called the Citywide Savings Program, or CSP, with the Program to Eliminate the Gap (PEG) in fiscal years 2010 to 2015.
New York City's fiscal year 2016 executive budget utilizes increased tax revenues to bolster reserves and fund new social service and housing commitments, though these recurring expenses may prove unsustainable given future budget shortfalls. While the introduction of a municipal savings program is a positive step, it remains limited in scope and relies heavily on lower debt interest rates rather than productivity improvements.
Recommendations related to Out-Year City Budget Gaps
The baby steps in the new savings program should become bolder strides as the budget process moves forward.
Key Data
$1,169 million
— tax revenues anticipated in the budget for fiscal year 2016 greater than anticipated last June
$218 million
— tax revenues greater than the revisions made in February 2015
$1,030 million
— total 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
— creation of a new capital program fund
New York City faces projected budget deficits exceeding $1.0 billion in fiscal year 2017 and approaching $2.1 billion in fiscal year 2019, yet the current administration has declined to implement efficiency targets to address these future shortfalls. Proactive planning and the implementation of a Program to Eliminate the Gap (PEG) are necessary to maintain balanced budgets and prepare for potential economic downturns.
Recommendations related to Out-Year City Budget Gaps
Mayor de Blasio should begin planning now for how to close the projected gaps and cope with any unexpected adverse conditions.
The administration should implement a Program to Eliminate the Gap (PEG) in anticipation of projected and possibly growing deficits.
Good management should include a continuous search for ways to achieve savings by making service delivery more efficient.
Key Data
$1.0 billion
— Projected budget gaps in fiscal year 2017.
$2.1 billion
— Projected budget gaps in fiscal year 2019.
New York City's fiscal year 2015 budget increases spending and adds to future budget gaps, which are projected to reach $3.1 Billion by 2018. To ensure long-term fiscal stability, the city must implement recurring health care savings, pursue operational efficiencies through labor negotiations, and reinstate a program to eliminate the gap.
Recommendations related to Out-Year City Budget Gaps
The Administration and the MLC should agree to changes that provide recurring savings on rapidly-growing health care costs.
The unsettled contracts present an opportunity to make city operations more efficient by eliminating archaic work rules, adopting new technologies, and reinventing service delivery.
There should be restraint in adding new spending.
Implementing new priorities in the budget should be coupled with a renewed emphasis on finding efficiencies within agency operations through a PEG program.
The de Blasio Administration should develop guidelines for regular deposits to and potential withdrawals from the RHBT in order to prevent future raids on the fund.
Key Data
$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.
$13.6 Billion
— Projected gross cost of negotiating labor agreements with the entire workforce between fiscal years 2014 and 2018.
$3.4 Billion
— Targeted savings in health care costs to offset labor agreement expenses.
A tentative labor agreement between the city and the teachers union resolves significant financial uncertainty, though its long-term affordability depends on achieving $3.4 billion in health care savings. To ensure fiscal stability, the city should implement cost-control measures such as requiring employees and retirees to contribute to their health insurance premiums.
Recommendations related to Out-Year City Budget Gaps
The city must ensure the agreement's affordability by securing concrete savings from health care costs.
The city should achieve more predictable savings by requiring employees and retirees to share in the cost of their health insurance premiums.
Key Data
$4 billion
— Calculated cost of the teachers' contract over the next four years.
$400 million
— Projected salary growth for employees in fiscal year 2015.
$1.5 billion
— Projected salary growth for employees in fiscal year 2018.
$3.4 billion
— Estimated new health care savings to be determined by city and labor officials.
The Fiscal Year 2015 preliminary budget utilizes unexpected tax revenue to restore $1 billion to the Retiree Health Benefits Trust Fund, which addresses a portion of the city's $92.5 billion retiree health liability. Additionally, the plan increases annual future reserves from $300 million to $600 million to better mitigate financial risks from labor contracts and state or federal budget decisions.
Recommendations related to Out-Year City Budget Gaps
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 of tax revenue restored to the Retiree Health Benefits Trust Fund.
