Revenue trends in New York reflect the complex interplay between tax collections, economic growth, and the fiscal health of the State and City. This page covers CBC’s work on structural budget gaps, tax revenue forecasting, toll evasion enforcement, the impact of tax policy on economic competitiveness, and strategies for achieving recurring budget savings.
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..
Reject tax increases that would harm the City’s economic competitiveness and place additional burdens on residents and businesses.
Reduce ineffective spending and improve operational efficiency, including spending on education, procurement, and administrative operations.
Right-size spending in areas where demand has changed, such as adjusting school funding to reflect declining enrollment and managing the growth of the FHEPS housing voucher program.
Build and maintain adequate reserves by not drawing down the rainy day fund or RHBT and including $1 billion of in-year reserves.
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
Continue to reduce fare evasion, which is on track to cost more than $900 million this year, by assessing the cost-effectiveness of enforcement efforts, refining the multifaceted approach to reducing fare evasion, accelerating the rollout of new faregates, and working with District Attorneys.
Collaborate with the City to improve uptake, assess the cost-effectiveness, and consider expanding Fair Fares NYC.
Reduce paratransit per-trip expenses by using the paratransit fleet and broker services strategically to ensure users are provided with the lowest-cost transportation option that meets their needs.
Continue biennial fare and toll increases and consider tying them to year-over-year expense growth instead of a flat 4 percent.
Key Data
In September 2026, the CBC reported that in 2024, New York State and its localities led the nation in taxes, collecting $12,357 per capita, which is 71% more than the national average of $7,244.
An August 2026 analysis showed that if New York State and City had maintained their 2010 millionaire share in 2023, they would have collected nearly $12 billion more in personal income tax revenue, with the State receiving $9.5 billion and the City receiving $2.2 billion.
In June 2026, the CBC noted that the New York City Fiscal Year 2027 Executive Budget included a substantial $6.6 billion upward revision to the tax revenue forecast for fiscal years 2026 and 2027, though projected annual tax revenue growth is expected to slow to 2.1% a year going forward.
A March 2026 report highlighted that between fiscal years 2021 and 2025, New York City's funded spending grew 6.8% annually, outpacing the 5.2% annual growth in tax revenues.
In February 2026, testimony revealed that New York City residents face the nation's highest combined top marginal personal income tax rate of 14.776%, while business activity in the city is taxed at 17.44%.
In 2024, New York State and its local governments collected the highest taxes per capita in the nation at $12,357, which is 71% higher than the national average. This high tax burden was driven by leading the nation in personal income tax collections at $41 per $1,000 of personal income and corporate income tax collections at $18 per $1,000 of state GDP.
Key Data
$12,357
— New York State and local taxes collected per capita in 2024, which led the nation and was 71% higher than the national average.
71%
— The percentage by which New York State and local tax collections per capita exceeded the national average in 2024.
$144
— New York State and local taxes collected per $1,000 of personal income in 2024, ranking second highest in the nation.
$41
— New York State and local personal income tax collected per $1,000 of personal income in 2024, which is 94% higher than the national average.
$18
— New York State and local corporate income tax collected per $1,000 of State Gross Domestic Product (GDP) in 2024, leading all other states.
$3,562
— New York State and local property tax collections per capita in 2024, which was 67% higher than the national average.
Although New York's share of the nation's millionaires ticked up slightly in 2023 to 9.0%, the long-term decline since 2010 has cost the state and city nearly $12 billion in lost personal income tax revenue. Despite making up less than 1% of resident filers, millionaires remain critical to the tax base, contributing 43% of state and 38% of city personal income taxes in 2023.
Key Data
$12 Billion
— The estimated amount of additional personal income tax revenue New York State and City would have received in 2023 if they had maintained their 2010 share of the nation's millionaires.
$9.5 Billion
— The additional personal income tax revenue New York State would have collected in 2023 if it had maintained its 2010 share of the nation's millionaires.
$2.2 Billion
— The additional personal income tax revenue New York City would have collected in 2023 if it had maintained its 2010 share of the nation's millionaires.
43%
— The share of New York State's personal income taxes paid by millionaires in 2023, despite making up less than 1% of resident filers.
38%
— The share of New York City's personal income taxes paid by millionaires in 2023, despite making up less than 1% of resident filers.
9.0%
— New York State's share of the nation's millionaires in 2023, up from 8.7% in 2022 but below the 12.7% share in 2010.
The budgets are in. Now find out what matters. With the Fiscal Year 2027 New York State and New York City budgets finalized, CBC invites you to a timely briefing with our research staff on what the budgets mean for New York's fiscal outlook. We'll highlight the most significant policy…
New York City's fiscal year 2027 budget includes a $6.6 billion upward revision to tax revenue forecasts, though future annual growth is expected to slow to 2.1 percent. Despite this revenue, the budget relies heavily on one-time resources and lacks sufficient recurring savings to address long-term fiscal gaps projected to reach $9.8 billion by fiscal year 2030.
Recommendations related to Revenue Trends
Double Executive Order 12 saving initiatives to $2 billion in fiscal year 2027 and increase by $1 billion annually thereafter.
Implement additional actions to reduce costs in CityFHEPS housing vouchers, due process (Carter) cases, and other fast-growing areas.
Fund additional new spending and City Council initiatives with recurring savings.
Increase the fiscal year 2027 General Reserve to $500 million to protect against economic volatility and unexpected spending shocks.
Key Data
$6.6 billion
— Upward revision to the fiscal year 2026 and 2027 tax revenue forecast.
Sherif Soliman has more than 30 years of experience in government and currently serves as Budget Director of the New York City Mayor’s Office of Management and Budget. In this role, he oversees the city’s fiscal policy, including the development of the expense and capital budgets, the city’s bond and…
New York City's fiscal year 2027 executive budget relies on short-term strategies and pension maneuvers to close gaps, while city-funded spending is projected to grow by $24.4 billion between fiscal years 2025 and 2030. These fiscal choices, combined with the risk of raising already high taxes, threaten long-term competitiveness and leave significant budget gaps of nearly $10 billion by 2030.
Recommendations related to Revenue Trends
The City should pursue a holistic transformation to achieve excellence in government rather than relying on short-term maneuvers.
The City should avoid raising already nation-leading taxes to prevent risking economic competitiveness.
The City should avoid using pension gimmicks and temporary plugs that exacerbate fiscal problems rather than solving them.
Key Data
28 percent
— The rate at which City-funded spending is projected to grow between fiscal years 2025 and 2030.
$24.4 billion
— The total increase in City-funded spending between fiscal years 2025 and 2030.
nearly $10 billion
— The projected outyear budget gap by fiscal year 2030.
$1.2 billion
— The amount of the accrual sweep used as a one-shot measure to balance the fiscal year 2027 budget.
Eliminating bus fares would cost over $900 million annually while failing to improve transit speeds or affordability for those who need it most. Instead, expanding the existing Fair Fares NYC program to 250 percent of the federal poverty level would cost significantly less and better target financial support to low-income residents.
Recommendations related to Revenue Trends
The City should increase eligibility for Fair Fares NYC to individuals making up to 250 percent of the FPL, adding 722,000 New Yorkers at a projected cost of $146 million per year.
The City should increase utilization of Fair Fares NYC by improving education, outreach, and simplifying enrollment processes.
The City should leverage proven strategies, such as signal priority and physically separated busways, to make the City's streets more conducive to faster bus traffic.
The City should work with the MTA to further improve bus speeds through operational changes.
Key Data
$900 million
— The estimated annual cost to the City to replace the MTA’s current bus fare revenues if bus fares were eliminated.
$86 million
— The cost of the existing Fair Fares NYC program in fiscal year 2025.
$146 million
— The projected annual cost to the City to expand Fair Fares NYC eligibility to individuals making up to 250 percent of the federal poverty level.
$3.1 billion
— The amount of subway fare revenue the MTA’s 2026 budget relies on.
$350 million
— The estimated amount lost to subway fare evasion in 2024.
$232 million
— The total cost of the expanded Fair Fares NYC program.
Toll evasion on New York's roads and bridges has resulted in over $1.2 billion in lost revenue for public authorities over the last five years, with the Metropolitan Transportation Authority alone losing $300 million in 2025. Legislative action is needed to strengthen enforcement, including classifying toll evasion as a "theft of service" misdemeanor and authorizing vehicle seizures for repeat offenders to protect vital transit funding.
Recommendations related to Revenue Trends
Permit law enforcement officers to confiscate fraudulent license plates and devices that obscure license plates when they issue a summons for an obscured or fraudulent plate.
Close a loophole that allows drivers with significant unpaid toll balances to re-register their vehicles under the name of a friend or family member and avoid toll payment.
Authorize the Department of Motor Vehicles to report repeat toll evaders to their insurers.
Allow the MTA to place liens on vehicles whose owners do not pay their tolls.
Allow the MTA to place liens on other personal property owned by individuals that do not pay their tolls.
Allow the MTA Police Department to execute judgements placed on personal property for unpaid tolls.
Authorize the MTA, PANYNJ, NYSTA, and NYSBA to seize vehicles whose owners let tolls go unpaid for 90 or more days at least 3 times within a 5-year period.
Classify the act of driving on a tolled facility with the intent to avoid paying tolls as a "theft of service" misdemeanor.
Key Data
$1.2 billion
— Total lost revenue for collecting agencies including the MTA, PANYNJ, NYSTA, and NYSBA over the last 5 years due to toll evasion.
$900 million
— Total revenue lost by the MTA due to toll evasion.
$300 million
— Revenue lost by the MTA in 2025 alone due to toll evasion.
75,000
— Number of summonses issued by the City-State Ghost Plate Task Force.
7,000
— Number of vehicles towed by the City-State Ghost Plate Task Force.
1,700
— Number of arrests made by the City-State Ghost Plate Task Force.
New York City faces significant economic headwinds characterized by outmigration, declining business headquarters, and high tax rates that exceed those of other states. Despite robust revenues, the city must address a $3.5 billion budget gap by improving efficiency, reining in wasteful spending, and avoiding tax increases to maintain competitiveness.
Recommendations related to Revenue Trends
The mayor and City Council should adopt a sound budget that improves services, expands effective programs, eliminates ineffective ones, enhances affordability and holds the line on taxes.
Relief from Albany’s class size mandate could unlock $1.2 billion while preserving smaller classes where they matter most.
Aligning school budgets with declining enrollment could save $400 million.
Fixing procurement could yield $700 million.
Maintaining current city-funded housing vouchers would save $330 million.
The Chief Savings Officers must dig deeper to eliminate spending that isn’t serving people well.
Key Data
$3.5 billion
— The amount the city projects it will spend more than it received this year.
$1.2 billion
— Potential savings from relief from Albany’s class size mandate.
$700 million
— Potential savings from fixing procurement.
$400 million
— Potential savings from aligning school budgets with declining enrollment.
$330 million
— Potential savings from maintaining current city-funded housing vouchers.
$1.1 billion
— The mayor’s recurring savings target.
New York State's fiscal year 2027 budget faces a $20 billion structural imbalance despite strong revenue growth, necessitating spending restraint to avoid future fiscal crises. The state should prioritize fiscal stability by rejecting proposed tax increases, which threaten economic competitiveness, and instead focus on targeted spending and building reserves.
Recommendations related to Revenue Trends
Restrain spending growth to 2.6 percent per year to close the structural budget gap by fiscal year 2030.
Reject proposed personal income, corporate income, unincorporated business, pass-through entity, and real property tax increases.
Make additional deposits to the Rainy Day Reserve.
Implement mandatory deposits for the Rainy Day Reserve.
Enact the lower-income tax credit for filers with dependents, supported by spending offsets.
Redirect $2.25 billion originally budgeted for lawfully present immigrants to reserves in fiscal year 2027 and the $3 billion annually thereafter to gap closing.
Key Data
$12.8 billion
— Reported out-year budget gap in fiscal year 2030.
$20 billion
— Structural imbalance masked by the reported budget gap.
$12.5 billion
— Amount by which State Operating Funds spending is boosted in the next fiscal year.
31 percent
— The decline in New York's share of the nation's millionaires between 2010 and 2022.
$13 billion
— Additional personal income tax revenue the State and City would have collected had New York's share of millionaires stayed at 2010 levels.
7.9 percent
— The rate of State Operating Funds spending growth for the next fiscal year.
New York City's Fiscal Year 2027 Preliminary Budget faces a $9.4 billion gap, which the city plans to address through tax increases and the use of nonrecurring resources rather than structural reforms. This approach relies on optimistic revenue forecasts and fails to implement sufficient recurring savings, leaving the city's long-term fiscal foundation precarious.
Recommendations related to Revenue Trends
Reject tax increases that would harm the City’s economic competitiveness and place additional burdens on residents and businesses.
Reduce ineffective spending and improve operational efficiency, including spending on education, procurement, and administrative operations.
Right-size spending in areas where demand has changed, such as adjusting school funding to reflect declining enrollment and managing the growth of the FHEPS housing voucher program.
Build and maintain adequate reserves by not drawing down the rainy day fund or RHBT and including $1 billion of in-year reserves.
Key Data
$9.4 billion
— Combined fiscal year 2026 and 2027 budget gap.
$7.6 billion
— Increase in the tax revenue forecast across fiscal years 2026 and 2027.
$3.7 billion
— Revenue from the proposed property tax increase.
14.0%
— Projected increase in property tax revenue in fiscal year 2027.
10.1%
— Projected growth in personal income tax collections in fiscal year 2026.
4.7%
— Projected growth in personal income tax collections in fiscal year 2027.
$263 billion is the size of the FY27 State budget proposed by Governor Hochul. With strong tax receipts, the State has enough to close next year's gap and put a dent in future gaps, plus fund universal childcare. But risks abound, including a structural budget gap and federal changes to…
New York State and its localities already impose the highest tax burden in the nation, with state taxes projected to be $44 billion higher this fiscal year than five years ago. Rather than raising taxes, which risks further eroding competitiveness and driving out residents and businesses, the state should focus on improving budget efficiency to meet public needs.
Recommendations related to Revenue Trends
The State and New York City should hold the line on taxes and not include State or City tax increases in the one-house or enacted budgets.
The State and New York City should double down on getting the most out of their budgets by efficiently delivering high-quality services instead of raising taxes.
Key Data
$44 billion
— The amount by which state taxes are projected to be higher this fiscal year compared to five years ago.
14.776 percent
— The combined top marginal personal income tax rate for New York City residents.
17.44 percent
— The tax rate on business activity in New York City.
140,000
— The number of people who moved from New York State to other parts of the country in 2024.
$29.5 billion
— The amount state operating funds spending has increased more than inflation in the last 10 years.
$76 billion
— The potential savings if New York State and its localities spent like New Jersey.
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York City's preliminary budget projects tax revenues will be $6.6 billion higher than previously expected over two years, though this optimistic forecast relies on economically sensitive taxes that generate nearly 60 percent of total revenue. Relying on these volatile sources creates significant risk, as an economic downturn could lead to revenue shortfalls that threaten the funding of critical city services.
Recommendations related to Revenue Trends
The Administration should not raise taxes, which will make the City less attractive for New Yorkers who fund our schools, police, and sanitation—and the businesses that create jobs and support our economy.
The City should redouble its efforts to find more substantial savings by the Executive Budget and commit to an affordable, efficient government that provides quality services for all New Yorkers.
The Mayor should ensure that every one of the people’s $127 billion is used well, before asking them to dig into their pockets.
The City should avoid using one-shot resources to balance the budget, as recurring programs need recurring revenues.
The Mayor should partner with municipal unions to redesign work processes and broaden responsibilities, then share the gains.
Key Data
$6.6 billion
— The amount by which tax revenues are estimated to be higher than expected over two years.
60 percent
— The portion of City tax revenues generated by economically sensitive taxes, which poses a risk during an economic slowdown.
$2 billion
— The potential impact of a commercial property tax increase that could be harmful to the economy.
$127 billion
— The total amount of the City's preliminary budget that should be used well before asking residents to pay more.
New York State and its localities lead the nation in tax collections, with per capita tax revenue reaching $12,495 in 2023, which is 78% higher than the national average. Additionally, the state and its localities spent $15,894 per capita in 2023, ranking third in the nation and exceeding the national average by 40%.
Key Data
$15,894
— New York State and its localities spent $15,894 per capita in 2023, which is 40% more than the national average.
$12,495
— New York State and its localities collected $12,495 in taxes per capita in 2023, the highest of all states and 78% more than the national average.
112%
— New York State and its localities collected 112% more in personal income tax per $1,000 of income than the national average.
$18.4
— New York State and its localities collected $18.4 in corporate income tax per $1,000 of State GDP, the highest amount of all states.
$3,454
— New York's local property tax collections per capita reached $3,454 in 2023, which was 71% higher than the national average.
$2,890
— New York State and its localities collected $2,890 in sales tax per capita in 2023, an amount higher than 42 other states.
New York City faces a significant fiscal challenge with a projected budget gap approaching $8 billion for fiscal year 2027. To address this, the city must prioritize effective programs and modernize operations to boost productivity before considering tax increases.
Recommendations related to Revenue Trends
The City should prioritize what works and shrink what doesn’t—before turning to the easier option of raising taxes.
Key Data
$8 billion
— Estimate of the City’s fiscal year 2027 budget gap.
$14.5 billion
— Amount City spending would be lower today if it had tracked inflation.
$1 billion
— Savings from rebidding the City’s health insurance plan.
New York faces a massive $20 billion structural budget gap and the nation's highest tax burden, necessitating a shift toward fiscal discipline rather than increased spending or taxation. By reallocating funds from ineffective programs and maintaining current tax levels, the state can improve affordability and competitiveness while better preparing for potential economic downturns.
Recommendations related to Revenue Trends
Hold the line on taxes, as higher taxes risk dislocation and are unnecessary.
Deliver services that work by driving quality and efficiency with performance data and accountability.
End aid increases to districts with declining enrollment to save $500 million annually.
Redirect $2.5 billion in state aid provided to wealthy districts that already self-fund a sound basic education.
Curb the $5 billion in economic development tax breaks and programs that fail to deliver results.
Protect and build Rainy Day reserves, as they are currently insufficient to weather a recession.
Refocus the Future of Health Care Commission on improving quality and controlling Medicaid costs.
Key Data
$20 billion
— The state faces a massive structural budget gap.
$10 billion
— Additional revenue the state would be collecting annually if its share of the nation's millionaires held steady since 2010.
$5 billion
— Amount in economic development tax breaks and programs that fail to deliver results.
$80 billion
— Amount New York State and its localities would save by spending like New Jersey.
$11 billion
— Amount New York State and its localities would save by spending what California does per person.
$9 billion
— Annual growth in state operating funds spending since FY2020.
The MTA's November 2025 Financial Plan projects near-term stability, but masks a $1.1 billion structural budget gap in 2029 caused by reliance on one-time resources and optimistic assumptions. Long-term fiscal health requires addressing this underlying imbalance through increased efficiencies, reduced fare evasion, and structural adjustments to expenses and revenues.
Recommendations related to Revenue Trends
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
Continue to reduce fare evasion, which is on track to cost more than $900 million this year, by assessing the cost-effectiveness of enforcement efforts, refining the multifaceted approach to reducing fare evasion, accelerating the rollout of new faregates, and working with District Attorneys.
Collaborate with the City to improve uptake, assess the cost-effectiveness, and consider expanding Fair Fares NYC.
Reduce paratransit per-trip expenses by using the paratransit fleet and broker services strategically to ensure users are provided with the lowest-cost transportation option that meets their needs.
Continue biennial fare and toll increases and consider tying them to year-over-year expense growth instead of a flat 4 percent.
Key Data
$1.1 billion
— The MTA's underlying structural budget gap in 2029.
$2.1 billion
— The amount of one-time resources the multi-year plan relies on.
$900 million
— The estimated cost of fare evasion in 2025.
$250 million
— The amount of recurring operating efficiencies the MTA plans to identify by 2029.
$306 million
— The reported budget gap in 2029.
$150 million
— The estimated increase in paratransit reimbursement in 2028 due to assumed legislative change.
New York City's upcoming budget faces a significant gap of $5 billion to $8 billion, driven by the need to address federal funding risks and prioritize essential services. While personal income tax revenue has shown strength, this is currently offset by business tax collections that have fallen below initial projections.
New York City's reliance on pandemic-era financial industry revenue surges to fund unsustainable spending has left the budget vulnerable, necessitating a shift toward more accurate revenue forecasting and fiscal discipline. To protect the city's long-term fiscal health, the administration must avoid further tax increases that risk shrinking the tax base and instead focus on stabilizing revenues through prudent management and economic growth.
Recommendations related to Revenue Trends
The City should use prudent, reasonable revenue forecasts that reflect today’s economic uncertainty without intentionally low-balling revenue estimates to keep dollars off the table.
The City should work with the City Council to pass a Local Law to strengthen the Revenue Stabilization Fund by requiring deposits during economic expansions, restricting withdrawals to a recession or severe emergency, and setting the fund’s target size.
The City should signal that NYC is open for business by keeping corporate rates where they are and seeking additional regulatory reforms.
The City should adopt mandatory deposits equal to 75 percent of any tax revenue growth above 3 percent to ensure the Rainy Day Fund is adequately funded.
Key Data
$2.5 billion
— Additional revenue the City would have received in tax year 2022 if its share of the nation's millionaires had remained constant at 2010 levels.
6.5 percent to 4.2 percent
— The decline in New York City’s share of the nation’s millionaires between 2010 and 2022.
17.44 percent
— The top combined marginal corporate tax rate, comprising the 8.85 percent City rate, 6.61 percent State effective rate, and 1.98 percent effective rate for the MTA surcharge.
13.5 percent to 14.8 percent
— Combined State and City income tax rates for households with adjusted gross income greater than $2.2 million.
New York City's reliance on high-income earners for tax revenue is threatened by a shrinking share of millionaires and a declining perception of the city's value proposition. To ensure long-term fiscal stability and fund essential services, the city must prioritize economic growth, housing affordability, and service efficiency rather than relying on further tax increases that risk accelerating the loss of high-earning residents.
Recommendations related to Revenue Trends
Expanding housing production to improve affordability is paramount to ensuring that living in New York remains feasible and attractive for a broad range of residents.
Clean and safe streets are equally vital, providing the order and quality of life that residents, businesses and visitors deserve.
High-quality and efficient public services — from transit to education — support a prosperous city, as New Yorkers should not pay top dollar for mediocrity.
Stable public finances preserve services for all New Yorkers, as expanding services without minding the store ultimately hurts those most in need.
Focusing on the fundamentals strengthens New York City’s value proposition to retain, attract, and grow millionaires.
Key Data
40%
— Share of New York’s personal income taxes paid by filers with adjusted gross income over $1 million in 2022.
$18 Billion
— Projected personal income tax revenue in fiscal year 2026, representing 22% of total City tax revenue.
35%
— Decline in the share of U.S. millionaires living in New York City between 2010 and 2022.
$2.5 Billion
— Additional personal income tax revenue the City would have collected in 2022 if it had maintained its 2010 share of millionaires.
$10.7 Billion
— Additional personal income tax revenue the State would have collected in 2022 if it had maintained its 2010 share of millionaires.
14.776%
— Combined top marginal personal income tax rate for the highest earners in New York State and City, which currently tops the nation.
The Metropolitan Transportation Authority faces significant structural budget gaps and must implement proposed fare and toll increases to maintain reliable service. Additionally, the agency should continue efforts to reduce fare evasion and pursue operational efficiencies to secure necessary revenue and manage expenses.
Recommendations related to Revenue Trends
The MTA should approve the proposed fare and toll increases to support ongoing operations.
The MTA must continue to rein in expenses and collect the revenue it is due.
The MTA should continue efforts to reduce fare evasion to support the operating budget.
The MTA and labor unions should pursue work rule changes that increase productivity and operational flexibility.
The MTA should promote Fair Fares NYC for those who struggle to afford public transit.
Key Data
$345 million
— Operating budget gap projected for 2027.
$800 million
— Annual structural budget gap, representing the difference between recurring revenues and recurring expenses.
$350 million
— Annual fare and toll revenue expected from the proposed increases.
$1 billion
— Estimated revenue lost to fare and toll evasion last year.
$900 million
— Estimated revenue on track to be lost to fare and toll evasion this year.
$500 million
— Recurring operating efficiencies found by the MTA over the past several years.
Fare and toll evasion cost the Metropolitan Transportation Authority approximately $1 billion in 2024, though recent enforcement efforts have begun to reduce these losses. Addressing this evasion is critical to closing the MTA's $800 million structural operating budget gap and ensuring the system's long-term financial stability.
Recommendations related to Revenue Trends
Refine and continue a multi-faceted approach to reducing fare and toll evasion, including improving enforcement, educating riders on the importance of fare payment, and better securing the transit system environment.
Accelerate rollout of new faregates funded in the 2025 to 2029 Capital Plan.
Accelerate the rollout of proof-of-payment to allow EAGLE Team inspectors to enforce fare payment on local and express buses without having to directly witness fare evasion.
Publish comprehensive and regular data on fare and toll evasion.
Work with the City to assess the cost-effectiveness of deploying police officers to enforce fare payment.
Work with the City to assess the effectiveness of the Fair Fares Program and consider expansion.
Key Data
$1 billion
— Estimated cost of fare and toll evasion to the MTA in 2024.
$800 million
— The MTA's structural operating budget gap that reducing evasion is essential to close.
330
— Number of subway fares evaded every minute during 2024.
710
— Number of bus fares evaded every minute during 2024.
10 percent
— Subway fare evasion rate in the first quarter of 2025.
44 percent
— Bus fare evasion rate in the first quarter of 2025.
New York's share of the nation's millionaires has declined significantly since 2010, resulting in billions of dollars of lost personal income tax revenue for the State and City. To fund essential services, New York must prioritize policies that retain and grow its millionaire population, as these high earners contribute a disproportionate share of tax revenue.
Recommendations related to Revenue Trends
New York must prioritize efforts to retain and grow its millionaire population to fund critically needed services.
Policymakers should recognize that raising taxes could accelerate the damaging trend of losing high-earning tax filers.
The state and city should address the mix of factors challenging New York's ability to attract and retain residents, including quality of life, social and cultural amenities, and the high cost of living.
Key Data
$34 billion
— Contribution of millionaires to State and City personal income tax (PIT) revenue in 2022.
31 percent
— The decline in New York's share of the nation's millionaires between 2010 and 2022.
$13 billion
— Additional PIT revenue the State and City would have collected in 2022 had millionaire shares remained at 2010 levels.
$10.7 billion
— Additional PIT revenue New York State would have received in 2022 if it had maintained its 2010 millionaire share.
$2.5 billion
— Additional PIT revenue New York City would have received in 2022 if it had maintained its 2010 millionaire share.
14.776 percent
— The top marginal personal income tax rate for New York City residents earning over $25 million annually.
Download the Presentation The New York State and New York City budgets are unaffordable and unprepared both for a recession and for federal budget cuts that will start hitting this fiscal year and grow in the future. Check out CBC’s New York State and New York City Fiscal…
New York City's fiscal year 2026 budget reflects a trend of spending that exceeds current revenues, with a $610 million deficit in fiscal year 2025 and a projected $3 billion shortfall for the upcoming budget. Future fiscal stability is threatened by the lack of contributions to the Rainy Day Fund and the reliance on past revenue booms to cover current obligations.
Recommendations related to Revenue Trends
The City should deposit at least $2 billion into the Rainy Day Fund to help preserve services and stability during the next recession.
Key Data
$122.7 billion
— The total fiscal year 2026 spending obligation once adjusted for prepayment of fiscal year 2026 obligations and underbudgeted programs and expenses.
7.6 percent
— The City-funded spending increase from fiscal year 2025 to fiscal year 2026, once adjusted for prepayments and underbudgeted expenses.
Over $3 billion
— The amount the fiscal year 2026 budget is short to pay for likely expenses and planned programs.
$8 billion to $10 billion
— The size of future budget gaps, once adjusted for underbudgeted programs.
$610 million
— The amount that fiscal year 2025 spending obligations exceeded fiscal year 2025 revenues.
The fiscal year 2026 budget agreement fails to adequately prepare for potential federal cuts and economic downturns, despite currently strong revenue levels. Future budget gaps are projected to exceed $9 billion, while a typical recession could reduce revenue by $11 billion over two years, overwhelming existing reserves.
Recommendations related to Revenue Trends
The City should put aside $3 billion to soften the first blows of federal cuts and protect against a future recession.
The City must stabilize the budget and secure the future by increasing efficiency and shrinking low impact programs.
The City must prioritize critical services, manage them to deliver results, and protect its fiscal foundation to ensure affordability and stability.
Key Data
$3 billion
— Amount that should be set aside to soften the first blows of federal cuts and protect against a future recession.
$9 billion
— Projected future budget gaps after accounting for underbudgeted expenses.
$11 billion
— Estimated revenue loss over two years in the event of a typical recession.
New York State's fiscal plan for fiscal year 2026 features spending growth of over 12 percent, significantly outpacing inflation and creating structural budget imbalances exceeding $22 billion. This approach leaves the state ill-prepared for potential economic downturns or federal funding cuts, as evidenced by the depletion of over $7 billion from rainy day reserves.
Recommendations related to Revenue Trends
The State should have set aside additional money to mitigate the initial impact of federal cuts.
The State should have repaid the unemployment insurance debt with other funds rather than utilizing rainy day reserves.
Key Data
$114.1 billion
— The amount of State Tax Receipts projected for the fiscal year 2026 budget.
$94.1 billion
— The amount of Federal Receipts projected for the fiscal year 2026 budget.
$39.0 billion
— The amount of State Misc. Receipts projected for the fiscal year 2026 budget.
12 percent
— The rate at which State spending is growing, which is the highest in recent years.
$22 billion
— The size of the State's structural budget imbalance.
$7 billion
— The amount taken from the State's rainy day reserves.
New York State's fiscal plan reveals a significant long-term imbalance between receipts and disbursements that now exceeds $20 billion, driven by ballooning spending and lower projected receipts. This financial trajectory creates future annual budget gaps of $14 billion, necessitating difficult choices to re-balance the budget while protecting reserves and maintaining competitiveness.
Recommendations related to Revenue Trends
State leaders should preserve core programs that have the greatest impact.
State leaders should shrink other programs despite likely popularity.
State leaders should protect recession-mitigating reserves.
State leaders should hold the line on taxes to ensure New York’s competitiveness.
Albany should continue to advocate for the federal support New York deserves.
Key Data
$14 billion
— Future annual budget gaps resulting from ballooning spending and lower projected receipts.
$20 billion
— The long-run imbalance between receipts and disbursements once reliance on non-recurring resources is removed.
12%
— The increase in adjusted State Operating Funds spending chosen by lawmakers.
$49 billion
— The amount the State spent before releasing the financial plan to New Yorkers.
New York City should establish clear, legally mandated rules for its Revenue Stabilization Fund, including a minimum target size of 16 percent of tax revenue and strict criteria for deposits and withdrawals. Additionally, the city must improve financial transparency by requiring detailed explanations whenever revenue or expenditure estimates vary significantly from prior years or between comptroller offices.
Recommendations related to Revenue Trends
The Mayor and City Council should enact a local law that details the City’s Rainy Day Fund deposit, withdrawal, and target size policy.
The City should identify a minimum target size for the Rainy Day Fund that is 16 percent or more of tax revenue.
The City should require deposits into the Rainy Day Fund when tax revenue growth is at least 3 percent, year-over-year.
The City should limit withdrawals from the Rainy Day Fund to a recession or severe emergency.
The City should define a severe emergency as one that is temporary and causes an increase in expenditures or decrease in revenues equal to or greater than 2 percent of total City funds.
The City should limit the first withdrawal following the occurrence of a recession or severe emergency to two-thirds of the balance of the fund.
The Charter should be revised to require new transparency requirements when revenues or expenditures vary significantly year-over-year or differ substantially from estimates made by the City and State Comptrollers.
The Charter should be revised to require an explanation of any tax revenue change greater than 10 percent from the prior fiscal year.
The Charter should be revised to require an explanation of any expenditure change in any major program or unit or appropriation greater than 10 percent and at least $10 million from the prior fiscal year.
The Executive Budget Message should include an explanation of any major program or unit of appropriation expenditure for the ensuing fiscal year where the estimate by the Office of the City Comptroller or the Office of the New York State Comptroller varies 20 percent or more.
Key Data
16 percent
— Minimum target size for the Rainy Day Fund as a percentage of tax revenue.
3 percent
— Threshold of year-over-year tax revenue growth that triggers mandatory deposits into the Rainy Day Fund.
2 percent
— Threshold for a severe emergency definition regarding revenue loss or expenditure increase.
10 percent
— Threshold for tax revenue change from the prior fiscal year requiring an explanation.
$10 million
— Minimum expenditure change threshold for requiring an explanation in the financial plan.
20 percent
— Variance threshold between City or State Comptroller expenditure estimates that requires an explanation.
New York City faces significant fiscal risks from potential federal budget cuts that could impact essential services, housing, and health programs. To maintain stability, the city must prioritize fiscal discipline by curbing spending growth, bolstering reserves, and ensuring accurate budget forecasting.
Recommendations related to Revenue Trends
The city should hold the line on new spending by not adding or expanding programs in the Executive and Adopted Budgets.
The city should buttress the fiscal year 2026 General Reserve by adding at least $1 billion to help absorb the immediate blow of federal cuts.
The city should strengthen the Rainy Day Fund by adding $500 million to be reserved for short-term emergencies.
The city should restrain spending growth by streamlining administrative overhead and increasing efficiency to minimize service disruptions.
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, and school food programs.
$1.4 billion
— Annual federal operating support for the New York City Housing Authority.
$2 billion
— Federal funding for 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.
$4 billion
— Amount of annual underbudgeting that drastically understates the size of future gaps.
New York City faces significant uncertainty regarding federal funding, which accounts for $7.4 billion of the fiscal year 2026 budget and supports critical services like education, housing, and healthcare. To mitigate potential revenue shortfalls, the City must prioritize fiscal discipline by restraining new spending, bolstering reserves, and eliminating budget gimmicks.
Recommendations related to Revenue Trends
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.
$91 billion
— Amount the State expects to receive in federal aid for fiscal year 2026.
$1.4 billion
— Federal public housing operating subsidies received by NYCHA last year.
$2.7 billion
— Federal funds that supported more than 133,000 housing vouchers across NYCHA and the City.
$1.1 billion
— Amount the City spent more on fiscal year 2024 obligations than it received.
$4 billion
— Annual amount of underbudgeting that understates future budget gaps.
The Metropolitan Transportation Authority faces a $35.4 billion funding gap in its 2025-2029 Capital Plan, requiring a balanced approach that includes increased state and city contributions, modest fare and toll hikes, and operational efficiencies. To address this shortfall, the state should prioritize rebuilding projects, implement sustainable financing, and improve accountability to ensure the transit system remains reliable and competitive.
Recommendations related to Revenue Trends
The MTA and the State should focus the Capital Plan exclusively on Rebuild and Improve projects to reduce the funding gap.
The State and City should increase their contribution by $9.0 billion in pay-as-you-go (PAYGO) financing to support critical investments.
The MTA should modestly increase fares, tolls, and vehicle registration fees to generate revenue for the capital plan.
The MTA should ensure labor provides the flexibility to generate at least $500 million in recurring operating budget savings needed to support debt.
The MTA should include provisions to catalyze action and provide tools to the District Attorneys, police and the MTA to dramatically turn the tide on fare evasion, which could increase revenue.
Key Data
$35.4 billion
— The financing gap for the 2025-2029 Capital Plan following the State Fiscal Year 2026 Executive Budget.
$68.4 billion
— The total size of the proposed 2025-2029 Capital Plan.
$9.0 billion
— The proposed increase in City and State contribution in pay-as-you-go (PAYGO) financing.
$6.8 billion
— The investment amount supported by modest increases in fares, tolls, and vehicle registration fees.
$500 million
— The amount of recurring operating budget savings labor should provide to support debt.
$3.6 billion
— The amount of funding gap reduction achieved by removing expansion projects from the Capital Plan.
New York's legislative budget proposals threaten the state's fiscal stability by increasing spending and taxes despite an existing $18.2 billion structural gap. This approach risks driving away residents and businesses while leaving the state unprepared for potential federal funding reductions.
Recommendations related to Revenue Trends
Lawmakers should hold the line on spending to avoid unsustainable growth.
The state should identify the most critical services and needs rather than increasing spending and taxes.
Lawmakers should keep money aside to fund a transition path to a new, lower level of federal aid if cuts materialize.
Rainy Day reserves should be saved to weather recessions and time-limited emergencies, rather than being depleted to plug recurring federal reductions.
New York should avoid another round of new tax increases to prevent squeezing businesses and risking the state's competitiveness.
Key Data
$18.2 billion
— The size of the structural gap in the precarious State budget.
$4 billion
— The amount of additional recurring spending proposed by the Assembly and Senate on top of the Governor's proposal.
13.7 percent
— The year-over-year adjusted State Operating Funds growth rate, which is more than 4 times the rate of inflation.
$11 billion
— The total increase in State Operating Funds spending in the Assembly plan.
$7 billion
— The amount allocated in the Assembly plan to pay off the State’s unemployment insurance trust liability.
New York City's recurring expenses have outpaced its revenues, forcing the city to rely on dwindling surplus funds to balance its budget. This precarious fiscal situation, exacerbated by underbudgeting and potential federal aid cuts, leaves the city unprepared for future economic downturns.
Recommendations related to Revenue Trends
End the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter, in the Fiscal Year 2026 Executive Budget.
Implement a Program to Eliminate the Gap (PEG) to reduce spending growth by streamlining administrative operations, increasing program efficiency, and scaling back or eliminating programs that deliver the least value to residents.
Not fund any new or expanded programs in the Executive Budget or during adoption.
Add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
Key Data
$636.0 million
— Amount by which expenses exceeded revenues in fiscal year 2023.
$1.1 billion
— Amount by which expenses exceeded revenues in fiscal year 2024.
$6.1 billion
— High point of rolled surplus funds reached in fiscal year 2022.
$3.0 billion
— Projected level of surplus funds at the end of fiscal year 2025.
$3.6 billion
— Shortfall in the fiscal year 2026 preliminary budget needed to fund existing services.
$4.0 billion
— Annual amount of underbudgeting for current services.
New York State's budget process lacks transparency, as current one-house and enacted budget materials fail to provide detailed, multi-year financial plans that include essential revenue and spending breakdowns. Legislators and the public require standardized financial plan tables for All Funds, State Operating Funds, and the General Fund to properly understand the long-term fiscal impact of budget decisions.
Recommendations related to Revenue Trends
The State should publish at least one financial plan table each for All Funds, State Operating Funds, and the General Fund to improve budget transparency.
Each of these three tables should provide reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom-line results, and allocations of fund balances for the budget year and three out-years.
The State should codify in State law the requirement to publish these financial plan tables to ensure consistent reporting.
New York State's government spending is growing at an unsustainable rate, with projections showing a $11.0 billion budget gap by fiscal year 2029. To address this structural imbalance and allow temporary tax increases to expire, annual spending growth must be limited to 2.7 percent.
Recommendations related to Revenue Trends
Lawmakers should find savings that restrain spending growth.
Keeping annual spending growth to 2.7 percent starting next fiscal year would close projected budget gaps, allow temporary tax increases to sunset, eliminate the structural imbalance, and still be faster than projected inflation.
Key Data
10.9 percent
— Projected increase in Fiscal Year 2026 State Operating Funds spending.
$15.5 billion
— Amount of the Fiscal Year 2026 spending increase in the Executive Budget.
$31.6 billion
— Total increase in State Operating Funds spending between fiscal years 2025 and 2029.
$11.0 billion
— Projected budget gap in fiscal year 2029.
$18.2 billion
— Structural imbalance masked by spending growth supported temporarily by extraordinary receipts.
2.7 percent
— Required annual spending growth rate from fiscal year 2025 to fiscal year 2029 to close the State's structural imbalance.
The City's financial planning process requires reform to address the growing issue of underbudgeting for predictable expenses, which distorts the fiscal picture. Implementing stricter requirements for explaining significant variances in tax revenue and expenditure projections would improve the accuracy and transparency of the City's budget.
Recommendations related to Revenue Trends
The Charter should require the City to deposit money into its Rainy Day Fund when the economy is growing to protect New Yorkers from dramatic cuts during a recession or short-term emergency.
The Charter should require a detailed explanation of the causes of significant annual changes when tax revenues or major program expenditures are projected to change more than 10 percent in any year.
The Charter should require a detailed explanation of the causes of estimation differences when executive expense budget estimates vary more than 20 percent from estimates by the City or State Comptrollers.
Key Data
$3.6 billion
— Amount added to the current year's spending through quarterly budget modifications for expenses that were predictable when the budget was adopted.
10 percent
— Threshold for projected changes in tax revenues or major program expenditures that would trigger a requirement for a detailed explanation.
20 percent
— Threshold for variance between executive expense budget estimates and those of the City or State Comptrollers that would trigger a requirement for a detailed explanation.
Strong revenues and lower-than-budgeted migrant costs are being used to mask underbudgeted expenses, leaving the fiscal year 2026 spending plan short nearly $4.0 billion for existing services. While higher revenue estimates reduce reported budget gaps on paper, the actual fiscal gaps for fiscal years 2027 through 2029 are significantly larger, ranging from $8.0 billion to $9.0 billion when accounting for underbudgeting.
Recommendations related to Revenue Trends
The Administration should break its severe underbudgeting habit and provide credible spending estimates.
New Yorkers deserve a clear picture of the City’s finances, including overtime, housing vouchers, and homeless shelters.
Hard choices and better management are needed to improve New Yorkers’ quality of life.
If the City’s leaders prioritize programs that work, shrink those that don’t, and improve the quality and efficiency of the government’s operations, New Yorkers will get what they pay for and need.
All leaders should focus on using accurate estimates and making the right choices for New Yorkers not only today but in the future.
Key Data
$4.0 billion
— The amount the fiscal year 2026 spending plan is short to fund existing services.
$4.2 billion to $5.1 billion
— The reported budget gaps for fiscal year 2027 to fiscal year 2029.
$8.0 billion to $9.0 billion
— The actual range of budget gaps for fiscal year 2027 to fiscal year 2029 when underbudgeting is taken into account.
6.7 percent
— The growth rate of City-funded spending in fiscal year 2025, adjusted for underbudgeting and pre-payments.
5.0 percent
— The growth rate of City-funded spending in fiscal year 2026, adjusted for underbudgeting and pre-payments.
$2.5 billion
— The amount of spending being added to fiscal year 2025 in the middle of the year.
New York City faces significant budget gaps in fiscal years 2027 and 2028, necessitating accurate revenue and expense forecasting to ensure long-term fiscal stability. To avoid worsening these gaps, the city must ensure that new programs and initiatives are fully funded through higher revenues or offsetting savings rather than relying on precarious spending paths.
Recommendations related to Revenue Trends
New programs and initiatives must be paid for with higher revenues or offsetting savings, otherwise they will widen future budget gaps.
The City should make mandatory deposits to the Revenue Stabilization Fund, with recommended amounts of $635 million or $1.7 billion depending on the tax forecast.
The City should prepare for federal changes by proactively assessing potential risks and opportunities but should not take pre-emptive actions.
The City must ensure spending is affordable in fiscal year 2026 and beyond by providing accurate and reasonable estimates of future revenues and expenses.
Key Data
$5.5 billion
— The reported budget gap for next year that the city must close.
$2.0 billion
— The amount the city currently underbudgets for spending in fiscal year 2025.
$3.6 billion
— The amount the city currently underbudgets for spending in fiscal year 2026.
$11 billion
— The amount of revenue that would be lost over two years during an average recession.
$2.0 billion
— The current balance held in the Revenue Stabilization Fund.
$1.2 billion
— The estimated additional asylum seeker savings in fiscal year 2025.
New York State and its localities lead the nation in tax collections, with residents paying $12,751 per capita and $169 per $1,000 of personal income, figures that significantly exceed national averages. Additionally, the state ranks second in the nation for spending, with total expenditures reaching $15,368 per capita, which is 45% higher than the national average.
Key Data
$15,368
— Total state and local expenditures per capita in New York, which is 45% higher than the national average.
$12,751
— Total state and local taxes collected per capita in New York, the highest of all states.
$169
— Total state and local taxes collected per $1,000 of personal income in New York, the highest in the nation.
45%
— The amount by which New York State and its localities' per-capita spending exceeded the national average in 2022.
79%
— The amount by which New York State and its localities' tax collections per person exceeded the national average.
56%
— The amount by which New York State and its localities' tax collections per $1,000 of personal income exceeded the national average.
New York City's total operating revenues reached $113,181 Million in fiscal year 2024, driven by $32,987 Million in real property tax collections and $19,231 Million in state categorical grants. Meanwhile, New York State generated $106,447 Million in total tax revenue during the same period, reflecting the broader financial landscape across both jurisdictions.
Key Data
$113,181 Million
— Total operating revenues for the City of New York in fiscal year 2024.
$32,987 Million
— Real property tax revenue collected by the City of New York in fiscal year 2024.
$19,231 Million
— State categorical grants received by the City of New York in fiscal year 2024.
$106,447 Million
— Total tax revenue for the State of New York in fiscal year 2024.
$115,183 Million
— Total primary government revenues for the City of New York in fiscal year 2024.
$291,957 Million
— Total primary government revenues for the State of New York in fiscal year 2024.
New York City's November 2024 financial update reveals higher-than-expected revenues, yet the city continues to underestimate future spending needs by over $3 billion annually. Consequently, the city faces projected budget gaps exceeding $8 billion annually, necessitating immediate action to prioritize critical programs and increase efficiency to stabilize finances.
Recommendations related to Revenue Trends
The Administration should prioritize critical programs, increase efficiency, and shrink spending on lower-impact programs to balance the budget and serve New Yorkers.
The Administration should start taking steps now to close next year’s gap in the January Preliminary Budget.
Key Data
$3 billion
— The City continues to low-ball spending for ongoing programs by more than $3 billion annually in future years.
$8 billion
— The City will actually face future budget gaps exceeding $8 billion annually.
$5.5 billion
— The City reported future budget gaps of $5.5 billion.
