The Program to Eliminate the Gap (PEG) is a recurring budgetary exercise in which New York City agencies identify savings to help balance the city’s financial plan and address projected budget gaps. This page covers CBC’s work on the implementation of PEG savings, the impact of these measures on city services, the use of efficiency and re-estimates to achieve fiscal targets, the restoration of previously announced savings, and the role of these programs in managing structural budget deficits.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The City should hold the line on new spending in the Executive and Adopted Budgets.
The City should buttress the General Reserve with at least another $1 billion in fiscal year 2026 to help absorb the immediate blow of federal cuts.
The City should strengthen the Rainy Day Fund by depositing $500 million and reserve the Fund for a short-term emergency like a recession, not for temporary mitigation of recurring federal cuts.
The City should implement a Program to Eliminate the Gap (PEG) to restrain spending growth, focused on streamlining administration, increasing efficiency, and shrinking programs that deliver less value to residents.
The City should end the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter.
Key Data
A July 2024 report revealed that PEG restorations over five years totaled $1.1 billion, representing just 7.3% of the original $15.4 billion in PEG savings, meaning the vast majority of the budget cuts remained in place.
A July 2024 chartbook highlighted that PEG savings of approximately $3.8 billion annually in fiscal years 2024 and 2025 were essential to balance the budget, and without them, out-year gaps would be $1.5 billion larger.
In January 2024, the CBC reported that the January round of agency PEG savings was substantially smaller than the November round, yielding just $1.2 billion in fiscal years 2024 and 2025 compared to the November round's $3.5 billion in net savings.
In September 2023, the City directed agencies to identify actions to reduce City-funded spending by 5% through a Program to Eliminate the Gap (PEG), though because certain central costs are excluded, this target actually reduced total City-funded spending by approximately 2.2%.
An analysis from January 2024 showed that 80% of the November 2023 PEG savings did not affect services, with 31.8% coming from underspending and re-estimates, 16.7% from operational efficiencies, and 10.5% from vacancy reductions.
Mayoral candidates were surveyed on their willingness to implement a Program to Eliminate the Gap (PEG) to control city spending growth, with responses varying significantly regarding the necessity and approach to such fiscal measures. The questionnaire highlights the ongoing debate over balancing the city's budget through savings plans versus other revenue-generating or spending-reduction strategies.
Key Data
$1.2 billion
— Cost of the CityFHEPS housing voucher program in fiscal year 2025.
$111 billion
— Total value of the City's five-year capital program.
$2B+
— Amount of unpaid city fines and fees a candidate proposed recovering.
$38K
— Amount the city currently spends per student.
To ensure fiscal stability and improve service delivery, the city should utilize Programs to Eliminate the Gap (PEGs) as a strategic tool for both cost savings and operational prioritization. These programs are essential for managing the city's budget effectively while ensuring that public services are both efficient and impactful.
Recommendations related to Program to Eliminate the Gap (PEG)
The next mayor should run regular Programs to Eliminate the Gap (PEGs) smartly to save money.
The next mayor should use Programs to Eliminate the Gap (PEGs) not just to cut but to improve and prioritize.
New York City faces significant fiscal risks from potential federal budget cuts that threaten vital services, including housing, health care, and education. To mitigate these impacts and address existing structural deficits, the city must implement strict fiscal discipline, including utilizing the Program to Eliminate the Gap to streamline operations and bolster financial reserves.
Recommendations related to Program to Eliminate the Gap (PEG)
The city should hold the line on new spending by ensuring the Executive and Adopted Budgets do not add or expand programs.
The city should buttress the fiscal year 2026 General Reserve by adding at least $1 billion to help absorb the immediate blow of federal cuts.
The city should strengthen the Rainy Day Fund by adding $500 million, reserving it for short-term emergencies like a recession.
The city should restrain spending growth with actions identified centrally and by agencies with a “Program to Eliminate the Gap” to streamline administrative overhead and increase efficiency.
The city should end the budget-estimating gimmickry to provide New Yorkers with accurate and reasonable estimates of revenue and expenses.
Key Data
$7.4 billion
— Amount of federal aid the city receives that supports vital services like child care vouchers, family shelters, school food programs, and education.
1.8 million
— Number of New Yorkers who receive SNAP benefits.
$1.4 billion
— Annual federal operating support that the New York City Housing Authority depends on.
$2 billion
— Amount of federal dollars that fund more than 96,000 housing vouchers administered by the New York City Housing Authority.
$91 billion
— Amount the state receives annually from Washington, supporting Medicaid, the Essential Plan, and education.
$1.1 billion
— Amount the city spent more on fiscal year 2024 obligations than it took in.
New York City faces significant financial risks from potential federal funding cuts, which comprise $7.4 billion of the fiscal year 2026 budget. To mitigate these risks and address existing fiscal challenges like $4 billion in annual underbudgeting, the city must implement a Program to Eliminate the Gap (PEG) and strengthen its financial reserves.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should hold the line on new spending in the Executive and Adopted Budgets.
The City should buttress the General Reserve with at least another $1 billion in fiscal year 2026 to help absorb the immediate blow of federal cuts.
The City should strengthen the Rainy Day Fund by depositing $500 million and reserve the Fund for a short-term emergency like a recession, not for temporary mitigation of recurring federal cuts.
The City should implement a Program to Eliminate the Gap (PEG) to restrain spending growth, focused on streamlining administration, increasing efficiency, and shrinking programs that deliver less value to residents.
The City should end the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter.
Key Data
$7.4 billion
— Federal aid included in the City’s Fiscal Year 2026 Preliminary Budget.
$4 billion
— Annual underbudgeting that understates future budget gaps.
$1.1 billion
— Amount the City spent more on fiscal year 2024 obligations than it received.
$1 billion
— Recommended addition to the General Reserve in fiscal year 2026 to help absorb federal cuts.
$500 million
— Recommended deposit into the Rainy Day Fund to prepare for short-term emergencies.
$91 billion
— Federal aid expected to be received by New York State for fiscal year 2026.
New York City's budget is currently precarious, with expenses exceeding revenues and a reliance on depleting surplus funds to cover shortfalls. To address these fiscal risks and prepare for potential federal aid cuts, the City must implement a Program to Eliminate the Gap (PEG) and adopt more accurate, transparent budgeting practices.
Recommendations related to Program to Eliminate the Gap (PEG)
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 to ensure the budget reflects actual costs.
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 to prevent further growth of unaffordable spending.
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 fund existing services.
$4.0 billion
— The annual amount by which current services are underbudgeted.
$6.1 billion
— The peak amount of accumulated surplus funds reached in fiscal year 2022.
$1.1 billion
— The amount by which expenses exceeded revenues in fiscal year 2024, adjusted for the City's ability to shift the timing of payments.
The Program to Eliminate the Gap (PEG) was essential to balancing the fiscal year 2025 budget, providing approximately $3.8 billion in annual savings for fiscal years 2024 and 2025. Without these measures, out-year budget gaps would be $1.5 billion larger, as only 7.3 percent of the original $15.4 billion in PEG savings were restored.
Key Data
$3.8 Billion
— The amount of annual savings generated by the Program to Eliminate the Gap (PEG) in fiscal years 2024 and 2025.
$1.5 Billion
— The amount by which out-year budget gaps would be larger if the Program to Eliminate the Gap (PEG) had not been implemented.
$1.1 Billion
— The total amount of PEG savings restored over five years.
7.3%
— The share of the $15.4 billion in original PEG savings that were restored.
$268 Million
— The amount of fiscal year 2025 PEG savings that were restored.
The cancellation of the April 2024 Program to Eliminate the Gap (PEG) was ill-advised, as the city may face abrupt funding shortfalls requiring sudden, harmful spending cuts. Restoring some previously announced PEG savings only accounted for 5 percent of the total savings, leaving the budget vulnerable to future fiscal cliffs.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should not have cancelled the April 2024 Program to Eliminate the Gap (PEG).
City leaders must make the hard and wise choices needed to prioritize key, high-impact programs and increase government efficiency.
The City must ensure the budget is transparent and completely and accurately funds the City’s current programs and the full cost of desired program expansions.
The City should adopt a thoughtful, nuanced approach to budgeting based on data and efficient and quality service delivery.
Key Data
$200 million
— Amount of previously announced PEG savings restored in the fiscal year 2025 budget.
5%
— Portion of the total fiscal year 2024 and 2025 PEG savings that the restored $200 million represents.
The Fiscal Year 2025 Preliminary Budget faces significant fiscal challenges, with projected budget gaps reaching up to $9.7 billion by fiscal year 2028. To address these precarious conditions, the City must reverse the decision to cancel the April 2024 Program to Eliminate the Gap and improve budget transparency to prioritize essential services.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should reverse the decision to cancel the April 2024 Program to Eliminate the Gap to help slow spending growth and close budget gaps.
The budget should be made more transparent by showing the full costs of programs and identifying which will be shrunk or eliminated.
Mayor Eric Adams and the City Council should take action to put the City on solid fiscal footing by addressing the fiscal cliffs and underbudgeted ongoing costs.
Key Data
$2.3 billion
— Projected growth in City-funded spending in fiscal year 2025.
$3.6 billion
— Shortfall in the preliminary budget for fiscal year 2025 to continue existing programs and services.
$9.1 billion
— Projected out-year budget gap for fiscal year 2026.
$8.8 billion
— Projected out-year budget gap for fiscal year 2027.
$9.7 billion
— Projected out-year budget gap for fiscal year 2028.
$8.6 billion
— Projected growth in spending between fiscal year 2025 and fiscal year 2028.
New York City's fiscal year 2025 preliminary budget faces a $3.6 billion shortfall, necessitating the implementation of a Program to Eliminate the Gap (PEG) to balance the budget and address underfunded programs. Without these measures, projected budget gaps for fiscal years 2026 through 2028 could reach between $8.8 billion and $9.7 billion.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should implement an additional PEG in the Executive Budget and shrink or eliminate programs that the available resources cannot fully support.
The Administration should further reduce planned spending through a PEG for the Executive Budget.
The City should fully fund underbudgeted and fiscal cliff programs to the extent resources are available, or explicitly identify which ones will be shrunk or eliminated.
The City should maintain balance in the fiscal year 2025 budget, as required, and present budget gaps that account for all planned services for fiscal years 2026 through 2028.
The City Council should ensure that its proposals for added or modified spending are affordable based on fully funding or reducing the current set of planned programs.
Key Data
$194.9 million
— The total amount of PEG restorations for fiscal years 2024 and 2025, representing 5.2 percent of the November 2023 Plan PEG.