$92.5 billion
— Total estimated retiree health liability for the City.
$300 million
— Previous annual amount of reserves set aside in the financial plan.
$600 million
— New annual amount of reserves set aside in the financial plan.
The city faces significant financial risk from expired municipal labor contracts, as there are no budgetary reserves to cover retroactive wage increases. Settling these contracts could create a $7 billion budget gap in fiscal year 2014, severely undermining efforts to maintain fiscal stability and close out-year budget gaps.
Recommendations related to Out-Year City Budget Gaps
A more holistic approach to municipal labor contracts would consider reforms to health insurance, salaries, work rules, productivity and cross-agency collaboration.
Key Data
$7 billion
— The potential budget gap that would immediately open in fiscal year 2014 if labor contracts are settled with retroactive pay and wage increases.
$3.5 billion
— The cost in fiscal year 2014 if retroactive pay is awarded to teachers and principals.
$300 million
— The approximate annual increase in operating costs for every 1 percent raise awarded to the city workforce.
$900 million
— The annual growth in recurring operating expenses if retroactive pay is awarded.
$3.7 billion
— The cost in fiscal year 2014 if 2 percent wage increases are provided to the entire workforce.
$72 billion
— The total size of the City of New York's budget, of which personnel costs make up more than half.
Legacy costs, including pension contributions, retiree health benefits, and debt service, are projected to consume nearly 25 percent of the New York City budget by fiscal year 2015. These expenses, driven by past commitments, are growing significantly faster than other spending, limiting the resources available for current service provision.
Key Data
almost 25 percent
— Legacy costs will claim almost 25 percent of the budget by fiscal year 2015, leaving fewer dollars for other budget priorities.
$8.5 billion to $17.8 billon
— Between fiscal years 2005 and 2015, legacy costs will have more than doubled from $8.5 billion to $17.8 billon.
$3.2 billion to $8.2 billion
— Pension contributions will rise from $3.2 billion to $8.2 billion between fiscal years 2005 and 2015.
$2.4 billion
— The annual cost of retiree health benefits will be $2.4 billion by fiscal year 2015.
$4.2 billion
— In 2005, debt service for the City’s major debt obligations totaled $4.2 billion.
$7.2 billion
— Debt service for the City’s major debt obligations will increase to $7.2 billion by 2015.
New York City's health insurance costs for employees and retirees are projected to grow by 39 percent to $6.6 billion by fiscal year 2016, accounting for 72 percent of the city's $2.6 billion projected budget gap. Implementing premium-sharing for employees and retirees, along with eliminating Medicare Part B reimbursements, could generate $1.8 billion in savings by fiscal year 2014, rising to $2.2 billion by 2016.
Recommendations related to Out-Year City Budget Gaps
The City should implement premium-sharing for employees to align with private sector and other municipal government standards and establish an employee interest in future cost containment.
The City should require premium-sharing by retirees, as few private sector employers offer retiree health insurance and public sector peers typically require higher contributions.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses, as this practice is rare among other state and local governments.
Key Data
$6.6 billion
— Projected health insurance costs for New York City municipal employees and retirees in fiscal year 2016.
72 percent
— Portion of the $2.6 billion projected budget gap in fiscal year 2016 accounted for by the growth in health insurance costs.
$1.8 billion
— Total savings in fiscal year 2014 if recommendations for employee and retiree premium-sharing and Medicare Part B reimbursement elimination are adopted.
$2.2 billion
— Total savings in fiscal year 2016 if recommendations for employee and retiree premium-sharing and Medicare Part B reimbursement elimination are adopted.
$280 million
— Potential annual savings from eliminating Medicare Part B reimbursement entirely.
$83 billion
— Estimated unfunded liability for retiree health insurance and other post-employment benefits (OPEB) as of fiscal year 2011.
New York City faces persistent structural budget deficits driven by escalating costs for health insurance and debt service, which are temporarily masked by unreliable one-time revenue sources like taxi medallion sales. Future fiscal stability remains at risk due to unresolved labor contracts, potential costs from Hurricane Sandy, and the continued reliance on non-recurring resources to balance the budget.