New York State spends $11 billion annually on economic development programs, with nearly two-thirds consisting of tax incentives that reduce government revenue. Most of these incentives, particularly film production tax credits, fail to generate sufficient returns on investment, necessitating a shift toward performance-based programs and better targeting to ensure fiscal sustainability.
Recommendations related to Revenue Trends
New York should ensure that tax credit programs are designed in ways that reward actual performance in key sectors, rather than hiring or investment that would have happened anyway.
New York should keep what works and amend, narrow, or eliminate programs that are ineffective.
The State should regularly conduct in-depth evaluations of specific incentives and programs to study what works and what doesn’t.
Lawmakers should waive tax secrecy provisions to grant evaluators access to the tax records needed to evaluate programs effectively.
New York should amend its film tax credit program to target incentives to the segments of the industry that are at risk, while reducing or eliminating the incentives that generate little to no impact.
Key Data
$11 billion
— Annual cost of economic development programs in New York State, nearly two-thirds of which are tax incentives.
30 cents
— Return on investment for every dollar of tax credits awarded in some cases, particularly regarding film production.
$5.8 billion
— Total amount spent by New York State on film and commercial production tax credit programs since 2007.
$878 million
— Foregone tax revenue cost to Georgia for its film tax credit in fiscal year 2023.
18,000
— Number of film production jobs added in New York over the two decades that film tax credits have been available.
17.6 percent
— New York's share of national film production employment in 2022.
New York State's fiscal outlook has improved due to an increase in tax receipts, yet the state continues to face a $15.6 billion structural imbalance. While reserves are growing, spending remains more than double pre-pandemic levels, necessitating careful management of future receipts and federal policy changes.
Recommendations related to Revenue Trends
The State should make additional deposits now, when receipts are strong, and should transfer the balance of the unprotected Economic Uncertainties Fund into the protected RDR, to ensure these funds are saved for a true emergency.
Additional receipts recognized during the closeout this fiscal year should be deposited into the RDR.
Higher receipts in the current year should be deposited to the RDR, and additional tax receipts in the out-years should be used to close gaps and reduce the structural imbalance.
The State should increase reserves to 22 percent of State Operating Funds based on prior recessions.
Key Data
$2 billion
— Average annual boost in State tax receipts resulting from an improved economic outlook.
$15.6 billion
— Current structural imbalance in New York State despite increased tax receipts.
4.8 percent
— Average annual rate of State Operating Funds spending growth.
$653 million
— Average difference in tax receipt forecasts between the Legislature/Comptroller and the Executive for fiscal year 2026.
$1.0 billion
— Reduced budget gap for fiscal year 2026 following cash management actions.
$2.3 billion
— Cash identified by the State as available in fiscal year 2025.
New York's proposed cap-and-invest program could impose a new annual cost of $12 billion by 2030 and generate over $30 billion in revenue over five years. The state needs to provide a more transparent assessment of the program's economic impacts and a clear plan for how this significant revenue will be utilized.
Recommendations related to Revenue Trends
The State should conduct and publicly release a more robust assessment of NYCI’s potential fiscal and economic impacts before or with the draft rules.
The State should recalibrate the 2030 emissions reduction goal to be ambitious but feasible, so New York can leverage market-driven, cost-effective emissions reductions that are balanced with economic growth.
The State should present a detailed plan to use the program’s revenue, which could exceed $30 billion over the next 5 years.
The State should consider switching to the conventional emissions accounting methodology.
The State should proceed with rulemaking only when comprehensive assessments are public and based on recalibrated targets.
The State should periodically evaluate and adjust the program based on experience.
The State should permit banking of allowances from the start, instead of after the first compliance period.
The State should allow limited use of rigorously verified offsets.
The State should modify design elements to facilitate linkage with other systems and broaden coverage.
Key Data
$12 billion
— Estimated annual cost of the proposed cap-and-invest program by 2030.
$30 billion
— Potential revenue generated by the cap-and-invest program over the next 5 years.
NYC Ferry has improved its financial standing through fare increases and operational efficiencies, reducing the per-trip subsidy from $11.50 to $8.55 between fiscal years 2019 and 2023. However, the system remains heavily subsidized, and future financial stability is threatened by potential declines in rental income from the 42nd Street Development Project and the exclusion of significant debt service costs from official subsidy figures.
Recommendations related to Revenue Trends
The Economic Development Corporation should eliminate the lowest-ridership routes to improve financial efficiency.
The Economic Development Corporation should target subsidies to those in the greatest need of affordable transit options.
The Economic Development Corporation should increase fares for other riders to match those of comparable premium transit services, like the $7 per trip charged for the MTA’s express bus system.
The Economic Development Corporation should continue to hold the line on service expansions absent rigorous analysis that they would be financially feasible.
Key Data
$8.55
— Per-trip subsidy in fiscal year 2023.
$56.5 million
— Annual total subsidy in fiscal year 2023.
$73.8 million
— Retained rental payments from the 42nd Street Development Project in fiscal year 2023.
$12.54
— Full per-ride subsidy including debt service.
$429.2 million
— Capital committed by the City of New York for NYC Ferry through fiscal year 2023.
$26.4 million
— Annual debt service on NYC Ferry capital commitments.
New York State's school aid formulas currently fail to accurately account for local fiscal capacity and student needs, resulting in inequitable funding distributions that favor wealthier districts. Reallocating expense-based aids and the School Tax Relief (STAR) program proportionally to Foundation Aid would better target resources based on actual student needs and local wealth.
Recommendations related to Revenue Trends
Formulas should more accurately estimate a district’s capacity and willingness to raise revenue and should use the actual local contribution as the expected minimum local contribution when it exceeds the estimate.
Calculations of local fiscal capacity should account for localities’ other spending obligations—including State mandates such as Medicaid, and others driven by economic or social factors such as poverty and unhoused residents.
Indices of need and regional cost should be updated regularly and be sufficiently granular to capture variation.
School districts’ building and transportation costs should be explored further to identify reforms that would incentivize efficiency of spending and to improve the funding distribution to better reflect local needs and resources.
Key Data
$8 billion
— costs of the State-run Medicaid program shifted to counties, which should be accounted for in school aid obligations.
$6 billion
— total of Building and Transportation Aid, the two largest expense-based aid categories.
$3.3 billion
— amount of education funding the STAR program shifts from locally-raised property tax revenue to the State each year.
$501 million
— amount received by districts in the bottom three deciles of wealth from the STAR program last year.
$942 million
— amount received by districts in the top three deciles of wealth from the STAR program last year.
$135 million
— additional funding that would be directed to lower-wealth districts if aids were distributed proportional to Foundation Aid.
New York State's school aid funding formulas currently fail to effectively distribute resources based on student need and local capacity, often favoring wealthier districts through outdated programs like STAR. Reforming these formulas to better account for local fiscal capacity and non-education spending obligations would allow for a more equitable distribution of state funds to districts that need them most.
Recommendations related to Revenue Trends
More accurately measure a district’s capacity and willingness to raise revenue, and use the actual local contribution as the expected minimum local contribution when it exceeds the measure.
Account for a locality’s other spending obligations—including State mandates such as Medicaid, and those driven by economic or social factors such as poverty and unhoused residents—by adjusting the expected local contribution.
Ensure that indices of need and regional cost are updated regularly, are sufficiently granular to capture variation, and consider that a well-constructed metric with a limited number of weights may be more effective than a metric with many more weights.
Quickly phase-out the hold harmless provision to align Foundation Aid with district enrollment.
Revise the expected local contribution to be the higher of the district’s actual contribution or the district’s fiscal capacity, which should be better measured.
Update district poverty estimates and regional cost measures for a more accurate assessment of need.
Remove arbitrary floors and ceilings that distort the funding distribution of Foundation Aid and expense-based aid categories.
Adjust aid for library, textbooks, and software to account for district wealth either by modifying the formula or folding the funding into Foundation Aid.
Eliminate High Tax Aid.
Eliminate the STAR program to better allocate State resources to where they are needed most.
Key Data
$3.3 billion
— The amount of annual School Tax Relief (STAR) funding that could be reallocated proportional to the current Foundation Aid formula.
$135 million
— The increase in funding flowing to the four lowest wealth deciles if Library, Textbook, Software, and High Tax Aid were reallocated based on need.
$1,805
— Statewide student transportation expenditures per student in 2022, which is the highest of any state.
$6 billion
— The total amount of Building and Transportation Aid for the coming school year, representing the two largest expense-based aid categories.
$501 million
— The current amount of STAR aid received by the 201 lowest-wealth districts, which would double to $1 billion under a reallocated model.
$942 million
— The current amount of STAR aid received by the 203 wealthiest districts, which would decrease to $336 million under a reallocated model.
The Industrial and Commercial Abatement Program has seen its costs grow six-fold to over $500 million annually, yet evidence suggests that the vast majority of projects receiving these tax breaks do not require them to be financially feasible. A thorough, objective evaluation is necessary to determine if this program is a cost-effective use of public funds before any further long-term extensions are granted.
Recommendations related to Revenue Trends
The Governor should veto S9822/A10530 because it extends the Industrial and Commercial Abatement Program without assessing its necessity for economic growth.
The Governor should sign a one-year extension, negotiated as a Chapter amendment, to allow time to objectively evaluate whether an extension would be cost-effective.
The state should identify eligibility and benefit changes to improve the cost-effectiveness of the Industrial and Commercial Abatement Program.
Key Data
3.6 percent
— Only 3.6 percent of projects receiving ICAP benefits in 2016 required the tax breaks to be financially feasible.
$81.4 million
— The cost of ICAP in fiscal year 2017.
$506.3 million
— The cost of ICAP in fiscal year 2024.
$500 million
— The amount spent per year on ICAP without first determining if it is an effective use of public funds.
CBC's Ana Champeny and Patrick Orecki delivered a briefing on the fiscal year 2025 budgets of New York State and New York City, including basic fiscal overviews and the risks facing the State and the City.
New York's school aid formulas, including Foundation Aid and the STAR program, currently distribute funds inefficiently by failing to accurately account for district wealth and enrollment trends. Reforming these formulas is essential to address the state's projected $16 billion structural budget gap and ensure resources are directed where they are most needed.
Recommendations related to Revenue Trends
Eliminate or phase-out the hold harmless provision to align Foundation Aid with district enrollment.
Revise the expected local contribution calculation to better reflect districts' actual fiscal capacity and willingness to generate local resources, which should be better measured.
Update district poverty estimates and regional cost measures for a more accurate assessment of need.
Reassess arbitrary floors and ceilings to ensure they are limited to extreme situations and do not undermine the intent of allocating school aid based on need and local capacity.
Adjust library, textbook, and software aids to account for district wealth either by modifying the formula or folding the funding into Foundation Aid.
Eliminate High Tax aid, which is fixed and not tied to an educational expense.
Eliminate the School Tax Relief (STAR) program due to its regressive nature and significant cost.
Key Data
$38.6 billion
— Total funding for school districts through Foundation Aid, expense-based aids, and the STAR program for the upcoming school year.
$16 billion
— The amount by which the State's structural budget gap will exceed by fiscal year 2028.
$2.8 billion
— The amount provided by the State in the 2023-24 school year to districts that fully fund a sound basic education before receiving a single dollar from the State.
$10.4 billion
— The amount of expense-based aids for the current year, including funding for building construction, student transportation, and vocational programs.
$20.6 million
— The amount the State provides more for specific expense-based aids than the formulas would otherwise determine, with 81 percent flowing to the wealthiest 40 percent of districts.
$3.3 billion
— The estimated cost of the STAR program in the next year.
The city's housing shortage is significantly impacting the economy, with negative outmigration costing over $300 million in income and sales tax revenue in fiscal year 2022. Furthermore, this severe lack of housing capacity dampens economic growth, potentially resulting in a loss of $2 billion in annual tax revenue.
Recommendations related to Revenue Trends
The City Planning Commission and the City Council must hold the line against opposition to needed progress to ensure the final zoning text results in a meaningful increase in development capacity.
Public officials should oppose any proposals that would reduce zoning capacity or trade growth in one area of the city for stasis elsewhere.
New York City must build more housing of every type in every neighborhood to improve affordability, bolster the tax base, and strengthen the city’s economy.
Key Data
$300 million
— Persistently negative outmigration, caused in part by housing affordability and availability, cost the City over $300 million in income and sales tax revenue in fiscal year 2022.
$2 billion
— The housing shortage is so severe that it dampens the City’s economy, potentially costing the City $2 billion in annual tax revenue.
New York City's fiscal year 2025 budget increases spending by $6.1 billion despite strong revenues, yet fails to deposit funds into the Rainy Day Fund. Spending obligations in fiscal year 2024 exceeded revenues by $1.1 billion, requiring the use of prior-year earnings to balance the budget.
Recommendations related to Revenue Trends
The City should adopt a transparent, accurate budget that fully funds planned services and identifies those that will shrink.
The City must ensure that spending added during budget adoption is offset by savings elsewhere.
The City should deposit at least $1 billion into the Rainy Day Fund over this and next year.
Key Data
$1.1 Billion
— Fiscal year 2024 spending obligations exceeded that year's revenues.
$2.0 billion
— The current balance of the Rainy Day Fund, which is considered insufficient to protect against recession.
$6.1 billion
— The amount by which the fiscal year 2025 adopted budget increases City-funded spending over fiscal year 2024.
$17.8 billion
— The amount City-funded spending is slated to grow from fiscal year 2020 to fiscal year 2025.
$116.1 billion
— Total All Funds fiscal year 2025 spending, adjusted for prepayments and excluding interfund agreements.
$5.0 billion
— The year-to-year drop in federal aid, primarily due to expiring COVID funding.
New York City's persistent housing shortage has led to significant outmigration, resulting in a loss of hundreds of millions of dollars in annual personal income and sales tax revenue. To reverse this trend and bolster the city's fiscal health, the city must implement broad-based zoning reforms and state-level policy changes to significantly increase housing production.
Recommendations related to Revenue Trends
Boosting supply will require both State legislative action and local zoning changes, such as those in the Adams Administration’s City of Yes for Housing Opportunity proposal, that increase the capacity for development throughout the city.
By modernizing the City’s zoning ordinance to allow more housing everywhere, the City can start to chip away at a housing shortage that has been years in the making.
Much more will need to be done at the State level to increase production at the scale needed to improve affordability, including reforming the State’s environmental review laws; passing laws to encourage development in the downstate suburbs; repealing the Scaffold law, which drives up insurance costs; modernizing building codes; and reforming the City’s property tax policy.
Increasing the supply of housing—everywhere—is essential to a healthier housing market for all households and to a higher quality of life for all New Yorkers.
Building more homes, at sufficient scale, improves affordability over time as new construction increases vacancy rates and frees up existing units for current residents to move into.
Key Data
$300 million
— Conservative estimate of the cost to the City in personal income and sales tax revenue due to net outmigration in 2022.
$1.4 billion to $1.9 billion
— Potential annual boost to City tax revenue if enough housing is built to close the supply gap.
$259 million
— Cost to New York City in personal income tax revenue from the net outmigration of 52,600 households in 2022.
$50 million
— Estimated cost to the City in sales tax revenue from out-migrating households in 2022.
$433 billion
— Reduction in national economic output in 2022 that would have resulted from a 2 percent reduction in national GDP due to restrictive land-use policy.
$21.1 billion to $28.6 billion
— Projected increase in annual gross city product if New York City receives its share of the economic growth from closing the regional housing gap.
New York State's fiscal year 2025 enacted budget includes $239 billion in total spending, which is $2 billion higher than initially reported. This spending trajectory, combined with reliance on non-recurring resources, drives a structural budget gap projected to exceed $16.1 billion by fiscal year 2028.
Key Data
$239 billion
— Total All-Funds spending for fiscal year 2025.
$2 billion
— Amount by which total All-Funds spending for fiscal year 2025 is higher than the State reported when the budget was enacted.
7.8%
— Adjusted State Operating Funds spending increase in fiscal year 2025.
$10.4 billion
— Dollar amount increase in Adjusted State Operating Funds spending in fiscal year 2025.
$16.1 billion
— Structural budget gap driven by the enacted budget.
$2.5 billion
— Higher tax receipts that are offset by the omission of savings proposed by the Executive.
While an expanding economy has improved the revenue outlook, the city's fiscal picture remains clouded by significant underbudgeting of planned services and expenditures. Future budget gaps are projected to reach between $5.5 billion and $5.7 billion annually, necessitating a shift toward realistic spending estimates and the prioritization of high-impact programs to avoid future fiscal instability.
Recommendations related to Revenue Trends
Only real, reasonable estimates will drive smart choices on spending and service priorities.
The Mayor and City Council should base their budget negotiations and decisions on reasonable and realistic spending and revenue estimates.
City leaders should narrow future budget gaps and break the habit of adding more unaffordable spending.
City leaders should prioritize high-impact programs and shrink or end less effective ones.
Key Data
$5.5 billion to $5.7 billion
— Projected budget gaps between fiscal years 2026 and 2028.
$2 billion
— Annual amount of services that are underbudgeted in the out-years.
6.3 percent
— Increase in City-funded spending in Fiscal Year 2025.
$200 million
— Amount of FHEPS housing vouchers that are underbudgeted.
New York City's fiscal stability is threatened by unrealistic budget estimates, with future budget gaps potentially reaching $17.4 billion by fiscal year 2028 when accounting for underbudgeting and potential new costs. To ensure long-term stability, the City must adopt more accurate revenue projections and prioritize spending on proven, necessary programs rather than relying on overly optimistic forecasts.
Recommendations related to Revenue Trends
Include reasonable estimates of costs of all planned programs in the budget.
Provide accurate, but reasonably conservative revenue estimates.
Allocate funded vacancies to where they are most needed to provide critical services.
Allow agencies to hire into funded positions and spend their budgets on needed programs.
Reduce future budget gaps by prioritizing spending to fund what is needed and proven to work.
Implement additional savings plans, focused on increasing productivity and shrinking lower impact and priority programs.
Put extra funds available now into the Rainy Day Fund and commit to saving it for a recession or severe, one-time emergency.
Key Data
$17.4 billion
— The potential budget gap by fiscal year 2028 if risks like class size mandates and FHEPS expansion are included.
$8.0 billion
— The estimated annual future budget gap, even without implementing the State class size reduction mandate or expanding the FHEPS housing voucher program.
$3.1 billion
— The amount by which the Office of Management and Budget revised its tax and non-tax revenue estimate upward for fiscal years 2024 and 2025.
$3.0 billion
— The lower end of the estimate for how much the fiscal year 2025 financial plan understates the cost of continuing current programs.
$450 million
— The potential cost of the class size reduction mandate in fiscal year 2026.
$900 million
— The lower end of the range by which fiscal monitors and the City Council project revenues will exceed the Office of Management and Budget's projections over fiscal years 2024 and 2025.
New York City should reform its debt management by indexing the Transitional Finance Authority Statutory limit to 2.5 percent of total personal income to ensure borrowing capacity aligns with economic growth. Furthermore, the City should formalize a policy to cap annual debt service at 15 percent of tax revenue and conduct a comprehensive review of its capital plan to prioritize necessary projects and reduce costs.
Recommendations related to Revenue Trends
The City and State should index the TFA Statutory limit to 2.5 percent of total personal income to ensure the City’s debt capacity grows with its underlying economic capacity.
The City should formalize its long-standing practice of keeping annual debt service costs below 15 percent of tax revenue to protect its operating budget and credit ratings.
The City should continuously and comprehensively improve how it makes capital investments, including prioritizing projects, reducing costs, and streamlining project delivery.
The State should amend the Constitutional debt limit to be more holistic by creating one limit based on an appropriate economic metric that covers all City debt repaid with tax revenues.
Key Data
$18.5 billion
— The amount the City requested to increase the TFA Statutory limit.
$12 billion
— The amount the Governor proposed to increase the TFA Statutory limit over two years.
$13.5 billion
— The current TFA Statutory limit as of fiscal year 2023.
$23.8 billion
— The projected TFA Statutory limit in fiscal year 2033 if indexed to 2.5 percent of total personal income.
$152.2 billion
— The total cost of the current 10-year City-funded capital plan.
$17 billion
— The value of additional capital projects identified by the City that are not yet incorporated into the current capital plan.
Fare and toll evasion have become significant, growing problems for New York's transportation agencies, costing the MTA alone over $700 million in 2023. To address these fiscal risks, the state should enact policies from the Fiscal Year 2025 Executive Budget that strengthen enforcement, increase penalties for evasion, and incentivize compliance.
Recommendations related to Revenue Trends
The MTA should be granted the power to issue warnings for first-time evaders while increasing the fine for violating transit rules from $100 to $200.
The MTA should be granted the power to forgive the fine for evasion if the individual is eligible for and enrolls in Fair Fares, New York City’s fare-discount program for low-income residents.
The MTA should be enabled to grant a fare card equal to half the fine amount if a second-time fare evader pays their fine in full to encourage compliance.
The state should make using a tolled road without payment a theft-of-services offense, increasing this from a civil to a criminal infraction.
The state should make it illegal to sell devices that obscure license plates to combat toll evasion.
The state should increase the fines for license plate fraud and related fraudulent practices.
The state should strengthen the administrative powers of agencies to enforce the law regarding license plate fraud.
The MTA should be granted the ability to confiscate various fake fare-payment devices, such as forged tickets or cards.
Key Data
$700 million
— Estimated lost revenue for the MTA from fare and toll evasion in 2023.
$315 million
— Cost of fare evasion on buses in 2022.
$285 million
— Cost of fare evasion on subways in 2022.
$44 million
— Cost of fare evasion on railroads in 2022.
$100 million
— Losses from license-plate-related rejections for the NYC Speed Camera Program in 2023.
$46 million
— MTA loss from license plate fraud in 2022.
New York State's fiscal stability is threatened by unsustainable spending growth that has pushed costs $21 billion above pre-pandemic trends and created a structural budget gap projected to reach $20.3 billion. To address this, the state must restrain annual spending growth to 2.0 percent and prioritize building reserves with closeout balances instead of relying on temporary tax increases and non-recurring resources.
Recommendations related to Revenue Trends
The State should be using closeout balances each year to build reserves, rather than to support further spending increases.
Spending growth should be slowed significantly—especially in high-cost areas such as Medicaid and school aid—in order to stabilize the State’s fiscal foundation and avoid further damage to New York’s already shaky economic competitiveness.
Restraining spending growth to 2.0 percent annually would close future gaps and eliminate the structural imbalance and allow temporary tax increases to expire.
Key Data
$20.3 billion
— The projected structural budget gap in the one-house budgets.
$16.8 billion
— The amount of non-recurring resources the Executive Budget relies on to achieve budget balance in fiscal year 2025.
$8.5 billion
— The total amount of non-recurring resources projected for fiscal year 2028.
$5.0 billion
— The portion of fiscal year 2028's non-recurring resources comprised of temporary tax increases.
$8 billion
— The additional amount currently required in principal reserves to cover receipts losses and spending growth of a typical recession.
2.0 percent
— The annual spending growth rate to which the State should restrain spending to close future gaps.
New York State's school aid growth has accelerated significantly in recent years, necessitating formula changes to ensure sustainability and better target resources to districts with high needs. Proposed reforms, including phasing out the hold harmless provision and eliminating the School Tax Relief program, would help moderate spending while still providing substantial funding to districts.
Recommendations related to Revenue Trends
The Legislature should reconsider this and enact a fiscal year 2025 budget that brings State school aid growth to a more sustainable level.
The State should consider other reforms that would provide more targeted savings, such as shifting some of its expense-based aid to Foundation Aid, which would target funding based on need and not a district’s ability to self-fund with local revenue.
The State should eliminate School Tax Relief (STAR), a property-tax-relief program that results in increased funding for wealthier districts.
The Governor and the Legislature should enact the phaseout of the hold harmless provision, which will allow Foundation Aid to be more reflective of changing demographics.
The State should seek additional savings from other sources, such as expense-based aid categories that do not incorporate district need.
Key Data
$413 million
— Savings from proposed changes to the Foundation Aid formula in school year 2024-25.
$38.1 billion
— Total State school aid in the coming school year under the Governor’s proposal.
$2.4 billion
— Amount of aid the State would still allocate to 145 districts that can fully fund a sound basic education with local and regular federal resources.
$15,761
— Per-student State aid in the coming school year.
$35,975
— Total school district revenue per student in school year 2024-25.
$1,885
— Funding per student allocated by the STAR program to high-wealth districts.
The New York City Housing Authority faces a persistent operating budget gap driven by rising expenses and stagnant rent collections, necessitating a reliance on non-recurring subsidies to balance its finances. Despite some progress in capital projects, the agency lacks sufficient funding to address its massive $60 billion five-year capital need, leaving the vast majority of its housing units without a clear path to comprehensive rehabilitation.
Recommendations related to Revenue Trends
Overhaul the rent collection process.
Negotiate savings, boost productivity, and modernize property management through collective bargaining.
Fix or replace deteriorating buildings with PACT and the Preservation Trust.
Improve management effectiveness and efficiency, and publicly track progress and impact.
Key Data
$791 million
— The gap between public housing expenses and core operating income in 2023.
46.5 percent
— The share of households behind on their rent in October 2023.
$100 million
— The increase in federal operating subsidy that offset weak rent collections.
27 percent
— The share of public housing operations supported by subsidies and non-recurring revenue in 2023.
$511 million
— The amount of federal capital funds diverted in 2022 and 2023 to fill the operating budget gap.
New York State's fiscal outlook has improved due to a stronger-than-expected economy, but rising tax receipts are insufficient to eliminate structural budget gaps. To achieve long-term fiscal stability, the state must implement significant spending restraint rather than relying on temporary revenue sources.
Recommendations related to Revenue Trends
Restrain SOF spending growth, ideally to 2.0 percent annually, which would close projected gaps, stave off a fiscal reckoning, and achieve structural balance by fiscal year 2028.
The State should not increase taxes, since our nation-leading taxes and spending should be sufficient, and higher taxes risk competitiveness for residents and businesses.
Deposit the additional fiscal year 2024 closeout surplus to the Rainy Day Reserve and make further structural improvements to reserves.
Reject the NYC sales tax capture, as the State should not foist its costs onto local governments, and the continuation of the sales tax capture unreasonably harms the City’s budget.
Key Data
$1.6 billion
— Cumulative increases in the tax receipts forecast for fiscal year 2025.
$16.4 billion
— The structural budget imbalance in fiscal year 2028, once the use of nonrecurring resources is taken into account.
$9.9 billion
— Projected budget gap in fiscal year 2028.
$1.4 billion
— Additional tax receipts likely by year-end and through the coming fiscal year.
$2.2 billion
— Fiscal year 2024 surplus identified in the Executive Budget in January 2024.
New York City faces a precarious fiscal position with a $3.6 billion shortfall in the fiscal year 2025 budget and projected future budget gaps reaching up to $9.7 billion. To ensure fiscal stability, the City must prioritize transparent budgeting by fully funding current programs before expanding services or adding new ones.
Recommendations related to Revenue Trends
The City Council must ensure that proposals to add or modify spending are affordable and do not make the City budget even more fiscally precarious.
The City must fully fund the programs it plans to deliver to ensure the spending plan accurately reflects the program plan.
The City should include the funding required to support the current level of City FHEPS vouchers in the budget before adding or expanding this or other programs.
City leaders should make the hard and wise choices needed to prioritize key, high-impact programs and increase government efficiency.
The City should avoid blunt instruments like blanket hiring freezes and instead use a thoughtful, nuanced approach based on data and efficient and quality service delivery.
Key Data
$3.6 billion
— The amount by which proposed spending in fiscal year 2025 is short to continue the current level of services.
$8.8 billion to $9.7 billion
— The projected future budget gaps for fiscal years 2026 through 2028, assuming ongoing programs are fully funded.
$10.2 billion
— The total resources provided across fiscal years 2024 and 2025 from higher than previously projected revenue, in-year reserves, and reductions in agency and asylum seeker spending.
$1.45 billion
— The total in-year budgetary reserves available to offset the $3.6 billion in underfunded ongoing programs.
New York City's fiscal condition is precarious as spending continues to climb, with the preliminary budget falling billions of dollars short of the funding needed to maintain current service levels. To stabilize the budget, the city must prioritize transparency regarding program costs and take decisive action to slow spending growth and close projected budget gaps.
Recommendations related to Revenue Trends
Additional actions are needed to slow spending growth and close gaps.
The budget should be more transparent by showing the full costs of programs and identifying which will be shrunk or eliminated.
Mayor Eric Adams and the City Council should take action to put the City on solid fiscal footing.
Key Data
$3.6 billion to $3.9 billion
— Annual shortfall in the Fiscal Year 2025 Preliminary Budget needed to continue programs at the current services level.
$9.1 billion, $8.8 billion, and $9.7 billion
— Projected out-year budget gaps for fiscal years 2026 to 2028, respectively.
$2.3 billion
— Proposed increase in City-funded spending in fiscal year 2025.
$19.7 billion
— Increase in City-funded spending between 2012 and 2019, which outstripped inflation by more than four times.
$15.4 billion
— Slated increase in City-funded spending between fiscal years 2019 and 2025.
$8.6 billion
— Projected growth in City-funded spending between fiscal year 2025 and fiscal year 2028.
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York State and its localities lead the nation in tax collections, with per capita tax revenue 63% higher than the national average and the highest tax burden per $1,000 of personal income. This high tax environment coincides with spending levels that are 50% higher per capita than the national average, ranking second only to Alaska.
Key Data
$15,350
— Total state and local expenditure per capita in New York, which is 50% more than the national average.
$10,331
— Total state and local taxes collected per capita in New York, the highest of all states.
$135
— Total state and local taxes collected per $1,000 of personal income in New York.
50%
— The amount by which New York State and its localities' per capita spending exceeded the national average in 2021.
63%
— The amount by which New York State and its localities' per capita tax collections exceeded the national average.
76%
— The percentage by which New York's local property tax collections per capita exceeded the national average.
New York City's fiscal position is precarious, with a $3.6 billion funding shortfall in the fiscal year 2025 preliminary budget and projected budget gaps reaching up to $9.7 billion by fiscal year 2028. To ensure stability, the city must implement a Program to Eliminate the Gap (PEG) and prioritize funding for essential services while transparently addressing or eliminating underfunded programs.
Recommendations related to Revenue Trends
The Administration should further reduce planned spending through a Program to Eliminate the Gap (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 and present budget gaps that account for all planned services for fiscal years 2026 through 2028.
The City Council should ensure that its proposals for added or modified spending are affordable based on fully funding or reducing the current set of planned programs.
The City should prioritize and fund effective and impactful programs while shrinking or eliminating less critical ones to increase efficiency.
Key Data
$3.6 billion
— The funding shortfall in the fiscal year 2025 preliminary budget needed to maintain current program levels.
$8.8 billion to $9.7 billion
— The projected budget gaps for fiscal years 2026 through 2028 if current service levels and plans are fully funded.
$2.5 billion
— The amount of new spending added to fiscal year 2024 to support current programs.
$194.9 million
— The total value of PEG restorations for fiscal years 2024 and 2025.
$2.2 billion
— The amount of the City-funds fiscal cliff, which includes funding for housing vouchers, childcare, and homeless shelters.
$675 million
— The amount of the federal-funds fiscal cliff, which is primarily for Department of Education programs.
151,700 is the net loss of New York personal income tax filers in 2020 and 2021. Was this primarily due to the pandemic? CBC is relaunching its podcast with a focus on policy discussions, starting with the podcast's founder and CBC alum Maria Doulis, Deputy New York State Comptroller for…
New York City's November 2023 budget savings plan, known as the Program to Eliminate the Gap, relies heavily on re-estimates and funding shifts rather than service cuts, though it does include revenue-generating measures like increased speed camera enforcement and audit collections. While the city aims for a 5 percent reduction in agency spending, the actual impact is closer to 2.2 percent due to significant exclusions like pension costs and migrant services.
Recommendations related to Revenue Trends
Agencies should continue to identify efficiency savings that do not affect critical program services.
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.
These efforts to identify efficiencies should be continued and strengthened.
Returning to standardized procurement practices wherever possible should increase competition and drive down the cost of providing services.
Key Data
$42 million
— Additional revenue in fiscal year 2024 from increased speed camera enforcement at certain intersections.
$24.3 million
— Increased Department of Finance audit revenue in fiscal year 2024.
$7.5 million
— Annual revenue from ensuring recipients are eligible for the coop and condo property tax abatement.
5.4 percent
— Share of the cumulative four-year impact of spending reductions in the November 2023 PEG that comes from revenues.
New York City faces a precarious fiscal situation with a projected $10.6 billion budget gap, driven by the expiration of temporary federal aid and the normalization of tax revenues following a pandemic-era surge. To address this, the city must prioritize efficient service delivery and structural labor reforms rather than raising taxes or depleting financial reserves.
Recommendations related to Revenue Trends
The City should avoid raising taxes, as doing so would weaken New York City’s competitiveness.
The City should prioritize services with significant impact and increase efficiency rather than focusing on expanding services.
The City 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 agreed-upon changes to work rules, job titles, health insurance, and other benefit administration structures to deliver services efficiently.
The City should avoid using precious reserves, as dipping into them would delay fixing underlying problems.
Key Data
$16 billion
— The added costs through 2027 resulting from recent collective bargaining agreements.
$7.1 billion
— The budget gap for fiscal year 2025 as shown in the City's financial plan.
$10.6 billion
— The more accurate budget gap when accounting for fiscal cliffs and regularly underbudgeted areas.
92 percent
— The portion of previous savings programs that did not directly affect program services.
20 percent
— The portion of the most recent savings program (PEG) that will affect current programs.
New York's proposed cap-and-invest program could generate billions of dollars in annual revenue, which should be managed transparently within the state budget to fund energy transition and efficiency initiatives. To ensure economic competitiveness and program success, the state must prioritize cost-effective design, including broad sectoral coverage and flexible compliance mechanisms, while avoiding the diversion of funds to unrelated political priorities.
Recommendations related to Revenue Trends
The State should allocate revenue on-budget, segregating it for uses that promote cost-effective emissions reduction to ensure transparency and accountability.
The State should allow and pursue linkage with other cap-and-invest programs to enhance cost-effectiveness by providing a larger pool of emissions reduction opportunities.
The State should keep sectoral coverage as broad as possible, limiting exemptions to sectors that are exceedingly difficult or expensive to regulate.
The State should maintain flexibility in compliance through trading, banking, and verifiable offsets to ensure the program behaves as a true market.
The State should regularly monitor, publicly report, and evaluate program data and modify the program based on evidence to improve accountability.
The State should align the program with other CLCPA-related regulations to minimize overlapping regulatory costs and improve overall policy effectiveness.
The State should finalize clear and comprehensive rules with adequate time for businesses to prepare to facilitate a smooth carbon market transition.
Key Data
$38,934 Million
— Cumulative auction revenue generated by California's cap-and-invest system since it began operating in 2013.
$112,790 Million
— Cumulative auction revenue generated by the European Union's emissions trading system.
$6 Billion
— The size of the special revenue pot generated by the Health Care Reform Act (HCRA) in New York.
65%
— The share of California's cap-and-invest proceeds currently distributed to State agencies to support transportation and community programs.
$900 Million
— The low end of California's annual auction proceeds since 2016.
$4 Billion
— The high end of California's annual auction proceeds since 2016.
The Metropolitan Transportation Authority faces significant financial risks due to uncertain tax revenues, potential casino delays, and ongoing fare evasion, which could lead to budget gaps reaching $927 million by 2027. To maintain fiscal stability, the agency must adhere to planned biennial fare increases, achieve operational efficiency targets, and consider expanding its general reserve fund.
Recommendations related to Revenue Trends
The MTA and stakeholders should closely monitor ongoing results because certain risks threaten its projected revenue and expenses.
The MTA should continue biennial fare and toll increases to ensure revenues keep pace with operating budget growth.
The MTA must implement efficiencies to meet its savings targets to mitigate potential budget gaps.
The MTA should continue to identify ways to increase productivity and reduce costs to improve its long-term fiscal health.
The MTA should consider whether the general reserve should be gradually increased to better buffer against identified financial risks.
Key Data
$1.1 Billion
— Annual increase in dedicated taxes provided by the New York State stabilization plan.
$927 Million
— Projected operating budget gap by 2027 if all identified revenue and expense risks materialize.
$700 Million
— Annual reduction in fare and toll revenue caused by fare evasion.
$165 Million
— Annual New York City subsidy for the paratransit program required by the state stabilization plan.
$500 Million
— Revenue generated per casino license, assuming the statutory minimum license fee.
$285 Million
— Projected revenue from biennial fare and toll increases in 2025.
New York State faces significant structural budget gaps as federal aid sunsets and tax revenue growth slows, necessitating a shift toward spending restraint. Despite recent increases in reserves, the state's current savings remain insufficient to weather a potential recession, requiring further deposits into protected accounts.
Recommendations related to Revenue Trends
The State should shift to restraining spending growth, rather than the recent trend of adding new spending, to close projected budget gaps.
The full balance of the State’s principal savings should be moved immediately into statutory lockboxes to ensure they are protected.
If receipts exceed projections this year, additional funds should be deposited in the Rainy Day Reserve.
To adequately prepare for a recession, the State should have more than $27 billion in reserves.
Key Data
$16.8 billion
— The structural gap between recurring receipts and disbursements.
$19.6 billion
— The current level of principal reserves as of March 31, 2023.
$27 billion
— The amount the State should have in reserves to weather a two-year recession.
$20.6 billion
— The projected increase in State Operating Funds spending from fiscal year 2024 to fiscal year 2027.
$19.5 billion
— The increase in State Operating Funds spending from fiscal year 2021 to fiscal year 2023.
$4.7 billion
— The reduction in the fiscal year 2025 out-year budget gap following the Mid-Year Update.
New York City faces a widening fiscal year 2025 budget gap of $10.6 billion, driven by spending that outpaces recurring revenues and the rising costs of supporting asylum seekers. To address this, the city must prioritize efficiency, including labor reforms and cost-saving measures like consolidating welfare benefit funds, while seeking increased financial support from federal and state governments.
Recommendations related to Revenue Trends
The City needs a citywide look at program impact and efficiency to identify all opportunities to reduce costs without cutting critical services.
Consolidating welfare benefit funds could save $150 million without cutting actual benefits.
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 reduce asylum seeker and migrant costs by efficiently providing only the most critical services.
The federal government should share a fair portion of the costs to reduce the need for overall savings.
Key Data
$10.6 billion
— The total fiscal year 2025 budget gap, including the fiscal cliff and program underbudgeting.
$10 billion
— The increase in projected spending on asylum seekers and migrants over four years.
$150 million
— Potential savings from consolidating welfare benefit funds without cutting actual benefits.
$7.1 billion
— The widened fiscal year 2025 budget gap, up from a previously estimated $5.1 billion.
90 percent
— The portion of asylum seeker and migrant costs currently covered by City coffers.
New York City faces substantial budget gaps reaching over 12.5 percent of City-funded spending, necessitating hard choices about which services to continue or scale back. While tax revenue collections are currently close to projections, there is potential for modest upside as the likelihood of a recession declines.
Recommendations related to Revenue Trends
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 of services to determine which to continue and which to end or scale back.
The City must increase government efficiency and focus on getting the basics right to achieve structural stability.
Key Data
$11.3 billion
— The budget gap the City will have to close in fiscal year 2025.
$11.4 billion
— The projected budget gap for fiscal year 2026.
$11.8 billion
— The projected budget gap for fiscal year 2027.
$500 million
— The expected upward revision to tax revenues for the current fiscal year.
$1 billion
— The expected annual upward revision to tax revenues in fiscal years 2025 to 2027.
$839 million
— The potential shortfall to fund planned services in fiscal year 2024.
Achieving an early consensus on revenue projections is a crucial part of passing a timely state budget, as it establishes the necessary framework for determining spending levels. Without such an agreement, the state faces a projected $4.3 billion budget gap for the upcoming fiscal year that requires either revenue increases or spending cuts to resolve.
Key Data
$4.3 billion
— The estimated budget gap for the upcoming fiscal year (FY 2024-2025) that exists without increases in revenue or cuts in spending.
New York City faces a potential fiscal cliff with projected budget gaps reaching between $9.9 billion and $13.8 billion, driven by city-funded spending that has increased over 50% in the last decade while recurring revenues have failed to keep pace. To address this, the city must prioritize impactful programs, improve efficiency, and manage staffing levels to ensure long-term fiscal stability and the continued delivery of core services.
Recommendations related to Revenue Trends
To stabilize the budget and minimize any pain from cuts, the most impactful programs should be prioritized first, allowing the city to end programs meant to be temporary and consolidate duplicative efforts.
Doing this well relies on the city greatly improving its data on program efficiency and effectiveness, and implementing a performance management and accountability process.
Agencies should implement changes to deliver services more efficiently and help the city run better, including collaborating to change processes and enhance workers’ skills.
The mayor’s office should take a hard look at staffing and performance, and make nuanced decisions to ensure city government can function well.
Strong consideration should be given to reviving the Program to Eliminate the Gap (PEG) monitoring function that the New York State Financial Control Board provided years ago.
Key Data
$9.9 billion
— Projected budget gap for next year, assuming higher tax revenues and lower migrant costs.
$13.8 billion
— Upper estimate of the projected budget gap for next year.
50%
— Increase in city-funded spending over the past decade while recurring revenues have not kept pace.
$16 billion
— Amount added to the budget for city worker raises without identified funding sources.
$2.5 billion
— Amount of programs funded by federal Covid aid and a temporary tax revenue surge.
42%
— Maximum percentage of the Fiscal Year 2025 budget gap attributed to the cost of caring for asylum seekers and migrants.
New York State's fiscal outlook has improved slightly due to lower spending and higher receipts, reducing the upcoming budget gap to $4.3 billion. However, significant long-term structural imbalances remain, with projected budget gaps of $9.5 billion in fiscal year 2026 and $7.7 billion in fiscal year 2027.
Key Data
$4.3 billion
— The reduced budget gap for the upcoming year.
$9.5 billion
— The projected budget gap for fiscal year 2026.
$7.7 billion
— The projected budget gap for fiscal year 2027.
$16.8 billion
— The state's long-term structural imbalance.
$9.1 billion
— The amount of fiscal year 2027 reliance on prepayments, reserves, and sunsetting tax increases.
New York faces a massive structural budget deficit as spending growth continues to outpace revenues, necessitating immediate fiscal restraint rather than reliance on temporary tax hikes or reserve depletion. To ensure long-term stability, the state must prioritize targeted school aid, control Medicaid costs, and curtail ineffective economic development programs.
Recommendations related to Revenue Trends
The state should restrain spending growth, necessarily starting with its largest programs.
State school aid should be better targeted to districts with higher-need students, instead of funneling billions of dollars to wealthy districts with strong local funding.
In Medicaid, the state should understand and reverse rapid cost growth in long-term care and other areas to reduce costs.
In “economic development,” the state should curtail — not expand — programs with dubious impacts.
The state should avoid another round of tax increases, as they are short-sighted and would likely damage New York’s long-term stability and economic competitiveness.
The state should avoid drawing down reserves, as draining finite funds would delay fiscal challenges and leave the state unprepared for future crises.
Key Data
$9 Billion
— Projected budget gap for next year.
$13 Billion
— Projected budget gap following next year.
$22 Billion
— Structural hole the state will face once temporary funds are removed.
9.0%
— Annual rate at which state spending grew over the past three years.
5.2%
— Annual rate at which state spending is budgeted to increase going forward.
$1.7 Billion
— Amount by which actual tax receipts exceeded forecasts through the first half of the year.
New York State's school spending has reached a record $85.8 billion, or $35,095 per pupil, despite declining enrollment and significant future budget gaps. To improve fiscal stability and educational outcomes, the state should reallocate aid from wealthy districts that can already fund a basic education and implement a more rigorous performance management system.
Recommendations related to Revenue Trends
The State should reduce or reallocate aid to wealthy school districts that are able to provide a Sound Basic Education with local resources and regular federal aid.
The State should freeze or reduce aids to districts that self-fund a Sound Basic Education, including by distributing expense-based aids based on need.
The State should implement a comprehensive performance management system for school districts that uses robust metrics to track activities and results, identifies and spreads best practices, and appropriately holds districts accountable.
The State should use the requirements of the Every Student Succeeds Act as a foundation to build a robust accountability system that tracks outcomes, quality, and efficiency.
To balance the budget, the State should rein-in spending growth, with poorly targeted school aid serving as a reasonable option for spending control.
Key Data
$85.8 billion
— Total spending on elementary and secondary education for the 2023-24 school year.
$35,095
— Total spending per pupil for the 2023-24 school year.
$37.4 billion
— Total state school aid for the 2023-24 school year, representing an 8.8 percent increase.
$2.8 billion
— Amount of state aid directed to 152 school districts that already fully fund a Sound Basic Education with local and regular federal resources.
$11.4 billion
— Total funding provided to districts that exceeds what is needed to fund a Sound Basic Education.
$9.6 million
— The total revenue shortfall for the five districts statewide that lack adequate resources to provide a Sound Basic Education.
The Metropolitan Transportation Authority faces significant fiscal risks, including potential revenue shortfalls from slower-than-expected ridership recovery, persistent fare evasion, and economic uncertainty. While recent stabilization plans have addressed immediate operating budget gaps, the agency must carefully manage its capital planning and revenue streams—such as congestion pricing and potential casino licensing—to ensure long-term financial health.
Recommendations related to Revenue Trends
Limit exemptions to public and some private transit providers, those specified in the law, and those agreed to in the Final Environmental Assessment.
Do not provide credit for payment of MTA or Port Authority of New York and New Jersey tolls, as credits will increase the congestion charge for drivers who are required to pay.
Vary the congestion charge by time of day and day of the week, and ensure the charge is easily understood and well-communicated.
Consider charging a vehicle-miles travelled (VMT) fee for those that stay inside of the zone.
Monitor and report congestion pricing outcomes and operational metrics to inform future policy adjustments.
Prioritize projects based on needs and available funds, as the MTA's capital needs will exceed available funding resources.
Key Data
$500 million
— Annual fare revenue shortfall resulting from the recent spike in fare evasion.
$325 million
— Revenue reduction resulting from a 5-percentage point shortfall in ridership.
$1.5 billion
— One-time revenue expected from the awarding of three new downstate casino licenses.
$1 billion
— Annual congestion pricing revenue expected to support the MTA's capital plan.