$3.6 billion
— The amount of funding shortfall in the fiscal year 2025 preliminary budget needed to fully fund current and planned service levels.
$3.7 billion to $3.9 billion
— The estimated amount by which budget gaps in fiscal years 2026 through 2028 are understated.
$9.1 billion
— The estimated budget gap for fiscal year 2026 if funds are added to mitigate fiscal cliffs and underbudgeting.
$9.7 billion
— The estimated budget gap for fiscal year 2028 if funds are added to mitigate fiscal cliffs and underbudgeting.
New York City's recent budget adjustments include two rounds of savings plans, though the January round was significantly smaller than the November round. To address future fiscal gaps and avoid fiscal cliffs, the city must prioritize programs, increase efficiency, and provide greater transparency regarding the sources of savings and projected costs.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should detail the sources of these savings and the underlying projections, so that New Yorkers understand what services are being provided, for how long, and to how many households.
The City should do much more to transparently budget for the projected costs of all programs, or explicitly shrink or sunset them.
The City should further restrain spending by prioritizing programs and increasing efficiency.
Key Data
$1.2 billion
— The amount of agency PEG savings in the January round for fiscal years 2024 and 2025.
$3.5 billion
— The net savings of the November PEG round after restorations.
2.9 percent
— The increase in adjusted fiscal year 2025 City-funded spending from fiscal year 2024.
21.5 percent
— The increase in adjusted fiscal year 2025 City-funded spending compared to fiscal year 2020.
$2.3 billion
— The dollar amount increase in adjusted fiscal year 2025 City-funded spending from fiscal year 2024.
$15.0 billion
— The dollar amount increase in adjusted fiscal year 2025 City-funded spending compared to fiscal year 2020.
The November 2023 Program to Eliminate the Gap (PEG) aims to address multi-billion-dollar budget gaps by implementing various savings measures, including efficiency improvements, vacancy reductions, and funding shifts. While these measures target a 5 percent reduction in agency spending, the actual impact is closer to 2.2 percent due to significant exclusions like migrant services and debt service.
Recommendations related to Program to Eliminate the Gap (PEG)
City agencies should use a data driven approach to identify less- or in-effective programs and inefficient processes that can be shrunk or streamlined to reduce costs.
Agency leadership should collaborate with line staff to determine how programs and services can be delivered more efficiently.
Returning to standardized procurement practices wherever possible should increase competition and drive down the cost of providing services.
Efforts to identify and implement efficiency savings should be continued and strengthened.
Key Data
$10.8 billion
— Spending on housing and services for migrants and asylum seekers in fiscal years 2024 and 2025.
$7.1 billion
— Projected out-year budget gap for fiscal year 2025 following the November 2023 PEG.
2,407
— Number of full-time positions eliminated through vacancy reduction and hiring freeze initiatives in fiscal year 2025.
$360 million
— Amount of annually recurring efficiency savings identified by agencies in the November 2023 PEG.
$1.4 billion
— Total value of 74 contracts awarded using emergency procurement methods for migrant and asylum seeker services.
$1.7 billion
— Total savings in the November 2023 PEG for fiscal year 2024.
New York City faces significant budget shortfalls, with projections estimating a gap of up to $10.6 billion for fiscal year 2025 when accounting for underbudgeted costs. To address these fiscal challenges, the city must prioritize efficient service delivery and labor reforms rather than raising taxes or depleting reserves.
Recommendations related to Program to Eliminate the Gap (PEG)
New York City’s leaders should make tough choices to close budget gaps without taking the easy but unwise route of raising taxes.
The city should protect reserves for when it is faced with a recession, rather than using them to avoid solving problems caused by unaffordable spending and underbudgeting.
The city should prioritize key services, relentlessly manage them to get results, and operate effectively and efficiently.
The city must engage labor to implement agreed-upon changes to work rules, job titles, health insurance, and other benefit structures to deliver services efficiently.
The city should pare down to the most critical services for migrants and asylum seekers and provide them cost-effectively.
Key Data
$7.1 billion
— Projected budget gap for fiscal year 2025 in the city's financial plan.
$10.6 billion
— Possible budget gap for fiscal year 2025 when including fiscal cliffs and underbudgeted areas.
$5.8 billion
— Comptroller's estimated budget gap for fiscal year 2025.
$12.2 billion
— Comptroller's estimated budget gap for fiscal year 2027.
5.3%
— Decline in New York City's population from 2020 to 2022.
20%
— Portion of the most recent Program to Eliminate the Gap savings that will affect current services.
$10.6 billion is the real-world, all-in budget gap that NYC could be facing once you include all spending that is currently unbudgeted or underbudgeted. In a co-production with Ben Max's podcast "Max Politics," CBC President Andrew Rein and Vice President for Research Ana Champeny about the City's decisions and unforeseen…
New York City faces a significant $10.6 billion budget gap, driven by migrant costs and unsustainable spending choices, necessitating strategic prioritization rather than tax hikes or reserve depletion. To address this, the City must engage labor in structural reforms and utilize transparent data to guide the Program to Eliminate the Gap (PEG) toward impactful service delivery.
Recommendations related to Program to Eliminate the Gap (PEG)
The City must prioritize services with significant impact and increase efficiency rather than focusing on expanding services.
The Council should focus on the data to help make the hard choices and minimize the impact on New Yorkers.
The City must secure input from labor and agree upon changes to work rules, job titles, and benefit structures to deliver services efficiently.
The City should engage in collaborative, informed, and thoughtful discussions to drive the hard choices necessary for fiscal stability.
Key Data
$10.6 billion
— The more accurate budget gap for fiscal year 2025 when accounting for fiscal cliffs and underbudgeted areas.
$7.1 billion
— The initial budget gap for fiscal year 2025 shown in the City's financial plan.
92 percent
— The portion of previous savings measures that did not directly affect program services.
20 percent
— The portion of the most recent Program to Eliminate the Gap (PEG) savings that will affect current programs.
$16 billion
— The added costs through 2027 from recent collective bargaining agreements that lacked offsetting productivity increases.
The City's fiscal year 2025 budget gap has widened to $10.6 billion, driven by rising costs for asylum seekers and pre-existing spending imbalances. To address these challenges, the City must conduct a thorough review of its Program to Eliminate the Gap (PEG) to ensure that cost-saving measures prioritize efficiency and protect critical services.
Recommendations related to Program to Eliminate the Gap (PEG)
The City needs to conduct a deeper analysis to assess whether the Program to Eliminate the Gap (PEGs) minimized reductions in critical services and maximized efficiency.
The City should work with labor to make changes to work rules and job titles, focusing on maintaining high-quality critical services while reducing costs.
The City should consolidate welfare benefit funds, which could save $150 million without cutting actual benefits.
The City should efficiently provide only the most critical services to reduce costs associated with asylum seekers and migrants.
Key Data
$10.6 billion
— The total fiscal year 2025 budget gap after accounting for the fiscal cliff and program underbudgeting.
$10 billion
— The increase in projected spending on asylum seeker and migrant costs over four years.
$150 million
— Potential savings from consolidating welfare benefit funds without cutting actual benefits.
$7.1 billion
— The estimated fiscal year 2025 budget gap, which widened from a previous estimate of $5.1 billion.
$2.4 billion
— The cost of the fiscal cliff excluded from the primary budget gap calculation.
$1.1 billion
— The amount of program underbudgeting excluded from the primary budget gap calculation.
New York City's November 2023 financial plan includes $1.7 billion in annual savings from a 5 percent Program to Eliminate the Gap (PEG), though it remains unclear whether these savings stem from genuine programmatic efficiencies or simply re-estimates and vacancy reductions. Achieving long-term structural stability will require the City to prioritize essential services and improve government efficiency rather than relying on temporary fixes.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should prioritize effective programs and shift other funds to support them, while eliminating or scaling back those that are less impactful.
Achieving structural stability will require prioritization—hard choices about which services to continue and which to end or scale back.
Achieving structural stability will require an increase in government efficiency and a focus on getting the basics right.
The City should identify savings through programmatic efficiencies rather than relying on re-estimates and savings from vacant positions.
Key Data
$1.7 billion
— Annual savings projected from the 5 percent Program to Eliminate the Gap (PEG).
5 percent
— Target for agency savings under the Program to Eliminate the Gap (PEG).
$11.3 billion
— Fiscal year 2025 budget gap the City must close.
$11.4 billion
— Projected budget gap in fiscal year 2026.
$11.8 billion
— Projected budget gap in fiscal year 2027.
$839 million
— Potential shortfall in fiscal year 2024 to fund planned services.
New York City faces a significant fiscal cliff with projected budget gaps reaching up to $13.8 billion, driven by increased spending and the expiration of temporary revenue sources. To address this, the city must prioritize impactful programs, improve operational efficiency, and revive the Program to Eliminate the Gap (PEG) monitoring function to ensure fiscal accountability.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
To stabilize the budget and minimize any pain from cuts, the city should prioritize the most impactful programs first, allowing it to end programs meant to be temporary and consolidate duplicative efforts.
The city should greatly improve its data on program efficiency and effectiveness, and implement a performance management and accountability process.
Agencies should implement changes to deliver services more efficiently and help the city run better.
The mayor’s office should take a hard look at staffing and performance, and make nuanced decisions to ensure city government can function well.
Key Data
$9.9 billion
— Projected budget gap for next year.
$13.8 billion
— Possible upper estimate of the budget gap for next year.
42%
— Portion of the Fiscal Year 2025 budget gap attributed to the cost of caring for new arrivals.
50%
— Increase in city-funded spending over the past decade.
$16 billion
— Amount added to the budget for city worker raises without identified funding sources.
$2.5 billion
— Value of programs funded by federal Covid aid and temporary tax revenue surges.
New York City faces a potential $13.8 billion budget gap for fiscal year 2025, with migrant services accounting for $6.1 billion of that total. To address these fiscal challenges, the administration is requiring agencies to implement 5 percent budget savings through the Program to Eliminate the Gap (PEG) across three rounds.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor should continue directing agencies to propose 5 percent budget savings—PEGs—for the November plan and to prepare for two more 5 percent rounds in January and April.
The City should direct agencies to reduce the costs of shelter and services, which appear extraordinarily high.
The administration should restructure operations to significantly reduce costs, which would be critical even without the migrant crisis.
Key Data
$13.8 billion
— The potential fiscal year 2025 budget gap.
$6.1 billion
— The estimated cost of services to migrants next year.
5 percent
— The budget savings—PEGs—agencies are directed to propose for the November plan and subsequent rounds.
3 to 1
— The ratio by which previous savings programs were overmatched by additional spending for new and expanded programs.