Recommendations related to Out-Year City Budget Gaps
The City should prioritize rightsizing capital investment to reduce the long-term trajectory of costs.
The City should prioritize reforming health insurance premium arrangements to reduce the long-term trajectory of costs.
The City should implement larger recurring expenditure cuts to address the structural budget deficit.
The City must adopt more enduring, if politically tougher, solutions to address structural budget problems rather than relying on one-shots.
Key Data
$1.5 billion
— Total savings from the November 2012 Program to Eliminate the Gap (PEG) over two years.
$4 billion
— Amount of non-recurring 'one-shot' resources used to close the fiscal year 2013 budget gap.
$2.5 billion
— The projected budget gap for fiscal year 2014.
$8.0 billion
— Annual cost of pension contributions, a major expenditure item contributing to budget gaps.
$6.3 billion
— Annual cost of Medicaid, a major expenditure item contributing to budget gaps.
$6.2 billion
— Annual cost of debt service, a major expenditure item contributing to budget gaps.
New York City faces a structural budget dilemma where spending growth outpaces revenue, necessitating a shift away from reliance on one-shot resources like asset sales and fund withdrawals. To address these out-year gaps, the city must implement structural reforms, including wage freezes, premium-sharing for health benefits, and stricter oversight of capital investments.
Recommendations related to Out-Year City Budget Gaps
The Council should sustain the three-year wage freeze to avoid opening a $5 billion budget gap in fiscal year 2014.
The Council should use its authority to phase out the reimbursement of Medicare Part B premiums through local legislation.
The Council should support the Mayor in seeking premium-sharing arrangements for employees and retirees to generate significant annual savings.
The City should phase in premium contributions for retirees under age 65 to help reduce the City’s unfunded liability.
The City should reexamine the level and nature of capital investments by restraining growth and establishing clear criteria for prioritizing projects.
Key Data
$3.6 billion
— The amount of "one-shot" resources the Executive Budget relies on to close the fiscal year 2013 gap.
$5 billion
— The potential budget gap in fiscal year 2014 if wage increases exceed the rate of inflation.
$90 billion
— The City's total unfunded liability for retiree health benefits.
$280 million
— The savings in fiscal year 2013 from phasing out the reimbursement of Medicare Part B premiums.
$700 million
— The annual savings from implementing employee contributions of 10 percent for single coverage and 25 percent for family coverage.
52%
— The portion of state-of-good-repair needs that will be funded in fiscal years 2013 to 2016.
New York City can no longer rely on large tax revenue surpluses to balance its budget, forcing a shift away from temporary one-shot resources like asset sales and trust fund withdrawals. To address future deficits, the city must consider fundamental structural changes, such as raising taxes, cutting services, or reforming generous municipal employee health insurance policies.
Recommendations related to Out-Year City Budget Gaps
The City can raise taxes again to address budget growth and out-year deficits.
The City can impose additional cuts on services and personnel to address budget growth and out-year deficits.
The City can tackle spending arrangements that drive budget growth and out-year deficits.
The City should tackle the City's generous health insurance policies for municipal employees and retirees to address out-year deficits.
Key Data
$1 billion
— Annual tax revenue cushion above the sum originally budgeted in every fiscal year from 2003 to 2011.
$5.3 billion
— Unanticipated tax revenues reached this high in fiscal year 2007.
$114 million
— Fiscal year 2012 tax collections running above the initially budgeted sum.
$42.2 billion
— Total tax revenues for fiscal year 2012.
$1.1 billion
— Additional tax revenues indicated in the February 2011 plan for fiscal year 2011.
$1.6 billion
— Higher-than-initially-anticipated tax revenues at the end of fiscal year 2011.
The Metropolitan Transportation Authority faces significant financial challenges, with projected deficits of $141 million and $221 million in the coming years, necessitating a "net-zero" wage increase for transit workers to avoid further fare hikes or service cuts. Because transit employees already receive compensation that exceeds that of their counterparts in other major cities and private sector workers, a wage freeze is a fair and necessary measure to maintain the system's stability.