$15 billion
— Amount of borrowing for the MTA’s 2020-2024 Capital Plan expected to be supported by congestion pricing revenues.
45 percent
— Portion of the $55 billion in funding for the 2020-2024 capital plan that is from sources that will not recur in the next cycle.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
The Metropolitan Transportation Authority faces a long-term structural budget gap that will reemerge after the current financial plan window, despite recent revenue infusions from tax increases and state subsidies. To ensure long-term fiscal stability, the agency must implement operational reforms, such as one-person train operations and work rule changes, to align spending with recurring revenues.
Recommendations related to Revenue Trends
The MTA should implement one-person train operation (OPTO) on subways to increase efficiency, which would save $442 million annually.
The MTA should implement proof of payment on commuter rail to reduce costs, which would save nearly $300 million per year.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels, which could save up to $1.6 billion annually.
The MTA should negotiate work rule changes with labor unions to allow the agency to adjust schedules and services to meet shifting rider needs.
Key Data
$2.6 billion
— The MTA’s budget gap for 2023, driven by declining ridership, skipped fare increases, and increased fare evasion.
$690 million
— The cost of fare and toll evasion to the MTA in 2022, up from approximately $250 million annually prior to the pandemic.
$900 million
— The projected annual budget gap the MTA will face in 2029 once federal COVID-related aid is exhausted.
$330 million
— The annual amount by which the cost of the Transport Workers Union (TWU) Local 100 collective bargaining agreement exceeds budgeted raises.
$442 million
— The estimated annual savings from expanding one-person train operation (OPTO) systemwide.
$1.6 billion
— The estimated annual savings from meeting benchmark maintenance and operations levels compared to peers.
New York State's reliance on volatile personal income tax revenue, which accounts for 45 percent of its own-source revenue, necessitates a robust rainy day fund to weather economic downturns. To ensure fiscal stability, the state should implement mandatory deposit rules and increase its reserve targets to cover potential multi-year revenue shortfalls.
Recommendations related to Revenue Trends
The State should combine all principal reserves into the Rainy Day Reserve (RDR) lockbox immediately to ensure appropriate protection for the entirety of the State’s reserves.
The State should deposit up to an additional $2.4 billion this year to the RDR as a priority for any excess mid-year receipts or underspending.
The State should set a target for the RDR of 22 percent of SOF spending, which would be enough to mitigate two years of recession tax receipts shortfalls.
The State should increase the maximum allowed RDR balance to 30 percent of SOF spending to provide capacity for the third year of a recession.
The State should mandate automatic RDR deposits when the economy is growing, with deposits equal to two-thirds of tax receipts growth in excess of 2 percent annually.
The State should consider whether to mandate the deposit of a portion of one-time extraordinary revenues, such as legal settlements, into rainy day savings.
Key Data
45%
— of New York State's own source revenue comes from the economically sensitive personal income tax.
$27.9 billion
— is the recommended rainy day savings level for fiscal year 2024, equal to 22 percent of State Operating Funds (SOF) spending.
$24.2 billion
— is the projected two-year revenue shortfall based on historical tax receipt losses during recessions.
6.5%
— is the average amount tax receipts were lower than projections in the first year of the last three pre-pandemic recessions.
15.9%
— is the average amount tax receipts were lower than projections in the second year of the last three pre-pandemic recessions.
$2.4 billion
— is the additional amount recommended to be deposited into the Rainy Day Reserve this year.
New York City faces significant future budget gaps, projected to grow from $7.5 billion in fiscal year 2025 to $10.7 billion by fiscal year 2027. To maintain fiscal stability, the city must avoid using one-time revenue surges to fund recurring programs and instead prioritize realistic spending projections and long-term savings.
Recommendations related to Revenue Trends
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 for fiscal year 2025.
$10.7 billion
— Projected budget gap for fiscal year 2027.
$400 million
— Cost to maintain the current FHEPS rental voucher program.
The Metropolitan Transportation Authority faces a widening budget gap as operating expenses are projected to rise by 3.3 percent annually, outpacing the 2 percent annual growth in fare and toll revenue. To ensure long-term fiscal stability, the agency must reconsider its current revenue strategies, address fare evasion, and implement operational efficiencies to better align costs with available resources.
Recommendations related to Revenue Trends
The MTA should revisit the 4 percent yield to see if it is sufficient for ongoing fiscal stability.
The MTA should continue planned periodic increases to fare and toll revenue.
The MTA should implement changes to increase productivity and flexibility, including expanding One-Person Train Operation, to offset costs.
The MTA should be supported in reducing fare evasion, as the increase in fare evasion alone equals the cost of two rounds of fare and toll increases.
The MTA’s capital efforts should focus on ensuring its equipment and facilities are brought to, and kept in, a state of good repair and appropriately modernized before spending precious resources on expansion.
Key Data
3.3 percent
— The rate at which the MTA’s operating expenses are projected to increase annually from 2023 to 2026.
$330 million
— The amount by which annual labor costs will exceed the budget by 2026 if the tentative Transport Workers Union pattern is adopted system-wide.
4 percent
— The rate of the MTA’s historical biennial fare and toll revenue increases.
32 percent
— The portion of the 2023 budget funded by fares.
57 percent
— The portion of the 2023 budget funded by taxes and subsidies.
11 percent
— The portion of the 2023 budget funded by motorist cross-subsidies.
New York State's fiscal outlook is precarious, with future budget gaps doubling to $9.1 billion next year and $13.4 billion by fiscal year 2027 due to unsustainable recurring spending and downward revisions to tax receipt estimates. While reserves have increased to over $19 billion, these funds are threatened by structural deficits that will become more apparent as temporary revenue sources and sunsetting taxes expire.
Recommendations related to Revenue Trends
Basic financial plans should have been released with the budget agreement to ensure transparency regarding the State's fiscal condition.
The State should put the funds in the Rainy Day Reserve lockbox to protect the increased reserves from looming budget gaps.
Key Data
$5 billion
— Annual downward revision of tax receipt estimates that widened budget gaps.
$20 billion
— Annual structural budget gap that will be revealed when one-shot and non-recurring revenues disappear.
$9.1 billion
— Future budget gap projected for the next fiscal year.
$13.4 billion
— Future budget gap projected for fiscal year 2027.
$19 billion
— Total amount of state reserves increased under the current budget.
NYC Budget Director Jacques Jiha briefed CBC Trustees on the New York City Fiscal Year 2024 Executive Budget. Director Jiha was appointed to serve as Budget Director in October 2020. He oversees New York City’s fiscal policy, including the development of the Expense and Capital Budgets, the City’s bond finance…
New York City's recent budget savings initiatives have increasingly relied on revenue-raising measures like fees, licenses, and fines, which now account for 8% of the Executive Budget's Program to Eliminate the Gap. Despite these efforts, the city faces significant budget gaps that require more effective strategies, such as prioritizing operational efficiencies to preserve critical services.
Recommendations related to Revenue Trends
Future actions should focus much more on prioritizing impactful programs and restructuring operations to preserve services, lest the City balance its budget by reducing critical services unnecessarily.
The City should shift vacancies to where they are most needed and take steps to aggressively reform how it hires, especially for critical functions.
The City should implement additional PEGs that focus on improving efficiency—reducing costs without reducing services—to narrow budget gaps significantly while preserving services.
Key Data
8%
— Revenue raising initiatives have increased as a share of the PEGs to 8 percent of the Executive PEG.
$180 million
— Recurring revenue from the four rounds of savings initiatives is nearly $180 million annually.
$542 million
— The Executive Budget PEG totals $542 million in fiscal year 2023.
$4.2 billion
— Budget gaps have widened since the Preliminary Fiscal Year 2024 Budget to $4.2 billion in fiscal year 2025.
New York City's budget has been bolstered by strong tax revenues and federal aid, but these one-time funds were used to expand unsustainable programs rather than ensuring long-term fiscal stability. With significant budget gaps projected through 2027, the city must prioritize productivity and high-impact programs to avoid service cuts or tax increases.
Recommendations related to Revenue Trends
The City must implement additional PEGs focused on productivity and prioritization of higher impact programs to avoid slashing services or raising taxes.
Key Data
$13.0 billion
— unprecedented influx of federal COVID aid that allowed the City to boost spending in fiscal years 2022 and 2023
$339.5 billion
— current estimate of tax revenues for fiscal years 2020 through 2024
$7.5 billion
— projected budget gap for fiscal year 2025
$3.0 billion
— likely shortfall in the fiscal year 2024 budget due to fiscal cliffs and underbudgeting
$600.0 million
— assumed federal aid for asylum seekers included in the fiscal year 2024 budget
The New York City Housing Authority faces a widening structural budget gap, with operating expenses significantly outpacing revenue due to rising costs and a plummeting rent collection rate that hit 63 percent in early 2023. To achieve solvency, the authority must implement structural reforms, including aggressive management improvements, collective bargaining for productivity gains, and a complete overhaul of its rent collection processes.
Recommendations related to Revenue Trends
NYCHA should fix or replace deteriorating buildings with Permanent Affordability Commitment Together (PACT) and the Preservation Trust.
The authority must improve management effectiveness and efficiency and publicly track progress and impacts.
The City should negotiate savings and increase productivity through collective bargaining.
NYCHA must overhaul the rent collection process to ensure residents pay rent on time.
Key Data
$789 million
— The 2022 operating revenue shortfall for public housing.
$2.9 billion
— The total amount spent to operate the public housing portfolio in 2022.
$1,481
— The monthly per-unit operating cost for public housing in 2022.
63 percent
— The rent collection rate as of February 2023.
$152 million
— The total overtime spending in 2022.
$40 billion
— The estimated capital investment needed to bring public housing units to a state of good repair.
New York City's rental assistance program costs have surged from $16 million in 2015 to a projected $636 million in 2023, creating a significant fiscal cliff as federal pandemic aid expires. To address this, the City must provide realistic cost estimates and identify sustainable revenue sources before expanding eligibility, especially given the city's projected multi-billion dollar budget shortfalls.
Recommendations related to Revenue Trends
Any proposed expansion to CityFHEPS should include a fiscal impact statement that shows how much it would increase costs and identifies recurring revenues to pay for it.
The City should provide realistic estimates of the program’s cost and reflect those in the City budget.
Consideration of the three pending bills that would expand eligibility for CityFHEPS should be based on their impact on City spending and from where the resources would come, including what other program spending may be reduced.
An effective, holistic strategy should include appropriate voucher funding from the federal and State governments.
Key Data
$16 million
— The cost of rental assistance programs in fiscal year 2015, when the City re-instituted its rental assistance programs.
$636 million
— The anticipated cost of rental assistance programs in fiscal year 2023.
$450 million
— The size of the fiscal cliff in fiscal year 2024 caused by expiring federal COVID-19 aid and a drop in City-funding.
$6.8 billion
— The total budget shortfall the City faces in fiscal year 2025.
$10.0 billion
— The projected budget shortfall for the City by fiscal year 2027.
80 percent
— The share of placements accounted for by CityFHEPS rental assistance vouchers in fiscal year 2022.
New York City faces a precarious fiscal outlook with widening budget gaps projected to reach $10.0 billion by fiscal year 2027, despite recent revenue increases. The city must prioritize essential services and improve operational efficiency rather than relying on temporary revenue boosts and new spending that exacerbate long-term financial instability.
Recommendations related to Revenue Trends
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 direct higher revenue to the Rainy Day Fund to prepare for potential downside risks.
The City should make every effort it can immediately and include additional savings in the Adopted Budget.
Key Data
$4.7 billion
— Additional revenues coming over two years that help balance the next year's budget.
$4.2 billion
— Projected budget gap in fiscal year 2025.
$7.0 billion
— Projected budget gap in fiscal year 2027.
$6.8 billion
— Future shortfall in fiscal year 2025 when accounting for underbudgeted programs and fiscal cliffs.
$10.0 billion
— Future shortfall in fiscal year 2027 when accounting for underbudgeted programs and fiscal cliffs.
82 percent
— Portion of the Program to Eliminate the Gap (PEG) savings that is offset by new spending.
The New York City Department of Buildings generated an average annual revenue of $317 million between fiscal years 2014 and 2022, consistently exceeding the agency's operational spending. While revenue peaked at $388.5 million in fiscal year 2019, it experienced a decline during the pandemic before showing modest recovery to $336.3 million in fiscal year 2022.
Recommendations related to Revenue Trends
Improving hiring at the Department of Buildings remains a priority, especially as the first year of compliance with Local Law 97 nears.
The Department of Buildings should increase the audit rate of professionally certified jobs to ensure buildings are compliant with relevant codes and protect workers and residents.
Key Data
$317 million
— Average annual revenue collected by the Department of Buildings between fiscal years 2014 and 2022.
$388.5 million
— Peak annual revenue reached by the Department of Buildings in fiscal year 2019.
$336.3 million
— Revenue collected by the Department of Buildings in fiscal year 2022.
$249.4 million
— Peak revenue from construction and building permits in fiscal year 2019.
$90.2 million
— Revenue generated from fines in fiscal year 2019.
New York City's Department of Education budget reached $36.9 billion in fiscal year 2023, driven by significant spending growth even as K-12 enrollment declined by over 141,000 students since the 2015-16 school year. With federal pandemic aid expiring and enrollment continuing to fall, the city faces a projected $12.0 billion budget gap in fiscal year 2026, necessitating careful management of school funding and program priorities.
Recommendations related to Revenue Trends
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
$36.9 billion
— The DOE's total budget for fiscal year 2023.
32.5 percent
— DOE spending growth between fiscal years 2016 and 2022.
141,000 students
— The decline in K-12 DOE enrollment between school years 2015-16 and 2021-22.
$37,000
— The amount spent per K-12 DOE student in fiscal year 2022.
$7.0 billion
— Federal education aid received by New York City since December 2020.
$12.0 billion
— The likely City budget gap in fiscal year 2026.
New York State's budget faces a structural imbalance with projected deficits reaching up to $20 billion by fiscal year 2027, driven by spending growth that significantly outpaces the 1.1% average annual growth in state receipts. To ensure fiscal stability, the state must restrain spending, allow temporary tax increases to expire, and improve fiscal management practices.
Recommendations related to Revenue Trends
Restrain SOF spending growth to 2 percent annually to bring spending trends in line with receipts and close forecast gaps.
Allow temporary tax increases to sunset as scheduled or earlier to improve competitiveness and reduce the costs of living and doing business in New York.
Maintain or expand the Governor’s Rainy Day reserves plan by dedicating more funding to the Rainy Day Fund lockbox and automating future reserves deposits.
Publish basic financial plan tables with the enacted budget so New Yorkers can understand the fiscal impacts of their leaders' choices.
Reform the State’s budgeting and fiscal management to improve services, stability, and accountability through standardized accounting and better debt management.
Key Data
1.1 percent
— Average annual growth rate projected for State receipts from fiscal year 2023 to fiscal year 2027.
1.9 percent
— Average annual increase projected for personal income tax receipts from fiscal year 2023 to fiscal year 2027.
0.8 percent
— Average annual increase projected for all other taxes from fiscal year 2023 to fiscal year 2027.
$7.8 billion
— Total decrease in federal aid over the period from fiscal year 2023 to fiscal year 2027.
$15 billion
— Projected structural gap in fiscal year 2027 under the Governor’s proposal.
$20 billion
— Projected structural gap in fiscal year 2027 if the Legislature’s plans are enacted.
$227 billion is the size of the NYS FY 2024 Executive Budget. The State's finances are in a precarious state, with the economy uncertain and the budget going from riches to rags. There is an $8 billion surplus this year, but outyear gaps of over $7 billion and a $12…
The New York City Housing Authority faces a structural budget gap driven by rising operating costs and a record-low rent collection rate of 64 percent. To achieve fiscal stability, the agency must move beyond its unsustainable reliance on non-recurring revenue sources and local government subsidies by implementing structural reforms.
Recommendations related to Revenue Trends
NYCHA should boost rent collections to ensure adequate revenue to operate and maintain its housing units.
NYCHA should negotiate savings and increased productivity through collective bargaining to address high operating costs.
NYCHA should fix deteriorating buildings through the RAD program and the Preservation Trust to reduce deferred maintenance costs.
NYCHA should improve property management to address the structural budget gap.
NYCHA should seek to appropriately enforce tenant obligations to pay rent to address flagging revenue.
Key Data
64 percent
— The rent collection rate fell to an all-time low of 64 percent in December 2022.
$454 million
— As of December 2022, 46 percent of households were in arrears, having accrued $454 million in unpaid rent.
$789 million
— NYCHA reported using $789 million in non-operating sources to balance its 2022 budget.
28 percent
— Non-operating sources accounted for 28 percent of the total revenue budget used to balance the 2022 budget.
$152 million
— Overtime spending increased 3 percent, reaching $152 million in 2022.
The Metropolitan Transportation Authority's financial stabilization plan relies too heavily on New York City taxpayers and requires a more balanced approach that includes recurring state contributions and significant productivity improvements. To ensure long-term fiscal stability, the plan should incorporate operational reforms and resume regular, predictable biennial fare increases.
Recommendations related to Revenue Trends
Productivity improvements, including changes in MTA operations that require agreement from labor, should constitute at least half of the gap-closing plan.
A recurring State contribution should be included in the stabilization plan, understanding that City taxpayers are already major contributors to State receipts.
The balance of the plan should be appropriately allocated among those in the MTA region to reduce the burden currently placed on New York City taxpayers.
The MTA should resume regular biennial fare increases, including the planned 5.5 percent fare and toll increases, to maintain price sufficiency and fiscal stability.
Key Data
$800 million
— Annual revenue generated by increasing the Payroll Mobility Tax’s top rate from 0.34 percent to 0.50 percent.
$500 million
— Annual cost required from New York City’s operating budget for certain MTA expenses.
$300 million
— One-time appropriation provided from the State budget to the MTA.
$2.9 billion
— Potential annual savings identified from operational reforms, such as one-person-train-operation and proof of payment fare collection.
$640 million
— Portion of the $800 million Payroll Mobility Tax increase likely to come from New York City businesses.
5.5 percent
— Planned fare and toll increases supported as part of the resumption of biennial adjustments.
New York City's economic development tax incentives, which cost the city $44 million annually in foregone revenue, should not be extended without rigorous evaluation of their effectiveness and efficiency. Previous assessments found that programs like the Commercial Revitalization Program and Commercial Expansion Program failed to significantly improve office vacancy rates or employment, suggesting that current extensions lack sufficient justification.
Recommendations related to Revenue Trends
An incentive should not be extended absent a rigorous evaluation of its effectiveness and efficiency and an analysis demonstrating it is needed to meet current and future goals.
For programs like CEP and CRP, existing evaluations should inform the Legislature’s decision of whether to extend, amend, or sunset these programs.
Any extension or expansion of an existing tax expenditure should be supported by a prospective model of its impacts and justified by an evaluation that determines whether the tax expenditure achieved its purpose.
Key Data
$44 million
— Annual foregone revenue for New York City from the package of economic development tax incentives.
$14 million
— Annual foregone revenue from property taxes due to the economic development tax incentives.
$15 million
— Annual foregone revenue from utility taxes due to the economic development tax incentives.
$7 million
— Annual foregone revenue from commercial rent taxes due to the economic development tax incentives.
$8 million
— Annual foregone revenue from sales taxes due to the economic development tax incentives.
New York City's fiscal year 2024 preliminary budget increases revenue forecasts by $738 million while delaying updates to property and personal income tax projections until more data becomes available. Despite balancing the current budget with rolled-over resources, the city faces significant future fiscal risks and potential budget gaps that could exceed $10 billion.
Recommendations related to Revenue Trends
The Administration should address the $1.1 billion fiscal cliff in its Executive Budget planning to better prepare for future uncertainty.
The Administration should deposit $1.0 billion in the Rainy Day Fund to prepare for potential economic downturns.
The Administration should initiate a productivity PEG that tasks agencies with restructuring programs to improve the quality and cost-effectiveness of City services.
The City Council should focus on how to mitigate significant future risks to ensure the City has adequate resources to serve New Yorkers in the near future.
Key Data
$738 million
— The amount by which the fiscal year 2024 revenue forecast was increased.
$5.0 billion
— The projected budget gap for fiscal year 2026.
$6.5 billion
— The projected budget gap for fiscal year 2027.
$10.0 billion
— The potential total of budget gaps when accounting for future labor agreements and other risks.
$1.5 billion
— The amount of resources rolled over from fiscal year 2023 to balance the fiscal year 2024 budget.
$390 million
— The amount of federal funds used as fiscal relief in the fiscal year 2024 budget.
New York City faces a manageable short-term fiscal outlook, but must address a $2.9 billion budget gap for fiscal year 2024 while preparing for potential long-term risks that could lead to an $11.5 billion gap by 2026. To ensure stability, the City should prioritize a $1 billion deposit into the Rainy Day Fund and exercise caution by only modestly increasing out-year revenue forecasts.
Recommendations related to Revenue Trends
The City should deposit at least $1 billion into the Rainy Day Fund this year to prepare for a rocky economic outlook.
The City should raise out-year revenue forecasts only modestly given the current economic uncertainty.
Key Data
$2.9 billion
— The fiscal year 2024 budget gap reported in the November 2022 financial plan.
$11.5 billion
— The potential budget gap reaching this amount in fiscal year 2026 if risks materialize.
$13 billion
— The potential City tax revenue shortfall over three years if the economy enters a recession.
$1.2 billion
— The likely increase in the fiscal year 2023 tax revenue forecast.
$350 million
— The annual savings expected from eliminating half of the vacant civilian positions.
$1 billion
— The amount the City should deposit into the Rainy Day Fund this year.
New York City faces significant fiscal risks, including potential revenue shortfalls of up to $16 billion over three years if a recession occurs, alongside widening budget gaps in fiscal years 2025 and 2026. To ensure future stability, the City must restrain long-term spending and improve operational efficiency rather than relying on illusory savings or re-estimates.
Recommendations related to Revenue Trends
It is critical that the City start taking action immediately to restrain spending over the long run to reduce the future gaps.
The City can and should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The City and agencies should have flexibility to shift vacant positions across and within agencies to units and titles that have critical staffing needs.
The best way to preserve services for New Yorkers when they need them most is to improve the quality and efficiency of the City’s operations today.
Key Data
$4.3 billion
— Potential revenue shortfall in the first year of a recession.
$10 billion and $16 billion
— Potential revenue shortfalls over 3 years in the event of a recession.
$865 million
— City-funded fiscal cliff in fiscal year 2024.
$1 billion
— City-funded fiscal cliff in fiscal year 2026.
$345 million
— Fiscal cliff from the depletion of non-recurring COVID aid in fiscal year 2025.
$760 million
— Fiscal cliff from the depletion of non-recurring COVID aid in fiscal year 2026.
The Metropolitan Transportation Authority faces a structural deficit exceeding $2.5 billion annually, exacerbated by declining ridership and the depletion of federal pandemic aid. To address these fiscal challenges, the agency must implement efficiency-focused operating reforms and secure new revenue sources to avoid a looming fiscal cliff.
Recommendations related to Revenue Trends
The MTA should seize the opportunity and runway created by federal aid to implement efficiency-focused operating reforms and restructure its long-term debt to reduce its structural deficit.
The MTA should adopt a multi-year phase-in plan for operating reforms, starting with efficiencies under management's purview and followed by changes collectively bargained with labor to achieve recurring annual savings.
Key Data
$2.5 billion
— The MTA's projected annual recurring structural deficit.
$1 billion
— The potential annual reduction in tax revenues if the economy slides into a recession.
33 percent
— The share of operating expenses covered by farebox revenue in September 2022, down from 51 percent in 2019.
$800 million
— The amount of new revenue needed in 2023 to close the remaining budget gaps.
$1.6 billion
— The amount of new revenue needed annually beginning in 2024 to close the remaining budget gaps.
63 percent
— The level of ridership compared to pre-pandemic levels.
New York City faces a precarious long-term fiscal outlook with widening budget gaps reaching $5.9 billion by fiscal year 2026, exacerbated by potential recession-driven revenue shortfalls of up to $16 billion over three years. To ensure future stability and preserve essential services, the city must improve operational efficiency and secure federal and state support for migrant service costs.
Recommendations related to Revenue Trends
The City should make additional and ongoing efforts to reduce these budget gaps.
The City can and should both hire for critical functions and eliminate many more, ultimately unneeded, positions.
The federal and State governments should shoulder a significant portion of these costs for services provided to migrants.
The best way to preserve services for New Yorkers when they need them most is to improve the quality and efficiency of the City’s operations today.
More transformative changes are needed to ensure future stability.
Key Data
$4.6 billion
— Budget gap projected for fiscal year 2025.
$5.9 billion
— Budget gap projected for fiscal year 2026.
$1 billion
— New spending included in the budget for services provided to migrants.
$900 million
— Cost increase to budget gaps in the first year if employee raises of three percent annually are implemented.
$4.3 billion
— Potential revenue shortfall in the first year of a recession.
$10 billion and $16 billion
— Potential revenue shortfall range over three years of a recession.
New York City's upcoming November modification to the Fiscal Year 2023 Financial Plan faces significant uncertainty due to high inflation and potential recession risks that threaten to reduce tax revenues. The city must address substantial budget gaps, which were projected at $4.2 billion for fiscal year 2024, alongside rising expenses from pension fund losses and unfunded recurring programs.
Key Data
$4.2 billion
— Projected budget gap for fiscal year 2024.
$3.7 billion
— Projected budget gap for fiscal year 2025.
$4.0 billion
— Projected budget gap for fiscal year 2026.
$10 billion
— Potential future budget gaps warned by the City and State Comptrollers.
$1 billion
— Expected efficiency savings for fiscal year 2023.
$1.6 billion
— Expected annual efficiency savings starting in fiscal year 2024.
New York City faces significant future budget gaps approaching $10 billion, driven by rising pension costs and the reliance on one-time federal aid to fund recurring programs. To stabilize long-term finances, the city must prioritize managerial efficiency and strategic hiring to close these gaps without resorting to drastic service cuts.
Key Data
$10 billion
— The amount that budget gaps will approach in the near future according to the city and state comptrollers.
$2 billion to $3 billion
— The amount by which annual pension contributions will be higher than budgeted due to poor stock-market performance.
$1 billion to $2 billion
— The amount of recurring programs like 3-K expansion and housing-voucher enhancement currently supported by one-time federal COVID aid and city revenues.
$1 billion to $1.5 billion
— The potential annual funding shortfall if the city agrees to 3% raises, despite the 1.25% set-aside.
The Metropolitan Transportation Authority faces a significant capital funding shortfall, with at least $12 billion of planned financing at risk or unaffordable due to structural deficits, delayed congestion pricing, and weaker-than-expected real estate tax revenues. To address this, the authority must prioritize critical state-of-good-repair projects and improve operational efficiency to ensure the system's long-term viability and competitiveness.
Recommendations related to Revenue Trends
The MTA should publish a $22.8 billion to $25.4 billion plan that identifies projects that can be committed by 2024.
The MTA should publish the planned schedule for the remaining outstanding projects from the 2010-2024 capital plans.
The MTA should develop an ambitious and solidly financed 2025-2029 capital program incorporating projects from prior plans and current needs.
The MTA should increase the efficiency of operations to help eliminate the structural deficit, possibly creating the capacity to issue debt for capital.
The MTA should continue to work with the federal and State governments to implement congestion pricing by 2023 to provide critical revenues.
Key Data
$12.0 billion
— Amount of future planned capital financing that is at risk or unaffordable.
$11.5 billion
— Amount of MTA pay-as-you-go funding or long-term debt that is unaffordable due to the structural operating deficit.
$500 million
— Amount at risk due to weakness in a new dedicated real estate transfer tax.
$3.0 billion
— Amount at risk due to uncertainty about the implementation of congestion pricing.
$52.9 billion
— Amount of projects still uncommitted from the 2020-2024 and two prior five-year capital plans.
$7.1 billion
— Average annual capital commitments over the past six years.
New York State's first quarterly update to the fiscal year 2023 financial plan reveals a less optimistic economic outlook, with downward revisions to future tax receipts opening budget gaps that grow to $6.2 billion by fiscal year 2027. To maintain stability, the state must prioritize building reserves and reducing recurring spending in high-growth areas like Medicaid and school aid.
Recommendations related to Revenue Trends
The State must build reserves, vigilantly restrain spending growth, and identify and implement long-run cost savings to address widening budget gaps.
It is imperative that the State continue on its path of depositing $15.4 billion into reserves, at least until there is a recession.
The State should seek to reduce recurring spending, especially in high-growth areas such as Medicaid and school aid, while continuing to build reserves.
Key Data
$6.2 billion
— Projected budget gap by fiscal year 2027.
$15.4 billion
— Amount the State plans to deposit into reserves over four years.
$2.1 billion
— Increase in tax receipts in fiscal year 2023 based on collections to date.
$1.9 billion
— Downward re-estimate of tax receipts in fiscal year 2024.
$3.4 billion
— Downward re-estimate of tax receipts in both fiscal years 2025 and 2026.
$6.1 billion
— Downward re-estimate of tax receipts in fiscal year 2027.
New York's Unemployment Insurance Trust Fund is currently insolvent with over $8 billion in debt to the federal government, forcing employers to face higher tax rates to facilitate repayment. State lawmakers must decide whether to allow these higher taxes to pay off the debt over time, use state revenues to accelerate repayment, or provide targeted tax relief to businesses, all while balancing the need for long-term structural reforms.
Recommendations related to Revenue Trends
The State could pay off the debt over time with higher tax rates, which is the standard practice.
The State could partially accelerate repayment of the debt using State revenues.
The State could rapidly pay off the debt using State revenues, which would provide immediate tax relief to employers.
Lawmakers should consider reforming the UI system to ensure it is better equipped to meet claims during economic downturns.
State lawmakers should balance these tradeoffs when deciding whether to address the UI Trust Fund debt.
Key Data
$8.1 billion
— New York's outstanding debt to the federal government as of June 7, 2022.
$110 million
— Interest accumulated for the federal fiscal year 2022.
27 percent
— New York's share of U.S. states' total outstanding UI debt.
64 percent
— Increase in the average State UI rate on employers from 2019 to 2021.
$6.5 billion
— Total UI benefits paid out in New York in the second quarter of 2020.
$2.65 billion
— Balance of New York's UI Trust Fund in February 2020.
The fiscal year 2023 budget agreement utilized a revenue windfall to increase spending, but failed to align recurring revenues with long-term spending needs. To ensure fiscal sustainability, the administration must implement recurring efficiency savings and address growing budget gaps that currently average $4 billion.
Recommendations related to Revenue Trends
The City must take actions to bring recurring revenues and recurring spending in line.
The Administration should require agencies to find recurring efficiency savings of 3 percent to 5 percent to be included in the November 2022 financial plan.
Restructuring operations and focusing on priorities will be essential to ensure fiscal sustainability.
Key Data
$4.5 billion
— Amount available to allocate in the budget.
$1.15 billion
— Amount by which the budget deal increases spending over the Executive Budget.
$4 billion
— Average annual budget gaps.
$300 million
— Additional savings identified in the Adopted Budget.
$1.45 billion
— Total amount of the Rainy Day Fund deposit.
New York City currently has significant additional tax revenue available, with $3.3 billion in fiscal year 2022 and $1.5 billion projected for the following year. To prepare for potential economic downturns, the city should deposit at least $2.5 billion into its rainy day fund and establish a formal, long-term structure for future reserve contributions.
Recommendations related to Revenue Trends
The city should add at least $2.5 billion to the rainy day fund this year.
The city should adopt a steady formula for future deposits into the rainy day fund.
The city should set a target size, mandate deposits, and specify criteria for when these funds can be withdrawn.
Key Data
$3.3 billion
— Additional tax revenue available in fiscal year 2022.
$1.5 billion
— Additional tax revenue projected for the following year.
$2.5 billion
— Proposed amount to be added to the city's rainy day fund this year.
New York City has identified $4.5 billion in additional revenue for fiscal years 2022 and 2023, providing a critical opportunity to bolster financial reserves and prepare for future economic downturns. Officials are urged to prioritize depositing these funds into the Rainy Day Fund and labor reserves rather than funding recurring programs that could create long-term fiscal cliffs.
Recommendations related to Revenue Trends
Deposit half of the newly identified resources, $2.3 billion, into the Rainy Day Fund.
Add $1.7 billion to the labor reserve over the financial plan to fully restore the reduction made during the pandemic.
Use the remaining resources for non-recurring actions rather than funding recurring programs with non-recurring revenue.
Shift between $250 million and $500 million annually from the general and capital stabilization reserves to the Rainy Day Fund.
Commit to setting rules to govern the Rainy Day Fund in Local Law to ensure resources are available during a recession or severe emergency.
Key Data
$4.5 billion
— Additional revenue available in fiscal years 2022 and 2023 than was projected in the Executive Budget.
$13 billion to $19 billion
— Potential revenue shortfall the City could face over three years in the next recession.
$3 billion
— Fiscal year 2022 tax revenues identified by the New York City Comptroller.
$1.5 billion
— Fiscal year 2023 revenue identified in the Mayor’s May 25th Revenue Letter.
$12 billion
— Recommended total balance for the Rainy Day Fund.
5.8 percent
— Proposed increase in City-funded spending in the Fiscal Year 2023 Executive Budget.
Ending the 421-a tax incentive program would not create a revenue windfall, as it would provide less than $100 million annually over the next seven years and fail to free up $1.8 billion for decades. Consequently, policymakers are urged to implement a well-crafted successor to the program and pass legislation for the NYCHA Preservation Trust to support housing supply and quality.
Recommendations related to Revenue Trends
State lawmakers should support a 421-a successor to ensure the city's rental housing does not grow even scarcer and more expensive, as ending the program would not result in a revenue windfall.
The proposed 485-w replacement program should be modified to incentivize more production in moderate-to-middle-income neighborhoods and require greater transparency.
State and City officials should take action to reduce construction and operating costs, increase zoning capacity, and reform the property tax.
Key Data
less than $100 million
— annual revenue impact over the next seven years if the 421-a program is ended.
$1.8 billion
— amount that would not be freed up for decades to come if the 421-a program is ended.
Ending the 421-a tax exemption program will not immediately generate $1.8 billion in revenue, as existing exemptions will continue for decades, with significant revenue not returning to the tax roll until 2043. To address housing needs, a successor program is required alongside policies that reduce construction costs, increase as-of-right zoning capacity, and reform property taxes.
Recommendations related to Revenue Trends
New York City should create a successor to 421-a as a key component of a broader package of policies to boost housing production.
Policymakers should focus on reducing construction and operating costs to improve housing affordability.
The City should prioritize increasing as-of-right zoning capacity to catch up to past population and job growth.
The City should pursue reforming the property tax to ensure long-term revenue stability and housing development.
Key Data
$1.74 billion
— Total exemption value for 421-a properties in fiscal year 2023.
$1.8 billion
— The amount of tax revenue that will not be immediately available for spending upon the expiration of the 421-a program.
$451 million
— The average annual available tax revenue from fiscal year 2030 to fiscal year 2036.
$123 million
— Estimated mini tax property taxes that 421-a properties will pay for fiscal year 2023.
$1.65 billion
— The amount of foregone tax revenue in fiscal year 2029.
$700 million
— The value of exemptions still in force in fiscal year 2043.
New York City has seen a $1.7 billion increase in expected tax revenues due to strong real estate and Wall Street performance, though future income remains uncertain due to inflation and remote work trends. To ensure long-term stability, the city must prioritize building rainy day reserves to over $8 billion and identify efficiency savings rather than relying on increased spending.
Recommendations related to Revenue Trends
The City should grow rainy day reserves to over $8 billion by the end of the financial plan.
The Mayor and City Council should identify and include 3 percent efficiency savings in the Adopted Budget.
Key Data
$1.7 billion
— increase in expected tax revenues this year due to record profits on Wall Street, recovery in tourism, and strength in the residential real estate market.
$8 billion
— target amount the City should grow rainy day reserves to by the end of the financial plan.
$2 billion
— fiscal cliff projected for fiscal year 2026 that requires action.
$2.3 billion
— amount of spending added by the Adams Administration in fiscal year 2023.
$270 million
— savings identified in fiscal year 2022.
$141 million
— savings identified in fiscal year 2023.
New York City faces a potential $9 billion fiscal disaster by 2026 due to budget gaps, employee raises, and fiscal cliffs, which could be exacerbated by a potential recession causing a $17 billion revenue shortfall. To avoid service cuts or tax increases, the city must prioritize spending, increase service efficiency, and deposit additional tax revenue into the Rainy Day Fund rather than expanding services.
Recommendations related to Revenue Trends
The mayor and council must resist the temptation to use additional tax revenue to expand services.
This money should be deposited into the Rainy Day Fund (RDF) for the next recession and help refill the city’s labor reserve.
The city also should schedule $500 million annual deposits to the RDF, which could come from the budgeted General and Capital Stabilization Reserves.
The executive budget should address the budget’s fiscal cliffs where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
The city must lower costs, ideally by improving efficiency or by reducing lower impact programs.
The city should use this next round of collective bargaining contracts to further increase productivity, which would generate savings to fund raises and stabilize the budget.
Key Data
$9 billion
— recipe for fiscal disaster by 2026 if nothing is done, accounting for budget gaps, employee raises, and fiscal cliffs.
$17 billion
— potential three-year revenue shortfall if a recession occurs.
$500 million
— annual deposits to the Rainy Day Fund the city should schedule.
$900 million
— total fiscal cliffs for next year where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
$2 billion
— total fiscal cliffs by fiscal year 2026.
$1.5 billion
— annual savings from a 3% Program to Eliminate the Gap for Productivity.
The City's Program to Eliminate the Gap (PEG) for fiscal year 2023 relied heavily on re-estimates and vacancy reductions rather than operational efficiencies, which comprised only a small fraction of total savings. To improve long-term fiscal stability, the City should implement a productivity-focused program that generates recurring savings by streamlining operations and leveraging technology.
Recommendations related to Revenue Trends
The Mayor’s Office of Management and Budget should initiate a productivity PEG to generate options to save 3 percent of City-funded agency spending.
The City should identify and implement efficiencies in centrally managed services like space leasing and fleet to provide additional savings.
Agencies should identify management reforms that reduce unit costs, streamline operations, and leverage technology.
The City should pursue reductions in Department of Environmental Protection spending to improve operations and lower needed water and sewer rate increases.
The City should ensure PEGs generate recurring savings that reduce baseline spending, rather than just reductions in one or two years.
Key Data
$1.5 billion
— The amount of City-funded agency spending the City should aim to save in fiscal year 2023 through a productivity PEG.
$1.6 billion
— The amount of City-funded agency spending the City should aim to save by fiscal year 2026 through a productivity PEG.
6.2 percent
— The portion of cumulative five-year savings from the Preliminary Fiscal Year 2023 Budget PEG that came from increased efficiency.
61.6 percent
— The portion of PEG savings that came from re-estimates of planned spending and shifting support for services from City funds to other sources.
7,026
— The number of full-time positions eliminated across 42 agencies through the PEG's vacancy reductions.
$290 million
— The annual savings generated by the PEG's vacancy reductions.
New York's fiscal outlook has improved significantly due to higher-than-expected tax receipts, federal aid, and tax increases, turning a projected $60 billion shortfall into a $55 billion surplus. However, the state risks future fiscal instability by proposing spending increases that exceed reserves and threaten to create multi-billion dollar budget gaps in the coming years.
Recommendations related to Revenue Trends
The Governor and the Legislature should adopt a budget that keeps to the Executive Budget’s top line on spending and focuses on allocating the $5 billion available for relief and recovery.
The Governor and Legislature should diligently manage and provide oversight of funded programs by developing plans, identifying goals, measuring activities and results, and ensuring accountability by managers and local governments.
The State should improve budgeting transparency by publishing basic financial plan tables that show the receipts and disbursements with the one-house and enacted budgets.
It is past time to implement statewide performance measurement and management in New York to ensure and assess how successful its spending is in delivering results.
New York should roll back its nation-leading taxes to protect the state's competitiveness and tax base.
Key Data
$18 billion
— The initial projected four-year tax receipts shortfall has evolved into a tax receipts surplus of $18 billion.
$12.7 billion
— The American Rescue Plan provided the State with $12.7 billion in general fiscal relief.
$4 billion
— The fiscal year 2022 enacted budget raised personal income tax and corporate tax rates, generating approximately $4 billion per year in additional tax revenues.
$40 billion
— A possible three-year receipt shortfall could total $40 billion based on the three recessions prior to the pandemic.
$15 to $17 billion
— A typical recession would result in approximately $15 to $17 billion in annual tax receipts shortfalls.
The proposed public subsidy for a new Buffalo Bills stadium lacks rigorous justification, as research consistently shows that professional sports facilities do not generate significant, consistent, or positive economic impacts like increased tax revenues or employment. Policymakers should require a transparent analysis that identifies the incremental benefits and full costs of any proposed subsidy to ensure it delivers a positive return on investment for the public.
Recommendations related to Revenue Trends
The State should transparently provide an analysis that identifies the benefits and full costs for any proposed subsidy.
The analysis should credibly identify the incremental economic and fiscal impacts attributable to a proposed subsidy and use them in conjunction with the length of time the subsidy would provide benefit to calculate a proposed subsidy’s value.
Any subsidy should be provided only after private investment and include clawback provisions.
The process should provide sufficient time for the public and lawmakers to evaluate the terms and justification for any deal.
The State should ensure the cost-effectiveness of its programs by requiring that any economic development spending be justified by a rigorous analysis.
Key Data
$862 million
— Estimated cost to renovate Highmark Stadium.
$1.4 billion and $1.7 billion
— Estimated cost range for a new stadium.
$350 million
— Additional cost for a stadium in downtown Buffalo due to site acquisition.
$27 million
— Estimated annual fiscal impacts, or tax revenue, generated by the presence of the Buffalo Bills.
$19.5 million
— Annual personal income tax revenue for the State of New York related to the Bills team payroll.
$385.8 million
— Total annual economic output generated by the Buffalo Bills.
$0 is the size of the New York State budget deficit in each year of New York State’s five-year Executive Budget financial plan, as proposed by Governor Kathy Hochul. The Governor’s budget proposal balances the budget in each of the next five years, an unprecedented level of fiscal stability for…
New York City's 421-a property tax exemption is essential for making rental housing development financially feasible, as high construction and operating costs otherwise render most projects unviable. Replacing this program with the proposed Affordable Neighborhoods for New Yorkers (ANNY) requires modifications to better align with diverse market conditions and ensure transparency, as the current proposal would likely reduce housing production.
Recommendations related to Revenue Trends
State lawmakers should authorize an as-of-right tax exemption designed to foster rental housing development, minimize disruption of land and development markets, and help the City meet its affordable housing production goals.
Modify ANNY to increase the amount of affordable and market rate rental development by offering additional options for rental buildings of 30 or more units outside the Manhattan core or expanding affordability levels for smaller buildings.
Ensure greater transparency and public reporting of data to support a robust assessment of the program’s impact and effectiveness, which would inform any successor program.
Harmonize the City and State affordable housing programs to reduce bureaucratic conflicts and red tape, as better alignment between ANNY’s affordability requirements and the City’s Mandatory Inclusionary Housing program would yield more development.
Key Data
75 percent
— The amount rents would have to increase to generate a reasonable rate of return without a property tax exemption.
50 percent
— The amount by which the cost to operate a multifamily building in New York City exceeds the national average.
30 percent
— New York City property taxes as a percentage of rental income, compared to 13 percent elsewhere in the country.
$9,800
— The monthly rent required in Manhattan to generate a 5 percent yield on cost without the 421-a tax exemption.
8 percent
— The increase in construction costs in New York City between February 2021 and February 2022.
3.7 percent
— The average annual increase in New York City construction costs since 2010.
New York State's fiscal outlook has improved due to strong tax receipts and federal aid, yet the budget relies on risky assumptions of steady economic growth and maintains the nation's highest personal income and corporate tax rates. To ensure long-term stability, the state should restrain spending to allow recent tax increases to sunset and prioritize building robust rainy day reserves.
Recommendations related to Revenue Trends
Hold the top line on spending to ensure New York allows the recent tax increases to sunset, since they hamper the State’s competitiveness to keep and attract residents and businesses.
Save for a rainy day by maintaining the planned reserve deposits and enacting improvements to the Rainy Day Fund structure, targeting at least 17 percent of SOF spending.
Reform the Medicaid global cap to be fiscally sustainable, where the rate of growth is limited to the lesser of common rate and base tax receipts growth or the proposed federal calculation of Medicaid cost growth.
Reject unnecessary budget powers and lump sum appropriations, specifically rejecting the authority to issue up to $3 billion in revenue anticipation notes.
Do not allow the State to continue to take $250 million annually in local sales tax revenue, as this initiative is misguided given the State’s improved fiscal condition.
Key Data
$10 billion
— The adjusted year-to-year spending growth in the proposed budget.
$250 million
— The amount the State takes annually in local sales tax revenue.
$3 billion
— The authority to issue revenue anticipation notes that the Legislature should reject.
$4.2 billion
— The total amount allocated for relief and recovery in the fiscal year 2023 budget.
15 percent
— The target for reserve funds as a percentage of SOF spending by fiscal year 2025.
$2.7 billion
— The amount in aid received annually by wealthy districts that already self-fund a sound basic education.
The Metropolitan Transportation Authority faces an annual structural deficit of at least $2.0 billion, which is currently being covered by federal aid and borrowing. To stabilize finances and avoid future service cuts or tax hikes, the agency should proceed with planned fare increases while restructuring operations to improve efficiency.
Recommendations related to Revenue Trends
The MTA should continue planned fare increases, which would be coupled with the City’s increased funding for Fair Fares to help stabilize the MTA’s finances for the future.
The MTA should implement changes that increase the efficiency of its operations to address the annual structural deficit.
The MTA should prioritize restructuring operations and preserving the fare policy to stave off possible future service cuts or dramatic tax or fare increases.
Key Data
$2.0 billion
— The annual structural deficit the MTA faces, which is currently covered by federal aid and borrowing.
$11.9 billion
— The amount of federal aid and borrowing used to cover the structural deficit from 2021 to 2025.
$1.6 billion
— The amount of selected re-estimates over the plan period that, when added to remaining MLF funds, would allow federal aid to cover the structural deficit for roughly one more year.