$13 billion
— The potential fiscal year 2025 gap if the City's asylum seeker cost estimate proves accurate.
The Programs to Eliminate the Gap (PEG) have largely failed to reduce actual programmatic spending, with only 10 percent of the $2.6 billion in recurring annual savings potentially affecting services. Instead, new annual spending of $8.0 billion to $8.9 billion between fiscal years 2024 and 2026 significantly outpaces these savings by approximately $5.0 billion to $6.0 billion per year.
Key Data
$2.6 billion
— Cumulative recurring savings from the Programs to Eliminate the Gap (PEG).
10 percent
— Portion of the $2.6 billion in recurring annual savings that may directly affect program services.
$8.0 billion
— New annual spending in fiscal year 2024.
$7.6 billion
— New annual spending in fiscal year 2025.
$8.9 billion
— New annual spending in fiscal year 2026.
$345 million
— Savings generated from reducing the DOE fringe growth rate.
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 future budget gaps, projected to grow from $7.5 billion in fiscal year 2025 to $10.7 billion in fiscal year 2027, necessitating a budget that avoids reversing savings programs and instead prioritizes fiscal stability. Policymakers must ensure that any added spending for recurring activities is offset by savings and that realistic spending estimates are used to prevent future fiscal cliffs.
Recommendations related to Program to Eliminate the Gap (PEG)
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
— Projected budget gap in fiscal year 2025.
$10.7 billion
— Projected budget gap in fiscal year 2027.
$400 million
— Cost to maintain the current FHEPS rental voucher program.
New York City's Program to Eliminate the Gap (PEG) initiatives have generated $4.1 billion in recurring savings, though the vast majority of these actions do not impact services and fail to sufficiently close the city's widening budget gaps. Future efforts should prioritize restructuring operations and implementing efficiency-focused savings to preserve critical services while addressing projected budget shortfalls.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
The City should shift vacancies to where they are most needed and take steps to aggressively reform how it hires, especially for critical functions.
The 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.
The strategy of implementing efficiency-focused PEGs should be prioritized in the adopted budget and in future financial plans.
Key Data
$4.1 billion
— Cumulative recurring savings from the four savings plans.
$1.1 billion
— Average annual PEG savings from fiscal year 2024 onwards.
23,000
— Number of full-time positions that remain vacant as of January 2023.
1,274
— Number of new full-time positions added in fiscal year 2024.
$179 million
— New recurring annual revenue from businesses and residents generated by revenue PEGs.
$18 million
— Amount of illusory savings in fiscal years 2024 and 2025.
The City's budget is projected to grow 3.9 percent annually through fiscal year 2027 even after accounting for the Program to Eliminate the Gap (PEG). To achieve fiscal sustainability and avoid service cuts or tax hikes, the administration must implement additional PEGs that prioritize productivity and high-impact programs.
Recommendations related to Program to Eliminate the Gap (PEG)
The City must implement additional PEGs focused on productivity and prioritization of higher impact programs to ensure fiscal sustainability.
Key Data
3.9 percent
— Projected annual growth of the City funds budget through fiscal year 2027 after the value of the Program to Eliminate the Gap (PEG) is deducted.
10.0 percent
— Projected increase in adjusted City funds spending in fiscal year 2023 after accounting for the PEG.
The NYPD's Program to Eliminate the Gap (PEG) achieved 3.7 percent in savings, falling slightly short of the city's 4 percent target. These savings, which averaged $205 million annually, were largely driven by hiring delays and re-estimated personnel spending, though the overall budget remains understated due to uncounted collective bargaining costs and unrealistic overtime projections.
Recommendations related to Program to Eliminate the Gap (PEG)
Budgeted overtime should reflect reasonable expectations given management, policy, and history.
Key Data
3.7%
— The NYPD PEG, excluding illusory savings, totaled this percentage of its City-funded spending over fiscal years 2024 to 2027.
$205 million
— The average annual savings from the NYPD PEG initiatives.
$100 million
— Savings from re-estimated spending on compensation for uniformed personnel.
$39 million
— Savings achieved by delaying the hiring of uniformed personnel in fiscal years 2024 to 2026.
$30 million
— Savings generated from additional parking summonses being issued.
$110 million
— The net reduction in previously planned fiscal year 2024 spending due to the agency City-funded operating budget PEG savings.
The City's Program to Eliminate the Gap (PEG) saves roughly $900 million annually, but 82 percent of these savings are offset by new spending, failing to address the growing multi-billion-dollar budget gaps. To ensure fiscal stability, the City must prioritize essential programs, increase operational efficiency, and include additional savings in the Adopted Budget rather than adding new positions.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should immediately start to prioritize essential programs, increase its operational efficiency, speed up critical hiring, and shrink lower impact programs.
The City should be shifting existing vacancies to where they are needed, not adding new positions.
The City should make every effort it can immediately and include additional savings in the Adopted Budget.
Key Data
$900 million
— Annual savings generated by the agency Program to Eliminate the Gap (PEG).
82 percent
— Portion of the Program to Eliminate the Gap (PEG) savings that is offset by new spending.
23,000
— Number of existing vacancies in the City.
$4.2 billion
— Projected budget gap in fiscal year 2025.
$7.0 billion
— Projected budget gap in fiscal year 2027.
New York City faces significant budget gaps, projected to reach $9.7 billion in fiscal year 2025 and $14.5 billion by fiscal year 2027, necessitating a strategic approach to spending. Rather than viewing savings plans as austerity, the city should prioritize restructuring operations, consolidating welfare-benefit funds, and increasing productivity to ensure fiscal stability.
Recommendations related to Program to Eliminate the Gap (PEG)
The city must thoughtfully rein in its spending by restructuring and prioritizing high impact services, rather than slashing programs or pruning low-hanging fruit.
The city should reorganize operations, streamline bureaucracy, and leverage technology to achieve the majority of its savings.
The city should consolidate welfare-benefit funds to achieve $150 million in savings through improved efficiency and purchasing power.
The city should increase sanitation productivity to generate $100 million in annual savings.
The city should engage in a continuous and thoughtful effort to increase government efficiency and quality.
Key Data
$9.7 billion
— Projected budget gap for fiscal year 2025.
$14.5 billion
— Projected budget gap for fiscal year 2027.
$150 million
— Potential savings from consolidating welfare-benefit funds.
$100 million
— Potential annual savings from increasing sanitation productivity.
3%-4%
— Percentage of agency budgets instructed to be saved.
$17 billion
— Cost of employee raises over five years.
The Adams Administration's three savings plans, including two Programs to Eliminate the Gap, reduce ongoing budgeted spending by approximately $3.0 billion annually. Analysis indicates that 92 percent of these savings come from sources like re-estimating costs and eliminating vacancies, meaning they should not impact the delivery of city services.
Key Data
$3.0 billion
— Annual reduction in ongoing budgeted spending from the three savings plans.
92 percent
— Portion of the savings plans' recurring impact that should not affect services expected to be delivered.
23,000
— Number of full-time vacant positions remaining in the City.
11,386
— Number of vacant full-time positions cumulatively eliminated by the savings plans.
3.4 percent
— Savings as a share of the total budget, excluding Medicaid, Public Assistance, and pension contributions.
The Program to Eliminate the Gap (PEG) directs the Department of Education to reduce City-funded spending by 3 percent, totaling $421 million in fiscal year 2024. To navigate fiscal challenges, the Department of Education should prioritize programs with the greatest impact and manage the effects of declining enrollment to ensure service continuity.
Recommendations related to Program to Eliminate the Gap (PEG)
Consider per-student spending and recognize that declining enrollment could yield flat or reduced total spending.
Diligently manage the impact of enrollment declines in individual schools with appropriate changes in funding and staffing to ensure the smoothest possible continuity and equity of services.
Identify priority programs funded by expiring federal pandemic aid and be transparent about whether the DOE plans to replace the one-time federal funds with recurring City and State resources or to shrink or end the programs.
Evaluate and modify DOE programs and initiatives to prioritize those that deliver maximum impact to the target populations.
Key Data
$421 million
— The amount of City-funded spending the Program to Eliminate the Gap (PEG) directs the DOE to reduce in fiscal year 2024.
3 percent
— The reduction in City-funded spending directed by the Program to Eliminate the Gap (PEG).
$392
— The reduction in per-student spending in fiscal year 2024 resulting from the Program to Eliminate the Gap (PEG).
$477 million
— The amount of savings the Program to Eliminate the Gap (PEG) is expected to reach in fiscal year 2026.
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, necessitating more than just the current 4 percent Program to Eliminate the Gap. To address these shortfalls while preserving services, the City should leverage its 23,000 vacancies to meet savings targets and prioritize improving operational efficiency through more flexible work rules and job titles.
Recommendations related to Program to Eliminate the Gap (PEG)
The City must recognize that the 4 percent PEG is insufficient and that additional actions will be needed to solve the budget problem.
Agencies should utilize the ample vacancies exceeding 23,000 Citywide to meet savings targets without layoffs while still hiring for critical positions.
The City should focus on improving operational efficiency as the best approach to preserving services.
The City should leverage the PEG to make work rules and job titles more flexible to increase operating efficiency and reduce ongoing costs.
Key Data
$6.5 billion
— The projected City budget gap by fiscal year 2027, excluding unbudgeted costs like labor contracts and asylum seeker services.
$8.8 billion
— The amount the City may need to fund this year and next.
$14.0 billion
— The potential future budget gap by fiscal year 2027.
23,000
— The number of citywide vacancies available to help meet savings targets.
The tentative DC 37 contract agreement is expected to cost $16.2 billion more than currently budgeted over the contract period, significantly widening projected City budget gaps. To offset these costs, the City should implement a growing, multiyear Program to Eliminate the Gap (PEG) in the Executive Budget and expand efforts to increase operational efficiency.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should be implementing a growing, multiyear Program to Eliminate the Gap (PEG) in the Executive Budget to offset these multi-billion-dollar collective bargaining costs.
The effort to increase flexibility should be significantly expanded to identify changes in work rules and job titles that increase the efficiency of City operations, providing needed savings to offset the costs of raises, while increasing salaries and improving career paths.
Key Data
$16.2 billion
— The estimated cost of raises over the contract period if the tentative agreement sets the pattern for all other unions.
$10.6 billion
— The projected City budget gap in fiscal year 2027 following the tentative agreement.
$6.4 billion
— The projected City budget gap in fiscal year 2025 following the tentative agreement.