Recommendations related to Out-Year City Budget Gaps
The award should include work rules changes that will produce savings that allow for enhanced maternity benefits and the accelerated installation of clear partitions for buses.
A more ambitious award could provide for small wage increases, not to exceed inflation, funded by additional productivity concessions or added employee responsibility for health insurance costs: implementing premium-sharing, increasing the contribution toward retiree health insurance, or ending the partial Medicare Part B reimbursement.
The MTA should merge the position of “conductor” and “train operator” to staff trains with a single person, to shift toward more efficient operations.
The MTA should implement a “net-zero” wage increase to avoid negatively impacting fares and services.
The MTA should increase employee responsibility for health care costs, through increased premium-sharing or salary contributions.
Key Data
$141 million
— Projected deficit for the year following 2013.
$221 million
— Projected deficit for the year following 2013.
$720 million
— Projected savings from the MTA's efficiency program in 2012.
$42 million
— Cost of a one point wage increase awarded to the TWU.
$92.4 million
— Budget gap opened by a 2.2% wage increase in 2012.
$1.4 billion
— Total amount to be raised from fare increases by 2015.
New York City faces a structural fiscal challenge where spending on health insurance, pensions, and debt service is projected to double, consuming a larger share of the budget and necessitating future service cuts. To address the projected $4.8 billion budget gap for fiscal year 2013 and beyond, the city must implement structural reforms to these three primary cost drivers rather than relying on temporary measures.
Recommendations related to Out-Year City Budget Gaps
The City’s leaders must work with the Municipal Labor Committee to reform health insurance arrangements to lower taxpayer costs and give workers a stake in containing future premium increases.
The City should adopt a premium-sharing arrangement similar to that of most New York State employees, specifically 10 percent for individual and 25 percent for family coverage, to produce $625 million in savings beginning in 2012.
The City should require retirees under age 65 to pay 50 percent of their premium to generate about $700 million in savings.
The City should eliminate the Medicare Part B reimbursement for retirees over age 65 to save an additional $250 million.
The City Council should join the Mayor in backing the pension reform bill introduced by the Governor to adjust eligibility and benefits for future employees.
The Mayor and City Council should make slowing the growth of debt service a higher priority by downsizing the capital budget to focus on essential infrastructure.
Key Data
$4.8 billion
— The projected budget gap for fiscal year 2013.
$23.1 billion
— The expected spending on health insurance, pension contributions, and debt service in 2015.
$30 billion
— The total savings from pension reform over the next 30 years.
$625 million
— The savings produced by adopting a premium-sharing arrangement for health insurance beginning in 2012.
$700 million
— The savings generated by requiring retirees under age 65 to pay 50 percent of their premium.
$250 million
— The savings from eliminating the Medicare Part B reimbursement for retirees over age 65.
New York City can avoid 4,300 teacher layoffs and other service cuts by adopting the state's labor agreement model, which could generate $1.4 billion in savings for fiscal year 2012. Implementing these changes, such as wage freezes, furloughs, and health insurance premium contributions, offers a sustainable alternative to temporary fiscal gimmicks like drawing down health benefit trust funds.
Recommendations related to Out-Year City Budget Gaps
The City should extend the wage freeze to a third year to achieve $388 million in savings in 2013.
The City should implement a five-day furlough for all municipal employees to save $400 million in 2012.
The City should require employee contributions toward health insurance premiums to save $735 million, with savings growing to $915 million by 2015.
The City should adopt the State’s long-standing policy for retiree premium-sharing to save an additional $290 million in fiscal year 2012.
Key Data
$1.4 Billion
— Potential savings for New York City in fiscal year 2012 by following the state's labor agreement template.
$388 Million
— Savings in 2013 from extending the wage freeze to a third year.
$400 Million
— Savings in 2012 from a five-day furlough for all municipal employees.
$735 Million
— Savings from requiring city employees to contribute to health insurance premiums.
$915 Million
— Savings from health insurance premium contributions by 2015.