$2.9 billion
— The amount borrowed from the Municipal Liquidity Facility that may support operations beyond 2025.
$321 million
— The amount by which MTA operating expenses ended 2021 below the planned budget.
$1.5 billion
— The amount of planned savings actions that were cancelled in the November 2021 Plan.
New York City's fiscal outlook is bolstered by higher-than-expected tax revenues, including a $1.6 billion increase this year, though long-term revenue growth faces risks from sluggish economic recovery and structural changes in commuting. To ensure future stability, the city must address fiscal cliffs, implement efficiency savings, and commit to annual deposits of at least $500 million into the Rainy Day Fund.
Recommendations related to Revenue Trends
The Administration should review federal COVID-related spending to ensure resources strategically support the City’s recovery without creating unsustainably-funded programs.
The Administration should identify additional agency and central function efficiency savings to include in the Executive Budget.
It is critically important that the Administration work with its municipal unions to identify and implement efficiency savings and rationalize benefit levels and administration during collective bargaining negotiations.
To help the City weather the inevitable future recession or severe emergency, the financial plan should include annual deposits of at least $500 million to the Rainy Day Fund.
Key Data
$1.6 billion
— Higher than expected tax revenues in the current fiscal year.
$575 million
— Average annual higher than expected tax revenues in fiscal years 2023 through 2025.
$839 million
— Increase in the property tax forecast for fiscal year 2023.
$669 million
— Increase in the property tax forecast for fiscal year 2024.
$436 million
— Increase in the property tax forecast for fiscal year 2025.
$1.5 billion
— Additional tax revenues provided in fiscal year 2022.
New York's reliance on high personal income and corporate tax rates, which are currently the highest in the nation, threatens the state's economic competitiveness and increases revenue volatility. To stabilize the fiscal foundation, the state should allow recent tax increases to expire and restrain spending.
Recommendations related to Revenue Trends
The enacted State budget should allow the business tax increase to sunset to promote the State's long-run competitiveness and stabilize its fiscal foundation.
The State should restrain spending to allow the personal income tax increase to sunset sooner or at least as scheduled.
Key Data
22 percent
— New York's share of the nation's millionaires declined 22 percent from 2010 to 2019.
New York City's tax revenue faces uncertainty due to market volatility, the end of federal transfers, and a sluggish economic recovery that has left employment below pre-pandemic levels. While property tax values are projected to increase to $1.4 trillion, the city must navigate potential downward pressure on real estate transfer taxes and the need for recurring revenue to address fiscal cliffs.
Recommendations related to Revenue Trends
The Adams Administration should identify recurring revenues for programs currently facing a fiscal cliff or eliminate them.
The City should remove unspecified labor and attrition savings from the financial plan or identify specific actions to achieve them.
NYCHA and H+H should implement reforms to achieve fiscal stability and reduce reliance on city subsidies.
Agencies should leverage technology to improve service delivery and create recurring savings.
Agencies should reduce spending on low impact programs and work with labor to change work rules to increase efficiency.
Key Data
$35.4 billion
— The current non-property tax revenue forecast for fiscal year 2023.
$30.0 billion
— The projected property tax revenue for fiscal year 2023.
8.2 percent
— The projected increase in the value of the City’s taxable real estate next year.
$1.4 trillion
— The projected value of the City’s taxable real estate next year.
12 percent
— The increase in market value of offices and retail stores after the recession.
5 percent
— The increase in market value of hotels after the recession.
New York City faces annual budget gaps that are actually $750 million higher than projected due to illusionary savings, with a potential federal fiscal cliff of $1.3 billion to $4 billion arriving in fiscal year 2025. To ensure long-term fiscal sustainability, the city must move away from reliance on non-recurring funds and instead restructure its budget to rely on recurring revenues.
Recommendations related to Revenue Trends
Mayor-elect Adams should proactively take steps to restructure the City’s budget and workforce to be fiscally sustainable with recurring City revenues.
The City should not count on significantly higher than expected tax revenue in the near term, as current revenues are closely aligned with the financial plan.
The City should include annual deposits to the Rainy Day Fund to prepare for the next recession, rather than relying on a single deposit.
The incoming administration should support a 3 percent to 5 percent Program to Eliminate the Gap (PEG) to address budget gaps and fiscal sustainability.
Key Data
$750 million
— The amount by which annual budget gaps are higher than projected due to the inclusion of illusionary labor and attrition savings.
$1.3 billion to $4 billion
— The annual federal fiscal cliff that will arrive starting in fiscal year 2025 with the depletion of federal COVID-aid.
$500 million
— The deposit to the Rainy Day Fund maintained in the fiscal year 2022 financial plan.
$2.9 billion
— The projected budget gap for the upcoming year as stated in the November 2021 Financial Plan.
The MTA faces a structural annual deficit of at least $2.0 billion, which is currently being managed through federal aid and borrowing. To ensure future stability, the agency must improve operational efficiency and proceed with planned fare increases while the City expands the Fair Fares program.
Recommendations related to Revenue Trends
The MTA should use this runway to implement changes that increase the efficiency of its operations.
The MTA should continue planned fare increases.
The City should aggressively roll out Fair Fares to help stabilize the MTA for the future.
Key Data
$2.0 billion
— The structural annual deficit the MTA faces, which is currently covered by federal aid and borrowing.
$2.9 billion
— The amount of MLF debt that will support operations through 2025.
$9.8 billion
— The portion of the 2020-2024 capital plan funding that was considered 'at risk' as of summer 2021.
New York State's reliance on non-recurring federal aid to support recurring programs creates a $3.5 billion fiscal cliff by fiscal year 2025, necessitating a shift toward transparent budgeting and fiscal restraint. To ensure long-term stability, the state must move away from accounting maneuvers that obscure true spending growth and instead adopt Generally Accepted Accounting Principles (GAAP) while identifying actions to close future budget gaps.
Recommendations related to Revenue Trends
The State should present clear, timely financial reports that display the true level and growth of State spending, and shift to budgeting and reporting using Generally Accepted Accounting Principles (GAAP).
The State should identify actions to reduce the existing out-year gaps, avoid the fiscal cliff, and bolster reserves needed to mitigate the inevitable next downturn.
The State should retain flexibility in how it will reduce future budget gaps, including restraining new aid growth for wealthy districts since that is preferable to other alternatives to meaningfully control spending.
The State should improve budgeting and financial reporting, including foregoing fiscal maneuvers, making clear how any accounting practices affect spending growth, and presenting timely adopted financial plans and quarterly financial plan updates.
The State should increase transparency of the State’s finances as a key component to ensuring the State is on sound fiscal footing and will have the ability to serve and protect New Yorkers not only today, but in the future.
Key Data
$3.5 billion
— The projected fiscal cliff, or gap between available funding and planned spending, in fiscal year 2025.
$12.7 billion
— The amount of American Rescue Plan (ARP) federal fiscal relief the State received in May 2021 to be disbursed over four years.
$7.3 billion
— The total amount of federal fiscal relief used to offset costs in fiscal year 2021.
$116.4 billion
— The projected State Operating Funds (SOF) spending for fiscal year 2022.
$100.8 billion
— The actual State Operating Funds (SOF) spending for fiscal year 2021.
The Metropolitan Transportation Authority faces a $2.7 billion annual structural deficit that requires immediate cost-saving reforms and continued periodic fare adjustments to ensure long-term fiscal stability. While federal aid provides a temporary buffer until 2026, the agency must implement productivity improvements and operational changes to avoid drastic service cuts or tax increases.
Recommendations related to Revenue Trends
The MTA must implement a two-year wage freeze starting next year.
The MTA must implement service cuts starting in 2023.
The MTA must implement the regularly scheduled 2021 and 2023 fare increases, intended to keep up with inflation of costs.
The MTA should continue the smart practice of increasing fares and tolls biennially to keep up with inflation.
The City should undertake robust efforts to promote its Fair Fares program, which provides half-price transit service to lower income residents.
The MTA should increase its subway and bus operations and maintenance productivity, which could save $1.6 billion.
The MTA should increase bus speeds, which could save $268 million.
The MTA should reform how it deploys conductors, including one person train operation (OPTO) on subways and fare payment modernization on commuter rail.
The MTA should reduce employee and retiree health care spending, which could save $663 million.
Key Data
$2.7 billion
— Annual structural deficit facing the MTA.
$2.9 billion
— Potential annual savings identified by 2024.
$1.6 billion
— Potential savings from increasing subway and bus operations and maintenance productivity.
$268 million
— Potential savings from increasing bus speeds.
$512 million
— Potential savings from reforming conductor deployment and fare payment modernization.
$663 million
— Potential savings from reducing employee and retiree health care spending.
New York State's First Quarter Financial Plan Update identifies $2.2 billion in additional annual tax receipts, totaling $8.5 billion over four years. While the state has allocated $2.4 billion to its Rainy Day and Economic Uncertainties reserve funds, current projections suggest receipts could be an additional $3 billion higher, necessitating further deposits to adequately prepare for future economic downturns.
Recommendations related to Revenue Trends
The vast majority of additional tax receipts should be deposited into Rainy Day reserves.
The State should release future financial plan updates on time, as they are critical for the public to assess the State’s fiscal condition.
Key Data
$2.2 billion
— additional tax receipts recognized this year
$8.5 billion
— additional tax receipts over four years
$2.4 billion
— amount added to the State’s Rainy Day and Economic Uncertainties reserve funds
$3 billion
— potential additional current year receipts higher than updated projections
$7.2 billion
— total reserves after deposits outlined in the Update
New York State is providing record levels of school funding, with total resources reaching $77.9 billion for the 2021-22 school year, including $11.4 billion in one-time federal pandemic aid. Despite this influx, the state faces future budget gaps of at least $5 billion and must implement rigorous oversight to ensure these funds effectively address learning loss and reduce educational disparities.
Recommendations related to Revenue Trends
The State should be tracking and publicly reporting key data and holding districts accountable for addressing the pandemic’s negative impacts, including mitigating learning loss and ensuring a healthy return to school.
The State should manage, expect, and hold districts accountable to improve achievement and reduce educational disparities, using data that it makes publicly available.
The State should consider significantly restraining the new funds it provides to wealthy districts.
State leaders should work with districts to set measurable goals to address the disruptions and improve learning outcomes going forward.
Over time, initiatives should be evaluated to identify what works so programs and learning strategies can be either replicated or terminated.
Key Data
$77.9 billion
— Total federal, State, and local resources for the 2021-22 school year.
$11.4 billion
— Extraordinary federal one-time education funding allocated to districts over a four-year period.
$13.2 billion
— Amount by which total statewide funding exceeds the calculated Sound Basic Education (SBE) funding need.
$5 billion
— Likely budget gaps the State faces in the years beyond fiscal year 2025.
$32.5 billion
— Total State school aid for the 2021-22 school year.
$42.7 billion
— Local revenues derived principally from property taxes.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
New York State currently benefits from strong tax receipts and federal aid, allowing for significant investments in relief programs and education. To ensure long-term fiscal stability, the state must prioritize building rainy-day reserves and transitioning recurring programs from temporary federal funding to sustainable state revenue sources.
Recommendations related to Revenue Trends
The state should put more funds aside for a rainy day — the next recession or severe emergency — and reduce the future federal fiscal cliff.
The state should shift priority recurring programs from federal to recurring state revenues over time.
The state should move funds back on budget, stop manipulating the timing of spending, budget and report using Generally Accepted Accounting Principles, and publish the financial plan when the budget is adopted and other financial reports on time.
Key Data
$212 billion
— Total budget size for the current year.
$3.3 billion
— Funding allocated for renter and homeowner relief programs.
$2.1 billion
— Funding allocated for the Excluded Workers Fund.
$800 million
— Funding allocated for small business recovery grants.
$13 billion
— Increase in school aid for the school year.
$10 billion
— One-time federal education funds provided to the state.
The Metropolitan Transportation Authority's financial outlook has improved due to federal aid and higher-than-expected revenue, though a long-term structural deficit remains. To ensure fiscal stability, the agency must focus on operational efficiency, regular fare and toll adjustments, and prioritizing essential capital projects.
Recommendations related to Revenue Trends
The MTA should improve the efficiency of its operations.
The MTA should continue its policy of regular biannual fare and toll increases to help adequately and appropriately fund its operations.
The City should continue to implement and ensure full uptake of Fair Fares as a key companion policy to assist low-income riders.
The MTA should expedite the implementation of congestion pricing.
The MTA should focus its investment on the highest priority state of good repair and normal replacement work and make publicly available its project schedules and costs.
Key Data
$8.0 billion
— Cumulative cash shortfall forecasted through 2024 in the February 2021 Financial Plan.
$6.5 billion
— Additional federal aid delivered by the American Rescue Plan.
$103.3 billion is the total amount of spending authorized by the City Council for Fiscal Year 2022. While officials call it a budget of $98.3 billion, the larger figure reflects the full amount to be expended, including $6 billion available from the prior year due to higher than expected tax…
$209 billion is the total spending in New York State's Enacted Budget for Fiscal Year 2022. Six months ago, New York State was staring down a four-year revenue shortfall totaling $60 billion—however, revenues have strengthened and the federal government passed a stimulus bill that includes what may be the largest…
Fiscal year 2021 tax revenues exceeded expectations by $2.1 billion, bolstered by $15 billion in additional federal aid. Despite this influx, the budget leaves the next administration with annual gaps of $5 billion and relies on federal funds for recurring programs, creating a looming fiscal cliff.
Recommendations related to Revenue Trends
The City should enact legislation that sets minimum mandatory deposits into the Rainy Day Fund to ensure the City has the resources to weather a recession.
It is imperative that the City track federal spending in detail, including metrics for program goals and results, to ensure transparency and effectiveness.
The City must improve the efficiency of City agencies so that they deliver necessary services in a fiscally sustainable manner.
Key Data
$2.1 billion
— Amount by which fiscal year 2021 tax revenues exceeded expectations.
$15 billion
— Amount of additional federal aid received.
$500 million
— Amount deposited into the Rainy Day Fund.
$11 billion
— Estimated amount needed in the Rainy Day Fund to weather a recession.
$5 billion
— Annual budget gaps projected for fiscal years 2023 through 2025.
New York City's $98 billion budget relies too heavily on temporary federal aid, which should not be used to fund long-term commitments that require sustainable city tax revenues. Instead, the $6 billion in available federal funds should be strategically invested in partnership with industry and nonprofit groups to restore 500,000 lost private sector jobs and address pandemic-exacerbated disparities.
Recommendations related to Revenue Trends
Federal relief monies should not be used to expand the city payroll and long-term program commitments, as city priorities should be part of the baseline budget funded by sustainable city tax revenues not by temporary federal grants.
City priorities such as Universal Pre-K and appropriate reimbursement for human services agency contracts should be part of the baseline budget funded by sustainable city tax revenues not by temporary federal grants.
Federal aid from the American Rescue Plan should be concentrated on strategic interventions designed in partnership with industry and nonprofit groups with a focus on restoring lost private sector jobs.
The administration and City Council should reconsider federal funding allocations to ensure they are invested to leverage the strongest and fastest recovery.
The administration and City Council should adopt a process for greater transparency and consultation with affected industries on how American Rescue Plan funds are invested.
Key Data
$6 billion
— The amount of flexible federal aid provided to New York City to achieve a rapid and equitable recovery.
$98 billion
— The total value of the proposed Executive Budget that requires amendment.
500,000
— The number of lost private sector jobs that should be the focus of strategic interventions.
The Metropolitan Transportation Authority faces a long-term structural fiscal imbalance, with a projected $2.4 billion shortfall in 2024 even after accounting for federal aid. To achieve fiscal sustainability, the agency should implement operational reforms—including productivity improvements in maintenance and bus operations, conductor operating reforms, and health care savings—that could yield up to $2.9 billion in annual savings by 2024.
Recommendations related to Revenue Trends
The MTA should implement one-person train operation (OPTO) on subways to reduce the need for train conductors and bring agency operations in line with its national peer systems.
The MTA should adopt proof-of-payment fare collection on commuter rail to allow for a roughly 50 percent reduction in conductors.
The MTA should increase subway facility maintenance productivity to the national peer median to save nearly $1 billion annually.
The MTA should increase bus service productivity by aligning hourly productivity with national peer benchmarks.
The MTA should implement premium cost sharing parity for retirees and the active workforce to align health insurance policy with other public employees in New York.
Key Data
$2.9 billion
— Potential annual savings from implementing the proposed reforms by 2024.
$2.4 billion
— The MTA's projected cash shortfall in 2024.
13,000
— The number of full-time positions the MTA could reduce by 2024 through the proposed reforms.
$981 million
— Annual savings by 2024 from subway facility maintenance improvements.
$512 million
— Annual savings by 2024 from conductor operating reforms.
$263 million
— Annual savings by 2024 if MTA retirees contributed to health care premiums at the rate of retired State workers.
The next New York City Comptroller will play a critical role not only in holding the next Administration and agencies accountable, investing and managing five pension funds with $248 billion in assets, and partnering in $13 billion City debt issuance, but also in spotlighting and promoting New York City’s fiscal…
The Fiscal Year 2022 Executive Budget utilizes $15 billion in federal aid and increased tax revenue to address pandemic-related hardships, yet fails to leverage these resources to close future budget gaps of $5 billion annually. Instead of implementing structural efficiencies, the plan relies on non-recurring savings and adds 5,000 staff, leaving significant fiscal challenges for the future.
Recommendations related to Revenue Trends
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 spending to increase efficiency and preserve services rather than using most federal funds within two years.
Key Data
$15 billion
— Additional federal aid available to the City.
$5 billion
— Annual budget gap in fiscal years 2023 to 2025 when unspecified labor savings are removed.
$1 billion
— Annual labor savings carried in fiscal years 2023 through 2025 without identified recurring spending reductions.
$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 general reserve in fiscal year 2022.
New York City faces a critical opportunity to utilize over $15 billion in federal aid to stabilize its long-term fiscal health by prioritizing efficient government services, right-sizing the workforce, and replenishing reserves. Implementing these strategic measures would reduce cumulative budget gaps by 62 percent between fiscal years 2023 and 2025 while allowing for modest salary increases.
Recommendations related to Revenue Trends
The City should spread federal aid over multiple years to support needed services and provide time to restructure spending to be sustainable with recurring revenues.
The City should implement a recurring, mandatory Program to Eliminate the Gap (PEG) to prioritize services and identify actions to increase efficiency.
The City should remove half of the current vacancies in each year of the financial plan and allocate those remaining as required to efficiently staff priorities.
The City should phase in employee and retiree contributions to health insurance premiums over three years to reduce recurring labor costs.
The Executive Budget should include $500 million annual deposits to the Rainy Day Fund, or 75 percent of the annual tax revenue growth above 3 percent, whichever is greater.
Key Data
$15 billion
— New resources from federal aid that will be included in the City’s Executive Budget.
62 percent
— Reduction in cumulative fiscal year 2023 through 2025 budget gaps if recommended strategies are implemented.
$560 million
— Recurring health insurance premium savings for the City from phasing in employee and retiree contributions.
$6 billion
— Amount of unrestricted American Rescue Plan aid the City is poised to receive.
$7 billion
— The City's annual cost for health insurance for employees and retirees.
$500 million
— Recommended annual deposits to the Rainy Day Fund.
24/7 is the number of hours and days New Yorkers traditionally have had access to the subway system. In response to the pandemic the MTA suspended overnight service to clean and disinfect the subway, giving riders the confidence they need to return to the system. The pandemic decimated revenue and…
New York State has received significant federal aid through the American Rescue Plan, creating a temporary surplus that allows the state to restore previously planned spending cuts without raising income taxes. However, because significant budget gaps are projected for fiscal years 2024 and 2025, the state must use the coming years to restructure its spending to ensure long-term sustainability.
Recommendations related to Revenue Trends
To address the gaps that will exist and grow when the federal funds are depleted, the State should use the next two years to restructure spending to be more sustainable.
Key Data
$12.6 billion
— Direct federal funding provided to the State through the American Rescue Plan.
$9.6 billion
— Projected surplus over fiscal years 2021 through 2023 resulting from additional state aid and higher revenue forecasts.
$5.9 billion
— Amount available to fully reverse spending reductions and make additional investments after omitting proposed personal income tax increases.
New York City faces significant fiscal challenges due to the pandemic, with property tax revenues expected to decline by 4.3 percent and annual budget gaps widening to over $5 billion. To achieve long-term stability, the city must use federal aid for one-time expenses rather than recurring costs and implement structural budget savings instead of relying on short-term strategies.
Recommendations related to Revenue Trends
The City should use federal aid to support one-time COVID-19 response expenditures rather than funding new programs or hiring that requires on-going funding.
The City should implement recurring budget savings by negotiating work rule changes with municipal unions and rationalizing employee benefits to yield substantial savings.
The City should resist the urge to fund programs with recurring costs using one-time federal revenue infusions.
The City should prioritize the judicious use of new federal resources over two to three years to support a long-term plan for fiscal stability.
The City should avoid further tax increases as the infusion of federal aid provides resources more than sufficient to bridge to a stable fiscal future.
Key Data
$5 billion
— Annual budget gaps for fiscal year 2023 and beyond.
4.3 percent
— Expected decline in property tax revenue.
$5.6 billion
— Estimated direct federal aid from the American Rescue Plan Act of 2021.
$1.15 billion
— Additional federal aid from FEMA reimbursement.
$71 billion
— Loss in market value of commercial and residential property.
$640 million
— Amount by which personal income and business taxes performed ahead of the plan as of November 2020.
New York's fiscal outlook has improved significantly due to stronger-than-expected tax revenues and federal aid, which have reduced projected shortfalls and eliminated the immediate need for tax increases. To ensure long-term stability, the city and state should prioritize using these funds to restructure government operations and achieve efficiencies rather than supporting new programs or ongoing expenses.
Recommendations related to Revenue Trends
The state should eliminate unproductive economic development programs and temporarily change financing of some capital programs, all actions that could narrow future budget gaps — without raising taxes.
The city should over two years phase in efficiency initiatives, totaling 3 to 5% of city-funded agency spending to help fund pandemic-related needs without raising taxes.
The 108 union-administered benefit funds could be consolidated, and employees could contribute to their health insurance like state employees and those in the private sector to reduce labor costs.
Focusing the state’s education aid on high-need districts instead of increasing funds to wealthy ones could provide significant savings.
The city must not use the funds to reverse the progress made shrinking the workforce.
Key Data
$1.9 trillion
— The size of the federal aid package.
$25 billion
— Amount of federal funds that will erase more than 40% of the state's pandemic-related revenue shortfall.
$5.9 billion
— Extra funds the state would have on hand by the end of fiscal year 2023 if it adopted the budget without proposed personal income tax increases.
4%
— Projected decline in property tax revenues for the city.
$5 billion
— The city's projected annual budget gaps in the future.
$7 billion
— Amount the city is slated to receive from the new federal package and enhanced FEMA reimbursement.
New York State's budget process requires greater transparency regarding fiscal year 2021 spending withholdings and repayments, as well as the proposed 5 percent spending reductions for the upcoming fiscal year. Additionally, the state should reject proposed extraordinary executive budget powers that undermine legislative authority and obscure the management of public funds.
Recommendations related to Revenue Trends
Publish timely and complete information about funds that were withheld and repaid as part of the fiscal year 2021 State budget midyear adjustment process, broken out by agency or recipient and major program to ensure transparency of withholdings and repayments.
Omit from the Enacted Budget the midyear budget modifications authority tied to receipt of federal aid, as the Governor and Legislature should convene to adjust the spending plan if necessary.
Omit from the Enacted Budget the State Operations appropriations transfer and interchange authority, as spending should be managed within amounts appropriated for specific, clearly identified purposes.
Omit from the Enacted Budget the COVID-19 Extraordinary Relief Fund controlled by the Executive, as these revenues should be subject to standard budget negotiations and enactment.
Provide a clear summary of all dedicated fund transfers to the State’s general fund for the 5 percent cuts being made for fiscal year 2022 and beyond.
Key Data
$700 million
— Subset of withholdings that were legally required to be reported to the Legislature in calendar year 2020.
$628 million
— Total Transportation withholdings identified in the Assembly Majority’s 'Yellow Book' analysis.
$584 million
— Portion of Transportation withholdings listed as 'non-statutory, non- 18b Transit Operating Aid, Mobility Tax'.
$426 million
— Amount withheld from and to be repaid to the Metropolitan Transportation Authority.
$98 million
— Amount to be cut from the Metropolitan Transportation Authority in fiscal year 2021, pending receipt of federal aid.
5 percent
— Reduced rate of withholdings from the previous 20 percent level.
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
The Metropolitan Transportation Authority faces significant long-term financial challenges despite recent federal aid and higher-than-expected 2020 revenues, necessitating careful management of future fare policies and federal funding. To ensure stability, the agency must prioritize essential capital projects and implement a more sophisticated, re-targeted fare structure that protects low-income riders while maximizing revenue.
Recommendations related to Revenue Trends
The MTA should not substantially change its policy of regular fare increases to keep pace with inflation.
Implementing and ensuring full uptake of Fair Fares is a key companion of regular fare increase policy in order to assist low-income riders.
Higher than planned 2020 receipts should be incorporated into the forecast and suggest that the MTA may increase revenue estimates in subsequent years.
It will be important to understand whether the MTA uses federal aid to reduce future budget gaps or to reverse previously identified plans, such as planned service reductions or converting short-term debt into long-term debt.
Maximization of fare revenue eventually requires a new, re-targeted fare structure modeled on other systems with high farebox recovery that price discriminate by trip type and time of day.
Key Data
$7.9 billion
— The forecasted three-year cash shortfall for the MTA from 2022 to 2024.
$1.5 billion
— The amount of cash the MTA reported having more than expected at the end of 2020.
$1 billion
— The amount of annual net revenue from congestion pricing that 30 percent of the 2020-2024 capital plan relies on.
$8.8 billion
— The reported amount of transit aid to be directed to transit providers in the NYC area.
$764 million
— The amount by which 2021 farebox revenues would be higher than planned if they achieved the midpoint of McKinsey’s best and worst cases.
$220 million
— The amount the MTA budgeted for FEMA reimbursement in 2021 in its November and December plans.
New York State faces significant budget gaps due to the pandemic, which the Executive Budget proposes to close through tax increases and spending reductions. Alternative strategies, such as shifting capital financing to long-term debt and reducing specific economic development spending, could generate billions in savings and eliminate the need for proposed tax hikes.
Recommendations related to Revenue Trends
The State should shift more capital financing to long-term debt to provide sufficient resources to make tax increases unnecessary.
The State should reduce unproductive economic development and low priority capital spending to provide sufficient resources to make tax increases unnecessary.
The State should smooth the year-to-year fluctuations in school aid to avoid a sudden drop-off.
The overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.
If the State reduces its planned capital disbursements by 10 percent and finances up to 50 percent of the remaining paygo capital spending with debt, it would save $1.6 billion in fiscal year 2022.
A 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt would yield another $713 million in fiscal year 2022.
Key Data
$1.5 billion
— Estimated tax revenue generated in fiscal year 2022 from the proposed personal income tax high-income surcharge.
$300 million
— Expected annual State tax revenue from recreational marijuana sales when the market is fully mature.
$500 million
— Projected annual yield from mobile sports wagering authorization by fiscal year 2025.
$1.6 billion
— Savings in fiscal year 2022 achieved by reducing planned capital disbursements by 10 percent and financing 50 percent of remaining paygo capital spending with debt.
$713 million
— Yield in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt.
$15 billion
— Initial annual tax receipts shortfall estimated by the State due to the pandemic.
$7.4 billion is how much NYS personal income tax was paid in 2018 by residents of other states. This revenue stream may be threatened if a lawsuit over taxation of out-of-state telecommuting residents prevails. Today's guest is E.J. McMahon, adjunct fellow of the Manhattan Institute and senior fellow of the…
NYCHA faces a precarious financial future as its operating budget relies heavily on declining rental income and uncertain City and federal subsidies. The authority's fiscal stability is further threatened by the need to fund massive repair backlogs and lead abatement, which exceed its current financial capacity.
Key Data
$3.7 billion
— The total amount of NYCHA's 2020 operating budget.
6 percent
— The amount by which 2020 rental receipts fell below expectations due to income losses and rent reductions.
82 percent
— The rent collection rate as of November 2020, which declined from 89 percent the previous year.
$228 million
— The amount of City funding NYCHA received for its operating budget in 2020, which was less than the $262 million originally anticipated.
$2.8 billion
— The estimated cost over 20 years to remediate and abate properties with lead paint.
$40 billion
— The total repair needs for NYCHA, a sum that the authority and the City cannot fund on their own.
New York State faces significant budget gaps, necessitating a balanced approach that avoids relying on one-time revenue gimmicks, cost shifts to local governments, or unsustainable long-term debt. Policymakers should prioritize realistic revenue projections, particularly regarding marijuana legalization and tax increases, while ensuring that any necessary borrowing is a last resort accompanied by a clear fiscal stability plan.
Recommendations related to Revenue Trends
Any proposal for marijuana legalization should be realistic about the timing of revenue, and avoid dedicating revenue to uses beyond programs related to the consequences of use.
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
The State should especially avoid shifting Medicaid costs onto localities.
The State should not convert this short-term debt to long term debt.
Borrowing for operations should be a last resort, used only after the State exhausts less harmful strategies, and should be accompanied by a multi-year fiscal stability plan and increased transparency and oversight.
Key Data
$8.2 billion
— The budget gap New York State was facing in the current year as reported in the October Mid-Year Financial Plan Update.
$16.7 billion
— The budget gap New York State was facing in fiscal year 2022, absent $8 billion in recurring to-be-determined local aid cuts.
$4.2 billion
— The amount by which State receipts are projected to be higher than previously estimated.
$7 billion
— The total amount of New York's rainy day funds, Economic Uncertainties Fund, and other reserves.
$3.5 billion
— The amount of short-term debt the State reportedly plans to repay within the fiscal year.
New York City faces a historic decline in property tax revenue and a significant fiscal shortfall, with a projected $4.3 billion budget gap for fiscal year 2023. To address these challenges, the city must implement structural spending reforms, including headcount reductions and modifications to employee benefits, rather than relying solely on federal aid.
Recommendations related to Revenue Trends
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.
Key Data
3.2%
— City-funded spending increase between fiscal year 2021 and fiscal year 2022.
$4.3 billion
— Projected fiscal year 2023 budget gap.
$1 billion
— Amount of labor savings by which the fiscal year 2023 budget gap is likely understated.
New York State and City face combined budget gaps of $73.3 billion over four years, and even with significant federal aid, they will need to implement substantial measures to close these deficits. Leaders must act with urgency to develop and implement credible fiscal stability plans to address these long-term financial challenges.
Recommendations related to Revenue Trends
State and City leaders should act with urgency to develop and implement credible fiscal stability plans.
Key Data
$73.3 billion
— Combined State and City budget gaps over four years.
$60.1 billion
— The most recent State financial plan's projected four-year deficit.
$13.2 billion
— The City's projected four-year budget gap as of the November 2020 Financial Plan.
$10.6 billion
— The amount of gap-closing measures the City would need to implement through January 2024 if federal aid provides a similar share of relief as in the Great Recession.
$4.8 billion
— The City's adjusted budget gap for fiscal year 2022 that must be closed by the release of the Preliminary Budget in January 2021.
$57 billion
— The total amount of gap-closing actions the State and City would need to implement if federal aid relieves the same portion of budget gaps as it did during the Great Recession.
Legalizing recreational marijuana requires a multi-year timeline to establish consistent tax revenues, as states typically need three to four years to realize robust receipts after legalization. Policymakers should avoid relying on these funds to close immediate budget gaps and instead ensure that any future revenue is managed on-budget and remains free from specific spending commitments.
Recommendations related to Revenue Trends
State leaders should be cautious and pragmatic when estimating revenues, as implementing the necessary tax, licensing, and oversight structures takes approximately 12 to 18 months.
Any future marijuana tax revenue should be received and spent on-budget, rather than through off-budget trusts or other fiscal gimmickry.
Marijuana tax revenue should be free from capture and not committed to a specific purpose, allowing it to be used for recurring operating budget purposes.
It may be reasonable to dedicate a portion of revenues to cover administrative costs and fund consequential public health and substance abuse programming.
Key Data
$764,000,000
— California's recreational marijuana revenue in the most recent year (Jul 19 to Jun 20).
$395,523,567
— Washington's recreational marijuana revenue in the most recent year (Jul 18 to Jun 19).
$341,691,001
— Colorado's recreational marijuana revenue in the most recent year (Aug 19 to Jul 20).
$225,543,653
— Alaska's recreational marijuana revenue in the most recent year (Sep 19 to Aug 20).
$142,517,466
— Oregon's recreational marijuana revenue in the most recent year (Sep 19 to Aug 20).
$110,385,289
— Nevada's recreational marijuana revenue in the most recent year (Jul 19 to Jun 20).
New York City's fiscal outlook requires aggressive management to control spending and address looming risks, as the city navigates the economic fallout of the pandemic. Officials must ensure that future revenue projections and savings plans are based on realistic, feasible data rather than optimistic forecasts.
Recommendations related to Revenue Trends
Agencies should be tasked with identifying savings, especially recurring savings that improve the efficiency of government and provide multi-year budget relief.
Savings in future years that are not based on a feasible plan should be removed from the financial plan.
The City should provide a detailed accounting of both response costs and core services, such as education, that may cost more during the pandemic.
The City should identify how much of this spending it expects to be reimbursed by the federal government; unreimbursed costs will increase the budget gap.
Unfilled positions should be removed from the financial plan.
Key Data
$302 million
— City tax revenue collections in the first two months of fiscal year 2021 exceeded the Adopted Budget forecast by $302 million (1.8 percent).
$63 billion
— The City collected $63 billion in tax revenue in fiscal year 2020, which was $1 billion more than projected in June 2020.
$2.2 billion
— The City has already committed to spending $2.2 billion on COVID-19-related expenditures in fiscal year 2021, an increase from $118 million in the Adopted Budget.
$8 billion
— New York State’s Enacted Budget for fiscal year 2021 included $8 billion in unspecified cuts to local assistance.
New York State faces significant budget gaps, but reinstating the dormant stock transfer tax is a flawed solution that would likely drive financial firms to relocate and reduce overall tax collections. Instead of relying on this volatile and potentially harmful revenue source, policymakers should pursue alternative strategies to address the state's fiscal challenges.
Recommendations related to Revenue Trends
Policymakers should leave the STT dormant and find alternative ways to fill the budget gap.
New York’s leaders should reject proposals to revive the STT.
Key Data
$8 Billion
— New York State's current budget gap.
$17 Billion
— The expected budget gap for New York State next year.
$13 Billion
— The amount advocates claim the stock transfer tax could yield in annual revenue.
$4 Billion
— The amount the stock transfer tax would have yielded in fiscal year 2020.
18 percent
— The portion of State tax collections accounted for by the securities industry in fiscal year 2020.
6 percent
— The portion of City tax collections accounted for by the securities industry in fiscal year 2020.
New York City's taxable sales declined 23 percent to $34.2 billion between June and August 2020, driven by massive losses in the accommodation and recreation sectors due to the pandemic. While retail shopping has largely recovered, the overall city sales tax revenue fell to $1.5 billion during that period, down from $2 billion the previous year.
Key Data
$34.2 billion
— New York City taxable sales in June to August 2020, representing a 23 percent decline.
$1.5 billion
— City sales tax revenue in June to August 2020, which declined 23 percent compared to the same period the previous year.
90 percent
— Proportional decline in the accommodation sector's taxable sales in June to August 2020 compared to the prior year.
37 percent
— Decline in New York City taxable sales from March to May 2020 compared to the prior year.
62 percent
— Decline in taxable food service sector sales in June to August 2020.
21.5 percent
— Share of retail taxable sales comprised by electronic retailers during the pandemic, up from 8.5 percent the prior year.
New York State faces significant budget gaps of $8 billion this year and an expected $17 billion next year, but reinstating the dormant stock transfer tax would likely drive away securities firms and reduce overall tax revenue. Instead of relying on this tax, policymakers should pursue alternative strategies to address the state's fiscal challenges.
Recommendations related to Revenue Trends
Policymakers should leave the STT dormant and find alternative ways to fill the budget gap.
New York’s leaders should reject proposals to revive the STT.
Key Data
$8 billion
— New York State's budget gap for the current year.
$17 billion
— The expected budget gap for New York State next year.
$4 billion
— The amount the stock transfer tax would have yielded in fiscal year 2020, which is only a third of advocates' estimates.
18 percent
— The portion of State tax collections accounted for by the securities industry in fiscal year 2020.
30 percent
— The outflow of trading activity in Sweden after the country introduced a 2 percent stock transfer tax in 1984.
16 percent
— The decrease in trade volume in France after the country imposed a stock transfer tax in 2012.
New York City faces a $4.2 billion budget gap for fiscal year 2022, necessitating additional savings programs and difficult fiscal decisions to maintain competitiveness. While agency spending is projected to decline by $838 million, the city must prioritize recurring savings and essential services to address ongoing budgetary risks and declining tax revenues.
Recommendations related to Revenue Trends
The City must implement additional savings programs in fiscal year 2021 to address budgetary risks.
The City needs to identify savings to close the $4.2 billion gap in fiscal year 2022.
Future budget cuts should aim to secure recurring savings while providing critical services to those most in need.
The City must make additional hard choices to maintain its competitiveness.
Key Data
$92.8 billion
— New York City’s total Fiscal Year 2021 Budget when adjusted for the use of prior year resources and reserves.
$69.1 billion
— Amount of the Fiscal Year 2021 Budget backed by the City’s own revenues, such as taxes, fines, and fees.
$4.2 billion
— Projected budget gap for fiscal year 2022 that requires the identification of additional savings.
$838 million
— Projected decline in agency operations spending from fiscal year 2020 to fiscal year 2021.
$1.5 billion
— Total year-over-year spending decline projected across 28 city agencies.
$652 million
— Total year-over-year spending increase projected across 48 city agencies.
New York City faces a fiscal crisis with potential revenue shortfalls from tax and state aid, but should avoid borrowing to balance the fiscal year 2021 budget. Instead, the city should prioritize fiscal management and only consider borrowing as a last resort under strict conditions and oversight.
The Metropolitan Transportation Authority faces a cumulative $16.2 billion budget gap through 2024 due to significant declines in farebox and tax revenue caused by the pandemic. To address these financial challenges, the agency must implement cost-saving measures, including labor efficiencies, service optimization, and toll increases, while avoiding unsustainable long-term debt.
Recommendations related to Revenue Trends
The MTA should work with the labor force to implement additional savings by increasing the efficiency of operations, and reducing overtime and employee benefits costs.
The MTA should forego new headcount, specifically the 776 positions planned for fiscal year 2021 that would cost $250 million.
The MTA should rescope the capital program to focus on projects that preserve the system’s state of good repair and reduce future maintenance expenses.
The MTA should optimize service to match ridership patterns and support critical needs of the economy, including adjusting service on overlapping routes.
The MTA should increase tolls by a greater percentage than the currently planned 4 percent increase in 2021 as toll traffic has returned at a faster rate than ridership.
Key Data
$16.2 billion
— Cumulative budget gap for the MTA from 2020 through 2024.
$5.1 billion
— Anticipated shortfall in fare and toll revenue in 2020.
$3.9 billion
— Anticipated shortfall in fare and toll revenue in 2021.
$1.6 billion
— MTA tax revenue shortfall in 2020.
$1.5 billion
— MTA tax revenue shortfall in 2021.
$1.8 billion
— Anticipated budget gap in 2024 even with an expected full return of revenue.
The fiscal year 2021 budget was balanced using reserves, federal aid, and expenditure reductions, but it relies on optimistic revenue projections and lacks a clear path for long-term stability. Significant risks remain, including potential state aid cuts and the need for recurring savings to address outyear budget gaps.
Recommendations related to Revenue Trends
The City should undertake a thorough review of agency programs and operations to identify recurring savings, reduce the City’s workforce through attrition, and implement recurring labor savings.
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures; borrowing should be a last resort.
Shrinking the workforce through attrition is both possible and preferable to layoffs.
Labor savings should be a part of the City’s budget balancing efforts.
Key Data
$10.4 billion
— The tax revenue shortfall and decrease in state aid opened a budget gap in fiscal years 2020 and 2021.
$6 billion
— The amount of the increased annual budget gaps starting in fiscal year 2022.
$9.0 billion
— The amount by which projections of fiscal year 2020 and 2021 tax collections were reduced.
$1 billion
— The recurring savings target to be negotiated with the City’s municipal labor unions.
$88.2 billion
— The total budget adopted by the City for fiscal year 2021.
The Metropolitan Transportation Authority faces a severe fiscal crisis with multi-billion dollar operating deficits exacerbated by the pandemic, requiring a strategic combination of operational efficiencies, capital project prioritization, and revised fare and toll policies. To bridge the funding gap, the authority must balance service levels with demand while treating borrowing for operating expenses as a strictly limited last resort.
Recommendations related to Revenue Trends
The MTA should pursue greater efficiencies to lower operating expenses, which in large part requires working collaboratively with labor unions.
The authority should prioritize planned capital investments to lower debt service costs, including postponing expansions and possibly slowing accessibility improvements.
MTA leaders should optimize service levels by continually adjusting capacity to current demand and safety requirements.
The authority should revise fare and toll policies to seek more revenue from fares and to raise tolls proportionally more than fares.
The MTA should borrow for operating expenses only as a last resort to be minimized and used only when other options are exhausted.
Key Data
$8.4 billion to $12.6 billion
— The estimated operating budget shortfall for 2020 and 2021.
$2.7 billion
— The cumulative shortfalls below MTA plan projections in 2020 to 2022.
$1 billion
— The annual revenue from congestion pricing expected starting in 2021 that has been delayed.
$3.8 billion
— The amount of federal aid the MTA has received.
$3.9 billion
— The additional federal aid requested by the MTA for 2020.
$64 billion
— The amount of capital commitments in the next five years.
The FY2021 New York City budget relies on potentially optimistic economic and revenue assumptions, questionable police overtime savings of nearly $300 million, and unspecified labor union savings of $1 billion to achieve balance. These measures fail to address long-term fiscal gaps, leaving the city vulnerable to future service reductions and layoffs as the fiscal crisis persists.
Recommendations related to Revenue Trends
City leaders should sharpen their pencils and focus their management on actions that reduce the yawning multiyear budget gaps presented by the fiscal crisis.
The City must implement a program of recurring efficiency savings and aggressive attrition to avoid drastic service reductions and layoffs.
Key Data
$300 million
— The amount by which the budget aims to reduce police overtime, which is considered highly unlikely given the weak history of overtime management.
$1 billion
— The amount of savings the budget aims to produce through collaboration with labor, for which there is a concerning lack of specificity regarding the necessary actions.
New York faces significant budget gaps, with state and city leaders urged to prioritize expenditure control and federal aid over tax increases that could harm economic competitiveness. High combined corporate and personal income tax rates, coupled with a declining share of the nation's millionaires, threaten the revenue stability that the state and city rely upon.
Recommendations related to Revenue Trends
Improving the fiscal outlook for both the State and the City primarily requires controlling expenditures and advocating for federal aid.
Any consideration of tax increases should include the impact on State and local economic competitiveness.
As New York’s leaders look to close budget gaps, they must be cognizant that combined State and City PIT rates are the second highest in the nation, while combined CFT rates are the highest.
Key Data
$8 billion
— Potential budget gap for New York State in fiscal year 2021.
$15 billion
— Potential budget gap for New York State in fiscal year 2022.
16.49 percent
— The sum of the State effective tax rate, City rate, and MTA taxes on businesses operating in New York City.
12.696 percent
— The top personal income tax rate imposed in New York City when combining state and local rates.
40 percent
— The portion of personal income tax revenues coming from millionaires in New York State and New York City.
$1.4 billion
— The amount of additional tax revenue that could have been generated if New York's share of national millionaire capital gains had remained at 2010 levels.
New York City faces a severe fiscal crisis with multi-billion dollar budget gaps driven by sudden, deep shortfalls in tax revenue. To balance the budget, the city must implement a combination of expenditure reductions, workforce attrition, efficiency improvements, and a temporary property tax increase, while avoiding long-term borrowing.
Recommendations related to Revenue Trends
The City should resume study of and implement a volume-based fee for refuse; such fees have been shown to reduce waste generation by households as the cost of disposing of one’s waste becomes more immediately felt.
Implementing a health insurance premium-sharing arrangement would provide significant recurring savings while ensuring the City continues to provide attractive benefits.
The City should assess the possibility of selling parking lots and underutilized buildings with the aim of generating $50 million in fiscal years 2021 and $100 million each in fiscal years 2022 and 2023.
City leaders should not let the harmful anti-competitive potential of a tax increase be realized by allowing it to become permanent.
The City should reduce headcount by 9,000 and still remain above the fiscal year 2008 peak.
Key Data
$6.9 billion
— Fiscal year 2021 tax revenues are now expected to be $6.9 billion, or 11 percent, less than the Preliminary Budget forecast published in January.
$1.5 billion
— The annual revenue letter to the New York City Council identified $1.5 billion in reductions to the fiscal year 2021 tax revenue forecast, due mostly to lower projections for sales, hotel, and real estate transfer taxes.
$5.0 billion
— The budget gaps in fiscal years 2022, 2023, and 2024 were initially projected to be $5.0 billion, $4.5 billion, and $4.9 billion, respectively.
$6.9 billion
— Including estimates for identified risks, the budget gap for fiscal year 2022 is projected to be $6.9 billion.
$134 million
— There were $134 million in reductions to non-tax City revenues, mainly from fines and forfeitures.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
The Economic Development Corporation has faced increasing fiscal strain as operating expenses, particularly from the NYC Ferry system, have outpaced revenue growth, leading to an operating loss in 2019. To address these pressures and balance budgets, the agency must continue to identify efficiencies, such as modifying ferry fare policies and delaying costly expansions.
Recommendations related to Revenue Trends
The Economic Development Corporation should continue to identify ways to make its ferry operations more efficient, such as implementing dynamic fare pricing and delaying the launch of costly planned expansions.
The Economic Development Corporation could generate additional recurring savings by modifying the ferry system’s fare policy and planned expansions.
The NYC Ferry system should charge higher fares on weekends and for noncommuters.