The Program to Eliminate the Gap (PEG) in the November 2022 Financial Plan relies heavily on spending re-estimates and illusory savings, such as the $376 million in annual illusory savings projected for fiscal years 2025 and 2026. To ensure future fiscal stability, the City needs to move beyond these temporary measures and implement structural changes, including eliminating over 24,000 vacant positions while prioritizing critical staffing needs.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The City and agencies should have flexibility to shift vacant positions across and within agencies to units and titles that have critical staffing needs.
The City must improve the quality and efficiency of the City’s operations to preserve services for New Yorkers.
Key Data
$916 million
— PEG spending reduction in fiscal year 2023
$1.6 billion
— PEG spending reduction in fiscal year 2024
$376 million
— Value of illusory savings in fiscal years 2025 and 2026
24,000
— Number of vacant full-time positions remaining after the November Plan
$350 million
— Expected annual savings from eliminating 5,000 vacant positions
80 percent
— Portion of fiscal year 2023 and 2024 savings comprised of spending re-estimates
New York City's Program to Eliminate the Gap has provided budget relief through spending re-estimates, reducing expenditures by $916 million in fiscal year 2023 and $1.6 billion in fiscal year 2024. However, the city needs to focus more on restructuring government operations to improve productivity and eliminate unneeded positions to address future budget gaps.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should make additional and ongoing efforts to reduce these budget gaps.
The City should hire for critical functions and eliminate many more, ultimately unneeded, positions.
The City should improve the quality and efficiency of the City’s operations to ensure future stability.
Key Data
$916 million
— Spending reduction in fiscal year 2023 via the Program to Eliminate the Gap
$1.6 billion
— Spending reduction in fiscal year 2024 via the Program to Eliminate the Gap
$1.5 billion
— Spending reduction in fiscal years 2025 and 2026 via the Program to Eliminate the Gap
Mayor Eric Adams has directed city agencies to identify efficiency savings through a Program to Eliminate the Gap, targeting $1 billion in fiscal year 2023 and $1.6 billion annually starting in fiscal year 2024. These savings are intended to address significant budget gaps, with agencies tasked with achieving efficiency targets of 3 percent in fiscal year 2023 and 4.75 percent annually thereafter.
Key Data
$1 billion
— Targeted savings for the Program to Eliminate the Gap in fiscal year 2023.
$1.6 billion
— Targeted annual savings for the Program to Eliminate the Gap starting in fiscal year 2024.
3 percent
— Efficiency savings target for city agencies in fiscal year 2023.
4.75 percent
— Annual efficiency savings target for city agencies in fiscal year 2024 and beyond.
Mayor Adams' directive for agencies to cut spending by 3% this year and 4.75% next year is a necessary and achievable step to address projected budget gaps that could reach $10 billion. By improving managerial efficiency, strategically managing the city's 28,000 vacancies, and modernizing labor contracts, the city can stabilize its finances without compromising critical services.
Recommendations related to Program to Eliminate the Gap (PEG)
The city must restrain spending and better manage vacancies and hiring to meet the Program to Eliminate the Gap targets.
The city should reorganize operations, streamline bureaucratic approvals, leverage technology, and fundamentally change ways of doing business to boost productivity and achieve savings.
The city should modernize labor contracts to reduce recurring costs, fund workers’ raises, and narrow budget gaps.
The city should hire strategically while eliminating thousands of unneeded vacant positions to restructure government and improve services.
The city should prioritize and better manage critical services to stabilize the budget and protect New York’s future.
Key Data
3%
— Agencies are directed to find ways to save 3% of their city-funded budgets this year.
4.75%
— Agencies are directed to find ways to save 4.75% of their city-funded budgets next year.
$10 billion
— The budget gaps will actually approach $10 billion in the near future, according to the Citizens Budget Commission and comptrollers.
$2 billion to $3 billion
— Poor stock-market performance will force the city to make annual pension contributions $2 billion to $3 billion higher than budgeted.
28,000
— The city currently has 28,000 vacancies.
12%
— Private-sector productivity has risen 12% over the past decade.
New York City's implementation of a Program to Eliminate the Gap (PEG) is a necessary step to stabilize the budget, with targets set at 3 percent for the current year and 4.75 percent for future years. To achieve these savings while managing 28,000 city vacancies, the city should prioritize changing work rules and contractual components to increase efficiency.
Recommendations related to Program to Eliminate the Gap (PEG)
Changing work rules and other contractual components to increase efficiency and provide PEG savings is the best way for the City to raise employee salaries without creating an unsustainable fiscal burden.
Key Data
3 percent
— The PEG savings target for the current year.
4.75 percent
— The PEG savings target for future years.
28,000
— The number of current city vacancies.
3 percent to 5 percent
— The range of PEG savings previously called for in June.
The city's initial budget plan included a program to eliminate the gap that generated $1 billion in savings by cutting vacant positions, but a subsequent executive budget added over 3,000 new positions, reversing most of those savings. Instead of increasing headcount, the city should focus on redistributing existing vacancies and removing bureaucratic hurdles to hiring in priority areas.
Recommendations related to Program to Eliminate the Gap (PEG)
Rather than add positions, the City should redistribute available vacancies across departments, within agencies, or across agencies.
Furthermore, until the City reduces managerial and procedural roadblocks to hiring, City agencies may struggle to fill priority vacancies.
Key Data
$1 Billion
— Amount of annually recurring savings included in the Program to Eliminate the Gap (PEG) in the Preliminary Budget.
7,026
— Number of vacant full-time positions at 42 agencies eliminated to achieve savings.
3,011
— Number of positions added in the fiscal year 2023 Executive Budget.
69 percent
— Portion of the February PEG reductions reversed by the addition of new positions in the Executive Budget.
0.65 percent
— Decrease in total authorized City headcount from November 2021 to April 2022.
The Executive Budget adds $2.3 billion in spending while failing to implement a Program to Eliminate the Gap (PEG), which would have helped offset costs. Instead of identifying necessary efficiency savings, the budget expands the gap by $1 billion annually, risking future service cuts or tax increases.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor and City Council should identify and include 3 percent efficiency savings in the Adopted Budget.
The City should make every effort it can immediately to include savings in the budget when adopted.
Key Data
$1 billion
— The amount by which the Executive Budget funds programs that would expand the gap annually.
$2.3 billion
— The amount of additional spending added by the Adams Administration in fiscal year 2023.
$270 million
— The amount of savings found in fiscal year 2022.
$141 million
— The amount of savings found in fiscal year 2023.
$8 billion
— The amount the City should grow rainy day reserves to by the end of the financial plan.
New York City faces a potential $9 Billion fiscal disaster by 2026 due to existing budget gaps, employee raises, and fiscal cliffs, necessitating immediate fiscal discipline. To avoid future service cuts or tax increases, the city should implement a 3% Program to Eliminate the Gap (PEG) for productivity, which would save $1.5 Billion annually, while prioritizing savings and addressing nonrecurring funding sources.
Recommendations related to Program to Eliminate the Gap (PEG)
The city should implement a 3% Program to Eliminate the Gap (PEG) for Productivity in the executive budget, which would save about $1.5 Billion annually.
The city must lower costs, ideally by improving efficiency or by reducing lower impact programs, to help address the budget gap.
The city should use this next round of collective bargaining contracts to further increase productivity, which would generate savings to fund raises and stabilize the budget.
Key Data
$1.5 Billion
— Annual savings from a 3% Program to Eliminate the Gap (PEG) for Productivity.
$9 Billion
— Total recipe for fiscal disaster by 2026, including the existing budget gap, employee raises, and fiscal cliffs.
$2 Billion
— Fiscal cliffs by fiscal year 2026 where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
$3 Billion
— Existing budget gap that contributes to the potential for fiscal disaster.
$4 Billion
— Estimated cost of employee raises that contributes to the potential for fiscal disaster.
$17 Billion
— Potential three-year revenue shortfall if the city experiences another recession.
New York City's Program to Eliminate the Gap (PEG) for fiscal year 2023 relied heavily on re-estimates and vacancy reductions, with only 6.2 percent of cumulative savings derived from actual efficiency improvements. To improve fiscal stability, the City should implement a 3 percent productivity PEG, targeting $1.5 billion in savings for fiscal year 2023 that grows to $1.6 billion by fiscal year 2026.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor’s Office of Management and Budget (OMB) should initiate a productivity PEG to generate options to save 3 percent of City-funded agency spending—growing from $1.5 billion in fiscal year 2023 to $1.6 billion by fiscal year 2026.
The analytic work should start immediately, and the total or selected productivity improvements should be part of the Executive Budget due in late April.
Agencies should identify management reforms that reduce unit costs, streamline operations, and leverage technology.
The City also should identify and implement efficiencies in centrally managed services like space leasing and fleet, which should provide additional savings.
Key Data
6.2 percent
— of the cumulative five-year savings from the Preliminary Fiscal Year 2023 Budget PEG came from increased efficiency.
61.6 percent
— of the PEG's savings came from re-estimates of planned spending and shifting support for services from City funds to other sources.
24.1 percent
— of the PEG's savings came from the elimination of vacant positions.
0.15 percent
— of total City-funded spending of agencies participating in the PEG was comprised of efficiency savings initiatives.
7,026
— full-time positions were eliminated across 42 agencies for annual savings of approximately $290 million.
$1.5 billion
— is the amount of savings a 3 percent productivity PEG would generate in fiscal year 2023.
The Fiscal Year 2023 Program to Eliminate the Gap (PEG) eliminated 7,026 vacant full-time positions, saving approximately $290 million annually. Rather than creating new positions, the City should address staffing challenges by increasing flexibility in headcount management and improving hiring processes to fill the remaining 22,376 vacancies.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should increase the flexibility of its systems that control, allocate, and reallocate headcount to ensure agencies can staff programs sufficiently.
The City should improve the systems it uses to control and manage hiring and to administer the civil service system.
DCAS should leverage technology and other process reforms to speed up the time between administering civil service tests and certifying results.
Key Data
7,026
— Number of vacant full-time positions eliminated across 42 agencies by the Fiscal Year 2023 Preliminary Budget Program to Eliminate the Gap (PEG).
$290 million
— Annual savings generated by the Fiscal Year 2023 Preliminary Budget Program to Eliminate the Gap (PEG).
22,376
— Number of vacant full-time positions available to be filled in the current fiscal year following the PEG and other authorized headcount changes.
7.3 percent
— Vacancy rate for full-time positions based on December 2021 on-board staff and November 2021 authorized levels.
The NYPD's Program to Eliminate the Gap (PEG) yielded $113 million in savings for fiscal year 2022, representing a 2.2 percent reduction in the department's City-funded operating budget. These savings were proportionally smaller than those of other large city agencies, with fiscal year 2023 PEG savings projected at just $38.5 million.