$290 Million
— Savings in fiscal year 2012 from adopting the state's policy for retiree premium-sharing.
The City faces a $4.7 billion budget gap for fiscal year 2013, and using the Health Insurance Premium Stabilization Fund to cover current shortfalls is a temporary fix that fails to address the underlying structural imbalance. Instead of relying on one-shot budget gimmicks, the City should implement structural reforms like health insurance premium cost sharing, which could generate $625 million in annual savings.
Recommendations related to Out-Year City Budget Gaps
City and labor leaders should focus their cooperative efforts on meaningful reforms of health insurance instead.
City 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.
Key Data
$4.7 billion
— Projected budget gap for fiscal year 2013.
$625 million
— Estimated annual savings from implementing health insurance premium cost sharing.
$500 million
— Amount accumulated in the Health Insurance Premium Stabilization Fund.
$1 billion
— Annual taxpayer contributions to union welfare funds.
$117 million
— Amount transferred from the Health Insurance Premium Stabilization Fund to union welfare funds in 2009.
$150 million
— Savings achieved in 2009 through increased deductibles for medical services.
New York City faces a $2.4 billion deficit in the upcoming fiscal year, necessitating a shift in strategy away from repeated agency service cuts toward structural reforms. Addressing this gap requires reducing expenditures on pension fund contributions and health insurance premiums through collective bargaining and state legislative action.
Recommendations related to Out-Year City Budget Gaps
The City should 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 “all other” category, which consists largely of pension fund contributions and health insurance premiums, should be reduced with new initiatives.
Unions must be willing to accept changes in collective bargaining over health benefits, and wide support must be garnered to push the State Legislature to authorize changes in future pension benefits.
Key Data
$2.4 billion
— The projected deficit for New York City in the next fiscal year.
$3.4 billion
— The total amount of budget balancing actions proposed in the six Programs to Eliminate the Gap (PEGs) spanning fiscal years 2009 and 2010.
$2.0 billion
— The total amount of agency expenditure reductions yielded from the $3.4 billion in proposed budget balancing actions.
$926 million
— The amount of the single largest cut, which was applied to the Department of Education.
$593 million
— The amount of revenue-raising measures identified in the City's PEG documents.
While the city has successfully implemented operating budget cuts to address out-year deficits, capital budget commitments have continued to rise, reaching a record high of over $12 billion in fiscal year 2011. Despite multiple rounds of announced reductions, the capital plan has failed to achieve fiscal austerity, with average yearly commitments growing 26 percent since the cuts began.
Recommendations related to Out-Year City Budget Gaps
The Mayor must become more determined about establishing priorities in the capital budget the way he has for the operating budget to ensure spending does not exceed planned levels.
Key Data
$12 billion
— Projected commitments for fiscal year 2011 in the most recent plan.
$12.2 billion
— Average yearly capital commitments since the Mayor began cutting the capital plan.
26 percent
— Increase in average yearly commitments compared to the period between fiscal years 2006 and 2008.
$38.9 billion
— Commitment plan for fiscal years 2009-2012 following the May 2008 cut.
$26.2 billion
— Commitment plan for fiscal years 2010-2013 following the January 2009 cut.
$1.3 billion
— Commitments for parks in fiscal year 2011.
New York City's fiscal year 2011 budget relies on $3.6 billion in surplus funds from the previous year to cover expenses, masking a structural deficit that will result in a $4.6 billion gap by fiscal year 2012. To address these looming out-year budget gaps, the City must reform public employee fringe benefits and scale back capital spending on non-essential development projects.
Recommendations related to Out-Year City Budget Gaps
The City should bring public employee health care and retirement benefits more in line with those of the private sector to achieve significant savings now and into the future.
The City should require employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees to save the City over $1 billion annually.
The City should create a new pension tier that requires greater employee contributions and a longer vesting period to save $200 million annually.
The City should scale back the capital commitment plan to focus on key priorities, such as state-of-good-repair work on the City's aging infrastructure, rather than less urgent development projects.
Key Data
6.3 percent
— The amount by which expenditures in FY2011 are higher than they were in the last fiscal year.