The NYC Ferry system should not run or expand routes to Coney Island and Ferry Point that will require extraordinarily high subsidies.
All agencies should scrutinize their operations to find efficiencies and redesign or eliminate programs that are not cost-effective.
Key Data
$382.7 million
— Operating revenue for the Economic Development Corporation in 2019.
$384.2 million
— Operating expenses for the Economic Development Corporation in 2019.
$1.8 million
— Operating loss recorded by the Economic Development Corporation in 2019.
$53 million
— Amount spent by the Economic Development Corporation to subsidize NYC Ferry in 2019.
$130 million
— Average annual operating surplus for the Economic Development Corporation between 2012 and 2014.
$10 million
— Estimated reduction in operating costs for fiscal year 2021 resulting from ferry service changes.
New York City faces a $7.4 billion tax revenue shortfall over two fiscal years, yet city-funded spending continues to grow and workforce size is projected to increase. State legislators are urged to reject a bill permitting the city to issue long-term debt for operating expenses until all other options for balancing the budget are exhausted.
Recommendations related to Revenue Trends
The State Legislature should reject S.8418/A.10520, which would permit the City of New York to issue long-term debt to pay for operating expenses and offset revenue losses.
The State Legislature should not consider granting borrowing authority until the City has exhausted options for balancing the budget that do not irreparably harm today’s New Yorkers.
Borrowing should only be used as a last resort after other actions are exhausted and federal aid proves insufficient.
Key Data
$7.4 billion
— tax revenue shortfall over two fiscal years
2.1 percent
— spending cuts of city-funded spending in fiscal year 2021
Governments facing fiscal stress due to economic downturns must balance budgets by carefully weighing options like utilizing reserves, reducing expenditures, increasing taxes, selling assets, or borrowing. To maintain long-term fiscal health and intergenerational equity, officials should prioritize strategies that minimize harm to vulnerable populations while avoiding practices that shift unsustainable debt burdens onto future generations.
Recommendations related to Revenue Trends
Governments should use no more than two-thirds of any rainy day fund in the first year of a fiscal crisis to ensure resources remain available for future needs.
New York should reverse its large financing role for local Medicaid costs, as current studies demonstrate this burden is highly inequitable.
Policymakers should avoid long-term borrowing for operations, as it violates the principle of intergenerational equity by forcing future taxpayers to pay for services consumed by current residents.
When selling government assets, officials should adopt the fiscally prudent policy of using proceeds to create equivalent value on the balance sheet, such as through capital investments or reserves.
Key Data
$100 million
— Amount of capital spending avoided that results in annual debt service savings.
$6.5 million
— Annual savings in debt service achieved by avoiding $100 million in capital spending.
two-thirds
— Maximum portion of any rainy day fund recommended for use in the first year of a fiscal crisis.
New York State faces significant budget gaps driven by revenue shortfalls, with projected deficits reaching $19 billion by fiscal year 2023. To address this fiscal stress, the state should implement strategic measures such as freezing middle-class tax cuts, suspending certain sales tax exemptions, and reducing unproductive capital spending.
Recommendations related to Revenue Trends
The State should freeze the implementation of middle class tax cuts at the calendar year 2020 rate.
The State should temporarily suspend the sales tax exemption on clothing items costing less than $110 to generate additional resources.
The State should modify its capital plan for the current period of fiscal stress and eliminate unproductive economic development capital spending.
Medicaid Redesign Team efforts should continue in order to find additional savings starting in fiscal year 2022.
The State should use some of its reserves to close current and future gaps.
Key Data
$13 billion
— Projected budget gap for fiscal year 2021.
$18 billion
— Projected budget gap for fiscal year 2022.
$19 billion
— Projected budget gap for fiscal years 2023 and 2024.
$774 million
— Additional resources generated in fiscal year 2021 by temporarily suspending the sales tax exemption on clothing items.
$2.0 billion
— Additional resources generated in fiscal year 2024 by temporarily suspending the sales tax exemption on clothing items.
$1.0 billion
— Target for asset sales in fiscal year 2022 and fiscal year 2023.
$7.4 billion -- the two-year tax revenue shortfall for the City of New York revealed when Mayor Bill de Blasio released the Executive Budget for Fiscal Year 2021 last month. In this episode we hear from the person who will help guide NYC through one of its greatest fiscal challenges,…
New York City faces a precarious fiscal situation with significant outyear budget gaps of $5.0 billion in fiscal year 2022, $4.5 billion in 2023, and $4.9 billion in 2024. While reserves and federal aid have covered short-term shortfalls, the reliance on non-recurring resources necessitates a long-term strategy to address structural deficits and potential revenue volatility.
Recommendations related to Revenue Trends
The City must implement additional spending cuts to hedge against risks like lower-than-expected federal aid and tax revenues.
The City must identify a long-term solution to the fiscal crisis to address significant outyear budget gaps, as current reliance on reserves is only a short-term fix.
Key Data
$4.0 billion
— Reserves and Retirement Health Benefit Trust Fund resources used to support spending despite tax revenue shortfalls.
$5.0 billion
— Projected budget gap for fiscal year 2022.
$4.5 billion
— Projected budget gap for fiscal year 2023.
$4.9 billion
— Projected budget gap for fiscal year 2024.
7.4 percent
— Expected increase in tax revenues in fiscal year 2022.
2.3 percent
— Projected growth in spending supported by City funds in fiscal year 2020.
The Fiscal Year 2021 Executive Budget relies on short-term strategies like reserve diversions and optimistic revenue assumptions, creating a significant fiscal gap for 2022. To address this, the city needs a more robust, recurring savings plan that identifies non-core services and operational efficiencies rather than relying on temporary measures.
Recommendations related to Revenue Trends
The City should implement a larger savings plan with more recurring value to address the multi-year fiscal crisis.
Working with its labor partners, the City should identify non-core services and subsidies to reduce or suspend, while seeking additional efficiencies in agency operations, employee benefits, contracts, leased space, and fleet operations.
Spending reductions should be focused on paring down to efficiently providing core needed services to strengthen the City’s ability to weather the economic downturn.
Key Data
$2.7 billion
— The two-year savings program totals this amount, representing less than 2 percent of the budget.
$2.6 billion
— Amount diverted from the Retiree Health Benefits Trust (RHBT) to balance the budget.
$1.4 billion
— Amount of other reserves used to balance the budget.
$5.0 billion
— The looming gap projected for fiscal year 2022.
7.4 percent
— The budget's assumption for tax revenue growth in fiscal year 2022.
New York City lacks sufficient budgetary reserves to manage economic downturns, with current savings falling far short of the projected revenue losses during recessions. Establishing a well-designed Rainy Day Fund with strict rules for deposits and withdrawals is essential to protect municipal services and ensure fiscal stability during future financial hardships.
Recommendations related to Revenue Trends
The State should amend the Financial Emergency Act to allow an exception for a Rainy Day Fund to be used during recessions or severe emergencies.
State law should define a recession as two successive quarters of economic decline as indicated by private employment or gross city product.
An emergency should be defined as severe when it is accompanied by a revenue shortfall or expenditure increase equal to or greater than 1 percent of the budget.
Withdrawals from the Rainy Day Fund should be limited to no more than two-thirds of the fund balance in any year to ensure funds are available for the second year of a crisis.
The City should implement mandatory deposits equal to 75 percent of the tax revenue growth above 3 percent to ensure sufficient funds are accumulated.
The City should establish a target size of 17.2 percent of tax revenue for the Rainy Day Fund, which can serve as a cap on the size of the fund.
Key Data
$1.25 billion
— Amount set aside in reserves for next year.
$6 billion
— Near-term revenue loss estimated by the Office of the New York City Comptroller.
$20 billion
— Three-year shortfall estimated if a recession occurs.
$9 billion
— Amount the City would have in reserves if the recommended strategy had been followed over the last 10 years.
71 percent
— Percentage of voters who approved the amendment to the City Charter to create a Rainy Day Fund.
17.2 percent
— Recommended target size of the Rainy Day Fund as a percentage of tax revenue.
New York State faces a significant fiscal crisis, with revenue losses estimated as high as $15 billion for the fiscal year, compounding a pre-existing $7 billion budget gap. To manage these shortfalls, the state has authorized $8 billion in short-term borrowing and relies on federal aid, though concerns remain regarding transparency in budget modifications and the potential misuse of long-term debt for operating expenses.
Recommendations related to Revenue Trends
The Executive should make its budget modification plan publicly available so that the Legislature and public can review and debate the revenue shortfall and spending adjustments.
The Legislature should generate its own contingency plans as soon as possible to productively respond to potential revenue shortfalls within the 10-day period.
The State should address the underlying structural Medicaid problem without harming the health system’s ability to respond to the pandemic, rather than relying on short-term revenue fixes.
The State should avoid using long-term debt for operating purposes, as this obligates future generations to pay for today's revenue gaps.
Key Data
$7 billion
— Budget gap faced by New York State even before the current economic disruption.
$15 billion
— Estimated revenue loss in the current fiscal year due to economic disruption.
$1.1 billion
— Federal aid provided for education in fiscal year 2021.
$4.5 billion
— Federal aid provided for Medicaid in fiscal year 2021.
$8 billion
— Short-term borrowing authorized to cover liquidity needs due to the extension of the income tax filing deadline.
$3 billion
— Line of credit the State will be able to access.
New York City faces a potential $20 billion revenue shortfall over three fiscal years due to the economic disruption caused by the pandemic. To address this, the city must move beyond business-as-usual budgeting and implement a more ambitious savings plan that targets $3 billion in reductions for the upcoming year.
Recommendations related to Revenue Trends
The City should control all non-critical spending in the current year and increase the target size of next year’s savings program to $3 billion.
The savings plan should be significantly larger and explicitly focused on generating recurring savings in spending.
Agencies should be charged with generating a menu of options for spending reductions that are rooted in improving efficiency, streamlining operations, and supporting more cost-effective operations.
The City will have to work with municipal unions on workforce savings.
The City will have to potentially enact more far-reaching measures, such as hiring freezes, layoffs, or service cuts.
Key Data
$20 billion
— Estimated potential revenue shortfalls over three fiscal years due to a similar recession.
$6 billion
— Estimated revenue shortfall in fiscal years 2020 and 2021.
$3 billion
— Recommended target size for next year's savings program.
$1.3 billion
— Savings target announced for the Executive Budget for Fiscal Year 2021.
0.91 percent
— Percentage of city-funded spending represented by the $1.3 billion savings target for Fiscal Year 2021.
0.23 percent
— Average of previous efficiency savings as a percentage of city-funded spending.
NYCHA's 2020 operating budget projects revenues exceeding $3.7 billion, yet the authority faces significant fiscal challenges due to stagnant rental income growth and an increasing reliance on City subsidies. While federal and City support has risen, the authority's rent collection rate has declined, falling from 94.9 percent in 2016 to 89.6 percent in 2019, further straining its ability to fund basic operations.
Recommendations related to Revenue Trends
NYCHA’s fiscal stability depends on future settlements being financially sustainable and providing enough flexibility for NYCHA to implement its turnaround plan.
NYCHA’s forthcoming organizational plan must include a program to boost the rent collection rate and maintain it going forward.
Devolving budgeting and accountability to the property level could improve collections but it will depend on property managers’ ability to implement changes and meaningfully improve tenants’ quality of life.
Personnel shifts are necessary but could contribute to structural imbalances if they are not accompanied by a combination of additional funding, reallocation of resources, spending cuts, or productivity enhancements.
Key Data
$3.7 billion
— Projected operating revenues for NYCHA in 2020.
$91 million
— Projected surplus for NYCHA in 2020.
94.9 percent
— NYCHA's rent collection rate in 2016.
89.6 percent
— NYCHA's rent collection rate in 2019.
$110 million
— Amount of tenant rent and arrears NYCHA failed to collect in fiscal year 2019.
45 percent
— Portion of owed rent collected by NYCHA on average per month.
The Citywide Savings Program relies heavily on routine budget adjustments like re-estimates and revenue increases, with efficiency savings accounting for only 33% of the total identified savings in fiscal year 2021. Implementing a consistent 1% annual efficiency savings target since fiscal year 2016 would have significantly slowed budget growth and reduced the fiscal year 2021 budget by $2 billion.
Recommendations related to Revenue Trends
The Citywide Savings Program should prioritize greater efficiency savings rather than relying on routine budget adjustments.
The city should implement a 1 percent annual efficiency savings target to curb the growth of city-funded spending.
Budget planning should focus on changes to agency practices that reduce spending without reducing services.
Key Data
0.6%
— The FY2021 Citywide Savings Program identifies savings equal to 0.6% of city-funded spending over five years.
33%
— Efficiency savings account for 33% of the total FY2021 Citywide Savings Program.
6%
— Revenue initiatives account for 6% of the total FY2021 Citywide Savings Program.
0.23%
— Between FY2016 and FY2021, efficiency savings averaged 0.23% of city-funded spending.
$2 Billion
— A 1% annual efficiency savings since FY2016 would have reduced the FY2021 budget by $2 billion.
4.7%
— With 1% efficiency savings, the city-funded budget would have grown at an average 4.7% annually compared to the 5.2% growth projected.
New York City and State face potential revenue shortfalls of $15-20 billion and $34 billion respectively in the event of a recession, yet currently hold only 6-16% of that amount in reserves. To prepare for these economic risks, leaders should restrain recurring spending, avoid tax increases, and deposit any revenues exceeding projections into rainy day funds.
Recommendations related to Revenue Trends
State leaders should close state budget gaps by restraining recurring spending without tax increases or fiscal gimmicks to manage potential revenue shortfalls.
The state should save any revenues coming in above current projections in its rainy day funds.
The state should stop increasing school aid to wealthy districts and instead put away those funds to protect New Yorkers in the future.
The mayor should immediately ask agencies to develop plans for productivity-based savings totaling 1% or more of city-funded expenditures.
Both the mayor and Council should commit to putting all funds above projections into reserves.
Key Data
$34 billion
— Estimated three-year revenue shortfall for New York State in the event of a recession.
$15-20 billion
— Estimated three-year revenue shortfall for New York City in the event of a recession.
6-16%
— Percentage of the estimated revenue shortfall amount currently held in reserve by the city and state.
$700 million
— Amount of revenues already identified by the state as coming in above current projections.
New York City taxpayers provide 71 percent of the Metropolitan Transportation Authority's non-fare and non-federal revenue, a share that is expected to grow as new funding sources like the mansion tax and central business district tolling are implemented. These contributions, which include local, regional, and state taxes, demonstrate that the City already funds the majority of the transit authority's subsidies.
Key Data
71 percent
— New York City taxpayers provide 71 percent of the MTA’s non-fare and toll, nonfederal revenue through a combination of local, regional, and State taxes.
$1.7 billion
— In 2018 City taxpayers, through the City budget, contributed nearly $1.7 billion of its own tax revenue to the MTA.
$25 billion
— The State enacted legislation directing three new revenue sources to the MTA, which are expected to support $25 billion of the 2020-2024 Capital Program.
$374 million
— The MTA forecasts the new mansion tax, which applies to New York City real property sales of at least $2 million, will generate $374 million in 2020.
$362 million
— The MTA forecasts the surcharge on for-hire vehicle trips that start, terminate in, or traverse Manhattan below 96th Street will raise $362 million in 2019.
New York State's fiscal year 2021 executive budget addresses budget gaps by relying on higher revenue projections, Medicaid savings, and spending restraints rather than new taxes. The plan includes proposals to consolidate school aid formulas, increase rainy day reserves, and implement reforms to retiree health insurance benefits to reduce long-term liabilities.
Recommendations related to Revenue Trends
The Legislature should adopt reforms to retiree health insurance benefits that will increase the progressivity of eligibility for benefits while reducing current other post-employment benefit (OPEB) costs and future liabilities.
All unallocated settlement funds should be placed into the State’s rainy day funds.
The best way to address potential risks is to build reserves, control spending, and make changes as needed in the budget process.
The MRT should recommend additional savings to eliminate the annual payment deferral.
Key Data
$1.7 Billion
— Unsound Medicaid payment delay continued in the budget.
$2.5 Billion
— Savings target for the Medicaid Redesign Team to restore spending discipline.
$826 Million
— Proposed increase in school aid.
$428 Million
— Planned deposit to the rainy day fund in fiscal year 2020.
$20 Million
— Projected recreational cannabis revenue in fiscal year 2021.
$188 Million
— Projected recreational cannabis revenue in fiscal year 2025.
New York City Health + Hospitals faces a persistent operating deficit, with outpatient services and inadequate Medicaid reimbursement being primary drivers of the shortfall. To address this, the City and State should implement performance-based budgeting, improve revenue collection, and reform the distribution of Medicaid supplemental payments to better align funding with actual service costs.
Recommendations related to Revenue Trends
The City Office of Management and Budget (OMB) and H+H leadership should develop a new approach to financial planning and budgeting.
Multiyear goals should be set for increasing efficiency as evidenced in reduced unit costs such as lower cost per visit and per discharge and for added revenue based on benchmarks from safety net institutions and internal comparisons among H+H facilities.
Progress toward the benchmarks should be publicly monitored, and H+H leadership held accountable.
Better target Medicaid supplemental payments to H+H and other facilities with the greatest need, and finance the nonfederal portion of these payments with State revenues rather than local intergovernmental transfers.
Use more equitably the surplus operating revenue earned by large networks from commercial insurers to cross subsidize indigent care on a system wide as well as an intra-institutional basis.
Better align Medicaid hospital payment rates to reasonable unit costs of services, and fund with better use of Medicaid supplemental payments, more equitably allocated high commercial insurance payments and other broad based sources.
Key Data
$3 billion
— Average annual operating deficit for H+H in fiscal years 2015 to 2017.
46 percent
— H+H operating deficit as a percentage of operating expenses from 2015 to 2017.
61 percent
— Share of the H+H operating deficit attributed to outpatient services.
53 percent
— Share of associated costs covered by Medicaid payments for H+H.
$1.7 billion
— Estimated City support to H+H in fiscal year 2019.
$490 million
— Lower end of the target operating deficit reduction using benchmarking.
New York State faces a significant fiscal imbalance driven by accelerating spending rather than declining revenues, which continue to grow steadily. To address this, the state should prioritize spending reductions in areas like Medicaid and economic development rather than increasing taxes, which could harm competitiveness.
Recommendations related to Revenue Trends
Reconstitute the Medicaid Redesign Team to identify savings.
Focus education aid on needy districts to fund fully SBE.
Reduce unproductive economic development program spending.
Consider reforms to retiree health benefits that were proposed repeatedly in recent Executive Budgets.
Exercise powers granted under the Medicaid global cap to prevent Medicaid spending from exceeding budgeted amounts.
Key Data
3.5 percent
— Annual average growth of State receipts between fiscal years 2011 and 2020.
2.1 percent
— Projected annual average growth of receipts between fiscal years 2020 and 2023.
12.7 percent
— Top personal income tax rate for New York City residents.
8.82 percent
— New York State’s top marginal personal income tax rate.
8.49 percent
— New York’s average combined State and local sales tax rate.
$19.3 billion
— Personal income tax liability of taxpayers with incomes greater than $1 million.
New York City's property tax system generates nearly $30 billion annually, accounting for 32 percent of all city revenues and demonstrating consistent growth of 6.2 percent since 1999. To improve equity and transparency while maintaining fiscal stability, the system requires comprehensive reform, including moving cooperatives and condominiums to Class 1 and implementing income-based tax rebates.
Recommendations related to Revenue Trends
Move cooperatives and residential condominiums to Class 1 with one-, two-, and three-family homes.
Valuation for tax purposes should reflect actual real estate market value, using sales-based models for one-, two-, and three-family homes, cooperatives, and residential condominiums.
Full market value should be the starting point for assessing the tax base, with differential effective tax rates used to favor residential properties.
The existing class share system should be eliminated.
Stability of the property tax should be achieved by phasing-in market value changes over three years for all parcels.
To ease burdensome tax bills, rebates of owner-occupied residential property taxes should be provided based on household income when tax bills exceed a set share of income.
Transition to the new system should occur over a five-year period.
Key Data
$30 billion
— Amount of revenue the property tax will generate in fiscal year 2020.
32 percent
— Portion of all city revenues generated by the property tax in fiscal year 2020.
$1 out of every $3
— Amount of city spending funded by the property tax.
6.2 percent
— Average annual growth of property tax revenue since fiscal year 1999.
New York school district revenues grew by $23 billion between 2006 and 2018, with local revenues increasing by 62 percent and state aid by 35 percent. Despite this significant funding growth, the current distribution formula remains flawed, failing to adequately target resources to the neediest districts while overfunding wealthy ones.
Recommendations related to Revenue Trends
The State should revamp the Foundation Aid formula and other education aid formulas to properly account for local wealth and actual local funding.
Eliminate hold-harmless provisions and guaranteed minimum funding increases.
Use the most up to date data available.
Expense-based aids and other types of education aid– such as high tax aid– should be redirected towards those districts without the resources to provide a SBE.
Key Data
$23 billion
— Total increase in school district revenues between school year 2006-2007 and 2017-2018.
47 percent
— Total percentage increase in school district revenues between school year 2006-2007 and 2017-2018.
62 percent
— Increase in local revenues between school year 2006-2007 and 2017-2018.
35 percent
— Increase in state education aid between school year 2006-2007 and 2017-2018.
$13.6 billion
— Amount spent more than necessary to fund a sound basic education in school year 2017-2018.
$1.8 billion
— Amount the wealthiest decile of districts spent more than needed to fund a sound basic education in school year 2017-2018.
The Metropolitan Transportation Authority faces a cumulative cash shortfall of $637 million by 2023, a projection that relies on optimistic assumptions about economic growth, fare collections, and tax revenues. Failure to meet these targets, including uncertain revenue streams like fare evasion reduction and various tax collections, could necessitate service cuts or further fare increases.
Recommendations related to Revenue Trends
The MTA must move forward aggressively with the Transformation and Budget Reduction Plans to improve the efficiency and effectiveness of operations.
The MTA should negotiate a labor settlement focused on increased productivity with the Transport Workers Union.
Any raises negotiated in the labor settlement should be offset by savings from productivity gains and in health and welfare benefit costs to ensure a “net zero” impact on the bottom line.
Key Data
$637 million
— Cumulative cash shortfall projected for the MTA by 2023.
$740 million
— Projected shortfall from the July forecast.
$361 million
— Expected savings from renegotiating paratransit agreements with New York City.
$451 million
— Reduction in projected savings for the Budget Reduction and Transformation Plans.
$200 million
— Growth in real estate-related tax revenue projections.
$144 million
— Decrease in Payroll Mobility Tax collections.
$15 billion is the CBC's estimate of the three-year revenue shortfall for New York City government in a recession. First Deputy Mayor Dean Fuleihan joined CBC President Andrew Rein for a wide-ranging discussion about the City's budget, closing Rikers, access to hydropower, NYC's competitiveness, and more.
$81.3 billion the amount of tax revenue New York State will collect in fiscal year 2020—46 percent of all resources in the $176 billion New York State budget. Michael Schmidt, Commissioner of the New York State Department of Taxation and Finance, joined the podcast to parse the details on the…
New York City voters are encouraged to approve Ballot Question 4, which would amend the City Charter to establish a 'rainy day fund' for managing budget shortfalls during economic downturns. This measure aims to mitigate the impact of potential multi-year revenue shortfalls, estimated at $15 billion, by allowing the city to save during prosperous times rather than relying on service cuts or tax increases during crises.
Recommendations related to Revenue Trends
Voters should vote yes to approve the change to the City Charter to create a "rainy day fund".
Voters should vote yes on Ballot Question 4 to strengthen the city’s budgeting processes.
Key Data
$15 billion
— Estimated multi-year revenue shortfalls that could result from a recession.
The MTA's proposed $51.5 billion capital plan relies on $6 billion in unauthorized funding from New York State and New York City, alongside $9.8 billion in bonds that may be difficult to finance given projected operating deficits. Furthermore, utilizing revenue from new sales tax and real estate transfer tax expansions for current bonding will necessitate future revenue increases to maintain equivalent funding levels in subsequent capital plans.
Recommendations related to Revenue Trends
The MTA should make public a comprehensive needs assessment to ensure the plan is spending money on the right things.
The MTA must clarify how it will secure the $3 billion in funding from New York State and $3 billion from New York City that have not yet been authorized.
The MTA needs to demonstrate how it will finance $9.8 billion in bonds and pay-as-you-go capital given its projected operating deficits.
The MTA must account for the fact that bonding out revenue from the new sales tax intercept and real estate transfer tax expansion will require additional revenue increases in subsequent capital plans.
Key Data
$51.5 billion
— Investment in the region’s mass transit network.
$3 billion
— Funding assumed from New York State.
$3 billion
— Funding assumed from New York City.
$9.8 billion
— Bonds and pay-as-you-go capital the MTA needs to finance.
70 percent
— The amount by which the new plan is greater than the MTA’s 2015-2019 capital plan.
65 percent
— The amount of the 2015-2019 capital plan committed as of June 2019.
The Opportunity Zone program, while intended to spur investment in low-income areas, creates significant potential for lost tax revenue at both the state and local levels in New York. To mitigate these fiscal impacts and ensure accountability, the state should implement rigorous reporting requirements for funds, limit eligibility to projects that provide clear public benefits, or decouple state tax policy from the federal program.
Recommendations related to Revenue Trends
The State can require Opportunity Funds operating in New York State to report on their activity in order to qualify for state tax benefits.
The State could require funds to report annually on the value of gains invested by New York State taxpayers in qualified opportunity funds.
The legislature could limit benefits to residential projects that meet a minimum affordability threshold for a fixed set of time or to commercial projects that are consistent with an REDC strategic plan.
The State could limit benefits to zones that meet both the poverty and family income thresholds, or to those that meet the criteria based on the most recently available Census data.
The legislature can decouple fully from the federal OZ program, which would minimize the direct impact on state and local tax revenue.
Key Data
$2 billion
— Estimated annual cost of the OZ program in lost federal revenue.
$63 million
— Estimated annual fiscal impact of the OZ program on New York State.
$31 million
— Estimated annual fiscal impact of the OZ program on New York City.
$6 trillion
— Estimated amount of unrealized capital gains held by taxpayers nationally.
$53 billion
— Amount that funds reportedly intend to raise to invest in OZ projects.
$9.4 billion
— Total cost of the OZ program for federal tax years 2018 to 2022.
New York State and City rely heavily on personal income tax revenues, which are particularly volatile due to a significant dependence on high-income earners whose income is sensitive to capital gains. This concentration of tax liability among top earners creates substantial budgetary risks, as annual revenue fluctuations often exceed those of other tax sources.
Key Data
$47.1 billion
— New York State's PIT revenue raised in state fiscal year 2015-2016.
37.0 percent
— Share of total New York State PIT liability accounted for by taxpayers with taxable income of $1 million or more in 2016.
$11.4 billion
— New York City PIT revenue in city fiscal year 2016.
21.2 percent
— Share of total New York City tax revenue comprised by PIT in fiscal year 2016.
38.9 percent
— Share of total New York City PIT liability accounted for by tax filers earning $1 million or more in 2016.
$3.7 billion
— PIT revenue generated from high-income earners in New York City in fiscal year 2016.
The Metropolitan Transportation Authority's 2020 financial plan projects significant cash deficits, growing to a cumulative $740 million by 2023, while relying on optimistic savings estimates and assumptions of continued economic growth. These fiscal challenges are compounded by vague transformation and budget reduction plans, alongside the risk that a potential economic downturn could lead to revenue shortfalls of nearly $1.7 billion.
Recommendations related to Revenue Trends
MTA leaders should focus on realistically assessing the savings potential of the Transformation Plan and pursuing the changes on which it depends.
MTA leaders should focus on specifying the elements of the Budget Reduction Program and integrating them with the Transformation Plan without causing a negative impact on service.
MTA leaders should focus on seeking zero-cost wage settlements in current collective bargaining.
MTA leaders should focus on monitoring economic developments to adjust as needed to potential downturns.
Key Data
$740 million
— The projected cumulative cash deficit for the MTA in 2023.
$1.7 billion
— The estimated loss in total revenue across a four-year financial plan if a recession similar to the average of three previous recessions occurs.
$538 million
— The amount of annual savings the financial plan counts on from the Transformation Plan in 2023.
$433 million
— The projected annual cash deficit for the MTA in 2023.
$376 million
— The amount of savings the financial plan counts on from the Budget Reduction Program in 2023.
$230 million
— The amount of annual savings the financial plan counts on from the Transformation Plan in 2020.
New York City is proposing a charter amendment to establish a Rainy Day Fund, which would allow the city to accumulate resources during periods of economic growth to mitigate spending cuts and tax increases during downturns. This mechanism aims to improve fiscal stability by modifying budget balancing requirements to permit the use of saved funds during emergencies or recessions.
Recommendations related to Revenue Trends
The City should establish a Rainy Day Fund to accumulate resources during periods of economic expansion and revenue growth.
The City should codify rules regarding deposits and withdrawals to the Rainy Day Fund in City law.
The City should permit the use of the Rainy Day Fund without violating the City Charter and the State Financial Emergency Act for the City of New York balanced budget requirements.
The Charter Revision Commission should have the proposed language reviewed and modified by those with deep expertise in drafting legislation.
Key Data
$100 million
— The minimum amount required for the general reserve at the beginning of any fiscal year.
New York City's spending obligations in fiscal year 2019 exceeded collected revenues by $255 million, highlighting an unsustainable reliance on prepaying future expenses to balance the budget. Expenditure growth is accelerating, with city-funded spending increasing by 5.7 percent in fiscal year 2019 and projected to rise by 5.3 percent in fiscal year 2020.
Recommendations related to Revenue Trends
The Mayor and Council Speaker should continue to identify opportunities to restrain spending much more, particularly in ways that improve productivity so that priority services are preserved.
Key Data
$255 million
— The amount by which spending obligations in fiscal year 2019 exceeded the revenues collected.
$4.576 billion
— The amount the City prepaid in fiscal year 2019 expenses at the end of fiscal year 2018.
$4.221 billion
— The amount "rolled out" in fiscal year 2019, with available money being used to prepay fiscal year 2020 expenses.
5.7 percent
— The rate at which City-funded expenditures grew in fiscal year 2019.
5.3 percent
— The projected increase in City-funded expenditures for fiscal year 2020.
333,433
— The number of authorized positions projected for the city workforce in fiscal year 2020.
The Budget Navigator tool has been updated with fiscal year 2019 and 2020 data from the New York City and New York State budgets. This interactive feature allows users to explore, isolate, and compare long-term trends in government revenues and expenses dating back to fiscal year 2008.
New York State has significantly increased education funding, with total school district revenues rising by $20 billion between 2006-2007 and 2016-2017, outpacing inflation. Despite this, the current Foundation Aid formula is flawed, failing to properly target resources to districts that need them most while continuing to provide aid to wealthy districts.
Recommendations related to Revenue Trends
The state should significantly revamp the Foundation Aid formula and other education aid formulas to properly account for local wealth and actual local funding.
The state should eliminate hold-harmless provisions and minimal growth rates to ensure aid is directed where it is needed most.
The state should use the most up to date data available when calculating education aid formulas.
The state should target school aid to those districts that need it to provide a sound basic education.
The state should set aside more in reserves to increase the likelihood that state education funding could be sustained through the next recession.
Key Data
$20 billion
— Total school district revenues increased by $20 billion between school year 2006-2007 and 2016-2017.
40 percent
— Total school district revenues increased by 40 percent between school year 2006-2007 and 2016-2017.
$13 billion
— New York will spend $13 billion more than necessary to fund a sound basic education in school year 2019-2020.
$83 million
— The total amount of funding needed to bring the 29 under-resourced districts to the level needed is less than $83 million.
$1.9 billion
— The wealthiest decile of districts are on track to spend $1.9 billion more than needed to fund a sound basic education in school year 2020.
$2 billion
— 165 districts raise enough revenues from just local resources to fund a sound basic education and still receive almost $2 billion in State aid.
New York City needs to establish a Rainy Day Fund to protect essential services and avoid tax hikes during economic downturns, as current budget rules prevent saving during prosperous times. A well-structured fund, targeted at 17 percent of tax revenues, would provide a necessary fiscal cushion against projected revenue shortfalls of $15 billion to $20 billion during recessions.
Recommendations related to Revenue Trends
The charter commission should leave the charter’s budgeting and financial management framework intact except to seize the opportunity to improve the charter by allowing an RDF, well structured to preserve both long- and short-term stability.
The first step is to determine the right size of the fund, and based on past revenue trends, 17 percent of tax revenues would be a good target size to mitigate a recession or emergency’s most damaging impacts.
Regular deposits should be required during economic expansions, and the commission should require annual deposits of 75 percent of all tax revenues in excess of 3 percent growth.
Withdrawals should be limited to periods of recession or emergency, where economic triggers should be defined in law and RDF funds should not all be used in one year.
Key Data
$1.25 billion
— The current financial plan includes $1.25 billion annually for reserves.
$15 billion to $20 billion
— The projected three-year revenue shortfall from a recession comparable to the past two would be $15 billion to $20 billion.
17 percent
— 17 percent of tax revenues would be a good target size to mitigate a recession or emergency’s most damaging impacts.
75 percent
— Annual deposits of 75 percent of all tax revenues in excess of 3 percent growth.
3 percent
— Annual deposits of 75 percent of all tax revenues in excess of 3 percent growth.
$9 billion
— Had this been in place during the current record-long recovery, the city would now have nearly $9 billion in its RDF.
New York State is nearing its statutory debt limit, which restricts its ability to finance capital projects based on personal income growth. To avoid hitting this ceiling, the state should prioritize essential infrastructure investments during the budget process rather than funding non-essential local projects.
Recommendations related to Revenue Trends
The State should limit capital spending to investments justified on the basis of need or rate of return.
State debt should only be issued for capital investments that are justified by need for repair or service enhancement.
If the State is going to add debt-funded capital appropriations, the additional spending should be limited to significant state infrastructure investments.
Absent an emergency, State spending should be allocated during the budget process, where state leaders can adequately consider priorities and tradeoffs.
The legislature should close out session without passing any capital pork.
Key Data
$1.4 billion
— Debt capacity available in fiscal year 2021.
$107 million
— Available debt capacity remaining by fiscal year 2024.
$1.9 billion
— Amount authorized for the State and Municipal (SAM) Facilities Program to provide small grants.
$475 million
— Amount of SAM funding in the fiscal year 2019 budget.
2 percent
— Personal income growth rate that would cause the State to reach its debt cap in fiscal year 2021.
4 percent
— Annual increase in the State’s debt cap through fiscal year 2024.
1.28 cents is the amount New York collects in fuel taxes for every vehicle mile driven. A recent CBC report "Switching Gears" explored the implementation of an innovative approach to finance highway and bridge improvements: a vehicle-miles traveled fee. What’s a VMT, and how does it work? CBC's Patrick Orecki…
New York City faces a potential $15 billion to $20 billion revenue shortfall in the event of a recession, yet the current budget proposal fails to adequately bolster reserves despite higher-than-expected personal income tax collections. To ensure fiscal stability, the city should prioritize depositing all additional revenue into reserves and offsetting any new spending with equivalent savings rather than increasing expenditures.
Recommendations related to Revenue Trends
The city should add all newly identified money to the city’s reserves and offset any added spending with dollar-for-dollar reductions.
Any new initiatives proposed by the mayor or council should be funded only if spending offsets can be identified.
The city should wipe out more of the 4,700 full-time vacancies still remaining in the budget.
The city should pursue more extensive fleet reduction to save more than the $20 million identified in fiscal year 2020.
The city should centralize procurement to achieve $80 million in savings and consolidate and centralize union welfare funds to save $160 million.
Key Data
$474 million
— Amount by which personal income tax revenues came in higher than expected through the end of April.
$317 million
— Average amount freed up between the executive budget and the adopted spending plan due to spending underestimates.
$800 million
— Potential funds available to play with going into budget adoption.
$15 billion to $20 billion
— Potential three-year revenue shortfall that a recession could cause.
$80 million
— Potential savings identified by centralizing procurement.
$160 million
— Potential savings identified by consolidating and centralizing union welfare funds.
Between school years 2006-2007 and 2016-2017, school district revenues in New York grew by $20 billion, or 41 percent, with local funding increasing significantly faster than state aid. Despite this growth, the current Foundation Aid formula relies on outdated measures and poorly targeted aid, leaving 29 school districts underfunded by nearly $83 million while failing to ensure a sound basic education for all students.
Recommendations related to Revenue Trends
Poorly targeted forms of school aid, including High Tax, Library, Textbook, and Software Aids, should be folded into a reformed Foundation Aid formula that uses current data—including actual local funding and student enrollment.
The arbitrary floors, ceilings, phase-ins and add-ons to the Foundation Aid formula should be eliminated.
Key Data
$62.6 billion
— Estimated cost for school districts in New York State to provide a sound basic education to all students in school year 2020.
$20 billion
— Total increase in school district revenues between school year 2006-2007 and school year 2016-2017.
$27.3 billion
— Total formula-based education aid in school year 2019-2020.
$18.4 billion
— Foundation Aid component of total State education aid in school year 2019-2020.
$13.3 billion
— Total increase in local funding for school districts between school year 2006-2007 and school year 2016-2017.
$6.5 billion
— Total increase in State aid for school districts between school year 2006-2007 and school year 2016-2017.
The Rockefeller Institute of Government and CBC hosted "Switching Gears: A New Way to Fund Transportation," a presentation and expert panel discussion on the vehicle-miles travel (VMT) fee. The event featured a presentation by CBC Senior Research Associate Patrick Orecki, which accompanied a CBC report released the same day, followed by a discussion…
New York City faces significant financial vulnerability, with potential tax revenue shortfalls estimated between $15.4 billion and $20.4 billion in the event of a recession similar to those in 2001 or 2008. These risks are compounded by long-term liabilities totaling $257.3 billion, including substantial bonded debt and pension obligations.
Key Data
$15.4 billion
— Potential tax revenue shortfall based on the 2001 recession.
$20.4 billion
— Potential tax revenue shortfall based on the 2008 recession.
$257.3 billion
— Total largest long-term liabilities in FY 2018.
$111.0 billion
— Bonded debt included in the largest long-term liabilities for FY 2018.
$98.5 billion
— Net OPEB liabilities included in the largest long-term liabilities for FY 2018.
$47.8 billion
— Net pension liabilities included in the largest long-term liabilities for FY 2018.
New York State faces a significant funding shortfall for transportation infrastructure as fuel tax revenues decline due to increased fuel efficiency and the rise of electric vehicles. To address this, the state should implement a vehicle-miles traveled (VMT) fee, which would charge motorists based on actual road usage rather than fuel consumption.
Recommendations related to Revenue Trends
New York should phase in implementation in order to allow the public sector to build expertise in a new area of revenue generation.
New York should require commercial fleets to transition to a VMT fee as an early stage of implementation.
New York should create a volunteer program for passenger vehicles to provide added insights into the implementation of a VMT for personal vehicles.
New York should provide a multiyear transition to yield the most benefits and allow ample time to establish the necessary infrastructure.
New York should maintain flexibility to accommodate new technology and remain technologically agnostic.
New York should establish rates that vary by type of vehicle and location to account for negative effects like air pollution and traffic congestion.
New York should execute a clear and transparent rate-setting process so that motorists know how, when, and at what rate a VMT fee is being imposed.
New York should use the VMT fee as an addition to existing sources to help remedy the mismatch between available highway and transit revenues and needed annual expenditures.
Key Data
$5.7 billion
— Amount required annually for the State to achieve a state of good repair on its assets.
$2.1 billion
— Amount of necessary repair work that is currently deferred.
51 percent
— Reduction in the inflation-adjusted per-mile direct cost to motorists who travel on State roadways since 1993.
123 billion miles
— Estimated distance traveled by motorists in New York State in 2016.
1 cent
— Average per-mile fee that could yield more than $1 billion annually.
1.5 cents
— Rate per mile charged to participants in the Oregon OReGO pilot program.
The Metropolitan Transportation Authority faces a growing annual cash deficit projected to reach $976 million by 2022, necessitating a strategy to control operating costs through labor negotiations. Future collective bargaining agreements should prioritize self-funded wage increases by securing savings through productivity improvements and increased employee contributions to health insurance.
Recommendations related to Revenue Trends
The MTA should revise the assumption that all represented workers will receive 2 percent wage increases annually and condition any pay increases on generating offsetting savings.
The MTA should increase employee health care contributions of represented workers to levels similar to the nonrepresented workforce to defray a significant share of the authority’s health and welfare expense.
MTA management and labor should set productivity goals and collaboratively develop an agenda of collective bargaining changes that would allow both sides to achieve these goals.
New collective bargaining agreements could reduce 'penalty payments' made to bus operators scheduled to work across both morning and evening peak periods.
New agreements could eliminate the restrictions on hiring more part-time bus operators and the restrictions on express bus scheduling that would allow the authority to orient service toward peak periods.
Key Data
$976 million
— Projected annual cash deficit for the MTA in 2022.
$2.3 billion
— Cumulative cash shortfall projected for the MTA in 2022.
$400 million
— Estimated savings from net-zero wage increases by 2022.
$496 million
— Potential annual savings from increasing subway maintenance productivity to the median for selected U.S. systems.
$444 million
— Potential annual savings if MTA total bus productivity matched the median of selected systems.
$86 million
— Potential annual savings if the LIRR could match the total productivity of Metro-North.
New York City's fiscal plan relies on revenue increases and expense reestimates rather than efficiency improvements, leaving the city vulnerable to a potential $15 billion to $20 billion revenue shortfall in the event of a recession. While the budget maintains high contingency reserves, it fails to implement the comprehensive capital planning needed to ensure long-term fiscal stability.
Recommendations related to Revenue Trends
The City must take the necessary steps to preserve services or forestall tax increases in the event of economic downturns.
The Program to Eliminate the Gap should be restructured to deliver resources needed to address any upcoming downturn rather than relying on expense reestimates and revenue increases.
Key Data
$15 billion to $20 billion
— Potential three-year revenue shortfall that a recession could drive.
3.6 percent
— City-funded spending increase in the FY 2020 Executive Budget.
4.6 percent
— Administration’s prior average spending increase.
$1.25 billion
— Annual amount budgeted for contingency and capital reserve funds.
New York City faces potential cumulative tax revenue shortfalls of $15 billion to $20 billion over three years during a recession, necessitating the establishment of a Rainy Day Fund to ensure fiscal stability. Implementing such a fund, with a target size of $10.8 billion for fiscal year 2020, would allow the city to manage economic downturns without resorting to service cuts or tax increases.
Recommendations related to Revenue Trends
The City and State should authorize the City to use an RDF by codifying its parameters and amending State law and the City Charter to permit it.
Legislation to establish the RDF should specify the target size, required deposits, and permitted withdrawals.
The target size of the RDF should be set at 17.2 percent of the pre-recession year tax revenue to cover two years of recessionary tax revenue reductions.
Minimum required deposits should capture at least 75 percent of the annual tax revenue growth in excess of 3 percent to ensure sufficient revenue is set aside during years with faster growth.
Withdrawals should be permitted during an economic contraction or a severe emergency with specific criteria to ensure the fund is used appropriately.
Key Data
$15 billion to $20 billion
— Cumulative tax revenue shortfalls over three years during a recession.
17.2 percent
— Target size of the Rainy Day Fund relative to pre-recession year tax revenue.
$10.8 billion
— Recommended Rainy Day Fund target size for fiscal year 2020.
75 percent
— Minimum portion of annual tax revenue growth in excess of 3 percent that should be deposited into the fund.
$8.5 billion
— Potential balance of the Rainy Day Fund if the proposed deposit requirement had been in place during the current nine-year expansion.
The New York State fiscal year 2020 budget agreement increases spending while failing to adequately bolster reserves against potential economic downturns, despite implementing new revenue streams like congestion pricing. While the budget includes measures to broaden the sales tax base and fund the Metropolitan Transportation Authority, it relies on extending temporary income tax surcharges to support increased spending rather than preparing for future fiscal instability.
Recommendations related to Revenue Trends
State leaders should restrain spending growth to prepare for potential fiscal imbalances.
Policymakers should phase out the temporary personal income tax surcharge to soften the impact of federal tax deduction caps and improve fiscal flexibility.
It is critical to limit fee exemptions for the congestion pricing program to preserve projected revenues and traffic reduction goals.
The State should increase the Rainy Day Reserve fund to better prepare for a potential three-year recessionary gap.
Key Data
$3 billion
— Size of the Rainy Day Reserve fund.
$34 billion
— Three-year potential gap in a recession.
$1 billion
— Growth in school aid.
$840 million
— Amount of school aid provided above what is needed to ensure a sound basic education.
$820 million
— Allocation for economic development capital spending.
New York's transportation infrastructure faces a significant funding shortfall, with current motorist user fees failing to cover the costs of maintaining roads, bridges, and mass transit systems. To address this, the state should modernize its revenue streams by increasing existing fees, implementing congestion pricing in New York City, and adopting a vehicle-miles traveled (VMT) fee to ensure long-term fiscal sustainability.
Recommendations related to Revenue Trends
The state should increase existing motorist user fees—including fuel taxes, motor vehicle fees, and tolls—to levels comparable to neighboring states to raise significant short-term revenue.
The Governor and legislature should advance a comprehensive congestion pricing proposal for New York City to raise revenue and reduce traffic in the Manhattan Central Business District.
New York should shift toward a sustainable vehicle-miles traveled (VMT) fee to better measure road usage and address long-term transportation funding needs.
The state should dedicate a premium on motorists to alternative transportation options to reimburse mass transit for making rides less congested.
Policymakers should pursue multiple options for increasing revenue to place the highway system on a more sound fiscal footing.
Key Data
$3.6 billion
— Annual revenue collected by New York State from motorist user fees in fiscal year 2018.
$5.5 billion
— The cost of state of good repair (SGR) needs at the New York State Department of Transportation in 2016.
$1.2 billion
— Potential annual revenue generated by a vehicle-miles traveled (VMT) fee charged at a rate of 1 cent per mile.
$4.2 billion
— Potential annual revenue the state could raise by increasing fuel taxes, motor vehicle fees, and toll rates.
17 percent
— The decrease in the amount of fuel tax per mile driven in New York since 1993.
15 percent
— The percentage of mass transit expenditures covered by motorist user fee cross-subsidies and other toll revenue contributions.