Key Data
$113 million
— NYPD's PEG savings for fiscal year 2022.
2.2 percent
— Reduction in the department’s City-funded operating budget for fiscal year 2022 via PEG.
$38.5 million
— NYPD PEG savings in fiscal year 2023.
0.75 percent
— PEG as a share of City-funded NYPD spending in fiscal year 2023.
$34.6 million
— Annual savings starting in fiscal year 2023 from eliminating 560 vacant school safety positions as part of the DOE's PEG.
The NYPD's Program to Eliminate the Gap (PEG) is relatively small, with the department's proportional cut ranking as the fourth lowest among the ten largest city agencies in fiscal year 2022 and the second lowest in fiscal year 2023. The fiscal year 2022 PEG amounted to 2.2 percent of the department's City-funded operating budget, with only one-third of the savings recurring through the elimination of 210 vacant civilian positions.
Key Data
2.2 percent
— The NYPD's fiscal year 2022 **Program to Eliminate the Gap (PEG)** represented this portion of the department's City-funded operating budget.
210
— The number of vacant civilian positions eliminated to achieve savings, which account for only one-third of the **Program to Eliminate the Gap (PEG)** savings.
New York City's preliminary budget for fiscal year 2023 includes a Program to Eliminate the Gap (PEG) that relies heavily on vacancy reductions rather than operational efficiencies, leaving significant fiscal cliffs unaddressed. To ensure long-term stability, the city must implement a more robust 3 percent annual PEG, transition recurring programs to permanent funding, and establish stricter controls for the Rainy Day Fund.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
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.
The Executive Budget should propose a plan to start to transition recurring programs to recurring funding.
The Mayor and City Council should also advance legislation to mandate deposits and establish stricter controls for use of the Rainy Day Fund.
Key Data
$650 million
— Recurring programs funded in fiscal year 2022 that lacked fiscal year 2023 funding, creating a City-funded fiscal cliff.
$1.3 billion
— Recurring programs that will lose their funding in fiscal year 2026, creating a federally funded fiscal cliff.
3 percent
— The annual target for the Program to Eliminate the Gap (PEG) that the Executive Budget should aim to reach.
7,000
— Number of vacant full-time positions eliminated in the Preliminary Budget.
The Program to Eliminate the Gap (PEG) successfully reduced headcount by eliminating thousands of vacant positions, yet it fell short of its overall savings targets and relied minimally on operational restructuring. To improve fiscal health, the administration should pursue further efficiency savings across agencies and central functions while collaborating with municipal unions to rationalize benefit levels.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
Key Data
$866 million
— Savings delivered by the PEG in fiscal year 2022.
$1.1 billion
— Annually recurring savings delivered by the PEG in fiscal year 2023 and beyond.
3 percent
— Savings target directed to most City agencies by the PEG.
3,200
— Vacant positions removed from the fiscal year 2022 authorized headcount.
7,000
— Vacant positions eliminated in fiscal year 2023 and beyond.
New York City agencies were instructed to propose savings equal to 3 percent of their budgets through the Program to Eliminate the Gap (PEG), aiming for $1.7 billion in annual savings. To achieve these goals, agencies are encouraged to leverage technology, reduce spending on low-impact programs, and streamline operations rather than cutting direct services or resorting to layoffs.
Recommendations related to Program to Eliminate the Gap (PEG)
Agencies should leverage technology to improve service delivery.
Agencies should reduce spending on low impact programs.
Agencies should work with labor to change work rules to increase efficiency.
Agencies should streamline work processes.
Agencies should consolidate like functions across agencies.
Key Data
$1.7 billion
— Total annual savings of City-funded agency spending, excluding debt service and exempted agencies.
$1.0 billion
— Portion of the total annual savings derived from agency operating budgets.
20,000
— Number of vacant positions that agencies were asked to eliminate as of November 2021.
3%
— Percentage of their City-funded budget that agencies were instructed to propose as PEGs for fiscal years 2022 and 2023 and beyond.
New York City can achieve significant efficiency savings beyond the Program to Eliminate the Gap by modernizing labor contracts, streamlining procurement, and better managing city assets like fleet and space. Implementing these reforms, including adjusting employee benefit contributions and optimizing sanitation routes, would improve fiscal stability and service quality without requiring service cuts.
Recommendations related to Program to Eliminate the Gap (PEG)
The administration and unions should modernize employee benefits, eliminate outdated salary differentials, and change contractual work rules that impede efficient service delivery.
The city and unions should modify some of the Citywide Agreement provisions for work hours, vacation and sick leave, overtime, and other benefits common across nonuniformed collective bargaining units.
The next round of collective bargaining should set a productivity savings target for all bargaining units.
The city should lengthen sanitation routes so that trucks are full when they tip to save more than $120 million annually.
The Absent Teacher Reserve should be time-limited, giving employees an appropriate opportunity and incentive to find new positions within the department.
Key Data
$1.3 billion
— The amount the city spent to lease space in fiscal 2021, which was 72% more than in fiscal 2014.
$160 million
— Potential annual savings from streamlining the city’s lengthy and cumbersome procurement process to reduce the cost of large contracts by 1%.
$80 million
— Potential savings from greater centralization of procurement.
$675 million
— Annual savings the city could realize if city employees shared premium costs slightly below the level of state employees.
$160 million
— Annual savings possible by consolidating the roughly 75 separate union welfare funds through administrative efficiencies and greater purchasing power.
$120 million
— Annual savings possible by lengthening sanitation routes so that trucks are full when they tip.
The November 2021 Financial Plan for Fiscal Years 2022 to 2025 faces significant budget gaps, with projections of $2.9 billion for next year, $2.7 billion in fiscal year 2024, and $2.1 billion in fiscal year 2025. To address these fiscal challenges, the incoming administration should implement a 3 percent to 5 percent Program to Eliminate the Gap (PEG) and collaborate with municipal unions to restructure the budget and workforce.
Recommendations related to Program to Eliminate the Gap (PEG)
Mayor-elect Adams should support a 3 percent to 5 percent Program to Eliminate the Gap (PEG).
The current and incoming Administrations should work together to have Program to Eliminate the Gap (PEG) options ready by January 1st to be considered for the Preliminary Budget.
Key Data
$2.9 billion
— Budget gap projected for next year.
$2.7 billion
— Budget gap projected for fiscal year 2024.
$2.1 billion
— Budget gap projected for fiscal year 2025.
$750 million
— Amount by which annual budget gaps are higher due to the inclusion of illusionary labor and attrition savings.
Mayor-elect Eric Adams' proposed 3-5% Program to Eliminate the Gap (PEG) is a necessary strategy to address the city's $5 billion annual budget gaps. This savings process should be integrated with a new performance management system to improve operational efficiency through technology, service sharing, and redesigned functions.
Recommendations related to Program to Eliminate the Gap (PEG)
Mayor-elect Adams should implement a 3-5% savings Program to Eliminate the Gap (PEG) to address the city's fiscal challenges.
The PEG process should leverage technology, redesign operations, share services, and manage functions like fleet and office space citywide to improve efficiency.
The PEG process should be intimately tied to the new performance management system to ensure savings are achieved while maintaining service quality.
Key Data
$5 billion
— Annual budget gaps the city faces starting next year, necessitating savings measures.
3-5%
— Targeted savings range for the Program to Eliminate the Gap (PEG) proposed by Mayor-elect Adams.
To ensure fiscal sustainability, the incoming administration should implement a regular, periodic Program to Eliminate the Gap (PEG) that identifies and executes recurring savings across all agencies and city-wide functions. This strategy, combined with modest workforce reductions through attrition, aims to redesign or eliminate less cost-effective services and improve operational efficiency.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
The PEG program should include all agencies and City-wide functions to help the City redesign programs or services, or shrink or eliminate less cost-effective ones.
The City should improve operations through the use of technology or process redesign as part of the PEG program.
The City should share resources across agencies or reduce/eliminate duplicative processes as part of the PEG program.
The City should strengthen centralized management of cross-agency operations, such as those for vehicles, office space, and energy, as part of the PEG program.
The performance management system should be tied to and inform the City’s budget allocations and PEG program.
Key Data
30,000
— The City's workforce increased by nearly 30,000, or 10 percent, from fiscal year 2014 to its peak in September 2019, necessitating the use of a PEG program to achieve sustainable workforce levels.
327,110
— The City's workforce reached a peak of 327,110 in September 2019, highlighting the need for the PEG program to implement modest workforce reductions through attrition.
6 percent
— In fiscal years 2018 and 2019, City-funded spending grew more than 6 percent annually, demonstrating the need for a PEG program to bring spending to a sustainable level.
$18 billion
— Fiscal year 2022 City-funded expenditures are expected to be $18 billion higher than fiscal year 2014, underscoring the necessity of the PEG program to identify recurring savings.
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The City's current budget strategy relies on non-recurring savings rather than structural efficiency, failing to utilize available federal aid and tax revenue to stabilize long-term fiscal health. Implementing a regular, reasonably sized Program to Eliminate the Gap (PEG) is necessary to prioritize programs, improve quality, and identify sustainable savings.
Recommendations related to Program to Eliminate the Gap (PEG)
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 restructure its spending to increase efficiency and preserve services rather than relying on non-recurring savings.
Key Data
$15 billion
— Additional federal aid provided to the City.
$5 billion
— Annual budget gaps in fiscal years 2023 to 2025 when unspecified labor savings are removed.
5,000
— Number of additional staff the City plans to add, reversing recent progress in shrinking the workforce.
$1 billion
— Annual labor savings carried in fiscal years 2023 through 2025 without identified recurring spending reductions.
$1.6 billion
— Amount the City reversed its plan to use from the Retiree Health Benefits Trust to balance the budget.
$200 million
— Increase in the City's general reserve in fiscal year 2022.
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The Program to Eliminate the Gap (PEG) included in the fiscal year 2022 preliminary budget is criticized for being too small and relying on program reductions rather than structural changes like productivity improvements or benefit modifications. To address the projected $4.3 billion fiscal year 2023 budget gap, the city needs to implement more aggressive spending restraints, including permanent headcount reductions and labor cost reforms.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
The Program to Eliminate the Gap (PEG) should be expanded to focus on improving productivity or modifying employee benefits, rather than disproportionately targeting program reductions.
Key Data
3.2%
— The projected increase in City-funded spending between fiscal year 2021 and fiscal year 2022.
$4.3 billion
— The projected budget gap for fiscal year 2023.
$1 billion
— The amount of labor savings by which the fiscal year 2023 budget gap is likely understated.