$3.6 billion
— The surplus from FY2010 used to balance the fiscal year 2011 budget.
$4.3 billion
— The gap the City would be facing in fiscal year 2011 without surplus and Retiree Health Benefits Trust Fund money.
$4.6 billion
— The amount by which expenditures will exceed revenues in fiscal year 2012.
$1 billion
— The annual savings the City would achieve by requiring employee contributions to health care premiums.
$200 million
— The annual savings the City would achieve by creating a new pension tier with greater employee contributions and a longer vesting period.
New York City faces significant fiscal challenges, including rising pension costs and debt service, which require structural reforms to ensure long-term stability. By implementing employee contributions to health insurance, reforming pension tiers for new hires, and scaling back the capital program, the city can achieve necessary savings to close projected budget deficits.
Recommendations related to Out-Year City Budget Gaps
The Council should support the Mayor’s efforts to bargain with municipal labor unions for contributions to health insurance premiums and to lobby the State Legislature for pension reform.
The Council should support reforming the pension package for new employees – commonly referred to as a new tier – to require greater employee contributions and a longer vesting period.
The City Council should downsize the capital program to lower debt service costs.
The City should reject the drawdown from the Retiree Health Benefits Trust to ensure funds are reserved for their original purpose.
Key Data
$3.8 billion
— projected deficit in fiscal year 2012
$65 billion
— accrued future liability associated with retiree health benefits
$1.3 billion
— recurring expenditure savings included in the financial plan
815 percent
— growth in pension costs between fiscal years 2000 and 2009
Rising pension and health insurance costs are creating unsustainable fiscal burdens that require structural reforms, such as implementing a new pension tier for future workers and requiring retirees to contribute to their health premiums. Additionally, the city should stop using the Retiree Health Benefits Trust to balance operating budgets, especially given improved tax revenue forecasts for fiscal years 2011 to 2013.
Recommendations related to Out-Year City Budget Gaps
The city should implement a Tier 5 pension system to reduce pension benefits for future workers to lower future costs.
Taxpayers should join a campaign to enact pension reform in the current legislative session.
The city should eliminate the diversion of funds from the Retiree Health Benefits Trust to balance the budget in the upcoming Executive Budget.
The city should require retirees to pay a substantial share of their health insurance premiums.
Key Data
$3.9 billion to $6.3 billion
— City pension contributions from fiscal years 2006 to 2009.
$7.9 billion
— Projected city pension contributions in fiscal year 2014.
$65 billion
— Actuarial value of future health insurance premiums for retirees and their dependents.
$2.5 billion
— Amount deposited into the Retiree Health Benefits Trust over two years starting in 2006.
$1.2 billion
— Amount from the Retiree Health Benefits Trust used to balance the budget in fiscal years 2011 to 2013.
$1.1 billion
— Additional tax revenue forecasted in each fiscal year from 2011 to 2013.
New York City faces significant out-year budget gaps driven by rapidly growing non-discretionary spending on pensions, health insurance, Medicaid, and debt service. By implementing reforms in these four areas, the City could save nearly $2.5 billion annually, helping to close projected budget deficits and avoid painful service reductions.
Recommendations related to Out-Year City Budget Gaps
A new and more affordable pension plan could be established for new workers through State legislation to reduce pension costs.
The City should share the cost of health insurance premiums with workers by requiring 10 percent for individual policies and 20 percent for family policies to reduce health insurance costs.
Retirees should be required to pay 50 percent of their health insurance premiums, and the City should stop paying for their Medicare Part B premiums to reduce health insurance costs.
The Mayor should join forces with the Governor to secure reforms in the State Legislature to limit Medicaid eligibility loopholes and excessive personal care services.
The City should pay off debt with the large operating surplus it has accumulated in fiscal year 2005 to reduce debt service obligations.
The City should focus on reducing construction costs by advocating for repeal of, or exemption of more projects from, the State’s Wicks Law.
Key Data
$2.5 billion
— Total annual savings the City could achieve by implementing reforms to reduce spending growth in non-discretionary areas.