New York State faces significant revenue volatility due to its heavy reliance on high-income earners and capital gains, with a potential recession threatening to create a three-year cumulative tax revenue shortfall of $34.1 billion. To mitigate these risks, the state should constrain operating spending growth to 2 percent and increase deposits into its rainy day reserves, which are currently insufficient to cover projected budget gaps.
Recommendations related to Revenue Trends
Final agreement on the Adopted Budget for Fiscal Year 2020 should constrain spending growth and make additional deposits to rainy day funds.
State leaders should reduce spending growth to at most 2 percent and increase reserves.
Larger deposits are required to forestall drastic service cuts and to prevent counterproductive tax increases in the midst of a recession.
Key Data
$34.1 billion
— Three-year cumulative tax revenue shortfalls if a recession begins in fiscal year 2021.
$2.5 billion
— Projected rainy day fund balance at the end of fiscal year 2020.
$19 billion
— Annual personal income tax revenues collected from the top 1 percent of filers.
$12 billion
— One-time monetary settlements accumulated between 2014 and 2019 that were not saved.
$2.6 billion
— Amount by which current-year personal income tax collections were lower than projected.
A proposed pied-à-terre tax on non-resident owners of high-value New York City homes is projected to generate $650 million annually, but critics argue it is a piecemeal approach that could harm the luxury housing market and the city's overall competitiveness. Instead of implementing this specific tax, the focus should be on comprehensive property tax reform and utilizing broader revenue sources like congestion pricing to address infrastructure funding needs.
Recommendations related to Revenue Trends
The extensive disparities in the property tax system should be addressed through comprehensive reform, not another piecemeal approach like the pied-à-terre tax.
Revenues should not be dedicated to specific funds, but rather allocated through the budget process.
It is crucial for the Legislature to pass congestion pricing in order to raise revenue, decrease congestion, and improve service.
The MTA capital program should be more focused on state of good repair needs and capital projects executed with greater efficiency.
Lawmakers should seriously consider lower tax rates for the pied-à-terre tax that will do less harm to the attractiveness of NYC.
Key Data
$5 million
— Threshold for the value of New York City homes owned by nonresidents that would be subject to the proposed annual property tax surcharge.
0.5 percent
— Starting rate of the annual property tax surcharge for nonresidents on the value of homes greater than $5 million.
4.0 percent
— Top rate of the annual property tax surcharge for nonresidents on the value of homes greater than $25 million.
$650 million
— Projected annual revenue yield from the proposed pied-à-terre tax.
New York City's current revenue forecasting process has successfully maintained fiscal stability by remaining conservative, with city-funded spending growing at 5.3 percent annually compared to 2.3 percent inflation. However, the city remains vulnerable to economic downturns, with potential tax revenue shortfalls estimated between $15 billion and $20 billion over three years during a recession.
Recommendations related to Revenue Trends
The Charter should be amended to make an exception to the balanced budget requirement to permit use of a Rainy Day Fund to help weather economic contractions.
The City should maintain the current revenue forecast process because it has served the City well by reducing the likelihood of overly optimistic forecasts.
The Charter should be amended to mandate the Retiree Health Benefits Trust Fund and require annual deposits to ensure sufficient resources are available to fund retiree health liabilities.
Key Data
$15 billion and $20 billion
— Estimated tax revenue shortfall over three years during a recession.
5.3 percent
— Average annual growth of City-funded spending over the last 18 years.
2.3 percent
— Average annual rate of inflation over the last 18 years.
$4.9 billion
— Normal cost of the OPEB benefit in fiscal year 2018.
$2.4 billion
— PAYGO cost of the OPEB benefit in fiscal year 2018.
New York State education funding is projected to reach $72 billion in 2020, which exceeds the $62.6 billion required to provide a sound basic education statewide. Rather than increasing overall aid by billions, the state should target a $164 million increase specifically to the 32 districts currently lacking sufficient resources.
Recommendations related to Revenue Trends
The state should target the distribution of aid to districts that need it, rather than ensuring that almost every district receives more funding regardless of its circumstance.
Policymakers should direct a state aid increase of just $164 million to the 32 districts that currently lack the resources to provide a sound basic education.
The state should refrain from adding billions in new education funding, as current revenue levels are sufficient to meet the constitutional requirement for a sound basic education statewide.
Key Data
$62.6 billion
— The estimated spending required to provide a sound basic education statewide.
$72 billion
— The projected revenue for school districts from federal, state, and local sources in 2020.
$164 million
— The total funding gap for the 32 districts that currently have less than is needed to provide a sound basic education.
$20 billion
— The total increase in district funds between the 2006-2007 and 2016-2017 school years.
41%
— The rate of growth in total district funds between the 2006-2007 and 2016-2017 school years.
$465 million
— The amount of state aid received by the 10% wealthiest districts in 2018-2019 despite already having sufficient resources.
New York's education funding has grown by 41% over the past decade, significantly outpacing inflation, yet debates continue regarding the necessary level of state aid. The state could ensure all districts meet the constitutional requirement for a sound basic education by targeting $164 million to the 32 currently underfunded districts, rather than pursuing the larger, untargeted increases often proposed.
Recommendations related to Revenue Trends
The state should ensure all districts have the resources to provide a sound basic education by increasing aid by $164 million and targeting it to the 32 districts that are currently underfunded.
Policymakers should prioritize this targeted allocation during budget negotiations and ensure that any State aid above this amount is targeted to specific educational needs while remaining balanced with the State’s fiscal realities.
Key Data
41 percent
— The growth in school district revenues between school year 2006-2007 and school year 2016-2017.
$164 million
— The amount of additional state aid required to ensure all districts have the resources to provide a sound basic education.
$9.4 billion
— The amount by which estimated 2020 school district spending exceeds what is necessary to fund a sound basic education.
$956 million
— The increase in school aid proposed in the Governor’s Executive Budget.
$20 billion
— The total increase in school district revenues between school year 2006-2007 and school year 2016-2017.
99 percent
— The increase in New York City local revenues over the past decade.
New York City is implementing a Program to Eliminate the Gap to address potential fiscal risks and economic downturns that could significantly widen out-year budget gaps. To ensure long-term fiscal stability, the city should aggressively pursue recurring efficiency savings and reevaluate existing fees to keep pace with rising service costs.
Recommendations related to Revenue Trends
OMB should set agency targets that generate savings in excess of the $750 million annual goal to provide options for priority setting and better position the City to identify additional savings.
The City should focus on increasing efficiency in operations and service delivery to generate recurring savings that lower costs while minimizing negative impacts on services.
The City should reevaluate existing fees to ensure they are keeping pace with rising costs for relevant services without reaching economically counterproductive levels.
Agencies should take the lead on identifying savings, as executives, managers, and front-line staff have valuable insights on how to improve programs and operations.
Key Data
$750 million
— The Mayor’s stated annual PEG target for agency savings.
$155 million
— Average annual efficiency initiative savings in the five-year savings plans for fiscal years 2016 through 2019.
0.25 percent
— The portion of the City funds budget represented by average annual efficiency initiatives in the five-year savings plans for fiscal years 2016 through 2019.
$10 to $12 billion
— The potential size of annual out-year budget gaps if a recession occurs.
New York City faces a potential economic downturn that could result in cumulative three-year budget gaps of up to $30 billion, significantly outpacing current reserves. To mitigate the need for drastic service cuts or tax increases, the city must prioritize immediate, substantial increases in recurring savings and constrained spending growth.
Recommendations related to Revenue Trends
The Executive Budget for Fiscal Year 2020 should reflect constrained spending growth, greater budget reserves, and a substantial increase in recurring savings.
The City should take immediate action to reduce spending growth and increase reserves to prepare for an inevitable economic downturn.
The savings will need to be substantially larger to forestall drastic service cuts and counterproductive tax increases in the midst of a recession.
Key Data
$30 billion
— Cumulative three-year budget gaps possible under a recession scenario.
$15 billion and $20 billion
— Potential tax revenue shortfall below projections over three years.
$1.25 billion
— Existing annual budget reserves available to the City.
$103.3 billion
— Estimated other postemployment benefit (OPEB) liability at the end of fiscal year 2018.
$750 million
— Amount of recurring savings announced in the Executive Budget.
$16.7 billion
— Portion of the budget gap that would need to be closed by actions other than using existing reserves.
New York's $78 billion Medicaid program includes $5.3 billion in supplemental payments that are crucial for hospital viability but face significant federal cuts and criticism regarding distribution equity. Legislative and executive leaders must develop strategies to equitably distribute these looming federal reductions and reform the allocation methods for the entire supplemental payment pool.
Recommendations related to Revenue Trends
The State should create a plan for mitigating and equitably distributing scheduled federal DSH cuts in advance of their implementation.
The State should establish a more equitable distribution policy for the full set of supplemental programs.
New allocation methods and contingency plans for federal cuts should take into account the role and magnitude of all of the supplemental payments and the interactions among them.
The source of the nonfederal share of payments should also be reconsidered.
Key Data
$78 billion
— Total size of New York State’s Medicaid program.
$5.3 billion
— Total amount of Medicaid supplemental payments not directly associated with the provision of medical services.
$2.9 billion
— Annual federal cut to New York State Medicaid supplemental payments phased in beginning October 1, 2019.
$1 billion
— Portion of supplemental payments for which the State's distribution method has been heavily criticized.
$3.7 billion
— Total funding for the Disproportionate Share Hospital (DSH) Program.
$811 million
— Funding for the Upper Payment Limit (UPL) Program.
New York State faces a $2.3 billion revenue shortfall driven by federal tax changes, stock market volatility, and an economic slowdown. To address this deficit, the state should limit spending growth to 2 percent, repeal the property tax relief credit, and reallocate unused settlement funds to bolster rainy day reserves.
Recommendations related to Revenue Trends
The State should restrain spending growth, avoid one-shot gap-closing actions, and bolster its rainy day funds to address the revenue shortfall.
The State should hold spending growth to 2 percent to save $1.45 billion in fiscal year 2020.
The State should increase education aid only to those districts that need additional State resources to fund a sound basic education, which could save more than $500 million.
The State should repeal the property tax relief credit set to expire after calendar year 2019 to reduce the fiscal year 2020 deficit by more than $1 billion.
The State should decrease State economic development programs that have not been proven effective, such as the film tax credit.
The State should eliminate the appropriations connected to unused settlement funds and dedicate them to rainy day funds to double the State’s reserves.
Key Data
$2.3 billion
— Shortfall in January personal income tax collections.
$1.45 billion
— Savings from holding spending growth to 2 percent in fiscal year 2020.
$500 million
— Potential savings from limiting education aid to districts that need additional resources.
$1 billion
— Savings from repealing the property tax relief credit.
$2.9 billion
— Total unused settlement funds that could be dedicated to rainy day reserves.
$2.3 billion
— Current rainy day reserves under the Governor’s budget proposal.
New York City's fiscal year 2020 preliminary budget shows modest spending restraint, with City-funded spending growth projected to increase 3.4 percent, but tax forecasts remain steady without generating a significant surplus. The city's financial plan relies on one-time savings rather than structural changes, while its $104.1 billion ten-year capital strategy continues to grow.
New York State has seen significant growth in education funding, with total revenues increasing by $20 billion between the 2006-2007 and 2016-2017 school years. Despite this increase, the current Foundation Aid formula fails to accurately reflect local wealth, and the state should prioritize targeting aid to the few districts that remain underfunded.
Recommendations related to Revenue Trends
The State should target any increase in aid to those districts that need it most.
New York State should reform the Foundation Aid formula, which is currently undermined by inconsistent local share calculations, arbitrary adjustments, and outdated data.
The State should ensure that aid distribution accurately reflects local wealth or financial support provided by local taxpayers.
Key Data
$20 billion
— Total increase in revenues to school districts between school year 2006-2007 and school year 2016-2017.
$6.5 billion
— Increase in State education aid between school year 2006-2007 and school year 2016-2017.
$13.3 billion
— Increase in local revenues between school year 2006-2007 and school year 2016-2017.
99 percent
— Increase in local revenues in New York City between school year 2006-2007 and school year 2016-2017.
$956 million
— Proposed increase in state aid in the Governor’s Executive Budget.
$338 million
— Proposed increase in Foundation Aid in the Governor’s Executive Budget.
New York City faces significant fiscal challenges, including $257 billion in long-term liabilities and a potential $16 billion revenue shortfall in the event of a recession, necessitating a strategy of contained spending and increased reserves. To ensure long-term stability, the City must prioritize efficiency measures, such as generating recurring savings equal to 1 percent of City-funded spending, and secure reliable revenue streams for public authorities like the Metropolitan Transportation Authority.
Recommendations related to Revenue Trends
The City should ensure the Citywide Savings Program generates recurring operational savings equal to at least 1 percent of City-funded spending to fund new or expanded programs.
To prepare for potential economic downturns, the City should increase budget reserves and reduce spending.
The City should support planned biennial fare increases and congestion pricing to provide essential recurring revenue to the Metropolitan Transportation Authority.
The City should limit spending growth to the rate of inflation, which would cap increases at 2.5 percent in fiscal year 2020.
The City should plan for annual deposits to the Retiree Health Benefits Trust at higher levels to address the nearly $100 billion unfunded liability.
Key Data
$16 billion
— Potential revenue shortfall in the event of a recession, measured against the four-year financial plan.
$257 billion
— Aggregate long-term liabilities at the end of fiscal year 2018.
$700 million
— Amount of annual savings that would be generated if efficiency measures equaled 1 percent of City-funded spending.
$1.375 billion
— Amount of budget reserves in fiscal year 2019.
$100 billion
— Long-term unfunded liability for retiree health insurance and other postemployment benefits.
$1.8 billion
— Overtime spending in fiscal year 2018.
New York State's reported spending growth has been masked by accounting maneuvers, such as shifting expenses off-budget and reclassifying tax credits, which obscure the true 3.4% growth rate in fiscal year 2020. These practices undermine budget transparency, making it difficult to accurately assess year-to-year spending trends and the actual impact of fiscal policies.
Key Data
3.4%
— Actual State Operating Funds spending growth in fiscal year 2020.
$4.1 Billion
— Amount shifted out of fiscal year 2020 State Operating Funds spending.
$106,154
— Actual State Operating Funds spending in millions for fiscal year 2020.
$1.4 Billion
— Reduction in reported State Operating Funds spending in fiscal year 2019 due to shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
$1.24 Billion
— Amount State Operating Funds spending appeared to decrease due to the reclassification of School Tax Relief (STAR) benefits.
$435 Million
— Master Settlement Agreement revenues used to pay certain Medicaid expenses off-budget in fiscal year 2019.
Legalizing recreational marijuana in New York could generate significant tax revenue, but early estimates are speculative and subject to implementation delays and market maturation challenges observed in other states. Policymakers should exercise caution by under-forecasting potential receipts, avoiding off-budget spending, and utilizing funds for general operating purposes rather than earmarking them for specific initiatives.
Recommendations related to Revenue Trends
Recreational marijuana revenues should not be included in the State financial plan until the very complicated steps of crafting the statute and regulations have been completed; budgeting should not rely upon best guesses or optimistic assumptions.
It is better to under-forecast revenues and have a surplus than be overly optimistic and create a deficit.
Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
The revenue should not be committed to a specific purpose.
Marijuana revenue will be recurring and reliable when the market is mature and should be used for recurring operating budget purposes.
Key Data
$430 million
— Amount collected in Washington State in fiscal year 2017 from marijuana sales taxes.
$82 million
— Tax revenue received by California in the first six months of legal recreational marijuana sales.
$185 million
— Projected tax revenue for California in the first six months of legal recreational marijuana sales.
$700 million
— New York State Department of Health estimate of potential annual tax revenue from marijuana legalization.
$110 million to $428 million
— Range of revenue estimates for a hypothetical excise tax in New York.
$33 million
— Estimated reduction in New York State's alcohol tax revenues due to legalized marijuana.
New York City's property tax system, the city's largest revenue source, suffers from a lack of transparency and equity that requires a comprehensive redesign. The proposed reforms include moving cooperatives and condominiums into Class 1, eliminating the existing class share system, and implementing a circuit breaker to provide tax relief for lower-income homeowners.
Recommendations related to Revenue Trends
Move cooperatives and residential condominiums to Class 1 with one-, two-, and three-family homes.
Class 1 should face the lowest tax burden, as measured by the effective tax rate.
Valuation for tax purposes should reflect actual real estate market value, using more transparent methods.
The existing class share system should be eliminated.
Stability of the property tax should be achieved by phasing-in market value changes over three years for all parcels.
To ease burdensome tax bills, rebates should be provided of owner-occupied residential property taxes based on household income.
Transition to the new system should occur over a five-year period.
Key Data
10 percent
— The Constitutional debt limit sets the maximum outstanding debt for New York City at this percentage of the five-year average of market value.
2.5 percent
— The maximum property tax revenue that can be raised and used for operating expenses is set at this percentage of the five-year average of market value.
2.25 times
— A report indicates that effective tax rates on commercial properties are no greater than this amount compared to owner-occupied homes in 46 of 53 cities.
5 percent
— The proposed circuit breaker could apply to property taxes on residential properties that exceed this percentage of household income for households with income below $100,000.
20 percent
— The current cap on assessed value growth over five years on Class 1 homes results in foregone revenue by delaying the recognition of growth.
8 is the number of years Andrew Cuomo has served as the 56th Governor of New York State. CBC's David Friedfel and Patrick Orecki join the podcast to discuss the demographic, fiscal, and policy trends of the last 8 years.
New York State's total tax collections increased by 30.5 percent since fiscal year 2011, even as personal income and business tax rates were reduced. The state has also allocated over $28 billion to economic development initiatives between fiscal years 2012 and 2019, with a significant portion directed toward tax expenditures for businesses.
Key Data
30.5 percent
— Total tax collections increased by this amount since fiscal year 2011, even as personal income tax and business tax rates declined.
$28 billion
— The state allocated more than this amount to economic development between fiscal year 2012 and fiscal year 2019.
$18.7 billion
— This amount of the total economic development allocation was used for tax expenditures for firms committing to create or retain jobs or make significant capital investments.
8.97 percent to 8.82 percent
— The top marginal personal income tax rate decreased from this range effective January 1, 2012.
$8 billion
— This amount of spending was allocated by the Department of Economic Development and the Empire State Development Corporation between fiscal years 2012 and 2019.
Legalizing sports betting in New York offers potential economic benefits, but state leaders must approach revenue projections with caution due to market saturation and the risk of cannibalizing existing gambling revenues. Policymakers should also consider the regressive nature of gambling taxes and the associated social costs, such as increased problem gambling, when designing legislation.
Recommendations related to Revenue Trends
State leaders should ensure that revenue estimates for sports betting are conservative to account for the uncertainty of transitioning from illegal to legal markets.
Legislators should ensure that taxes are designed thoughtfully in a competitive marketplace to avoid discouraging operators and limiting the transition to legal gambling.
Policymakers must ensure that sports betting’s potential impact on other gambling revenues is considered to avoid cannibalizing existing income streams from casinos and lotteries.
Legislation should ensure that gambling taxes are recognized as regressive and that the state accounts for the social costs associated with the increased prevalence of problem gambling.
Key Data
$150 billion
— Estimated annual illegal sports betting market in the United States.
$2.8 billion to $8.7 billion
— Estimated portion of the illegal sports betting market comprised by New York.
$8.25 billion
— Potential Gross Gaming Revenue available as taxable revenue for states from legalizing sports betting.
$155 million to $475 million
— Forecasted Gross Gaming Revenue for New York.
$112 million
— Gaming taxes generated by New York casinos in Fiscal Year 2017-2018.
$58 million
— Reported losses for Resorts World Catskills for the six-month period ending June 30, 2018.
The Metropolitan Transportation Authority faces declining fare revenue, with estimates reduced by over $550 million for the 2018 to 2021 period despite a new $385 million annual revenue source. Consequently, the agency projects growing cash deficits reaching $634 million by 2022, driven by expenses that are outpacing revenue growth.
Key Data
$385 million
— annual revenue from the New York City Transit Assistance Fund.
$376 million
— amount taken out of the four-year financial plan due to fare revenue estimate changes.
$550 million
— reduction in fare revenue estimates over the 2018 to 2021 period.
2.2 percent
— reduction in fare revenue estimates over the 2018 to 2021 period.
The New York City Housing Authority faces a $32 billion capital needs crisis, requiring a shift toward an affordable housing steward model to preserve its units. To address this, the authority should leverage underutilized land assets, expand public-private partnerships, and integrate into the city's broader affordable housing strategy to generate necessary funding and improve operational efficiency.
Recommendations related to Revenue Trends
Providing NYCHA with one-third of the City’s planned capital commitments for affordable housing over the next five years would give NYCHA an additional $1 billion through fiscal year 2022.
Increasing the pace of public-private partnerships to convert public housing units to the more stable Section 8 funding stream will address more than $2 billion in capital needs through 2022.
NYCHA should reduce the number of units it operates by transferring senior housing to qualified nonprofit organizations and sell its small, inefficient buildings with fewer than 200 units, which would address another $2.6 billion in capital needs.
Selling 10 percent of NYCHA’s air rights could raise $1.5 billion.
Accelerating the pace of infill development to build an additional 10,000 units could raise an additional $1.4 billion.
Key Data
$32 billion
— Quantified capital needs of the New York City Housing Authority over the next five years.
31 percent
— Funding coverage of capital needs for the 2007-2011 period.
11 percent
— Funding coverage of capital needs for the 2012-2017 period.
39 percent
— Amount by which NYCHA's operating costs are higher than those of other landlords operating rent-stabilized buildings.
874 units
— Size of the Triborough portfolio of project-based Section 8 housing.
1,395 units
— Size of the Ocean Bay development in Far Rockaway.
New York City's fiscal year 2019 budget features a 7.4 percent increase in city-funded operating spending and a $65 billion capital plan, raising concerns about the balance between spending and savings. The city faces significant fiscal risks from ballooning capital costs and the need for continued support for public authorities like NYCHA and Health + Hospitals.
Recommendations related to Revenue Trends
The City should ensure that raises in excess of the 1 percent per year set aside for municipal unions are funded through concessions or productivity increases.
The City should develop a policy to increase the size of the Retiree Health Benefit Trust to help reduce its other postemployment benefits liability.
The City must halt the growth of the workforce, which has already grown by more than 33,000 positions.
Agencies should be required to find recurring efficiency savings equal to 1 percent of their City-funded spending.
The Capital Plan should be reduced and refocused on strategic priorities that emphasize state of good repair and maximize the return on investment.
The City should use current resources as “pay-go capital” instead of borrowing to invest in infrastructure without increasing long-term liabilities.
Key Data
$4.7 billion
— The amount by which City-funded spending increased from fiscal year 2018.
11.6 percent
— The portion of tax revenue represented by debt service in fiscal year 2019.
12.9 percent
— The projected portion of tax revenue that debt service will represent by fiscal year 2022.
$1.8 billion
— The City's subsidy to New York City Health + Hospitals in fiscal year 2019.
$25 billion
— The estimated capital needs for NYCHA developments.
The Citywide Savings Program for fiscal year 2019 relies heavily on re-estimates and funding shifts, with efficiency savings accounting for only 16% of the total $4.67 billion in savings. Revenue generation through this program is limited to $270 million, highlighting a need for more ambitious goals to achieve lasting operational efficiency.
Recommendations related to Revenue Trends
Mayor de Blasio must set higher goals for more effective use of city resources to achieve lasting savings in city operations.
There must be more ambitious goals for efficiency savings.
Getting more efficient generates lasting budget savings that will increase in size over time.
Key Data
$270 million
— Revenue portion of the Fiscal Year 2019 Citywide Savings Program.
$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.
The city's executive budget for fiscal year 2019 proposes $90.8 billion in spending, with city-funded expenditures growing by 5.8%—more than twice the rate of inflation—driven by strong property tax revenues. To improve long-term fiscal health, the City Council should prioritize spending restraint, justify new agency costs, and direct surplus funds toward reducing long-term obligations like the $90 billion retiree health benefit liability rather than incurring new debt.
Recommendations related to Revenue Trends
The City Council should limit growth in agency spending and confine its own requests to those with the most significant impact.
The City Council should push to use additional city resources to make investments with a long-term payoff.
Commissioners should justify new spending, account for the performance of existing programs and specify how they are saving on costs by improving operations.
The City Council should limit its own agenda to those items that provide the most return on investment.
The mayor and Council should make a deposit to the Retiree Health Benefits Trust Fund to help defray the city’s $90 billion obligation for the health benefits of public retirees.
Surplus revenues should be used to purchase capital assets, such as equipment and vehicles, outright instead of incurring new debt.
The City Council should prioritize spending restraint and prudent use of resources to ease long-term burdens.
Key Data
$90.8 billion
— Total spending proposed in the fiscal year 2019 executive budget.
5.8%
— Growth rate of city-funded expenditures between fiscal years 2018 and 2019, which is more than twice the rate of inflation.
$90 billion
— The city's total obligation for the health benefits of public retirees.
$76 billion
— Amount of debt repaid by city tax dollars expected next year.
$96 billion
— Expected debt repaid by city tax dollars in four years.
$4.25 billion
— Current balance of the Retiree Health Benefits Trust Fund.
New York's Health Home initiative, designed to coordinate care for Medicaid enrollees with complex needs, has seen annual spending grow from $87 million in 2012 to $558 million in 2017, driven largely by enrollment growth. Despite this significant investment, the program faces challenges in targeting the most cost-effective subpopulations and requires better data and analytic frameworks to assess its impact on costs and outcomes.
Recommendations related to Revenue Trends
A priority initiative in the near future should be more attention and urgency to building and applying a database and analytic framework for assessing program impacts with attention to identifying the subpopulations which are likely to receive the greatest benefits from the program.
The creation of additional HHs with agencies such as community health centers and mental health centers as the lead entity might improve enrollment efforts without recreating the limitations of highly specialized care management arrangements.
A tiered rate structure with lower rates for those having been successfully served over some extended period of time might be more cost-effective.
The centralized mechanism could be direct initiatives by DOH or DOH support for activity by a coalition of stakeholder agencies who agree to share marketing and training products.
Additional attention should be given by all stakeholders to ways in which better sharing of information can be facilitated.
Key Data
$87 million
— Annual spending on Health Homes in 2012.
$558 million
— Annual spending on Health Homes in 2017.
$157 million
— Amount spent on outreach in 2017, representing 28 percent of total spending.
175,000
— Current enrollment in Health Homes.
$110
— Monthly outreach rate effective October 1, 2017.
New York City's Fiscal Year 2019 Executive Budget increases operating spending at more than twice the rate of inflation, missing an opportunity to bolster reserves despite strong tax revenue growth. While the plan eliminates unrealistic revenue projections from taxi medallion sales, it relies on personal income tax growth to offset rising expenses and capital commitments that have reached approximately $82 billion.
Recommendations related to Revenue Trends
The City should bolster reserves as strong tax revenue growth continues.
New York City faces nearly $1 billion in additional spending requirements due to state-mandated programs and funding shortfalls, necessitating careful fiscal management. While tax revenue projections exceed initial estimates by up to $1.4 billion, these gains are insufficient to cover the combined costs of state actions and local priorities like the Fair Fares initiative.
Recommendations related to Revenue Trends
The City will need to exercise restraint in other areas to manage the additional fiscal burdens.
The City’s budget should retain flexibility to address City Council priorities, such as the $212 million Fair Fares initiative.
Key Data
$107 million
— Anticipated revenue shortfall from new taxi medallion sales that will not materialize.
$750 million to $1.4 billion
— Forecasted increase in tax revenue for fiscal years 2018 and 2019 compared to the Fiscal Year 2019 Preliminary Financial Plan.
$600 million
— Amount of sales tax revenue intercepted by the State following the refunding of STARC bonds in 2016.
$970 million
— Total anticipated State budget impact on the New York City FY 2019 Executive Budget.
The Long Island Rail Road operates less efficiently than the Metro-North Railroad, with higher operating expenses and lower farebox recovery ratios that necessitate greater taxpayer subsidies. To address these financial disparities, the Metropolitan Transportation Authority must pursue productivity reforms, such as standardizing work rules and aligning fare recovery targets, to improve the fiscal health of the commuter rail system.
Recommendations related to Revenue Trends
MTA management should begin identifying its agenda for improved productivity.
Simply standardizing work rules across the two railroads could help generate savings.
Increasing the share of all LIRR costs covered by fares to the same level as Metro-North would have yielded an estimated $170 million additional fare revenue in 2017.
Key Data
$1,453 million
— LIRR operating expenses in 2017.
$1,310 million
— Metro-North operating expenses in 2017.
$730 million
— LIRR fare revenue in 2017.
$737 million
— Metro-North fare revenue in 2017.
$170 million
— Estimated additional fare revenue in 2017 if LIRR recovery ratios matched Metro-North.
New York City's tax burden is significantly higher than other large U.S. cities, with personal income and commercial property taxes being particularly high. Policymakers should carefully consider these competitive disadvantages and the potential for outmigration before pursuing further tax increases.
Recommendations related to Revenue Trends
Policymakers considering raising the personal income tax or the commercial property tax need to be aware that both taxes are already significantly higher than in other large cities.
Policymakers would be well advised to examine options where New York City is not as far out of line with other cities.
The policy implication is that these conditions should be considered in any initiatives to raise more revenue from the property tax.
Key Data
46%
— New York City's state and local taxes were 46% higher than the average for the other cities.
154%
— New York City's commercial property tax was 154% higher than Los Angeles.
$327,000
— The annual difference in commercial property tax for a $25 million property in New York City compared to the average of the other 14 largest cities was $327,000.
51%
— New York City's commercial property tax was 51% higher than the average for the other 14 of the 15 largest cities.
The Tax Cuts and Jobs Act creates a cap on state and local tax deductions, threatening to reduce New York's competitiveness and potentially drive residents and businesses to other jurisdictions. This federal policy change could result in $1 billion in unplanned state personal income tax and $109 million in state business tax increases, necessitating a strategic state response to protect the local economy.
Key Data
$1 billion
— unplanned State personal income tax increase resulting from the Tax Cuts and Jobs Act
$109 million
— unplanned State business tax increase resulting from the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act threatens New York City's economic competitiveness by capping state and local tax deductions, potentially driving residents and businesses to relocate and reducing tax revenue. To mitigate these impacts, the city and state must implement strategic tax reforms and spending controls to prevent unplanned tax increases and protect the local economy.
$9.5 billion is CBC’s estimate of the extra taxes New Yorkers will pay due to the cap on the state and local tax deduction, known as the SALT cap, enacted in the Tax Cuts and Jobs Act of 2017. Andrew Rein, director of CBC's Special Committee on Federal Tax Changes,…
The Tax Cuts and Jobs Act has created significant fiscal challenges for New York by capping state and local tax deductions, which threatens to reduce tax competitiveness and drive away high-income earners. To mitigate these impacts and address unplanned tax increases, the state should consider targeted policy adjustments like decoupling from specific federal definitions and implementing new business tax structures.
Recommendations related to Revenue Trends
The State should proceed with decoupling from the personal exemption, enhanced child tax credit, and the SALT cap since these would be relatively easy to administer and would relieve New Yorkers of $740 million of unplanned tax increases.
The State should adopt a phased-in Employer Compensation Expense Tax (ECET), which would be optional for employers, to blunt the impact of the SALT cap to maintain competitiveness.
The State and localities should create charitable education and health funds, to which taxpayers can make federal and State-deductible contributions and receive partial State and local income and property tax credits.
The State should consider reforming the estate tax to address New York’s attractiveness to high-income households.
Both New York State and New York City should control spending to reduce the need for high State and local taxes.
Key Data
$9.5 billion and $15.3 billion
— Estimated cost to New Yorkers in additional federal taxes due to the SALT cap.
$33,000
— The gap in cost of living between New York and Florida for a taxpayer earning $1 million due to the SALT cap.
$423,000
— The gap in cost of living between New York and Florida for a taxpayer earning $10 million due to the SALT cap.
$21.0 billion
— Amount paid by New York State taxpayers earning more than $500,000 annually, representing 49 percent of State personal income taxes.
$421 million
— Reduction in annual State income tax revenues if 2 percent of taxpayers earning more than $500,000 leave.
$100 million
— Reduction in City income tax revenues if 2 percent of taxpayers earning more than $500,000 leave.
New York has failed to adequately build rainy day reserves despite a long period of economic growth and significant monetary settlements, leaving the state vulnerable to potential revenue losses from a future recession. To better prepare for economic downturns, the state should enact legislation to mandate deposits into its reserve funds, similar to the successful model implemented in California.
Recommendations related to Revenue Trends
New York State should consider legislation to mandate deposits into a rainy day fund.
The level of reserves should be thoroughly analyzed with respect to tax revenue volatility, and a healthy level should be established to protect New Yorkers from the impacts of budget cuts to vital services that would result from an economic downturn.
New York should make significant deposits to reserves to prepare for economic downturns, similar to California's approach.
Key Data
$13.5 billion
— The proposed total for California's rainy day fund in fiscal year 2019.
$1.8 billion
— The current balance of New York State's rainy day reserves.
$43.9 billion
— The estimated four-year impact of a recession on a financial plan that assumed economic growth.
47.5 percent
— The growth in California's all fund tax revenues between 2010 and 2016.
27.0 percent
— The growth in New York's all fund tax revenues between 2010 and 2016.
$10.7 billion
— The amount in monetary settlements from fiscal years 2015 to 2018 that could have been used to bolster reserves.
Federal tax law changes threaten to trigger an unplanned $1 billion net state tax increase for New Yorkers, necessitating immediate state-level action to mitigate negative impacts. Proposed solutions, such as new tax credits and an employer compensation tax, require careful legislative oversight and further analysis to ensure they are effective and transparent.
Recommendations related to Revenue Trends
New York should take quick action on immediate threats while ensuring that appropriate analysis and deliberation continue on more complex issues that pose challenges over the longer term.
An alternative to consider is to uncouple from specific federal changes that would have the most undesired effects, such as the personal exemptions and child tax credits, and allow conformity with others.
The proposed legislation must assure the funds are governed by the same transparency, accountability, and legislative oversight requirements as apply to other governmental spending.
The proposal for the Employer Compensation Expense Tax will need to be fully analyzed and informed by the continued input of experts and stakeholders.
Since the proposal for the Employer Compensation Expense Tax would not go into effect until 2019, it is appropriate to continue refining it beyond and outside the budget adoption process.
Key Data
$1 billion
— The amount of the unplanned net state tax increase on New Yorkers resulting from the federal tax cut package without state-level action.
New York City's capital spending reached unprecedented levels during the Bloomberg administration, with debt service rising to 15 percent of tax revenues and water and sewer fees increasing by 135 percent since 2003. To manage future capital needs, the city should implement a formal investment policy that utilizes pay-as-you-go funding from new revenue sources and dedicates a portion of annual budget surpluses to capital projects.
Recommendations related to Revenue Trends
The next administration should articulate a standard for keeping debt from becoming unaffordable.
The administration should develop criteria for paying for some capital expenses from the operating budget.
The administration should seed a fund for pay-go capital with a new revenue source, such as tolls on the East River Bridges or taxi medallion sales.
The City should adopt a standard for dedicating a share of yearly surplus revenues or annual budget growth toward capital projects.
The City should renew its Project Labor Agreements to reduce labor costs and improve managerial flexibility.
Key Data
$500 million
— Amount devoted to pay-go capital in fiscal years 2006 and 2007.
135 percent
— Increase in water and sewer fees since fiscal year 2003.
15 percent
— Threshold for debt service as a share of total city tax revenues.
$300 million
— Estimated capital budget savings over four years from Project Labor Agreements.
$3.5 to $4.7 billion
— Range of record year-end general fund surpluses between fiscal years 2005 and 2008.
The federal tax overhaul passed last month may have enormous impacts in New York and could upend the relationship between the federal government and the states. CBC and the CUNY Graduate School of Journalism gathered experts to assess the impact and potential city and state responses in a special half-day…
New York City's fiscal monitors generally project a stable economic outlook, though they caution that potential revenue weaknesses in business income, real estate transfer, and sales taxes could impact the city's financial health. These assessments remain subject to significant uncertainty regarding future state and federal policy changes, which could dramatically alter the city's projected budget gaps.
Key Data
$700 million
— Revenue from new taxi medallions considered at risk over the financial plan period by the State and City Comptrollers.
$500 million
— Annual revenue risks identified by the State Comptroller for fiscal years 2019 through 2021.
$800 million to $1.3 billion
— Additional tax revenue projected by the Independent Budget Office over the financial plan compared to the Office of Management and Budget.
$3.2 billion, $2.3 billion, and $1.6 billion
— Budget gaps projected by the Office of Management and Budget for fiscal years 2019, 2020, and 2021, respectively.
The passage of the "Tax Cuts and Jobs Act" necessitates an evaluation of its substantial impacts on the economy, property values, and tax revenues in New York City and State. A special committee has been formed to identify the legislation's highest impact areas and develop strategies to mitigate potential harm to local budgets and residents.
2.7% is the economic growth forecast for 2018 in the Port Authority’s 17-county region, which encompasses more than 200 municipalities. The Port Authority's Chief Economist Alex Heil joined WT[D]P to discuss the economic and transportation trends that impact the Port's bottom line.
New York State faces a budget gap between $4.4 billion and $6.3 billion, necessitating difficult decisions regarding spending caps, tax cuts, and potential federal funding losses. Policymakers must address these revenue shortfalls and spending pressures while navigating an election year and potential changes to federal tax and health policies.
Recommendations related to Revenue Trends
The Governor should recognize the time has come to end the poor use of state funds regarding Property Tax Relief rebates.
The state should consider whether middle income tax cuts should be delayed to address revenue shortfalls.
The Governor should propose a spending plan that adheres to the 2 percent growth cap.
The Governor should partner with organized labor to achieve savings during difficult financial times.
The Governor should propose substantive changes to the $17 billion Foundation Aid formula to direct limited resources to the highest needs districts.
The Governor should propose economic development reforms, including an end to project specific appropriations and the creation of a 'database of deals'.
Legislative leaders should question the State Budget Director on the financial plan in its entirety, including out-year deficits and economic assumptions.
Key Data
$4.4 billion and $6.3 billion
— Reported budget gap before accounting for potential federal policy changes.
$1.2 billion
— Estimated cost of Property Tax Relief rebates in state fiscal year 2019.
$1.1 billion
— Projected reduction in State revenues from middle income tax cuts in fiscal year 2019.
$411 million
— Forecasted cuts to Disproportionate Share Hospital funding.
$1.1 billion
— Amount of Children’s Health Plus funding at risk in fiscal year 2019 absent federal reauthorization.
$17 billion
— Total value of the Foundation Aid formula for education.
The New York State Film Tax Credit program, which features a $420 million annual cap that is effectively bypassed by rollover provisions, should be repealed to improve state finances. Because the state has already allocated credits for future years and requires large claims to be spread over three years, the budget will not realize full financial benefits from a repeal for at least four years.
Recommendations related to Revenue Trends
The state should repeal the New York State Film Tax Credit.
The state should enact a timely repeal of the wasteful film tax credit to begin the process of realizing financial benefits.
Key Data
$420 million
— The annual cap for the film tax credit, which is somewhat superfluous due to rollover provisions.
$5 million
— The threshold for tax credit claims that requires companies to spread the claim over three years.
$6 million
— An example of a credit amount awarded in 2017 from the 2019 allocation.
four years
— The minimum amount of time it will take for the state budget to realize full financial benefits from repealing the film tax credit.
three years
— The period over which companies claiming credits in excess of $5 million must spread their claim.
$26 billion is the amount of property taxes the City will collect this fiscal year-- it is the largest single source of revenue that funds NYC government. Special guest Martha Stark is a former Commissioner of the Department of Finance. She joined the podcast to discuss the complexities of the…
The Metropolitan Transportation Authority's 2018 budget faces significant financial instability, with projected deficits growing as the agency relies on unidentified funding sources to support the Subway Action Plan. Without securing new revenue or implementing cost reductions, the agency risks turning a projected cash surplus into a substantial deficit, exacerbated by downward revisions in forecasted revenues.
Recommendations related to Revenue Trends
The board should not advance a budget without either funding sources identified to support the SAP or commensurate reductions in other areas to maintain a cash balance.
In the event a portion of the expected funding is realized, those elements critical to improving the subway system’s infrastructure—and not initiatives primarily geared toward station appearances and customer communications—should be prioritized.
Without any new funding, the board should reject the 2018 budget as proposed.
If the MTA intends to scale back the SAP to match available funding, specific details need to be provided to enable the board to make an informed decision.
Draining reserve funds and eschewing PAYGO capital for more debt should be avoided.
Key Data
$498 million
— Projected 2018 end-of-year deficit if the Subway Action Plan is implemented without additional revenues.
$1.3 billion
— Total downward revisions in forecasted revenues for the 2017 to 2020 period.
$528 million
— Increase in state and other funding from yet-to-be-identified sources to support phase one of the Subway Action Plan.
$16.4 billion
— Total 2018 proposed budget.
4.6 percent
— Increase in forecasted expenses over the prior year.
$428 million
— Budgeted operating costs for the Subway Action Plan in 2018.
The November 2017 Financial Plan projects a $187 million decrease in current-year revenues while maintaining no significant re-estimates for the following three years. Outyear budget gaps are reduced by amounts ranging from $187 million in fiscal year 2018 to $708 million in fiscal year 2021, driven by technical adjustments rather than efficiency savings.
Key Data
$187 million
— Projected decrease in current-year revenues.
$187 million
— Decrease in outyear budget gaps for fiscal year 2018.
$708 million
— Decrease in outyear budget gaps for fiscal year 2021.
Business Improvement Districts in New York City are funded primarily through special assessment fees on property owners, which totaled over $100 million in fiscal year 2016. Because these fees function as a tax, the city should implement more rigorous, transparent performance evaluations and oversight during the contract renewal process to ensure these funds are used effectively.
Recommendations related to Revenue Trends
The current contract should be revised to specify that BID contract renewal is conditioned upon a thorough performance review and analysis of progress in implementing the BID's strategic plan and should include specific evaluation criteria and performance metrics to be utilized by SBS.
The contract should also require BIDs to survey their members at least once every five years to determine satisfaction with the BID's strategic plan and performance.
The additional performance measurement data, combined with the data SBS already collects, should be included in the annual BID Report for every BID for which a contract is renewed in that year.
SBS should also disclose any written notices of violations it has issued to BIDs, as well as the actions taken by BIDs to correct these concerns.
The City Council should hold oversight hearings at least once each year to review the SBS’s oversight of BIDs with contracts up for renewal.
Care should be taken during the formation process that new BIDs will have sufficient size and resources to operate efficiently.
Key Data
$100 million
— Total BID assessment revenues in fiscal year 2016.
$134 million
— Total revenue collected by BIDs from all sources in fiscal year 2016.
$106 million
— Revenue derived from the special assessment fee in fiscal year 2016.
79 percent
— The portion of total BID revenue derived from the special assessment fee in fiscal year 2016.
$838
— The median BID assessment fee in fiscal year 2016.
0.13 percent
— The average share of a building's market value represented by BID charges.
This episode's datapoint is "60+," as in the combined years of professional experience of special guests Renee Boicourt and Kent Hiteshew in matters of public finance. Listen to a live recording from CBC's recent event, "Fiscal Crises," where our expert guests discussed lessons learned from the bankruptcy of Detroit and…
The Mario M. Cuomo Bridge, which cost approximately $4 billion to construct, requires a significant toll increase to cover the $2.9 billion in long-term debt service costs. Rather than implementing a systemwide toll hike, the state should increase tolls specifically on the bridge to ensure those benefiting from the infrastructure pay for its construction and maintenance.
Recommendations related to Revenue Trends
The Thruway Authority should increase the toll on the new Cuomo Bridge alone to cover the bridge's debt and maintenance costs.
The state should reconsider the announced systemwide toll freeze that runs through 2020 to ensure debt service is paid when costs are payable.
There should be transparency and public discussion on the toll increase now that the bridge is open for use.
The Thruway Authority should increase tolls by the rate necessary to service the debt when the costs are payable.
Key Data
$2.9 billion
— The amount in loans and bonds that will need to be repaid for the bridge's construction.
$10.61
— The projected toll for passenger vehicles using E-Z Pass under full-cost scenarios.
$174 million
— The average annual debt service cost for the Cuomo Bridge's loans and bonds.
24%
— The percentage increase required on all Thruway tolls to fund the bridge's debt service if a systemwide hike were implemented.
$5
— The current toll for passenger vehicles.
$4 billion
— The total projected price of the Cuomo Bridge.
New York school districts exhibit significant disparities in revenue sources, with wealthier districts relying more on local property taxes while poorer districts depend more heavily on state aid. Despite higher tax efforts in poorer areas, wealthy districts generate substantially more revenue per pupil, prompting calls to reallocate state resources to better align with district wealth and student needs.
Recommendations related to Revenue Trends
The State should properly account for district wealth and reallocate state resources from high-wealth to low-wealth districts.
Key Data
$21,206
— Per pupil spending in New York compared to the national average of $11,392 as of the 2014-2015 school year.
$24,845
— Average school district revenue per pupil in school year 2015-2016.
53 percent
— Share of total district revenues derived from local governments, mostly from property taxes.
44.2 percent
— Average share of total district revenues provided by state aid.
72 percent
— Share of revenues in the 1st wealth decile that are derived from state aid.
13 percent
— Share of 10th wealth decile revenues that are derived from state aid.
The Metropolitan Transportation Authority should shift its funding framework to rely more on motorist cross-subsidies, such as congestion pricing or mileage-based user fees, rather than increasing the burden on taxpayers. Currently, the agency's reliance on taxpayer subsidies is disproportionately high, with New York City residents and businesses contributing the vast majority of regional and statewide tax allocations.
Recommendations related to Revenue Trends
The MTA should seek additional motor vehicle use charges to cross-subsidize transit.
Policymakers should adopt a mileage-based user fee, also known as a vehicle-miles traveled tax, which would better reflect the actual use of roads and bridges than motor fuel taxes.
The MTA and its workforce should more aggressively pursue efficiencies at the agency to make the stabilization plan self-sustaining.
Long-term funding streams to support transit needs ought to come from motorists, either from congestion pricing or other charges for motor vehicle use.