The November 2020 Financial Plan's savings program relies heavily on non-recurring debt service savings rather than the significant, recurring structural changes needed to stabilize the city's long-term finances. To address the $3.8 billion fiscal year 2022 budget gap, the city must prioritize agency-identified recurring savings, reduce headcount through attrition, and align employee benefit contributions with other public agencies.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
Key Data
60 percent
— of the annual savings in the November 2020 Financial Plan's Savings Program do not recur.
0.35 percent
— of City-funded spending represented by the fiscal year 2023 savings.
$1 billion
— in annual labor savings included in the Financial Plan for fiscal years 2022 to 2024 that have seen no progress.
$3.8 billion
— fiscal year 2022 budget gap that the City needs to close in the Preliminary Budget.
New York City faces a fiscal crisis where borrowing or layoffs of 22,000 workers are presented as the primary options, despite the availability of alternative strategies like increasing agency efficiency and implementing hiring freezes that could reduce the workforce by 7,000 employees a year. Rather than relying on debt that shifts costs to future generations, the city should prioritize structural savings and rigorous oversight to ensure long-term fiscal stability.
Recommendations related to Program to Eliminate the Gap (PEG)
Commissioners should comb their agencies to increase efficiency of city services, or reduce spending on lower priorities.
The city should use attrition; a stricter hiring freeze could reduce the workforce by 7,000 employees a year, while still allowing the city to fill two-thirds of its vacancies.
The city should reinvigorate the successful labor-management committee the administration established in 2014 to reduce health insurance spending.
If borrowing does become justified, authorization should come with significant conditions and oversight.
The city should have to produce and implement a multiyear plan that will lead to fiscal stability.
The Financial Control Board should have to certify and oversee the plan and borrowing, reestablishing a control period.
Key Data
$2 billion
— The current city budget, adjusted for inflation, is $2 billion higher than what the city spent in 2018.
14,000
— The city has around 14,000 more workers now than the highest point before the last recession.
7,000
— A stricter hiring freeze could reduce the workforce by 7,000 employees a year.
22,000
— The mayor warns that if the Legislature does not let him borrow billions, the city will have to lay off 22,000 workers.
$5 billion
— The city would have to repay the debt over time, such as borrowing $5 billion and paying back $7 billion.
$7 billion
— The city would have to repay the debt over time, such as borrowing $5 billion and paying back $7 billion.
New York City faces a significant fiscal crisis requiring $1 billion in recurring labor savings to close its budget gap without resorting to widespread layoffs. By reforming health insurance benefits, consolidating welfare funds, and modernizing work rules, the City can achieve these necessary savings while maintaining essential services.
Recommendations related to Program to Eliminate the Gap (PEG)
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 guaranteed return on the fixed return fund should be sharply reduced through State legislation.
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 City should reinvigorate the partnership with the MLC with the goal of implementing a new premium-sharing arrangement.
The pay scale for sanitation workers should be revised to establish new productivity targets and compensation structures.
Key Data
$1 billion
— The amount of recurring labor savings the Adopted Budget for Fiscal Year 2021 calls for.
$1.1 billion
— The amount of uniformed-agency overtime budget in fiscal year 2019.
$1.2 billion
— The estimated value of the taxpayer-provided guarantee for the TDA fixed return investment option.
$1.3 billion
— The amount City payments to welfare funds are projected to exceed in fiscal year 2020.
$400 million
— The amount the City would save annually by eliminating Medicare Part B premium reimbursement and the income-related monthly adjustment amount.
7.0 percent
— The annual average growth rate of health insurance premium costs from fiscal year 2009 to fiscal year 2019.
The fiscal year 2021 budget relies on achieving $1 billion in recurring labor savings and implementing agency savings programs, including a $350 million reduction in police overtime. Failure to meet these targets could lead to the layoff of 22,000 municipal employees, necessitating a focus on attrition, productivity, and benefit changes to balance the budget.
Recommendations related to Program to Eliminate the Gap (PEG)
The City must prioritize negotiating and managing the changes necessary to achieve the assumed savings in the budget.
The City should utilize attrition, increased productivity, and negotiated fringe benefit changes to achieve necessary savings without resorting to layoffs.
Key Data
$1 billion
— Recurring savings target with municipal labor unions.
$350 million
— Reduction in overtime at the New York City Police Department approved as part of agency savings programs.
22,000
— Number of employees potentially facing layoffs if savings targets are not met.
0.1 percent
— Growth of adjusted city-funded spending in fiscal year 2021.
$88.2 billion
— Adopted budget for fiscal year 2021.
$92.8 billion
— Total budget size in fiscal year 2021.
New York City faces significant budget gaps due to the pandemic, requiring a combination of expenditure reductions, workforce attrition, and targeted efficiency measures to maintain fiscal stability. These strategies, including health insurance reform and delaying capital projects, aim to balance the budget without resorting to long-term borrowing or damaging service cuts.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should resume study of and implement a volume-based fee for refuse, as such fees have been shown to reduce waste generation by households.
Implementing a health insurance premium-sharing arrangement would provide significant recurring savings while ensuring the City continues to provide attractive benefits.
The City should pursue time limits on or elimination of the Absent Teacher Reserve, which would generate potential savings of about $60 million per year.
Centralizing procurement at the Department of Citywide Administrative Services could save about $80 million by reducing contract costs.
The City should assess the possibility of selling parking lots and underutilized buildings with the aim of generating $50 million in fiscal year 2021 and $100 million each in fiscal years 2022 and 2023.
Key Data
$57 million
— Savings in fiscal year 2021 from reducing the uniformed police force by 1,174 officers over two years.
$60 million
— Annual savings from a reduction of 500 DOE civilian positions by fiscal year 2022.
$164 million
— Estimated efficiency savings from welfare fund consolidation.
$700 million
— Annual savings when health insurance premium-sharing for employees is fully implemented.
$2.4 billion
— Reduction to the five-year capital plan through operational strategies to reduce planned new school construction.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
The Citywide Savings Program, intended to identify cost-saving initiatives, relies heavily on routine budget adjustments like re-estimates and funding shifts rather than structural efficiency improvements. Achieving just 1% in annual efficiency savings since fiscal year 2016 would have reduced the fiscal year 2021 budget by $2 billion, highlighting the need for more substantive cost-cutting measures.
Recommendations related to Program to Eliminate the Gap (PEG)
The Citywide Savings Program should prioritize greater efficiency savings to reduce spending without reducing services.
The administration should shift focus away from routine budget adjustments like re-estimates and funding shifts toward structural efficiency initiatives.
The city should aim for 1 percent annual efficiency savings to meaningfully reduce the growth of city-funded expenditures.
Key Data
$2,360 million
— Total five-year savings identified in the FY2021 Citywide Savings Program.
0.6%
— Percentage of city-funded expenditures represented by the FY2021 Citywide Savings Program savings over five years.
33%
— Portion of the FY2021 Citywide Savings Program comprised of efficiency savings.
0.23%
— Average efficiency savings as a percentage of city-funded spending between FY2016 and FY2021.
$2 Billion
— Amount the FY2021 budget would have been reduced if 1 percent efficiency savings had been achieved annually since FY2016.
4.7%
— Average annual growth of the city-funded budget if 1 percent efficiency savings had been identified since FY2016.
New York City and State face significant revenue shortfalls of up to $34 billion and $15-20 billion respectively in the event of a recession, yet currently hold only a small fraction of these amounts in reserve. To improve fiscal preparedness, the state should restrain recurring spending and save excess revenues, while the city should implement agency savings programs and prioritize building its rainy day fund.
Recommendations related to Program to Eliminate the Gap (PEG)
State leaders should close state budget gaps by restraining recurring spending—without tax increases or fiscal gimmicks.
The state should stop increasing school aid to wealthy districts and put away those funds to protect New Yorkers in the future.
The mayor should immediately ask agencies to develop plans for productivity-based savings totaling 1% or more of city-funded expenditures to be included in the executive budget.
The Council should do its part by identifying savings and not adding funds to support new or expanded programs.
The State must pass legislation enabling the use of a rainy day fund, with the requirement that it only be used during an economic recession or severe emergency.
Key Data
$34 billion
— Three-year revenue shortfall for the state in a recession.
$15-20 billion
— Three-year revenue shortfall for the city in a recession.
6-16%
— Amount of the potential shortfall currently held in reserve by the city and state.
$700 million
— Revenues already identified by the state above current projections.
The FY 2020 Executive Budget's Program to Eliminate the Gap relies primarily on expense reestimates, revenue increases, and funding shifts rather than structural efficiency improvements. While the program includes a recurring reduction of 1,600 vacant positions, it fails to generate the necessary resources to prepare for a potential $15 billion to $20 billion revenue shortfall in the event of a recession.
Key Data
1,600
— Reduction in headcount of 1,600 vacant positions on a recurring basis as part of the savings program.
$15 billion to $20 billion
— Potential $15 billion to $20 billion three-year revenue shortfall that a recession could drive, which the current savings program fails to address.
$1.25 billion
— Annual contingency and capital reserve funds, which are budgeted at $1.25 billion annually.
New York City's implementation of a Program to Eliminate the Gap (PEG) aims to address fiscal risks by requiring agencies to generate savings through expense reductions or revenue enhancements. To be successful, the city should target savings exceeding the $750 million goal, prioritize recurring efficiency improvements, and empower agencies to lead the identification of cost-saving measures.
Recommendations related to Program to Eliminate the Gap (PEG)
The Office of Management and Budget should identify significantly more than $750 million in savings to provide options for mayoral priority setting and better position the City to identify additional savings if needed.
The City should focus on increasing efficiency to produce recurring savings by redesigning programs, improving operations through technology, or sharing resources across agencies.
Agency executives, managers, and front line staff should take the lead on identifying savings to optimize programs, services, and operations.
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 target.
It is prudent to reevaluate existing fees to ensure they are keeping pace with rising costs for relevant services without reaching economically counterproductive levels.
Key Data
$155 million
— Average annual efficiency initiative savings in the five-year savings plans for fiscal years 2016 through 2019, representing less than 0.25 percent of the City funds budget.
$750 million
— The Mayor’s stated annual target for the Program to Eliminate the Gap (PEG), which is equal to 1 percent of the City funds budget.
$10 to $12 billion
— Potential annual out-year budget gaps if a recession occurs.
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…
The City of New York's Preliminary Budget for Fiscal Year 2020 projects a 3.4% increase in city-funded spending, necessitating a more robust Program to Eliminate the Gap (PEG) to ensure long-term fiscal stability. To prepare for potential economic downturns, the city must prioritize recurring savings through operational efficiencies rather than relying on one-time revenue actions.