$4 billion
— Annual budget gaps the City must grapple with over the next three years.
$25 billion
— Projected non-discretionary spending by fiscal year 2009.
$19 billion
— Amount of non-discretionary spending in fiscal year 2005.
$549 million
— Savings from pension reform by fiscal year 2009.
$1,197 million
— Savings from health insurance reforms in fiscal year 2009.
New York City and State face significant fiscal pressure from rapidly growing retirement benefit costs, which are projected to reach $6.3 billion for health insurance alone by 2008. To address these budget gaps, the report recommends shifting new employees to defined contribution plans, increasing employee contributions, and reducing the generosity of retiree health and pension benefits to align with private sector practices.
Recommendations related to Out-Year City Budget Gaps
Require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
Stop reimbursing retirees for Medicare Part B premiums.
The City and State should seek to place all new workers in defined contribution plans.
Increase required employee contributions to pension plans.
Raise the minimum age requirement for retirement to align with federal standards.
Base pension benefits on the more standard definition of final average salary, excluding overtime.
Define work-related disabilities more rigorously to set more standard criteria.
Eliminate the variable supplements available to some retired New York City uniformed workers.
Key Data
$4.7 billion
— Projected City pension contributions in fiscal year 2008.
$6.3 billion
— Combined cost of health insurance for the City and State in 2008.
$1.5 billion
— Combined cost of health insurance for City and State retirees in 2004.
$12,000
— Annual variable supplement payment for some retired New York City uniformed workers in 2007.
$1,450
— Annual out-of-pocket cost for a typical single City retiree under age 65.
43%
— Percentage of retired firefighters receiving additional benefits due to a disability.
New York City faces unprecedented budget gaps that cannot be solved by temporary measures or borrowing, necessitating structural changes to government operations. Implementing specific efficiency measures, such as a 40-hour work week for civilian employees and streamlined procurement, could generate over $1 billion in annual savings to help address these long-term fiscal challenges.
Recommendations related to Out-Year City Budget Gaps
The City should require all civilian employees to work a 40-hour work week to allow for a reduction in the total number of positions.
The City should replace the Mayor’s Office of Contracts with a new procurement entity that offers 'one-stop' oversight to improve agency support services.
The City should implement an advanced e-procurement system to lower transaction costs and vendor prices.
The City should move approximately 30,000 students from the most restrictive settings to less restrictive special education environments to align with state patterns.
The Police Department should reschedule the police officers’ work day to increase time in law enforcement and decrease paid time for changing uniforms.
Responsibility for energy conservation in City agencies should be centralized within the Office of the Mayor to increase efficiency.
Key Data
$6.4 billion
— The projected budget gap for fiscal year 2003-04.
$1 billion
— The total annual savings from the five proposed efficiency measures.
$498 million
— The annual savings realized by requiring civilian employees to work a 40-hour work week.
$197 million
— The annual savings from streamlining the City's procurement process.
$267 million
— The annual savings from restructuring special education placement and support services.
$251 million
— The annual savings from implementing more rational staffing strategies at the Police Department.
New York City faces a structural fiscal imbalance with growing gaps between planned spending and expected future revenues, exacerbated by risks like unsettled collective bargaining agreements and waste export contracts. Despite rising debt service payments, the city has failed to implement comprehensive debt reform or utilize budget surpluses for pay-as-you-go capital spending, opting instead to use them for short-term balancing.
Recommendations related to Out-Year City Budget Gaps
The City should pursue comprehensive reform of the City’s debt practices to limit debt service growth.
The City should enact significant productivity improvements and invest wisely in its infrastructure to deliver more competitive services.
The City should set effective limits on borrowing and work to repeal the burdensome Wicks Law to better meet capital needs.
The City should use its budget surplus to finance capital spending on a pay-as-you-go basis or pay down debt instead of using it to balance the budget.
Key Data
8 percent
— The rate at which debt service payments are projected to grow per year over the next four years.
$36 billion
— The total value of the City's five-year capital plan.
25 years
— The timeframe over which City headcount has increased to its highest levels.
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