Uncommitted funds and funds in the current capital program should be re-tasked to work that can accelerate the process of bringing the subway to a state of good repair.
Key Data
$80 billion
— Total authorized for capital plans spanning the 2000 to 2014 period.
$18 billion
— Amount of authorized capital funds from the 2000 to 2014 period that remains unspent.
$9.2 billion
— Amount of authorized capital funds from the 2000 to 2014 period that remains uncommitted to construction projects.
12 percent
— Share of MTA’s mass transit funds currently contributed by motorists.
$835 million
— Operating subsidies contributed by New York City for the MTA in 2016.
$3.4 billion
— Amount of regional taxes paid by New York City residents and firms out of $4.6 billion in 2016.
The New York City Housing Authority has achieved recent financial surpluses through increased federal and city support, though its long-term budget remains precarious due to potential federal funding cuts. To ensure future stability, the authority must aggressively implement efficiency reforms, including adjusting rent collection, optimizing non-rental income, and controlling operating expenses.
Recommendations related to Revenue Trends
Ease work rule restrictions in the upcoming collective bargaining negotiations.
Come to an agreement for rent payment by non-profit tenants in NYCHA buildings.
Support NYCHA's proposal to raise parking fees to market rates.
Lobby the federal government against onerous changes to public housing operating and capital subsidies.
Key Data
$171.8 million
— The surplus recorded by the New York City Housing Authority in 2015.
$36 million
— The surplus recorded by the New York City Housing Authority in 2016.
$122 million
— The growth in rent paid by NYCHA tenants between 2013 and 2016.
$82 million
— The additional federal support realized by NYCHA in 2016 compared to 2013.
$25 million
— The expected revenue from the Holmes Tower transaction at closing.
$19.6 million
— The projected operating deficit for the New York City Housing Authority by 2019.
The fiscal year 2018 budget relies on a $4.2 billion surplus to prepay expenses while navigating economic uncertainty and fluctuating tax revenue forecasts. To improve fiscal health, the city should prioritize operational efficiencies to fund potential tax reductions, such as lowering the Commercial Rent Tax for small businesses.
Recommendations related to Revenue Trends
The City should limit new spending and achieve more savings, tax reductions, and reserves.
Agencies need to step up efforts to make their operations more cost-effective by implementing efficiencies, which could enable a reduction in the Commercial Rent Tax to benefit small businesses.
Any additional raises should be paid for with productivity gains, which also necessitate settling the contracts promptly.
Health insurance contributions from employees and retirees should be on the table during negotiations.
Regular deposits to the Retiree Health Benefit Trust should be considered, and efforts to grow the fund should be guided by standards for deposits and withdrawals.
Key Data
$183 million
— Increase in the property tax revenue forecast for fiscal year 2018.
$87 million
— Amount of expanded tax exemptions for veterans and low-income senior citizens.
$4.2 billion
— Expected surplus at the end of fiscal year 2017 to be used to prepay fiscal year 2018 expenses.
$87.3 billion
— Adjusted Adopted Budget for Fiscal Year 2018.
$442 million
— Increase in the surplus roll used to fund additional spending in fiscal year 2018.
$340 million
— Additional revenue used to fund additional spending in fiscal year 2018.
The Fiscal Year 2018 Executive Financial Plan includes a balanced budget and cautious tax revenue projections, though the city faces economic uncertainty and potential federal funding shifts. To ensure fiscal stability, the city should prioritize efficiency savings, restrain spending growth, and reform the Commercial Rent Tax to support local businesses.
Recommendations related to Revenue Trends
The City should find additional efficiency savings and make agency participation in the CSP mandatory to increase efficiency savings as part of the CSP.
The Administration and Council should redirect some of the savings from the CSP to tax reductions.
The City should reform the Commercial Rent Tax, which would end this tax for nearly 4,000 businesses in Manhattan.
The City should restrain spending growth to ensure fiscal prudence during a time of economic uncertainty.
The City should improve the capital planning process to ensure realistic scheduling and funding of infrastructure projects.
Key Data
$1.5 billion
— CSP projected annual savings in fiscal year 2017.
$1.1 billion
— Total savings decrease to this amount in fiscal year 2021.
$400 million
— Efficiency savings of just 1 percent of city-funded agency budgets would equal this amount each year.
$52 million
— Annual cost in revenue of the Commercial Rent Tax.
$1.25 billion
— Current level of the City's reserves each year.
$4.0 billion
— Assets currently held in the Retiree Health Benefit Trust.
New York City's property tax system is riddled with inequities, with effective tax rates varying significantly across different property types and neighborhoods due to assessment caps and phase-ins. To address these issues while raising $2 billion in additional revenue, the city could implement reforms such as revaluing properties, consolidating homeowner categories, or eliminating assessment caps that currently favor certain properties over others.
Recommendations related to Revenue Trends
The city should raise revenue proportionally from all property classes to maintain the current distribution of the tax levy.
Policymakers should address inequities affecting homeowners by consolidating all homeowners into a single category and assessing them at a uniform rate.
The city should eliminate assessment caps and phase-in provisions for all properties to reduce intra-class inequities and improve transparency.
Officials should revalue condos and co-ops based on market values using sales prices to correct severe undervaluation.
The city should implement means-tested property tax exemptions or "circuit breakers" for elderly or low-income homeowners to protect them from sharp tax increases.
Key Data
$21.1 billion
— Baseline property tax levy estimated for fiscal year 2015.
$2 billion
— Target amount of additional revenue to be raised by the proposed reforms.
$4.5 billion
— Estimated revenue foregone in fiscal year 2015 due to existing cap and phase-in rules.
$1.6 billion
— Amount of lost revenue attributed to assessment caps applied to smaller rental properties.
$846 million
— Revenue raised in fiscal year 2015 from the revaluation of condos and co-ops and the application of a 6 percent assessment ratio.
$936 million
— Revenue raised in fiscal year 2015 from the elimination of assessment growth caps on 1-3 family homes.
The Metropolitan Transportation Authority faces a worsening fiscal outlook due to increased labor costs and reduced state subsidies, which are only partially offset by operational efficiencies and one-time insurance recoveries. Without utilizing a 1 percent annual general reserve, the agency faces a projected $372 million cash deficit by 2020, necessitating new policy actions to avoid significant financial instability.
Recommendations related to Revenue Trends
The MTA should utilize a 1 percent annual general reserve to provide $650 million over the plan period to help mitigate projected deficits.
The agency must implement new policy actions to address the projected 2020 cash deficit if the general reserve funds are unavailable.
Key Data
$271 million
— Total reduction in dedicated tax and state subsidy revenues over the financial plan.
$175 million
— Total favorable impact expected from unspecified operating expense efficiencies.
$100 million
— One-time insurance proceeds received from Superstorm Sandy claims to support 2017 operations.
$372 million
— Projected negative cash balance for the agency in 2020.
$650 million
— Potential funds available over the plan period if a 1 percent annual general reserve is not utilized.
$704 million
— Amount of previously appropriated state funding accelerated to support the capital program.
New York City's projected revenue from future taxi medallion sales is increasingly unrealistic due to market instability caused by ride-sharing competition, which has significantly depressed medallion values. The city should remove these projected revenues from its financial plan until the industry stabilizes and a more accurate valuation can be determined.
Recommendations related to Revenue Trends
The City should adjust its budget assumptions to reflect this situation, with the most prudent action being removing this revenue from its financial plan until the industry stabilizes.
Trends in the industry suggest the City should, at a minimum, adjust its assumptions for how much can be earned from future sales.
A more prudent action is to remove the revenue from the financial plan until a more stable and realistic basis can be identified for the value of any future auctions.
Key Data
$1.2 billion
— Expected revenue from the sale of new taxi medallions from fiscal years 2019 to 2023.
$359 million
— Revenue generated from the auction of 350 medallions during fiscal year 2014.
$864,000
— Average winning bid for an individual medallion during the 2014 auctions.
$1.1 million
— Average winning bid for a corporate medallion during the 2014 auctions.
$480,000
— Average price of independent medallions in 2016 private transfers.
$600,000
— Average price of corporate medallions in 2016 private transfers.
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.
New York State's proposed executive budget includes a $1.1 billion increase in school aid, but the accompanying changes to the Foundation Aid formula would solidify existing inequities by favoring wealthier districts. Rather than perpetuating these flaws, the state should reform the formula to ensure funding is directed toward districts with the greatest need, which could be achieved for an additional $569 million.
Recommendations related to Revenue Trends
New York State should reform the Foundation Aid formula to alleviate current inequities instead of making them permanent.
The state should change the problematic features of the Foundation Aid formula to ensure all districts could be fully funded.
Key Data
$1.1 billion
— Increase in school aid proposed in the New York State Executive Budget.
$4.3 billion
— Amount certain advocates claim local districts are owed in Foundation Aid.
$569 million
— Additional funding required to fully fund all districts under Foundation Aid if problematic formula features were changed.
$25.6 billion
— Total school aid proposed for school year 2017-2018.
The Metropolitan Transportation Authority should increase transit fares and motor vehicle charges to better align revenue with operating expenses and improve fiscal health. These adjustments would help address the projected deficit while ensuring that fares and tolls more accurately reflect the costs of providing and using the transit system.
Recommendations related to Revenue Trends
The Board should continue the policy of regular and predictable fare increases and move toward a long-term goal of covering approximately half of mass transit expenses with fare revenue.
Transit fares should increase greater than 4 percent in 2017 and 2019.
The MTA should seek additional motor vehicle use charges to cross-subsidize transit, such as tolling East River Bridges or introducing a vehicle-miles traveled user fee.
The MTA should explore capping the number of allowed rides for weekly and monthly passes to improve services and finances.
The MTA should ensure the contractor and the agency have the capacity to implement an income-conditioned fare structure so that it can be implemented quickly if adopted by the City.
Key Data
$2.7 billion
— The MTA's projected deficit using GAAP in 2017.
42 percent
— The increase in fringe benefits for employees and retirees since the MTA implemented a fare increase in 2009.
$90 million
— The estimated potential yield from capping the number of allowed rides for weekly and monthly passes in 2015.
$1.86
— The average revenue per ride on the transit system.
3.9 percent
— The average annual increase in operating expenses since the MTA implemented a fare increase in 2009.
The NYC Preliminary Budget for FY2018 faces scrutiny regarding potential downward revisions in tax revenue projections following shortfalls in fiscal year 2017 collections. Questions remain about whether the city will prioritize recurring efficiency savings over one-time budget maneuvers and how it will address significant capital needs, such as the $17 billion in unmet requirements for the New York City Housing Authority.
New York City's property tax is the city's largest revenue source, projected to generate $24 billion in fiscal year 2017, which accounts for 44 percent of all city tax revenues. However, the system creates significant inequities, as effective tax rates vary widely between property types and among similar properties due to complex tax laws and exemption programs.
Key Data
$24 billion
— Projected revenue generated by the property tax in fiscal year 2017.
44 percent
— Share of all City tax revenues accounted for by property taxes in fiscal year 2017.
$382 billion to $1.47 trillion
— Growth in the value of property in New York City from fiscal years 2000 to 2017.
$8.4 billion to $25.8 billion
— Growth in the property tax levy from fiscal years 2000 to 2017.
$3 billion
— Cost of housing and economic development tax exemptions in 2016.
$350 million
— Cost of personal tax exemptions in 2016.
New York State's All Funds tax revenue projections for fiscal year 2017 have declined by $1.4 Billion from the adopted budget, with personal income tax revenues falling by $775 Million since the first quarter update. Consequently, out-year budget gaps are widening, reaching $3.5 Billion for fiscal year 2018, $7.1 Billion for fiscal year 2019, and $8.9 Billion for fiscal year 2020.
Key Data
$739 Million
— All Funds tax revenue projections down from the first quarter update for fiscal year 2017.
$1.4 Billion
— Total drop in All Funds tax revenue projections from the adopted budget for fiscal year 2017.
$775 Million
— Personal income tax revenue estimates down from the first quarter update for fiscal year 2017.
New York State's fiscal year 2017 tax revenue projections have faced repeated downward adjustments, with personal income tax collections falling $423 million below plan through September. These revenue shortfalls, combined with rising personnel and minimum wage costs, threaten to expand the projected fiscal year 2018 budget deficit to over $4 billion.
Key Data
$497 Million
— Decrease in fiscal year tax revenue projections in May.
$626 Million
— Additional decrease in fiscal year tax revenue projections in August.
$423 Million
— Personal income tax collections below plan through the end of September.
$338 Million
— Total receipts below updated projections.
$260 Million
— Personnel cost increase in 2017 due to collective bargaining agreements.
$520 Million
— Personnel cost increase in 2018 due to collective bargaining agreements.
The Metropolitan Transportation Authority faces long-term fiscal instability as it relies on depleting cash reserves to fund capital investments while confronting risks from potentially stagnant tax revenues and rising labor costs. To ensure future financial health, the agency must secure new revenue streams, such as increased tolls or vehicle-miles traveled fees, while simultaneously identifying operational efficiencies.
Recommendations related to Revenue Trends
The MTA should prepare a plan to fund PAYGO capital contributions without exhausting cash balances.
The MTA should adjust financial projections to better reflect foreseeable risks.
The MTA should set aside additional resources for the agency’s OPEB trust fund.
The MTA should secure new revenue primarily from cross-subsidies from motor vehicle users, including higher tolls, gasoline taxes, and license and registration fees.
The MTA should implement a new vehicle-miles traveled fee to generate necessary revenue.
MTA leadership should continue and intensify its efforts to identify and implement efficiencies.
Key Data
$15.5 billion
— Total MTA 2017 Preliminary Budget.
$1.1 billion
— Amount of pay-as-you-go (PAYGO) capital investments projected from surpluses.
$14 billion
— Total OPEB liability as of March 31, 2016.
$113 million
— Projected adjusted cash deficit in 2020.
2.4 percent
— Expected increase in total revenue in 2017 over 2016.
0.9 percent
— Projected tax and subsidy growth in 2017.
The Access-A-Ride paratransit program faces a worsening fiscal outlook, with projected expenses reaching $646 million by 2020 and an increasing reliance on a cross-subsidy from regular transit riders. To improve financial sustainability, the MTA should implement strategies such as shifting ambulatory trips to lower-cost providers, increasing fares, and securing Medicaid reimbursement for non-emergency medical transportation.
Recommendations related to Revenue Trends
The MTA should shift ambulatory trips to its broker car service (BCS) program, which uses for-hire vehicles to complete trips at less than half the cost of contracted carriers.
The MTA should establish a subsidy program for paratransit trips completed by taxicabs and other for-hire vehicles to allow users to hail rides without advance reservations.
The MTA should increase paratransit fares to discourage excessive use and better align the program's revenue with its costs.
The MTA should expand the use of feeder service, which connects users with accessible fixed-route stops, to reduce the number of door-to-door trips and lower unit costs.
The MTA should pursue Medicaid reimbursement for non-emergency medical transportation to tap into a new revenue source for trips that qualify under federal law.
Key Data
$461 million
— The total cost of the Access-A-Ride program in 2015.
$71
— The cost per trip for Access-A-Ride in 2014, the highest among 29 peer cities.
$126 million
— The potential annual savings for the MTA if all ambulatory customers were shifted to the broker car service program.
$28 million
— The potential annual savings if all trips originating within the Manhattan taxicab "hail zone" were replaced by a taxicab subsidy program.
$184 million
— The potential annual fiscal benefit from doubling paratransit fares.
$385 million
— The projected amount of MTA revenue needed to subsidize Access-A-Ride in 2020.
New York State's tax revenue is increasingly reliant on the volatile personal income tax, which accounted for 63 percent of total tax revenues in 2016, up from 54 percent in 1986. A recession of the magnitude seen in the 2009-2012 period could result in a four-year revenue shortfall of $59 billion, or 18.2 percent of projected tax revenues.
Recommendations related to Revenue Trends
In order to counter the potential impacts of an economic downturn, the State should build its reserves now.
Because New York has comparatively small reserves, the State must prepare for the possibility that tax increases and/or spending cuts would be necessary in the event of a recession.
Key Data
$59 billion
— The potential cumulative four-year revenue shortfall if a recession of the size and scope of the 2009-2012 period were to repeat.
18.2 percent
— The potential loss of tax revenues over four years in the event of a recession.
$74.7 billion
— Total New York State tax revenues in 2016.
63 percent
— The share of total tax revenues derived from the personal income tax in 2016.
41.5 percent
— The contribution of the top 1 percent of taxpayers to personal income tax revenues in 2015.
$3 billion
— The approximate annual revenue provided by the personal income tax surcharge set to expire on December 31, 2017.
New York City's financial plan includes projections for tax revenues, expenses, headcount, debt service, and savings from the health savings agreement and the Citywide Savings Plan. These elements constitute the city's fiscal outlook as of June 2016.
New York City faces a fiscal challenge as the current surplus is exhausted and revenue growth is projected to slow significantly from historical averages. To manage future budget gaps, the city must rely on an ambitious and partially speculative savings program while addressing the growing financial deficits within the public hospital system.
Recommendations related to Revenue Trends
The city must implement more efforts at savings through efficiencies to sustain spending in a less prosperous future.
The city must move quickly to stop the bleeding of cash at Health + Hospitals to keep the budget balanced in the potentially difficult years ahead.
The city must implement a viable financial plan for Health + Hospitals to address the agency's projected deficits.
Key Data
$3.4 billion
— The surplus roll from good times that will be exhausted beginning in fiscal year 2018.
4.7 percent
— The projected tax revenue growth rate in fiscal year 2018.
4 percent
— The projected tax revenue growth rate in fiscal year 2020.
6.5 percent
— The average tax revenue growth rate from fiscal year 2009 to 2016.
$2.2 billion to nearly $3.0 billion
— The range of projected budget gaps after fiscal year 2017.
New York City's fiscal year 2017 financial plan anticipates tax revenue growth of 1.9 percent for the year, with an average growth of 3.6 percent between fiscal years 2016 and 2017. While the budget includes significant new spending and maintains record reserves, it faces potential risks due to a reliance on uncertain Medicaid revenues and other re-estimates to close budget gaps.
Key Data
1.9 percent
— Projected growth in tax revenues for fiscal year 2017.
3.6 percent
— Average projected growth in tax revenues between fiscal years 2016 and 2017.
The Mayor's Executive Budget for Fiscal Year 2017 faces a complex fiscal landscape, with projected revenues of $81.7 billion and $82.1 billion for 2016 and 2017, respectively, amid signs of a softening economy. The budget must also navigate the loss of $600 million in sales tax revenue withheld by the state, while balancing new spending initiatives against the need for efficiency and reserve growth.
Recommendations related to Revenue Trends
The administration should resist the temptation to raid the Retiree Health Benefits Trust, which contains around $3.1 billion, to provide budget relief.
The City should increase the size of the savings plan by setting savings targets of 5 percent for all agencies to meaningfully offset the cost of new initiatives or to boost reserves.
The City should prioritize efficiency measures that are sufficient to offset the cost of any new needs rather than relying on debt service savings from refinancings.
The City should ensure that the turnaround plan for New York City Health + Hospitals is credible and accompanies the Executive Budget.
Key Data
$81.7 billion
— Projected revenue for fiscal year 2016
$82.1 billion
— Projected revenue for fiscal year 2017
$790 million
— Total value of City Council budget priorities
$337 million
— One-time support for New York City Health + Hospitals included in the January budget
$1.4 billion
— Record overtime costs for all agencies in fiscal year 2015
$600 million
— Sales tax revenue withheld by the state
The 2016 state budget agreement relies on optimistic economic growth projections to manage significant out-year deficits, while simultaneously increasing education and capital spending. Although tax cuts for middle-income earners are included, the long-term financial plan remains precarious without structural reforms like capping STAR benefits or rationalizing retiree health insurance.
Recommendations related to Revenue Trends
The state should rationalize retiree health insurance shares to help secure its financial future.
Policymakers should cap STAR benefits to improve the state's long-term fiscal outlook.
The state should extend rational funding plans for SUNY and CUNY to ensure sustainable financial management.
To balance the financial plan, the state must hold the line on agency spending.
The state should extend the personal income tax surcharge on high-income earners to maintain revenue levels.
Key Data
$1.2 billion
— Projected out-year deficit for state fiscal year 2018.
$3 billion
— Projected out-year deficit for state fiscal year 2019.
$3.4 billion
— Projected out-year deficit for state fiscal year 2020.
$24.8 billion
— Total state education spending, which grew by 6.5 percent.
$4.2 billion
— Annual tax savings for married couples with incomes between $24,000 and $300,000 by 2025.
$54 billion
— Five-year transportation capital plan approved by the state.
New York's rational tuition plan for SUNY and CUNY, which allows for predictable annual increases while maintaining state financial support, should be extended to avoid the return of volatile and irrational tuition fluctuations. This program has successfully kept New York's public university tuition rates significantly lower than the national average and neighboring states, ensuring affordability while providing stable funding.
Recommendations related to Revenue Trends
The final state budget should extend the SUNY 2020 and CUNY 2020 Program for an additional five years to ensure tuition predictability and continued state financial support.
Policymakers should extend the rational funding plan to prevent students from being exposed to irrational and unpredictable tuition fluctuations.
Key Data
$6,330
— In-state tuition per academic year at CUNY four-year institutions in 2015-2016.
$6,470
— In-state tuition per academic year at SUNY four-year institutions in 2015-2016.
$7,640
— Average in-state tuition and fees for public four-year undergraduate universities in New York.
$9,410
— National average in-state tuition and fees for public four-year undergraduate universities.
$1 billion
— Annual state financial support provided to SUNY senior colleges.
$1.2 billion
— Annual state financial support provided to CUNY senior colleges.
The proposed fiscal year 2017 budget includes significant shifts in tax policy, including the conversion of the STAR property tax exemption into a personal income tax credit and the redirection of sales tax revenue from New York City to the state. Additionally, the budget expands economic development spending and tax credits, which should be reconsidered in favor of more disciplined fiscal management and targeted aid distribution.
Recommendations related to Revenue Trends
A moratorium should be declared on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
The State’s current year $2.5 billion in one-time financial settlements should not be used to support ongoing operating expenses; these funds should be used to provide long-term benefits such as pay-as-you-go capital investments that replace borrowing, enhanced reserves, or accelerated debt payments.
State aid should give priority to districts with the greatest need and fewest resources.
Arbitrators should account for the full cost of a decision, including retroactive pay and the impact on fringe benefits, without increasing taxes, making service cuts, or employing fiscal gimmicks.
Converting the STAR exemption into a PIT credit would have two substantial benefits: It would allow property taxpayers to see changes in their school district’s tax levy more clearly, and it would provide another administrative mechanism to prevent taxpayers from receiving the STAR benefit on multiple homes.
Key Data
$2.3 billion
— Total expenses shifted from the State to New York City over three years through CUNY senior college cost shifts and the rescinding of the State’s takeover of Medicaid growth payments.
$3.4 billion
— Annual cost to state taxpayers for the STAR (School Tax Relief) program intended to lower the burden on homeowners of property taxes.
$2.5 billion
— Amount of one-time financial settlements in the current year that should be used for long-term benefits rather than ongoing operating expenses.
$600 million
— Amount of sales tax revenue shifted from New York City to the State over three years through a complex transaction relating to the Sales Tax Asset Receivable Corporation.
$24.2 billion
— Total school aid amount following a 4.3 percent increase in the fiscal year 2017 budget.
$1.1 billion to $3.6 billion
— Projected growth of general fund budget gaps in fiscal years 2018 to 2020 if necessary savings are not achieved.
New York City's fiscal year 2017 budget proposal includes a Citywide Savings Program that is insufficient to offset new spending or build necessary reserves against an impending economic slowdown. To prepare for potential financial instability, the city must identify operational efficiencies that provide recurring savings rather than relying on one-time adjustments.
Recommendations related to Revenue Trends
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 should include much more in the way of agency savings from initiatives that improve operations and provide recurring savings.
The City should exercise spending restraint and build reserves regularly and well in advance of a potential downturn.
Key Data
$2.7 billion
— The increase in city-funded spending in the fiscal year 2017 budget proposal.
$1.9 billion
— The value of new savings initiatives proposed in the fiscal year 2017 Citywide Savings Program over fiscal years 2016 to 2020.
45 percent
— The decline in China's stock market since its peak in June.
70 percent
— The drop in the price of a barrel of oil since June 2014.
$7.9 million
— The total value of initiatives to make agencies more efficient in fiscal year 2016.
0.6 percent
— The savings amount as a share of city-funded spending during the fiscal year 2016 to 2020 period.
New York City's property tax system is riddled with inequities, such as the undervaluation of co-ops and condos and the use of assessment caps that disproportionately benefit valuable properties. To address these issues while raising $2 billion in revenue, the city should consider reforms like revaluing properties, consolidating homeowner categories, or eliminating assessment caps and phase-ins.
Recommendations related to Revenue Trends
The city should eliminate all disparities among homeowners by assessing and taxing both 1-3 family homes and co-ops and condos in the same way.
The city should eliminate the caps for Class 1 properties to ensure that all homeowners face the same effective tax rate.
The city should eliminate the caps and phase-in provisions for all properties to address inequities among appreciating and depreciating properties.
If city officials are concerned with protecting homeowners who do not have sufficient cash incomes to cover their property taxes, caps on increases in assessments should be means-tested.
The city should provide special exemptions or property tax 'circuit breakers' to elderly or low-income homeowners to target relief to those with limited cash incomes.
Key Data
$2 billion
— The target amount of additional revenue to be raised by the proposed property tax reforms.
$4.5 billion
— The estimated revenue foregone in fiscal year 2015 due to existing cap and phase-in rules.
17.5 percent
— The amount of tax liability offset by abatements for most co-op and condo units.
1.21 percent
— The assessment ratio for a two-family home in Park Slope/Carroll Gardens.
45 percent
— The assessment ratio for a commercial property in East New York/Starrett City.
2.8 percent
— The assumed annual increase in market values for all properties used in the report's forecasts.
New York City's $82 billion preliminary budget increases spending by 4.5 percent, relying on economic growth and rising property values rather than tax increases to fund the plan. Despite this growth, the budget lacks a robust savings plan, with current agency savings targets falling below 1 percent of city-funded spending and reserves remaining stagnant at $1.5 billion.
Recommendations related to Revenue Trends
The city should set a 5 percent target for agency savings that goes much further.
Agencies should aggressively seek efficiencies to create savings that offset the costs of new programs.
Operations should be reviewed vigorously, with programs restructured or eliminated when necessary and opportunities for leveraging city dollars identified.
A strong savings program will be essential to boost reserves.
Additional deposits to the retiree health benefits trust fund should be made this year.
Key Data
$82 billion
— The size of the preliminary budget unveiled by the mayor.
4.5 percent
— The increase in city-funded spending.
$400 million
— Agency savings included in the fiscal year 2016 budget.
$269 million
— Agency savings included in the fiscal year 2017 budget.
$1.5 billion
— The current level of city reserves.
$3.4 billion
— The value of the retiree health benefits trust fund.
This school year New York State will spend $23.5 billion on aid to school districts, accounting for 25 percent of the state-funded operating budget. The State’s role in K-12 public education is critical to offsetting disparities in local wealth and student need, yet numerous problems remain in the state school…
The Metropolitan Transportation Authority faces a potential $1.5 billion shortfall over its financial plan due to the risk of an economic downturn, with annual losses reaching as high as $616 million. Even under optimistic growth forecasts and planned fare increases, the agency projects a $182 million cash deficit by 2019.
Key Data
$1.5 billion
— potential shortfall over the financial plan based on the last three recessions
$616 million
— potential shortfall in a single year based on the last three recessions
$182 million
— projected cash deficit in 2019 even if the region continues to grow as forecasted
The Metropolitan Transportation Authority faces a potential revenue impact of $1.5 billion, or 3.9% of its 2018 budget, in the event of an economic downturn. Proactive measures are necessary to prepare for a future recession without increasing the agency's long-term costs.
Key Data
$1.5 billion
— potential impact of an economic downturn on the MTA
3.9%
— of the MTA's 2018 budget that could be impacted by an economic downturn
The Metropolitan Transportation Authority's financial plan relies on optimistic economic growth projections that could lead to a $1.5 billion revenue shortfall over four years if a recession occurs. To mitigate these risks, the agency should adopt more cautious revenue assumptions, establish an explicit rainy day fund, and restrict the reallocation of capital and retiree benefit funds to cover operating expenses.
Recommendations related to Revenue Trends
The MTA should adopt more cautious economic and revenue assumptions to better prepare for potential downturns.
The agency should establish an explicit rainy day fund covering a larger share of total expenses before releasing future reserves to reduce other long-term liabilities.
The MTA should implement greater restrictions on the diversion of OPEB funding to ensure long-term financial stability.
The agency should maintain a firmer commitment to PAYGO capital allocations to reduce the risks associated with reallocating these funds to cover operating expenses.
The MTA should continue to increase planned efficiency gains beyond current targets to help bring expenditures in line with available revenues during a downturn.
Key Data
$1.5 billion
— The cumulative revenue shortfall the MTA would experience over a four-year period in an illustrative recession scenario.
$616 million
— The revenue loss the MTA would face in Year Three of an illustrative recession scenario.
$4.6 billion
— The revenue shortfall the MTA would face over the financial plan period if a recession similar to the 2007 downturn occurred.
$20 billion
— The current unfunded OPEB liability of the MTA.
$1.3 billion
— The annual savings achieved by the MTA's expenditure growth curbing initiative as of 2015.
The MTA's 2015-2019 capital plan has been reduced to $26.1 billion, necessitating a clear strategy for prioritizing essential repairs and signaling upgrades over system expansions. Officials must explicitly define the funding mix, clarifying whether the financial burden will fall on taxpayers, transit riders, or motorists through fees and tolls.
Recommendations related to Revenue Trends
The content of the now reduced scale of the program must be specified in a revised capital plan to be submitted to the Capital Program Review Board, with challenging cuts made in accord with priorities favoring progress toward a state of good repair and enhanced signaling systems over less urgent, albeit desirable, system expansions.
The Mayor and Governor and their budget staffs should identify the sources of their committed funds, clarifying whether the money will come via taxes on the region's residents and businesses, fares from MTA riders, or fees and tolls from motor vehicle users.
The mix of revenue sources to be relied upon by each government should be specified in the Governor's January 2016 Executive Budget and the Mayor's November Financial Plan modification or January 2016 Financial Plan.
Key Data
$26.1 billion
— The revised size of the MTA's 2015 to 2019 capital plan.
$29 billion
— The amount initially sought by the MTA Board for the capital plan.
$26.8 billion
— The amount more recently sought by Chairman Prendergast for the capital plan.
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.
NY1 Thanks to the surge of car services like uber, fewer and fewer people are taking yellow cabs—and it's just not cabbies who are feeling the pinch. The decline has real implications for the city's transit system, which received fifty cents for every cab ride.
The Metropolitan Transportation Authority faces a $2.6 billion capital funding gap, while revenue from taxes on New York City's taxi and for-hire vehicle industry is shifting due to the rise of ride-hailing services and changing travel patterns. To address this shortfall, policy options include expanding the per-ride tax to all for-hire vehicles, increasing the tax rate to match taxicabs, or reforming the transportation sales tax to dedicate more revenue to the transit authority.
Recommendations related to Revenue Trends
Needed MTA capital funds should be provided from additional motor vehicle cross-subsidies to help offset the negative externalities of automobile use.
The 50-cent per-ride taxicab tax should be expanded to include all black car and Dispatch Service Provider (DSP) trips.
The per-ride tax on black cars and DSPs should be updated to a rate of 3.95 percent of the fare rather than a flat 50-cent charge.
The transportation sales tax should be reformed to dedicate the entire tax to the MTA at a rate sufficient to close the funding gap.
Key Data
$2.6 billion
— The remaining MTA capital funding gap that needs to be filled.
$250 million
— Estimated tax revenue from TLC services in 2015.
74%
— The increase in tax collections from the industry between 2011 and 2015.
$33 million
— Additional revenue that would have been raised in 2015 by applying the per-ride tax to all black car and DSP trips.
$70 million
— Additional revenue that would have been generated in 2015 if black car and DSP trips were taxed at 3.95% of the fare.
$225 million
— Potential increase in MTA revenues in 2019 from a reformed sales tax at a 7.75% rate.
The proposed legislation to increase free transfers on subways and buses would reduce Metropolitan Transportation Authority revenue by $40 million annually, exacerbating existing funding shortfalls for capital plans and operating expenses. Current fare structures already provide significant value, with average revenue per ride significantly lower than inflation-adjusted levels from two decades ago.
Recommendations related to Revenue Trends
Veto S3228/A2607, a bill mandating an increase from one to two free transfers for persons purchasing a ride on Metropolitan Transportation Authority (MTA) subways and buses, to avoid negative consequences in foregone revenue for the MTA.
Prioritize the preservation of fare revenue to support debt service for $500 million in much needed capital investments rather than expanding free transfers.
Key Data
$40 million
— Annual reduction in MTA revenues estimated if the bill mandating an increase in free transfers is enacted.
$1.21
— Average fare revenue per ride in 1993.
$2.05
— Equivalent sum of the 1993 average fare revenue if it had grown with overall inflation by 2014.
$1.70
— Actual average revenue per ride in 2014.
$500 million
— Amount of capital investments that could be supported by the fare revenue that would be lost under the proposed bill.
The fiscal year 2016 adopted budget includes $200 million in new spending, which is supported by current revenue but creates long-term fiscal risks. Future budget gaps and an inevitable economic downturn threaten to erode the revenue necessary to sustain these recurring expenses.
Key Data
$200 million
— spending added in the fiscal year 2016 adopted budget for additional police, social service providers, and other programs.
New York City's outstanding debt has exceeded $110 billion, with debt service costs projected to consume one out of every eight dollars in tax revenue. The city's capital strategy lacks a clear needs assessment, making it difficult to determine if the planned investments are worthwhile or if the current debt burden is sustainable.
Recommendations related to Revenue Trends
New investments need to be undertaken cautiously given the large and growing debt load.
Proposed capital spending should be limited to clearly defined projects with demonstrable benefits.
The City should link its capital strategy to a comprehensive needs assessment to ensure progress toward achieving a state of good repair.
Key Data
$110 billion
— New York City's outstanding debt as of June 30, 2014.
96 percent
— Growth of New York City's outstanding debt since 2002.
8 percent
— Debt repaid from tax revenues in fiscal year 2016 as a percentage of the City's real property values.
13 percent
— Debt repaid from tax revenues in fiscal year 2016 as a percentage of the City's personal income.
$83.8 billion
— Total value of the proposed Ten-Year Capital Strategy for Fiscal Years 2016-2025.
30 percent
— Projected increase in debt service paid from the operating budget.
The New York City Housing Authority faces significant financial instability, with operating deficits projected to reach $194 million by 2019 due to low rent collection rates and insufficient non-rental income. To address these gaps, the authority's roadmap proposes increasing rent collections to 95 percent, expanding non-rental revenue streams, and pursuing residential infill development to generate up to $800 million over a decade.
Recommendations related to Revenue Trends
NYCHA should increase rent collection rates to HUD's 95 percent target to generate an estimated $39 million in 2015.
NYCHA can generate more than $26 million annually in non-rental income by increasing parking fees closer to market rate, increasing monthly fees for appliances, expanding commercial activities, and raising rent collections from nonprofit tenants.
Streamlining management to curtail the scope of responsibility for borough offices to non-redundant functions would save $33 million annually by 2019.
Eliminating responsibility for community and senior centers would save $19 million annually and rely on service provision by better-equipped City agencies and nonprofits.
NYCHA can improve productivity by negotiating work rule changes in collective bargaining to limit overtime compensation for work performed in the evenings and on weekends.
Key Data
$194 million
— Projected operating deficits for NYCHA in 2019.
77 percent
— NYCHA's average rent collection rate.
$320
— Amount by which NYCHA's monthly operating costs per unit exceed those of a private rent-stabilized unit.
$39 million
— Estimated revenue generated in 2015 by increasing rent collection rates to HUD's 95 percent target.
$26 million
— Annual non-rental income that can be generated by increasing parking fees, appliance fees, commercial activities, and nonprofit rent collections.
$400 million to $800 million
— Total revenue generated over 10 years from two types of residential infill development.
The MTA relies on a complex mix of revenue sources, including $5.7 billion from fares and $1.7 billion from tolls, yet faces a projected $2.1 billion unfunded deficit by 2018 under current policies. To address this, a new funding framework is proposed that would shift costs to ensure fares cover 45 to 50 percent of operating expenses, while motorists bear the full cost of road infrastructure and contribute to mass transit through surplus user fees.
Recommendations related to Revenue Trends
Mass transit users should pay fares sufficient to cover 45 to 50 percent of the operating costs of those services.
The cost of road infrastructure—bridges and tunnels in the MTA’s case—ought to be borne entirely by motorists.
Motor vehicle user fees should generate a surplus large enough to cover 20 to 25 percent of the cost of mass transit services to help compensate for the negative externalities of vehicle use.
Tax subsidies to mass transit should comprise 25 to 30 percent of the operating costs and also fund “catch up” capital investments needed to bring the system to a state of good repair.
Key Data
$5.7 billion
— Annual revenue generated by the fare box for the MTA.
$1.7 billion
— Annual revenue generated by tolls on MTA bridges and tunnels.
$2.1 billion
— Estimated unfunded deficit for mass transit services in 2018 under current policies.
$1.6 billion
— Annual revenue generated by the Payroll Mobility Tax.
$1.6 billion
— Annual revenue generated by the Metropolitan Mass Transportation Operating Assistance (MMTOA).
$1.1 billion
— Annual appropriation from local and state general funds.
New York City's fiscal year 2016 executive budget benefits from a strong local economy, with tax revenues exceeding previous projections by $1,169 million. While these additional resources are being used to bolster reserves and fund new social service and housing commitments, concerns remain regarding the long-term sustainability of this increased spending given potential future budget gaps.
Recommendations related to Revenue Trends
The baby steps in the new savings program should become bolder strides as the budget process moves forward to improve the efficiency of municipal service delivery.
Key Data
$1,169 million
— Tax revenues anticipated in the budget for fiscal year 2016 greater than anticipated last June.
$218 million
— Tax revenues anticipated in the budget for fiscal year 2016 greater than the revisions made in February 2015.
$1,030 million
— Total increase in reserves for potential adverse developments.
$250 million
— Increase in the general reserve.
$1.0 billion
— New level of the general reserve.
$500 million
— Creation of a new capital program fund.
New York City faces projected budget gaps exceeding $1.0 billion in fiscal year 2017 and approaching $2.1 billion by fiscal year 2019, necessitating a proactive strategy to manage expenditures and revenues. Implementing a structured program to identify efficiencies and close these gaps is essential for maintaining fiscal balance, regardless of the specific terminology used to describe such measures.
Recommendations related to Revenue Trends
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.
The Mayor should implement a strategy to keep the budget balanced and make service delivery more efficient in the future, regardless of the specific name given to the program.
The financial plan should include significant savings from new efficiencies in service delivery to ensure long-term fiscal health.
Key Data
$6.5 billion
— Savings in fiscal year 2014 attributed to PEGs implemented from fiscal years 2008 to 2013.
$1.0 billion
— Projected budget gap in fiscal year 2017.
$2.1 billion
— Projected budget gap in fiscal year 2019.
$4.8 billion
— The unprecedented PEG amount in Year 1 of Mayor Bloomberg’s first financial plan following the 2001 recession and September 11 attacks.
New York City's tax revenue forecasting faces significant uncertainty due to the high concentration of tax payments among a small group of taxpayers and the inherent volatility of economic cycles. Relying on overly optimistic revenue projections creates substantial fiscal risk, as potential recessions could lead to multi-billion dollar shortfalls that existing reserves are insufficient to cover.
Recommendations related to Revenue Trends
Fiscal discipline requires that tax revenue forecasts are not only rigorous but cautious to provide a margin of error against potential revenue shortfalls.
Policymakers should avoid estimating revenue optimistically, as this can lead to unsustainable spending levels when economic growth slows or a downturn occurs.
Key Data
$7.2 billion
— The amount the Office of Management and Budget forecast tax revenue would grow over the fiscal years 2015-2019 period.
$15.8 billion
— The cumulative revenue shortfall relative to the Office of Management and Budget's forecast if a recession similar to the 2001 downturn began in fiscal year 2017.
1 percent
— The portion of tax filers who pay half of personal income taxes in New York City.
32 percent
— The peak-to-trough decline in corporate taxes during the past decade.
49 percent
— The peak-to-trough decline in banking taxes during the past decade.
70 percent
— The peak-to-trough decline in real estate transaction taxes during the past decade.
The Metropolitan Transportation Authority faces persistent budget deficits and insufficient capital investment, requiring a new financing strategy to ensure long-term fiscal stability. A proposed '25-50-25' formula suggests that bridge and tunnel tolls should cover facility costs and subsidize mass transit, while riders and taxpayers share the remaining operating expenses.
Recommendations related to Revenue Trends
The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
User fees paid by motorists should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund 'catch-up' capital investments needed to bring the system to a state of good repair.
Key Data
$17.1 billion
— The annual operating and financing expenditures of the MTA's agencies budgeted for 2012.
$2.6 billion
— The amount of additional annual revenue the 25-50-25 policy would provide by 2016 without new taxes.
$3.6 billion
— The projected deficit for the MTA in 2016, or approximately 18 percent of operating expenses.
$32 billion
— The amount of MTA debt outstanding in 2011, which increased from $14 billion in 2000.
$16.8 billion
— The total investment in five 'megaprojects' including the South Ferry Terminal, Flushing Line Extension, Second Avenue subway line, East Side Access, and Fulton Street Transit Center.
$3.6 billion
— The amount of cost overruns associated with the five 'megaprojects' mentioned above.
The MTA relies on regular fare increases to cover operating costs, but could instead generate significant revenue by capping the number of rides allowed on unlimited 7-day and 30-day MetroCards. Implementing such caps could yield approximately $93 million annually, providing a fairer alternative to broad fare hikes that impact all riders.
Recommendations related to Revenue Trends
The MTA should cap the number of rides permitted on 7-day and 30-day passes to generate needed revenue while affecting fewer riders.
The MTA should use more information than is currently available about how high-volume passholders use the system to guide the setting of specific caps.
The MTA should consider using the revenue from caps to lessen the increase in MetroCard prices or to support borrowing for the capital plan.
Key Data
$93 million
— Annual revenue the MTA could secure by capping rides on unlimited 7-day and 30-day MetroCards.
$147 million
— Expected annualized yield from the 2015 subway and bus fare increase.
$15 billion
— Funding gap for the proposed MTA capital plan.
$807 million
— Estimated annual foregone revenue from 'free' rides on unlimited passes.
26 percent
— Increase in total subway and bus ridership between 1996 and 1999.
72 percent
— Increase in bus ridership between 1996 and 1999.
New York State has been borrowing from its pension funds to manage budget gaps, a practice that has deferred $2.5 billion in payments and is projected to cost $780 million in interest. Despite receiving $5.4 billion in unexpected bank settlement revenue, the state continues to rely on these deferrals, which weakens the long-term fiscal health of the pension system.
Recommendations related to Revenue Trends
The State should end the practice of borrowing from public employee pension funds and instead use available resources to pay down existing liabilities.
The State should use a portion of the $5.4 billion windfall from bank settlements to pay down the outstanding $2.5 billion in past pension borrowings.
The State should reverse the planned $713 million pension borrowing for this year and the proposed $395 million deferral for next year.
Key Data
$5.4 billion
— Unexpected revenue received by New York State from bank settlements.
$1.8 billion
— Amount the Executive Budget proposes to borrow from public employee pension funds in coming years.
$2.5 billion
— Outstanding liability from past pension fund borrowings.
$713 million
— Amount the State will defer in pension payments this year.
$1.1 billion
— Total pension deferrals projected from fiscal year 2016 through 2020.
$780 million
— Total interest costs expected under the Executive Budget's pension borrowing proposal.
Implementing a variable fee for residential trash removal would provide an economic incentive to reduce waste while creating a new revenue stream to support disposal infrastructure. This shift would align fees with usage, ensuring that residents who generate more trash pay more, while helping the city meet its ambitious environmental goals.
Recommendations related to Revenue Trends
The City should implement a variable fee for residential trash removal to provide an economic incentive to reduce non-recyclable and non-compostable waste.
City officials should craft a plan for phased implementation of garbage fees before moving to wider expansion.
The City should start the implementation of garbage fees with a voluntary pilot program.
The City should use bag or sticker programs for large apartment buildings to address administrative challenges.
The City should offer rebates to offset the new fees for residents.
Key Data
$300 million
— Annual cost of landfilled trash managed by the Department of Sanitation.
1 million tons
— Annual greenhouse gas emissions produced by landfilled trash.
80 percent
— The City's goal to reduce greenhouse gas emissions by 2050.
$7
— The estimated monthly cost of disposal for the average New York City household.
$1.5 billion
— The amount New York City taxpayers spend annually to pick up residential and public trash.
$500
— The amount New York City taxpayers spend per household annually to pick up residential and public trash.
New York City's economy is thriving, resulting in additional revenues for the Fiscal Year 2016 Preliminary Budget. The city is utilizing these resources to address service needs while maintaining reserves, though increased capital spending plans warrant a review of priorities and affordability.
Municipalities utilize diverse funding models for solid waste management, with revenue recovery rates ranging from as low as 4% in Houston to over 137% in Dallas. These figures illustrate the varying reliance on general funds versus enterprise funds and user fees to cover the costs of residential garbage collection across major U.S. cities.
Key Data
11.4%
— 2012 solid waste revenues as a share of expenses in Baltimore.
137.9%
— 2012 solid waste revenues as a share of expenses in Dallas.
5.0%
— 2012 solid waste revenues as a share of expenses in the District of Columbia.
4.0%
— 2012 solid waste revenues as a share of expenses in Houston.
123.1%
— 2012 solid waste revenues as a share of expenses in Los Angeles.
13.8%
— 2012 solid waste revenues as a share of expenses in Philadelphia.
The Port Authority's Brooklyn maritime facilities consistently operate at a loss, with two specific sites costing over $180,000 per acre in 2013. Repurposing these underutilized properties could save $29 million annually by 2029 while creating significant opportunities for housing and job growth.
Recommendations related to Revenue Trends
The Port Authority should close the two underperforming Brooklyn facilities to reduce losses and spending.