Recommendations related to Program to Eliminate the Gap (PEG)
The Program to Eliminate the Gap (PEG) announced today should be developed with an eye to making operations more efficient and generating recurring savings.
Greater recurring savings from making government more efficient are needed to bolster reserves and make certain that the City can provide critical services to New Yorkers in both good times and bad.
Spending growth should be limited to inflation and reserves should be increased.
Key Data
3.4%
— City-funded spending growth projected for fiscal year 2020.
$104.1 billion
— Total value of the Preliminary Ten-Year Capital Strategy for Fiscal Years 2020 to 2029.
8.7%
— Increase in the Preliminary Ten-Year Capital Strategy compared to the prior ten-year strategy.
New York City's savings plans under Mayor de Blasio rely heavily on re-estimates, funding shifts, and debt service, with efficiency savings accounting for only 16% of the total. Because efficiency savings represent just 0.2% of total spending over the five-year period, more ambitious goals are required to achieve lasting improvements in city operations.
Recommendations related to Program to Eliminate the Gap (PEG)
There must be more ambitious goals for efficiency savings.
To achieve lasting savings in city operations, Mayor de Blasio must set higher goals for more effective use of city resources.
Key Data
$4,670 million
— Total savings proposed in the Fiscal Year 2019 Citywide Savings Program.
0.2%
— Efficiency savings as a percentage of total spending proposed during the five-year period.
16%
— Share of total savings attributed to efficiency under Mayor de Blasio.
20%
— Share of total savings attributed to efficiency under Mayor Bloomberg.
New York City agencies have demonstrated inconsistent participation in the Program to Eliminate the Gap (PEG) across fiscal years 2012 through 2019, reflecting varying levels of engagement under different mayoral administrations. The provided analysis highlights the need for more consistent and comprehensive savings efforts to ensure municipal fiscal efficiency.
New York City's historical budget gap-closing programs, including both traditional Programs to Eliminate the Gap (PEGs) and the Citywide Savings Programs (CSPs) implemented under Mayor Bill de Blasio, are tracked in an updated graphic. This resource documents the size of these proposed savings initiatives in preliminary budgets dating back to 1982.
New York City's Citywide Savings Program aims to reduce expenses through initiatives like procurement reform and fleet optimization, yet agency participation remains voluntary and inconsistent. If all agencies achieved efficiency savings equal to just 1 percent of their city-funded expenditures, the city could generate $378 million in annual savings, significantly expanding the current program's impact.
Recommendations related to Program to Eliminate the Gap (PEG)
City agencies should review their operations to enhance productivity and reduce expenses.
The city should reinstate mandatory savings requirements for agencies, as current voluntary participation has resulted in limited engagement from many departments.
Agencies should follow the lead of the Office of Management and Budget’s Savings Unit by actively identifying and implementing recurring efficiency initiatives.
The city should continue to prioritize substantial efforts to reduce expenses in light of potential federal budget risks and a slowing economy.
Key Data
$1.5 billion
— Total Citywide Savings Program amount in fiscal year 2017.
$1.3 billion
— Total Citywide Savings Program amount in fiscal year 2018.
$378 million
— Potential annual savings if all agencies achieved efficiencies worth 1 percent of their city-funded expenditures.
$331 million
— Four-year total savings from the 11 initiatives identified by the Office of Management and Budget’s Savings Unit.
$124 million
— Savings in fiscal year 2021 from the 11 initiatives identified by the Office of Management and Budget’s Savings Unit.
0.1 percent
— Average efficiency savings achieved by the 10 largest participating agencies.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
The Citywide Savings Program identifies $3.8 billion in savings through fiscal year 2021, yet less than 10 percent of these reductions stem from actual improvements in government efficiency. Instead, the plan relies heavily on debt service savings and re-estimates, failing to implement the recurring productivity gains necessary to hedge against future budget risks.
Recommendations related to Program to Eliminate the Gap (PEG)
To serve as a meaningful hedge against budget risks, all of this amount should come from improving government productivity in ways that generate recurring savings.
The creation of a Savings Unit is a positive step; however, it should not absolve city agencies of responsibility for initiating their own efforts to operate more efficiently.
Agencies should be required to identify efficiency improvements to generate the next $500 million in savings promised by the Administration.
Key Data
$3.8 billion
— Total savings identified in the Preliminary Budget for Fiscal Year 2018 to be achieved in fiscal years 2017 to 2021.
9.7 percent
— Portion of total savings derived from improving the efficiency of government operations.
$500 million
— Additional savings the Office of Management and Budget has committed to finding for the Executive Budget.
1.1 percent
— Total savings as a share of city-funded expenditures.
$366 million
— Total efficiency savings identified in the Citywide Savings Program.
The Citywide Savings Program has expanded to $5.4 billion in proposed multiyear savings, yet only 16 percent of these savings stem from actual agency efficiency measures. The majority of the program relies on uncertain initiatives like Medicaid payment reductions, debt service adjustments, and spending re-estimates rather than structural productivity improvements.
Recommendations related to Program to Eliminate the Gap (PEG)
The administration should continue to build on the progress in the Citywide Savings Program by focusing more on efficiency initiatives.
The City should generate savings from increasing productivity of city government.
The City should avoid relying on spending re-estimates, funding shifts, spending delays, and accruals as they do not make agencies more efficient.
Key Data
$5.4 billion
— Multiyear savings proposed in the latest Citywide Savings Program.
$883 million
— Total savings derived from agency efficiency measures, representing 16 percent of total savings.
$1.5 billion
— Savings claimed from a reduced payment to the State for the City’s share of the Medicaid program, accounting for 28 percent of the plan.
The Mayor's Executive Budget for Fiscal Year 2017 includes a five-year Citywide Savings Plan totaling $1.85 billion, which represents only 0.6 percent of city-funded spending. This savings plan is criticized for being insufficient to offset new initiatives or bolster reserves, prompting calls for agencies to identify efficiency-based savings targets of 5 percent.
Recommendations related to Program to Eliminate the Gap (PEG)
The administration should increase the size of the Citywide Savings Plan to meaningfully offset the cost of new initiatives or to boost reserves.
The administration should increase the size of the Citywide Savings Plan by setting savings targets of 5 percent for all agencies.
The administration should focus on efficiency measures within the Citywide Savings Plan that are sufficient to offset the cost of any new needs.
Key Data
$1.85 billion
— The total value of the five-year Citywide Savings Plan for fiscal years 2016 to 2020.
0.6 percent
— The size of the Citywide Savings Plan relative to total city-funded spending.
New York City's current Citywide Savings Program is insufficient to offset new spending or prepare for economic uncertainty, as it relies heavily on one-time re-estimates rather than the structural efficiencies seen in past Programs to Eliminate the Gap (PEGs). A more robust savings plan is necessary to build reserves and ensure fiscal stability ahead of a potential economic downturn.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor should ask agencies to identify operational efficiencies that provide recurring savings to increase the budget cushion and guard against economic uncertainty.
The expanded Citywide Savings Program in the Executive Budget should include much more in the way of agency savings from initiatives that improve operations and provide recurring savings.
Key Data
$1.9 billion
— Total value of new savings initiatives proposed in the FY17 Citywide Savings Program over fiscal years 2016 to 2020.
0.6 percent
— The amount of savings as a share of city-funded spending during the fiscal years 2016 to 2020.
$1.2 billion
— The amount of savings identified in the FY17 Citywide Savings Program attributed to agency initiatives.
45 percent
— The decline in the Chinese stock market since its peak in June, which contributes to global economic uncertainty.
70 percent
— The drop in the price of a barrel of oil since June 2014, which impacts global demand and domestic manufacturing.
The Citywide Savings Program, which replaced the Program to Eliminate the Gap, is criticized for being too small and lacking sufficient efficiency initiatives compared to previous administrations. The program's savings goals are unambitious, with only a small fraction of initiatives achieving recurring savings through improved agency operations.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor should set a higher goal for the Citywide Savings Program in his Executive Budget.
The Citywide Savings Program should be expanded in the Executive Budget as a high priority.
The administration should set higher savings goals for the program.
All city agencies should be required to participate in the savings program, as several have not.
The program should include more initiatives that achieve recurring savings by making agency operations more efficient.
Key Data
$1.9 billion
— Total planned savings over fiscal years 2016 to 2019.
0.6 percent
— The planned savings over fiscal years 2016 to 2019 as a share of total city-funded spending.
$270 million
— The amount of initiatives in the Citywide Savings Program that achieve recurring savings by making agency operations more efficient.
$804 million
— Initiatives yielding savings in fiscal year 2016.
$235 million
— Lower bound of savings in fiscal years 2017 to 2020.
$279 million
— Upper bound of savings in fiscal years 2017 to 2020.
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 faces projected budget gaps of over $1.0 billion in fiscal year 2017 and nearly $2.1 billion by fiscal year 2019, yet the current administration has declined to implement a Program to Eliminate the Gap (PEG). Establishing these efficiency targets is essential for maintaining balanced budgets and preparing for potential economic downturns, as demonstrated by historical fiscal discipline.
Recommendations related to Program to Eliminate the Gap (PEG)
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 to ensure efficiency targets are met.
City management should include a continuous search for ways to achieve savings by making service delivery more efficient, even in a strong economy.
Key Data
$1.0 billion
— Projected budget gap in fiscal year 2017.
$2.1 billion
— Projected budget gap approaching this amount in fiscal year 2019.
Despite a reluctance to use the term "Program to Eliminate the Gap," the city faces projected budget gaps exceeding $1.0 billion in fiscal year 2017 and approaching $2.1 billion by fiscal year 2019. To ensure long-term fiscal health, the administration should adopt a strategy to identify savings and improve service delivery efficiency, regardless of the specific name given to the program.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor should give the Program to Eliminate the Gap a new name and present a financial plan that includes significant savings from new efficiencies in service delivery.
Mayor de Blasio should begin planning for how to close projected budget gaps and cope with any unexpected adverse conditions as well as new needs that may emerge.
Good management should include a continuous search for ways to achieve savings by making service delivery more efficient, even in the absence of budget gaps.
The Mayor's next financial plan should be creative in naming his strategy and in identifying ways to keep the budget balanced and make service delivery more efficient in the future.
Key Data
$1.0 billion
— Projected budget gap identified in the fiscal year 2017 financial plan.
$2.1 billion
— Projected budget gap approaching in the fiscal year 2019 financial plan.
$6.5 billion
— Savings in fiscal year 2014 attributed to PEGs implemented from fiscal years 2008 to 2013.
$4.8 billion
— Unprecedented PEG amount in Year 1 of Mayor Bloomberg’s first financial plan following the September 11, 2001 terrorist attacks.
New York City's fiscal plan lacks a Program to Eliminate the Gap (PEG), which historically helped manage budget gaps by identifying efficiencies and reducing agency expenses. Without this mechanism, the city faces projected budget gaps of up to $3.1 billion by fiscal year 2018, necessitating a renewed focus on expense reduction and operational efficiency to ensure long-term fiscal stability.
Recommendations related to Program to Eliminate the Gap (PEG)
Implementing new priorities in the budget should be coupled with a renewed emphasis on finding efficiencies within agency operations through a PEG program.
The Mayor and the Council should reduce expenses and continue to enhance the City’s reserves.
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.
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.
$6.6 billion
— Savings generated through 12 rounds of PEGs implemented since fiscal year 2008.
The November 2012 Program to Eliminate the Gap (PEG) aims to save $1.5 billion over two years to address structural budget deficits driven by rising health insurance and debt service costs. Despite these savings, the city faces ongoing fiscal risks from Hurricane Sandy recovery, expired labor contracts, and reliance on one-time revenue sources like taxi medallion sales.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should prioritize rightsizing capital investment to reduce the long-term trajectory of debt service costs.
The City should focus on reforming health insurance premium arrangements to address the structural budget deficit.
The City should implement larger recurring expenditure cuts in future budget rounds to address the structural budget gap.
Key Data
$1.5 billion
— Total savings generated by the November 2012 Program to Eliminate the Gap (PEG) over two years.
$8.0 billion
— Annual cost of pension contributions, which is a major driver of expenditure growth.
$6.3 billion
— Annual cost of Medicaid payments, contributing to the structural budget deficit.
$6.2 billion
— Annual cost of debt service, which continues to outpace revenue growth.
$5.2 billion
— Annual cost of health insurance, a significant expenditure item that cannot be reduced unilaterally by the Mayor.
$4 billion
— Amount of non-recurring 'one-shot' resources used to close the $4.6 billion fiscal year 2013 budget gap.
The City's fiscal challenges require structural changes rather than relying on one-shot resources like the sale of taxi medallions or withdrawals from the Retiree Health Benefits Trust Fund. To address the budget gap, the City should implement structural reforms such as sustaining a wage freeze, introducing premium-sharing for health insurance, and reevaluating capital investment priorities.
Key Data
$6 billion
— Savings produced in fiscal year 2013 from 11 rounds of agency cost-cutting, which includes the Program to Eliminate the Gap.
2.7 percent
— Annual limit on growth in city expenditures helped by the Program to Eliminate the Gap and a three-year wage freeze.
New York City faces a new fiscal reality where tax revenue surpluses are no longer available to balance the budget, forcing reliance on temporary one-shot resources like asset sales and trust fund drawdowns. To address future deficits, the city must move beyond these temporary fixes and consider structural changes, such as reforming generous municipal employee health insurance policies or implementing further service and personnel cuts.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should tackle spending arrangements that drive budget growth and out-year deficits, specifically the generous health insurance policies for municipal employees and retirees.
The City should impose additional cuts on services and personnel to balance the budget if revenue surpluses disappear.
The City should raise taxes to address the budget gap if revenue surpluses disappear.
Key Data
$1 billion
— Annual tax revenues above the sum originally budgeted in every fiscal year from 2003 to 2011.
$5.3 billion
— High point of unanticipated tax revenues reached in fiscal year 2007.
$1 billion
— Unanticipated tax revenues in recession year 2009.
$114 million
— Amount fiscal year 2012 tax collections are running above the initially budgeted sum.
0.3 percent
— Increase in total tax revenues for fiscal year 2012.
$42.2 billion
— Total tax revenues for fiscal year 2012.
New York City can avoid 4,300 teacher layoffs and other service cuts by adopting the state's labor agreement model, which includes wage freezes, furloughs, and employee health insurance contributions. Implementing these measures would generate significant savings, including $735 million from health insurance premiums alone, providing a sustainable alternative to temporary fiscal gimmicks.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should extend the wage freeze to a third year to achieve $388 million in savings in 2013.
Municipal leaders should implement a five-day furlough for all municipal employees to save $400 million in 2012.
City employees should contribute to their health insurance premiums at the same rate as state employees to generate $735 million in savings.
The City should adopt the state’s long-standing policy for retiree premium-sharing to save an additional $290 million in fiscal year 2012.
City leaders and the Municipal Labor Committee should consider these changes seriously to avoid layoffs and service cuts.
Key Data
$1.4 billion
— Potential savings for New York City in fiscal year 2012.
$735 million
— Savings from requiring City employees to contribute to health insurance premiums.
$400 million
— Savings from a five-day furlough for all municipal employees in 2012.
$388 million
— Savings from extending the wage freeze to a third year in 2013.
$290 million
— Savings from adopting the state’s policy for retiree premium-sharing in fiscal year 2012.
$915 million
— Savings from health insurance contributions by 2015.
Between fiscal years 2009 and 2010, New York City proposed $3.4 billion in budget-balancing actions known as Programs to Eliminate the Gap (PEGs), though these resulted in less than $2.0 billion in actual agency expenditure reductions due to revenue-raising measures and funding shifts. While agencies like the Department of Education faced the largest absolute cuts, future budget stability relies on reforming pension fund contributions and health insurance premiums rather than continuing to cut agency services.
Recommendations related to Program to Eliminate the Gap (PEG)
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.
New initiatives should be implemented to reduce the “all other” budget category, which consists largely of pension fund contributions and health insurance premiums.
Unions must be willing to accept changes in collective bargaining over health benefits to achieve larger savings in fringe benefits.
Wide support must be garnered to push the State Legislature to authorize changes in future pension benefits to achieve significant future savings.
Key Data
$3.4 billion
— Total budget balancing actions proposed in Programs to Eliminate the Gap (PEGs) during the last two fiscal years.
$2.0 billion
— Actual agency expenditure reductions achieved from the $3.4 billion in proposed PEGs.
$926 million
— The single largest expenditure cut, which was applied to the Department of Education.
$593 million
— Revenue raising measures identified in the City's PEG documents.
$121 million
— Expenditure reduction applied to the Sanitation Department.
$103 million
— Expenditure reduction applied to the Administration for Children’s Services.
The fiscal year 2011 Program to Eliminate the Gap relies heavily on $369 million in one-time revenue actions and funding shifts rather than structural expenditure cuts, delaying necessary fiscal adjustments. Looking ahead to fiscal year 2012, the city faces a $1 billion gap that will require significant expenditure reductions, including $350 million in cuts to education and a total headcount reduction of 8,264 positions.
Recommendations related to Program to Eliminate the Gap (PEG)
The City must implement reforms to reduce employee health insurance or pension costs to avoid harmful cuts to services as efficiency savings are exhausted.
Key Data
$585 million
— Total value of the fiscal year 2011 Program to Eliminate the Gap.
$369 million
— Amount of the fiscal year 2011 Program to Eliminate the Gap derived from revenue actions.
$1 billion
— Proposed total for the fiscal year 2012 Program to Eliminate the Gap.
$750 million
— Total expenditure actions included in the fiscal year 2012 Program to Eliminate the Gap.
$350 million
— Planned cuts to education in the fiscal year 2012 Program to Eliminate the Gap.
8,264
— Total headcount reduction planned for the fiscal year 2012 Program to Eliminate the Gap.
The operating budget's Program to Eliminate the Gap requires immediate and recurring savings, whereas the capital budget has seen planned cuts repeatedly reversed, leading to record-high spending commitments. Without a more determined effort to establish priorities in the capital budget similar to those applied to the operating budget, spending is likely to continue exceeding planned levels.
Recommendations related to Program to Eliminate the Gap (PEG)
The Mayor must become more determined about establishing priorities in the capital budget the way he has for the operating budget.
Key Data
$38.9 billion
— The reduced commitment plan for fiscal years 2009-2012 following the first cut in May 2008.
$26.2 billion
— The total commitment plan for fiscal years 2010-2013 following the second round of cuts.
$12 billion
— The projected 2011 commitments, which represent a new record high.
26 percent
— The increase in average yearly commitments since the Mayor began cutting the capital plan compared to fiscal years 2006-2008.
$1.3 billion
— The amount committed for parks in fiscal year 2011.
$12.2 billion
— The average yearly commitments since the Mayor began cutting the capital plan.
The fiscal year 2011 budget relies on $3.6 billion in surplus funds to balance expenditures, as the city faces a $4.3 billion gap without these one-time resources. The Program to Eliminate the Gap (PEG) includes over 4,200 job losses and service cuts to health, welfare, and senior centers, while the city continues to fund discretionary pork barrel projects.
Recommendations related to Program to Eliminate the Gap (PEG)
The City should reform health care and retirement benefits for its workers to bring them more in line with the private sector.
Requiring employee contributions to health care premiums of 10 percent for individuals, 25 percent for families and 50 percent for retirees would save the City over $1 billion annually.
The City should focus on key priorities, such as state-of-good-repair work on the City's aging infrastructure, and trim back on less urgent development projects.
Key Data
4,200
— Number of jobs lost as part of the Program to Eliminate the Gap (PEG).
1,100
— Number of jobs lost through layoffs under the PEG program.
$100 million
— Value of service cuts to health and welfare programs.
$231.7 million
— Amount of proposed budget cuts restored by the City Council.
$165.2 million
— Amount added by the City Council in new initiatives.
Mayor Bloomberg's preliminary budget for fiscal years 2010 through 2014 addresses a $4.1 billion gap through a combination of revenue projections, union contract negotiations, and an 'Agency Program' that cuts 4,286 jobs. While the plan avoids broad tax increases, it faces scrutiny regarding its reliance on optimistic state aid projections, the preferential treatment of the Department of Education, and the continued depletion of the Retiree Health Benefits Trust.
Recommendations related to Program to Eliminate the Gap (PEG)
The City needs a realistic plan for how to deal with inevitable cuts in State aid.
The City should reconsider the decision to reject the advice to link withdrawals from the Retiree Health Benefits Trust to growth in the current year liability for retiree health insurance premiums.
The City Council and public should question if the highly favored status of teachers and the Department of Education is justified given the current difficult fiscal situation.
Key Data
$4.1 billion
— Gap in the budget for fiscal year 2010-11.
$2.9 billion
— Surplus generated in the current year to pay for expenses in fiscal year 2010-11.
$371 million
— Savings yielded by the Agency Program in the current year.
$799 million
— Savings yielded by the Agency Program next year.
4,286
— Jobs to be eliminated by the end of fiscal year 2011.
$1.3 billion
— Estimated fiscal year 2011 impact of the Executive Budget as a loss in aid.
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