The Port Authority should repurpose the 105 acres of land to generate benefits for the community and the regional economy through housing and commercial development.
City planners should engage the community to envision how the property could best be used to enhance the area.
Key Data
$82 million
— The amount of money the Port Authority of New York and New Jersey lost in 2013.
$205,718
— The loss per acre produced by the Brooklyn facility in 2013.
$184,788
— The loss per acre produced by the Red Hook facility in 2013.
$29 million
— The amount of money the Port Authority could save annually by 2029 if the facilities were repurposed.
3,800 and 7,600
— The range of potential housing units the site could yield if redeveloped.
2,500
— The number of jobs the site could yield if redeveloped, which is more than three times the current number.
The Port Authority of New York and New Jersey's maritime ports have consistently run deficits, with projected losses reaching $107 million by 2029 due to underutilized facilities and limited revenue growth. To achieve fiscal sustainability, the agency should repurpose underperforming facilities and support changes to collective bargaining agreements to lower operating costs and improve competitiveness.
Recommendations related to Revenue Trends
Identify excess capacity at facilities with low productivity and convert them to higher uses.
Increase potential revenue from terminal leases as they come up for renewal by supporting terminal operators in efforts to increase productivity through collective bargaining.
Close and repurpose Brooklyn and Red Hook facilities to generate savings and potential revenue.
Lower costs driven by staffing arrangements for groups of workers—known as 'gangs'—that service ships and move cargo.
Lower container royalties paid by shippers to the workers’ union to fund payments and benefits beyond those funded in their contracts.
Key Data
$107 million
— Projected annual deficit for Port Commerce in 2029.
$82 million
— Loss incurred by Port Commerce in 2013.
$354 million
— Estimated container royalties paid by carriers for New York-New Jersey terminals in 2013.
$300 million
— Potential savings from eliminating cash payments and port-specific assessments.
$29 million
— Projected annual savings by 2029 from closing Brooklyn and Red Hook facilities.
18%
— Potential cost reduction by reducing the total number of gang members.
The Metropolitan Transportation Authority faces a $15 billion funding gap for its $32 billion capital plan, requiring a new approach to revenue generation. A proposed "25-50-25" funding model suggests balancing costs through a combination of public tax subsidies, increased transit fares, and higher fees on motor vehicle users.
Recommendations related to Revenue Trends
The MTA should adopt a "25-50-25" funding approach, where public subsidies from taxes on regional residents and employers cover one-quarter of the cost of transit services.
Mass transit fares should be increased to cover one-half the cost of transit services.
Motorists’ user charges should be increased to cover one quarter of the cost of mass transit services to compensate for the negative effects of vehicle use.
The MTA should implement innovative revenue mechanisms like the Move New York plan, which includes a vehicle-miles-traveled tax to charge vehicles based on road usage and congestion levels.
Key Data
$32 billion
— Total investment required for the MTA's capital plan.
$15 billion
— The funding gap identified in the MTA's capital plan.
$1.6 billion
— The annual increase in funding from the payroll mobility tax authorized in 2009.
$2.75
— The projected single-ride subway fare by 2016.
$167 to $293
— The range of annual increased costs motorists would face under the proposed Move New York plan.
The New York City Health and Hospitals Corporation faces a worsening financial imbalance with projected budget gaps growing from $702 million in fiscal year 2015 to $1.7 billion in fiscal year 2018. To address these challenges, the corporation must implement aggressive cost controls, expand MetroPlus enrollment, and establish a more rational financial relationship with the City to ensure long-term fiscal sustainability.
Recommendations related to Revenue Trends
HHC must prioritize implementing cost controls and the associated restructuring critical to its financial plan.
The corporation should focus on managing MetroPlus to grow enrollment and maximize returns.
HHC needs to address the financial burden of caring for a large population of uninsured residents in the face of declining supplemental federal Medicaid funds.
City leaders should develop a rational financial relationship with New York City to incentivize greater efficiencies and help fulfill HHC’s mission and mandates.
HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
Key Data
$7.6 billion
— Estimated total revenue for HHC in fiscal year 2014.
$2.2 billion
— MetroPlus insurance premium revenue in fiscal year 2014.
$379 million
— Direct City appropriations, grants, and other revenue in fiscal year 2014.
$5.0 billion
— Estimated revenue from patient services billed on a fee-for-service basis in fiscal year 2014.
$1.7 billion
— Projected budget gap for HHC in fiscal year 2018.
$702 million
— Projected budget gap for HHC in fiscal year 2015.
The PATH transit system faces growing annual deficits, projected to reach $487 million by 2018, due to its reliance on only two revenue sources: passenger fares and bridge and tunnel toll cross-subsidies. To improve fiscal viability, the system should adopt a three-source funding model that includes tax subsidies, while potentially transferring operations to New Jersey Transit to enhance coordination and governance.
Recommendations related to Revenue Trends
The PATH system should adopt a three-source funding model that draws revenue from passenger fares, tax subsidies, and cross-subsidies from auto users.
Policymakers should implement a '50-25-25' or 'equal shares' formula to distribute revenue responsibilities among passengers, taxpayers, and motorists.
The agency should consider transferring PATH operations to New Jersey Transit to facilitate the collection of tax subsidies and improve coordination with other bi-state transit services.
To increase revenue, the system should implement higher fares beyond those currently planned to better align with the actual cost of service.
Local governments should create a new tax subsidy through either a sales tax in the five counties with the most PATH use or a property tax in those counties and the Manhattan central business district.
Key Data
$487 million
— The projected annual deficit for the PATH system in 2018.
$383 million
— The annual deficit for the PATH system in 2013.
$1.96
— The average fare revenue per ride in 2013.
$8.45
— The actual full cost of a single PATH ride in 2013.
$1.2 billion
— The annual amount of state taxes and federal grants that support New Jersey Transit.
62 percent
— The portion of total expenses represented by the PATH deficit in 2013.
New York State is set to receive over $4 billion in legal settlements, presenting a unique opportunity to improve long-term fiscal health rather than funding short-term expenses. The state should prioritize using these funds to pay down debt, address unfunded liabilities, bolster reserve funds, and invest in one-time capital projects that yield recurring benefits.
Recommendations related to Revenue Trends
The state should reduce long-term debt by paying off $4 billion in bonds, which would save $231 million annually in debt service.
New York should increase pay-as-you-go capital investments to accelerate state-of-good-repair projects for transportation and transit systems without incurring new debt.
The state should reduce other long-term liabilities by making pension funds whole and establishing a retiree health insurance trust fund to address unfunded obligations.
New York should increase the Rainy-Day Reserve Fund by adding settlement money to help prevent drastic service cuts and tax hikes during future economic downturns.
The state should make one-time investments that provide multiyear benefits, such as funding information-technology systems or revolving-loan funds for localities, to generate recurring savings.
Key Data
$4 billion
— The amount of settlement funds New York state will soon receive from large financial institutions.
$52.2 billion
— The total amount of New York state's current long-term debt.
$66.5 billion
— The estimated amount of New York's unfunded other-post-employment-benefit (OPEB) liability.
$174 billion
— The total capital needs across 47 state agencies and public authorities identified in the 10-year statewide capital plan.
$350 million
— The amount currently held in the Rainy Day Reserve Fund, which is restricted for use during economic downturns.
$160 million
— The annual savings or benefit that could be generated by a $4 billion revolving-loan fund for school district computer equipment.
The fiscal year 2015 budget projects spending growth of 2.7 percent annually, which outpaces the 1.8 percent average annual revenue growth and creates significant budget gaps in future years. To maintain fiscal stability, the city must implement recurring savings, exercise spending restraint, and reinstate programs to identify agency efficiencies.
Recommendations related to Revenue Trends
The Administration and the MLC should agree to changes that provide recurring savings on rapidly-growing health care costs.
The unsettled contracts present an opportunity to make city operations more efficient by eliminating archaic work rules, adopting new technologies, and reinventing service delivery.
There should be restraint in adding new spending.
Implementing new priorities in the budget should be coupled with a renewed emphasis on finding efficiencies within agency operations through a PEG program.
The de Blasio Administration should develop guidelines for regular deposits to and potential withdrawals from the RHBT in order to prevent future raids on the fund.
Key Data
1.8 percent
— Average annual projected revenue growth between fiscal years 2014 and 2018.
2.7 percent
— Projected rate of total spending growth per year between fiscal years 2014 and 2018.
$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.
39 percent
— Projected growth of health care costs by the end of the financial plan in 2018 without savings.
The PATH rail system faces growing annual deficits, projected to reach $487 million by 2018, which are currently covered by cross-subsidies from bridge and tunnel tolls. To improve fiscal viability, the system should adopt a more equitable financing model that incorporates passenger fares, tax subsidies, and reduced cross-subsidies from motorists.
Recommendations related to Revenue Trends
The '50-25-25' approach—50 percent of the cost paid by riders, 25 percent of the cost paid by tax subsidies, and 25 percent of the cost paid by cross-subsidies—would lead to an equitable and easily understood basis for generating the necessary revenue.
An 'equal shares' approach—one-third, one-third, one-third—formula, might also be justified.
PATH should adopt a consistent funding structure that shares the cost of operating the transit system among all who benefit.
Consideration also should be given to altering its governance in order to facilitate collection of a tax subsidy and improve coordination with other bi-state transit operations.
PATH could pursue other changes to make the fare system more equitable, such as a distance-based fare system or peak pricing.
Key Data
$487 million
— Projected annual deficit for PATH in 2018.
$383 million
— PATH's annual deficit in 2013.
$1.9 billion
— Total planned investments for PATH during the 2014-2018 five-year capital plan.
$2.2 billion
— Total value of damage from Superstorm Sandy to PANYNJ facilities.
$1.5 billion
— Expected cost of the Newark Airport extension project.
$3.7 billion
— Accumulated annual losses for PATH from 2004 to 2013.
New York City's fiscal year 2015 preliminary budget benefits from higher-than-anticipated tax revenues, allowing for a $1 billion restoration to the Retiree Health Benefits Trust Fund. Additionally, the financial plan increases annual future reserves from $300 million to $600 million to better manage potential budgetary risks.
Recommendations related to Revenue Trends
No further withdrawals from the Retiree Health Benefits Trust Fund should occur unless and until clear guidelines for its use have been established.
Key Data
$1 billion
— Amount restored to the Retiree Health Benefits Trust Fund using additional tax revenue.
$92.5 billion
— The City's total retiree health liability that the Trust Fund was established to help reserve against.
$300 million
— The previous annual amount of reserves set aside in future years of the financial plan.
$600 million
— The increased annual amount of reserves set aside in future years of the financial plan.
New York State's ability to fund a $2 billion tax cut depends on limiting annual State Operating Funds spending growth to 2%, a difficult target given that major programs like Medicaid and school aid are growing at 4% or more. Achieving this surplus requires significant cost containment across other state agency operations and local assistance, which have already faced years of reductions.
Recommendations related to Revenue Trends
The state must limit annual State Operating Funds spending growth to 2 percent to generate the projected surplus for tax cuts.
Policymakers must implement continued discipline and serious efforts at agency reform and redesign to maintain spending restraint.
The state must curtail expectations for growth in other local government assistance to meet the overall spending growth goal.
The state must manage spending expectations for all other areas of local government assistance to align with the 2 percent growth target.
The state must avoid switching to less conservative assumptions for health insurance premium growth in the financial plan.
Key Data
$2 billion
— The amount of tax cuts proposed in the State of the State address that require surplus funds to be paid for.
2 percent
— The annual growth rate limit for State Operating Funds disbursements required to generate the surplus.
$7.7 billion
— The projected increase in State Operating Funds spending from fiscal year 2014-15 to 2016-17 under current projections.
$5 billion
— The reduction in planned spending needed to generate a $2.4 billion surplus.
$36.7 billion
— The combined spending on Medicaid and school aid, which comprises 40 percent of total State Operating Funds.
200,742
— The number of state employees as of the most recent data, representing a decline from 209,231 since fiscal year 2010-11.
New York City can generate significant revenue to fund new municipal initiatives by reforming the inequitable property tax system and broadening the sales tax base to include more non-essential services. While cutting corporate tax breaks is an option, it offers limited immediate financial relief compared to the billions potentially available through structural tax reforms.
Recommendations related to Revenue Trends
The city should end wasteful corporate subsidies, although this will only yield limited immediate savings.
The administration should pursue significant modifications to arcane property tax provisions, such as "caps" and "phase-ins," to redress inequities and raise substantial new money.
The city should broaden the sales tax base by subjecting more non-essential services to the tax, which could raise more than $1 billion annually.
Key Data
$930 million
— The cost of business property tax expenditures in the last fiscal year.
$30 million
— The estimated annual savings from cutting corporate tax breaks.
$4 billion
— The amount of annual revenue sacrificed by the current property tax system.
$3.1 billion
— The annual value of the 2004 property tax hike.
$440 million
— The annual revenue generated by the 2009 sales tax hike.
$1 billion
— The potential annual revenue from broadening the sales tax base.
This discussion took place as part of the CBC's Conference, The Most Important Economic and Fiscal Decisions Facing the Next Mayor, held on December 6, 2013 in New York City. Presenters: Donald Boyd; Andrew Hayashi Moderator: Alair Townsend Panelists: Andrew Haughwout, James Parrott, and Martha Stark
New York City's tax burden is significantly higher than in other large cities, with personal income and commercial property taxes acting as outliers that may influence migration and economic competitiveness. Policymakers should exercise caution when considering further tax increases, as the city's existing tax structure already places it at a competitive disadvantage compared to neighboring jurisdictions.
Recommendations related to Revenue Trends
Policymakers considering raising the personal income tax or the commercial property tax need to be aware that both taxes are already significantly higher than in other large cities.
Policymakers would be well advised to examine options where New York City is not as far out of line with other cities regarding tax burdens.
The policy implication is that these conditions should be considered in any initiatives to raise more revenue from the property tax.
The implications of studies on tax migration must be considered carefully because of the limited parallels between state and local circumstances.
Key Data
46%
— New York City's state and local taxes were 46% higher than the average for other large cities.
10%
— New York City's commercial property tax was 10% higher than third-highest Philadelphia.
25%
— The 1.3 percentage point increase from 2002 as a share of gross city product represents a 25% increase in the level of taxation.
3.9%
— The effective rate of the commercial rent tax is 3.9% of gross rent for properties with gross rent of more than $300,000 annually.
26%
— New York City's taxes were 26% higher than the second-highest city, Philadelphia.
New York City's economic development programs have grown significantly, with annual tax expenditures reaching $1.6 billion and capital spending rising to $751 million by 2012. To improve future performance, the city should prioritize infrastructure investments in high-potential neighborhoods, reform tax expenditure programs for better cost-effectiveness, and enhance transparency in discretionary benefit awards.
Recommendations related to Revenue Trends
Use capital investments to enhance infrastructure in neighborhoods with job growth potential.
Encourage growth in the cultural, medical and educational sectors by enhancing access to capital through conduit financing.
Continue reform of as-of-right tax expenditure programs to make them more cost-effective.
Establish clearer standards for awarding discretionary tax expenditure benefits.
Continue rezoning and expand special mixed use districts to facilitate diversified job growth in areas currently limited to industrial use.
Better manage the Economic Development Corporation by focusing on job creation and enhancing transparency.
Key Data
$1.6 billion
— Annual tax expenditures in New York City as of 2012.
$751 million
— Annual capital spending on economic development in New York City as of 2012.
$9.7 billion
— Total conduit debt outstanding for economic development projects as of 2012.
$368 million
— Relevant operating expenditures for economic development in 2012.
New York City's property tax system is riddled with inequities that result in widely varying effective tax rates across different property types and neighborhoods. To address these issues while raising $2 billion in additional revenue, the city should consider reforms such as revaluing properties, eliminating assessment caps, and consolidating property classes to create a more transparent and equitable system.
Recommendations related to Revenue Trends
The city should provide special exemptions or property tax “circuit breakers” to elderly or low-income homeowners to protect those with limited cash incomes from sharp tax increases.
The city should value condos and co-ops based on market values using sales prices to eliminate the undervaluation that currently exists.
The city should assess co-ops and condos at the same 6 percent assessment ratio as 1-3 family homes to eliminate disparities among homeowners.
The city should eliminate the caps for Class 1 properties to ensure that property tax liabilities are not artificially suppressed.
The city should eliminate the caps and phase-in provisions for all properties to address inequities among appreciating and depreciating properties.
Key Data
$21.1 billion
— The estimated baseline property tax levy for fiscal year 2015.
$2 billion
— The amount of additional revenue each of the three proposed options is designed to raise in fiscal year 2015.
$4.5 billion
— The estimated revenue foregone in fiscal year 2015 due to existing cap and phase-in rules.
$1.6 billion
— The amount of revenue lost specifically from assessment caps applied to smaller rental properties.
0.81%
— The effective tax rate for Class 1 properties in fiscal year 2014.
4.57%
— The effective tax rate for Class 3 properties in fiscal year 2014.
New York State faces projected budget gaps of $2 to $3 billion by fiscal year 2016-17, driven by spending that continues to outpace revenue growth. To address this, the state should reform its $4 billion annual investment in local tax relief programs, such as STAR and the Family Tax Relief rebate, to better target households with the greatest financial burden.
Recommendations related to Revenue Trends
The Commission should re-examine and reform the local tax relief programs on which the State already spends $4 billion annually to better target relief to those most burdened by high property taxes.
The Commission should achieve its objective by better targeting STAR aid and the Family Tax Relief rebate.
The Commission should expand the Real Property Tax Credit so that all three of these programs provide deeper relief for low and moderate income households with the greatest burden.
The Commission's work should be focused on repurposing and improving the significant sums already directed to local tax relief, not on spending for new programs.
Key Data
$2 to $3 billion
— Projected out-year budget gaps by fiscal year 2016-17.
14 percent
— Projected growth in tax receipts over the next three years.
$4 billion
— Annual state spending on local tax relief programs.
$3.4 billion
— Cost of the STAR program in fiscal year 2014.
$410 million
— Amount allocated for Family Tax Relief rebates.
$20.2 million
— Amount provided by the Real Property Tax Credit to 209,691 taxpayers.
New York State's tax system contains over 150 sales tax exemptions totaling more than $9 billion, many of which disproportionately benefit higher-income consumers rather than essential goods. Reforming these exemptions alongside business tax incentives, which currently cost the state $2.6 billion, offers a significant opportunity to improve tax fairness and state revenue.
Recommendations related to Revenue Trends
The state should reduce exemptions from the sales tax to broaden the tax base.
The state should reform business tax incentives to eliminate costly credits that lack evidence of effectiveness.
Policymakers should repeal or examine almost $1.8 billion in sales tax exemptions identified by the Commission.
The state should implement periodic reviews of the costs and benefits of business tax incentive programs to ensure accountability.
The state should expand transparency on which businesses benefit from tax incentive programs.
Key Data
$9 billion
— Total value of the more than 150 separate state sales tax exemptions.
$1.8 billion
— Amount of sales tax exemptions identified that should be repealed or examined.
$2.6 billion
— Total state tax incentives for businesses previously identified.
$180 million
— Annual savings from tightening eligibility for the largest business tax incentive programs.
$1 billion
— Estimated cash receipt in fiscal year 2015 from business tax credits that had been deferred in tax years 2010 through 2012.
$520 million
— Value of the exemption for capital improvements to property.
The Metropolitan Transportation Authority faces a structural deficit that is masked by cash-basis accounting, necessitating a shift toward a funding model where fares, tax subsidies, and auto-user fees each contribute to long-term sustainability. To address this, the agency should implement a "50-25-25" revenue strategy, which includes regular fare increases and new auto-user fees like congestion pricing or bridge tolls to cover operating costs.
Recommendations related to Revenue Trends
The MTA should continue moderate but regular fare increases to ensure riders contribute their share of operating costs.
The agency should enact new forms of auto-cross subsidy, such as higher bridge and tunnel tolls or congestion pricing, to secure major new funding.
The MTA must put renewed energy into cost reduction efforts to improve its financial standing.
Key Data
$2.8 billion
— The MTA's annual deficit when calculated using Generally Accepted Accounting Principles (GAAP).
$26.6 billion
— The estimated cost for core capital needs related to state-of-good-repair and rolling stock replacement from 2015-2019.
$1.9 billion
— The amount of new resources the MTA identified between February 2013 and the publication of the Comptroller's report.
$1.3 billion
— The amount of annual savings the MTA intended to achieve by 2017 through cost-reduction measures launched in 2009 and 2010.
$67 million
— The actual amount of annual savings generated by 2017 from cost-reduction initiatives outside of the paratransit program.
New York State's 10-year, $174 billion capital plan requires improved transparency regarding asset conditions, a more robust financing strategy, and better project-level tracking to ensure accountability. The plan relies on a mix of bond proceeds, pay-as-you-go funding, and user fees, necessitating a standardized approach to reconcile commitments with actual disbursements.
Recommendations related to Revenue Trends
The State should provide better information about asset condition and the match-up between planned levels of state of good repair (SOGR) spending and need.
The State should develop an improved financing plan that addresses the issue of affordability.
The State should provide better project-level data to facilitate project tracking.
The State should reconcile differences and standardize the approach to commitments versus financing and disbursements in future plans.
The State should establish a framework for assessing the affordability of the plan, similar to New York City’s Annual Statement of Debt Affordability.
Key Data
$174 billion
— Total planned investment commitments for the fiscal year 2013-14 to 2022-23 period.
$113 billion
— Amount of the plan committed to transportation.
$117.8 billion
— Amount allocated for State of Good Repair (SOGR) projects.
$180.3 billion
— Debt outstanding for agencies and authorities included in the plan for fiscal years ending in 2011-12.
$93 billion
— Amount the State and its authorities expect to borrow over the 10-year period.
$66.5 billion
— Amount expected from PAYGO funding over the 10-year period.
The enacted fiscal year 2014 budget adds $1.8 billion in annual spending commitments by 2017, relying on risky revenue forecasts, tax increases, and one-time accounting shifts to cover the costs. These measures, including poorly targeted tax breaks and rebates, threaten to balloon the fiscal year 2017 budget gap to $6.0 billion without further intervention.
Key Data
$6.0 billion
— The projected budget gap for fiscal year 2017 if new ways to pay for added spending and tax breaks were not implemented.
$1.8 billion
— The amount of annual commitments added by the final year of the financial plan.
$1.75 billion
— The cash infusion provided by a shift in the accounting method for financing workers’ compensation.
$410 million
— The estimated annual cost of personal income tax rebates for families earning between $40,000 and $300,000.
$677 million
— The total amount of new business tax breaks committed over three years.
$70 million
— The amount by which 2013 tax revenue fell short of the projection made in April 2012.
New York State's fiscal year 2013-14 budget proposal shows a recent uptick in tax collections, though this is likely a temporary result of taxpayers accelerating income to avoid federal tax changes. Consequently, any unanticipated resources should be treated as non-recurring and used for debt reduction or rainy day funds rather than expanding ongoing operating expenses.
Recommendations related to Revenue Trends
The Legislature should keep state operating funds spending growth under 2 percent to maintain fiscal discipline.
Unanticipated resources should be treated as non-recurring and used prudently for investments, such as debt reduction and/or rainy day fund deposits, to help improve the State’s long-term financial standing.
The Legislature should require that all of the State Insurance Fund reserves be used prudently for purposes such as capital investment and debt retirement.
New York should not increase expenditures for economic development until the State more systematically scrutinizes and justifies its subsidies for business.
The Legislature should enact real mandate relief measures that aid local governments instead of adopting the proposed pension "stabilization" plan.
Key Data
$21.1 billion
— The amount proposed in school aid for the next school year, which represents an increase of $888 million.
$50 million
— The total pool for the school year 2012-13 competitive grant program, of which only $17 million was awarded.
$2 billion
— The amount of excess reserves resulting from accounting changes at the State Insurance Fund.
$800 million
— The amount by which the proposed budget increases spending for economic development activities.
$7 billion
— The amount currently spent annually in New York on economic development.
The Governor's proposal to implement a "fixed rate" pension contribution plan threatens the long-term financial stability of New York's pension systems by deferring necessary payments. Maintaining the state's historic practice of fully funding pension obligations as they come due remains the most reliable method for ensuring future benefit security.
Recommendations related to Revenue Trends
The New York State Teachers’ Retirement System Board should reject the Governor's proposal to allow local governments to opt into a “fixed rate” contribution plan to fund their public employee pension obligations.
Local governments should maintain the historic practice of fully funding pension obligations on an annual basis rather than deferring costs.
Policymakers should prioritize paying pension benefit obligations when they are due to ensure the long-term viability of the pension funds.
Key Data
94%
— Assets covering liabilities for New York's pension systems in 2010.
100%
— The Teachers' Retirement System funded ratio in 2010.
97%
— The Teachers' Retirement System funded ratio in 2011.
8%
— The assumed rate of return for pension investments.
6.6%
— The ten-year earnings average for pension investments.
1.1%
— The five-year returns average for pension investments.
New York City's budget relies heavily on non-recurring 'one-shot' resources, such as $4 billion used to close the fiscal year 2013 gap, to mask structural deficits driven by escalating health insurance and debt service costs. To address these ongoing fiscal challenges, the city must move beyond temporary measures and implement more enduring, recurring expenditure reductions.
Recommendations related to Revenue Trends
The City should prioritize rightsizing capital investment to reduce the long-term trajectory of debt service costs.
The City should reform health insurance premium arrangements to address the structural budget deficit caused by escalating health insurance costs.
The City should adopt more enduring, structural solutions to balance the budget rather than relying on unreliable one-shot revenue sources.
The City should implement larger recurring expenditure cuts to address the ongoing fiscal challenges and budget gaps.
Key Data
$1.5 billion
— Total savings from the Program to Eliminate the Gap (PEG) over two years.
$8.0 billion
— Annual cost of pension contributions.
$6.3 billion
— Annual cost of Medicaid.
$6.2 billion
— Annual cost of debt service.
$5.2 billion
— Annual cost of health insurance.
$4 billion
— Amount of non-recurring 'one-shots' used to close the fiscal year 2013 budget gap.
The Metropolitan Transportation Authority faces ongoing financial challenges that require a multi-year strategy to increase revenue through higher fares and tolls, alongside a restructuring of funding sources. Implementing a "25-50-25" funding formula, adjusting senior discount policies, and capping unlimited ride passes are proposed measures to ensure long-term fiscal stability and service reliability.
Recommendations related to Revenue Trends
The MTA should adopt a "25-50-25" formula for funding transit services, where 20-25 percent of expenses are covered by auto-user cross subsidies, 45-50 percent by riders, and 25-30 percent by state and local tax subsidies.
Fare and toll decisions should be made on a multi-year basis to ensure predictability for the system’s revenues and passengers.
The MTA should implement toll increases larger than currently proposed, as a 50 cent increase for EZ Pass users falls short of yielding a fair share from motor vehicle users.
Transit fares should yield a revenue increase greater than 7.5 percent annually in 2013 and greater than 15 percent in 2015 to cover rising operating costs.
The MTA should "cap" the number of allowed rides for weekly and monthly passes to protect against fraudulent abuse.
The MTA should explore peak pricing on subways and buses with a goal of reduced rush hour crowding.
The MTA should extend the fare calculation policy used for Senior Citizen EasyPay Metrocards to all EasyPay customers to ensure they receive the best deal available.
The MTA should begin a more limited senior citizen discount policy and explore its eventual elimination to better target financial assistance.
Key Data
20-25 percent
— Proposed share of transit expenses to be paid by auto-user cross subsidies.
45-50 percent
— Proposed share of transit expenses to be paid by riders.
25-30 percent
— Proposed share of transit expenses to be paid through state and local tax subsidies.
42 percent
— Current reliance on fare revenue.
13 percent
— Current reliance on cross subsidies from motor vehicle use.
50 cent
— The proposed increase for EZ Pass users on major bridges and tunnels.
The Metropolitan Transportation Authority faces significant long-term deficits, with a projected shortfall of over $3.6 billion by 2016 despite planned fare and toll increases. To address this, a new funding model proposes a "25-50-25" split, where 25% of revenue comes from auto user fees, 50% from transit fares, and 25% from tax subsidies to generate nearly $2.6 billion in additional annual revenue.
Recommendations related to Revenue Trends
Auto user fees should pay for the facilities available to drivers, meaning the cost of bridges and tunnels should be funded entirely through tolls and fees paid by the motorists who use them.
Motorists' tolls and fees should generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services as a cross-subsidy.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund "catch-up" capital investments.
Key Data
$2.6 billion
— Additional annual revenue generated by 2016 under the proposed 25-50-25 funding model.
$3.6 billion
— Projected deficit for the MTA in 2016.
$167 to $293
— Range of increased annual costs motorists would face under the proposed plan.
39%
— Current percentage of operating expenses the MTA recovers through fares.
$17.1 billion
— Annual operating and financing expenditures of the MTA's agencies in 2012.
$2.75
— Cost of a single-ride subway ticket by 2016 under the proposed plan.
The Metropolitan Transportation Authority faces recurring deficits and inadequate capital investment, necessitating a new financing policy to ensure fiscal stability. A proposed '25-50-25' formula suggests allocating costs among motorists, transit riders, and taxpayers to generate necessary revenue and fund essential system repairs.
Recommendations related to Revenue Trends
The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
User fees paid by motorists should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
The MTA should stop running large deficits and lower its future debt burden by funding regular replacement needs with operating revenues rather than borrowing.
Key Data
$2.6 billion
— Additional annual revenue the 25-50-25 policy would provide by 2016 without new taxes.
$17.1 billion
— Annual operating and financing expenditures of the MTA’s agencies budgeted for 2012.
$3.6 billion
— Projected deficit for 2016, equivalent to approximately 18 percent of operating expenses.
$17.8 billion
— Cumulative unfunded liability for Other Post-Employment Benefits as of the end of 2011.
$32 billion
— MTA debt outstanding in 2011, which increased from $14 billion in 2000.
$16.8 billion
— Total investment represented by five major 'megaprojects' with cost overruns of more than $3.6 billion.
The Metropolitan Transportation Authority faces severe financial instability, with projected deficits reaching $2.7 billion annually and potential revenue losses of $1.8 billion due to legal challenges against the payroll mobility tax. To address these fiscal challenges, the agency must implement predictable fare increases and exercise strict belt-tightening measures, including service adjustments based on actual ridership patterns.
Recommendations related to Revenue Trends
Periodic, predictable fare increases along with continued belt-tightening, including a trimmed service schedule, are unavoidable elements of a sensible solution.
The MTA needs the revenue from the planned 2013 and 2015 fare hikes.
The $29.5 million going for service restorations should be better justified.
Adjustments can be made to deploy buses in accord with shifting usage patterns.
Key Data
$47 million
— Unexpected cash surplus in 2012.
$1.8 billion
— Potential annual revenue loss if the payroll mobility tax invalidation is sustained.
$2.7 billion
— Estimated deficit in the current year using audited financial statement accounting principles.
$2.5 billion
— Annual deficits from 2008 to 2011.
16%
— Deficits as a percentage of annual expenses from 2008 to 2011.
$136 million
— Combined loss to the 2013 and 2015 deficits caused by delaying planned fare hikes.
NY1 For the past five years, City Hall has cut from the budget because it says it can't afford those programs. Those cuts are based on complicated revenue forecasts done by City Hall and others.
New York City can no longer rely on the rapid revenue growth and large surpluses of the past decade, as tax revenue growth is projected to be a modest 4 to 5 percent annually. To address the resulting budget gap, the City must move away from reliance on temporary 'one-shot' resources and implement structural changes, such as wage freezes, health insurance premium sharing, and re-evaluating capital investments.
Recommendations related to Revenue Trends
The Council should sustain the three-year wage freeze to avoid a serious risk to the budget.
The Council should tie depletion of the Retiree Health Benefits Trust fund to health insurance reforms, most importantly, phasing out the reimbursement of Medicare Part B premiums.
The Council should support the Mayor in seeking premium-sharing arrangements for employees and retirees to reduce the City’s unfunded liability.
The Council should reexamine the level and nature of capital investments, as debt service continues to grow and little is known about how priorities are established.
Key Data
6.6 percent
— Annual growth rate of tax revenues from fiscal years 2002 to 2012.
2.7 percent
— Annual growth rate of tax revenues in the decade prior to 2002.
$5.3 billion
— The high point of the City's tax surplus in fiscal year 2007.
$39 million
— The amount of tax revenue recognized to date in fiscal year 2012 that exceeded expectations.
4 to 5 percent
— Forecasted annual tax revenue growth over the financial plan period.
$3.6 billion
— The amount of 'one-shot' resources the Executive Budget relies on to close the fiscal year 2013 gap.
The Metropolitan Transportation Authority faces a substantial debt burden, with debt service costs consuming a significant portion of its total revenue and projected to rise further. To manage this, the authority must avoid fiscal practices like back-loading payments or stretching debt terms, which merely defer costs to future taxpayers and riders rather than achieving genuine savings.
Recommendations related to Revenue Trends
The MTA should follow guidelines that promote the greatest total savings and prevent the unfair passing of costs onto future taxpayers and straphangers.
The MTA Board should not seek any exemptions from the State Comptroller’s guidelines, which prohibit stretching of debt and require nominal dollar savings in debt service.
The MTA should avoid 'scoop and toss' practices and 'stretching' debt, as these are undesirable public finance practices that increase total costs.
Key Data
$32 billion
— The amount of long-term debt outstanding held by the Metropolitan Transportation Authority.
$2.1 billion
— The amount of debt service due on bonds in 2012.
17 percent
— The portion of the MTA's total revenues, including tax subsidies, consumed by debt service.
$2.6 billion
— The projected debt service cost for the MTA in 2015.
$39 billion
— The projected amount of outstanding debt the MTA will have by 2015.
$7 billion
— The amount of outstanding debt MTA leaders are considering for a large-scale refunding.
The New York City Health and Hospitals Corporation faces significant fiscal challenges as expenses grow faster than revenues and reliance on uncertain Medicaid supplemental payments increases. With projected operating deficits exceeding $1.7 billion by 2016, the corporation must either identify new revenue sources or redouble efforts to deliver services more efficiently to avoid dramatic service reductions.
Recommendations related to Revenue Trends
The Health and Hospitals Corporation will need to redouble its efforts at delivering services more efficiently or face a dramatic reduction in the services it can provide to New York City’s needy residents.
Key Data
$1.6 billion
— Annual revenues HHC expects from Medicaid supplemental payments through 2016.
$1.7 billion
— Projected operating deficit for HHC in fiscal year 2016.
$7 billion
— Amount by which Wall Street profits are running below projections for fiscal year 2012.
$42 billion
— Total tax revenues for New York City in fiscal year 2012.
New York's proposed $805 million increase in school aid is poorly targeted, with competitive grants and categorical aid formulas failing to prioritize the neediest districts. To ensure equitable support, the state should prioritize distribution through the foundation aid formula while capping categorical aid and reevaluating existing aid formulas to eliminate inefficiencies.
Recommendations related to Revenue Trends
The proposed $805 million increase should be highly targeted to the neediest districts by relying heavily on distribution through the foundation aid formula.
Categorical aid should be frozen or subject to a tight growth cap to prevent untargeted distribution.
The competitive grant program should be much smaller, if not eliminated to ensure aid is accessible to all districts.
All the formulas for distributing school aid should be reexamined to address excesses and inefficiencies.
A full-on effort to retool the school aid formulas should be launched to ensure every dollar boosts student achievement.
Key Data
$805 million
— Governor’s proposed state aid increase for school districts.
$2.2 billion
— Total school aid cut from its $21.7 billion peak in school year 2009-10.
17.6 percent
— Statewide average reduction in foundation aid per student from school year 2009-10 to 2011-12.
$290 million
— Proposed increase in foundation aid.
$265 million
— Proposed addition of categorical aids.
$250 million
— Proposed funding for new competitive performance grants.
New York City can no longer rely on large, unanticipated tax revenue surpluses to balance its budget, as it did for the previous decade. Consequently, the city must move away from temporary, one-shot revenue solutions and address underlying spending drivers, such as municipal health insurance policies.
Recommendations related to Revenue Trends
The Mayor and City Council can raise taxes again or impose additional cuts on services and personnel.
The City can tackle spending arrangements that drive budget growth and out-year deficits.
Tackling spending arrangements, especially the City's generous health insurance policies for municipal employees and retirees, may be unavoidable if revenue surpluses disappear.
Key Data
$5.3 billion
— The high point of unanticipated tax revenues reached in fiscal year 2007.
$114 million
— The amount fiscal year 2012 tax collections were running above the initially budgeted sum.
$42.2 billion
— The total tax revenues for fiscal year 2012.
$7 billion
— The amount Wall Street profits are running below what was assumed when the budget was adopted.
$1 billion
— The amount of revenue from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— The amount drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
New York City's decade-long trend of tax revenues consistently exceeding budget expectations by over $1 billion has ended, with fiscal year 2012 collections tracking only $114 million above the budgeted amount. Consequently, the City is relying on one-shot resources like the sale of taxi medallions and funds from the retiree health insurance trust to balance the budget instead of relying on unanticipated revenue surpluses.
Key Data
$5.3 billion
— Unanticipated tax revenues reached this high in fiscal year 2007.
$114 million
— FY 2012 tax collections are running this amount above the initially budgeted sum.
$42.2 billion
— Total tax revenues for fiscal year 2012.
$7 billion
— Wall Street profits are running this amount below what was assumed when the budget was adopted.
$1 billion
— Revenues from the sale of taxi medallions used to balance the fiscal year 2013 budget.
$1 billion
— Revenues from the retiree health insurance trust fund used to balance the fiscal year 2013 budget.
The Metropolitan Transportation Authority faces significant financial constraints, with projected deficits and a reliance on fare increases to cover operating expenses. A "net-zero" wage agreement with the Transport Workers Union is necessary to avoid further fare hikes or service reductions, as current compensation levels for transit employees already exceed those of comparable systems.
Recommendations related to Revenue Trends
The award should include work rules changes that will produce savings that allow for enhanced maternity benefits and the accelerated installation of clear partitions for buses.
A more ambitious award could provide for small wage increases, not to exceed inflation, funded by additional productivity concessions or added employee responsibility for health insurance costs: implementing premium-sharing, increasing the contribution toward retiree health insurance, or ending the partial Medicare Part B reimbursement.
The award should also serve the public interest by promoting both greater efficiency in MTA operations and fair and safe treatment of MTA employees.
Key Data
$720 million
— Projected savings in 2012 from the MTA's efficiency program.
$42 million
— Cost to the MTA for each one point increase awarded to the TWU.
$1.4 billion
— Total revenue expected to be raised from fare increases by 2015.
$92.4 million
— Projected budget gap in 2012 if an award along the lines of projected inflation is granted.
$176.4 million
— Projected budget gap in 2013 if an award along the lines of projected inflation is granted.
$256.4 million
— Projected budget gap in 2014 if an award along the lines of projected inflation is granted.
New York's pension system relies heavily on state funding, with employee contributions accounting for only 1% of total revenues in 2010, significantly lower than the 8.5% national average. A proposed reform aims to modernize the system by requiring public employees to contribute between 3% and 6% of their salaries toward pension costs, while introducing a risk/reward mechanism linked to investment earnings.
Recommendations related to Revenue Trends
The Governor's proposal to modernize the system would require public employees to contribute between 3% to 6% of their salary toward the cost of their pensions.
The proposal includes a “risk/reward” provision that would adjust employee contributions based on investment earnings and employer contribution rates.
Key Data
11.5%
— Employee contributions as a share of combined employee and employer contributions to New York State’s pension systems.
33%
— U.S. average of employee contributions as a share of combined employee and employer contributions.
1%
— Public employee contributions as a share of total revenues to New York State’s pension systems in 2010.
8.5%
— U.S. average of public employee contributions as a share of total revenues.
47th
— New York’s systems ranking among states for public employee contributions as a share of total revenues.
3% to 6%
— Proposed range for public employee contributions toward pension costs.
New York's public employee pension costs are projected to rise significantly, with New Yorkers paying $574 per person annually in taxes to support these benefits. Implementing proposed pension reforms for new employees could save taxpayers an estimated $123 billion over the next 30 years and reduce the strain on public service funding.
Recommendations related to Revenue Trends
Future employees who opt for the traditional defined benefit plan will contribute between 3% and 6% of their paychecks toward their pensions, depending on their income.
The retirement age would rise from 62 to 65, consistent with national trends.
Overtime would be barred from pension calculations as it is for all but 6% of all public employees in the country.
New employees would be given the opportunity to enroll in a 401(k)-style plan, as most private-sector workers do.
Employees would be able to have up to 10% of their salary deposited in a retirement account if they opt for the full matching program.
Key Data
$574
— New Yorkers pay $574 per person per year in taxes for public employee pensions.
$123 billion
— Proposed changes would save taxpayers throughout New York State an estimated $123 billion over the next 30 years.
19%
— Without reform, pension costs will total 19% of fare and toll revenue for its subways, buses, bridges and tunnels by FY 2014.
$8.6 billion
— New York City’s pension costs are expected to reach $8.6 billion by FY 2014.
$1 billion
— For the MTA, pension costs will rise to $1 billion in FY 2014.
30%
— Without reform, pension costs will total 30% of the MTA payroll.
New York State residents, workers, and businesses contribute over $80 billion annually to the state government, with the distribution of these revenues and subsequent expenditures varying significantly across the state's four primary regions. While New York City and the Downstate Suburbs generate a disproportionately large share of state revenue, the Capital Region and the Rest of State receive a larger share of state-funded expenditures relative to their populations.
Key Data
$80 billion
— Annual amount sent to the state government by New York State residents, workers, and businesses.
$26.1 billion
— State-funded disbursements for education in fiscal year 2010, representing almost half of all local-assistance disbursements.
$4.5 billion
— Amount of state funds spent on capital projects during fiscal year 2010.
$1.2 billion
— Amount of state funds spent on general-purpose local assistance in fiscal year 2010.
45 percent
— New York City's share of state revenue payments when allocating income tax payments by residence.
24 percent
— Share of state revenues provided by the Rest of State region.
The rental payment made by the water and sewer system to the City's treasury has grown significantly, rising from $102 million in 2003 to $234 million in 2012 due to a change in the calculation method. While the current 15 percent formula is arbitrary, alternative methods like tying payments to actual services rendered or utility taxes could provide a more logical basis for these revenues, though they would not necessarily lower the costs for customers.
Recommendations related to Revenue Trends
The City should consider a payment method based on City-funded GO debt service plus payment for services rendered by the City to the water and sewer system.
The Water Board could make a rental payment equivalent to what it would pay in City property taxes under the rate charged utilities.
The Water Board could make a rental payment equivalent to what it would pay under the utilities business income tax.
The Water Board could make a rental payment equivalent to what it would pay for property and utilities business income taxes combined, as other utilities do.
The City should adopt a better justified basis for setting the rent to make the charge more acceptable to customers.
Key Data
$102 million
— Low of rental payment in 2003.
$234 million
— Rental payment budgeted in fiscal year 2012.
$73.8 million
— Amount paid by the Water Board to the City for judgments, claims, and street cleaning in fiscal year 2011.
$15 billion
— Real property assets held by the water system.
$2.96 billion
— Revenues of the water system in fiscal year 2011.
7.6%
— The increase in the price charged for water if the property tax approach were implemented.
New York's new personal income tax brackets generate a net gain of $1.9 billion in annual revenue, though this increases reliance on high earners in the volatile financial services sector and reduces state competitiveness. To ensure long-term fiscal stability, these revenue changes must be paired with structural reforms, including pension system modifications that could save over $120 billion over three decades.
Recommendations related to Revenue Trends
New York should reform the current tax structure to address the combined high and regressive set of state and local taxes.
The state should authorize design-build procurement practices for infrastructure projects to deliver facilities more speedily.
New York should allow destination gambling to recapture jobs and revenues currently lost to neighboring states and Nevada.
The state should limit next year’s budget growth to no more than 2 percent to ensure fiscal responsibility.
New York should reform the state and local pension system along the lines of the Governor’s “Tier 6” proposal to achieve significant long-term savings.
Key Data
$1.9 billion
— Net gain in annual revenue provided by the new personal income tax brackets.
12.7 percent
— State and local income tax rate that high earners in New York City will be paying.
$120 billion
— Projected savings from pension system reforms over the next 30 years.
2 percent
— Recommended limit for next year's budget growth.
New York State and local governments spend approximately $6.6 billion annually on economic development through tax breaks and direct expenditures, yet these programs often lack transparency and measurable goals. To improve fiscal accountability, the state should consolidate these disparate programs into a unified economic development budget and implement performance-based funding to ensure tax dollars are effectively driving growth.
Recommendations related to Revenue Trends
The councils should have responsibility and authority over all state economic development resources, not just a subset of selected programs.
Performance should be gauged only by new activity created in addition to baseline payroll and/or property value.
Benefits should be paid retroactively based on firm performance.
The state should create a Unified Economic Development Budget that includes tax expenditures, direct subsidies, and benefits conferred by local entities.
Funds for the expansion of regional council investments should be generated by reducing or eliminating current programs that are deemed unsuccessful after a thorough review.
Key Data
$6.6 billion
— Estimated annual cost to the State of all economic development programs in lost tax revenues, power subsidies, and direct spending.
$2.5 billion
— Amount by which separate state tax credit programs reduce state tax receipts annually.
$1.0 billion
— Amount expended annually by the City of New York and more than 100 Industrial Development Agencies in tax breaks.
$554 million
— Cost to the State in lost tax receipts from the Empire Zone program in 2010.
$586 million
— Amount invested by the State trying to establish the Centers of Excellence program from 1997 to 2006.
$1.8 billion
— Amount spent annually by seven state public authorities and six state agencies, mostly in the form of capital investments.
New York State's reported mid-year budget surplus is misleading due to volatile revenue sources and economic uncertainty, meaning any unexpected funds should be used to address existing fiscal gaps rather than new spending or tax cuts. The state faces significant challenges, including finalizing labor savings, relying on fiscal gimmicks, and a projected $2.4 billion budget gap for the upcoming fiscal year.
Recommendations related to Revenue Trends
Talk of a surplus and using it for new initiatives should end immediately because the likelihood of any surplus is remote and it should be used for more prudent uses.
Before committing to any new spending or tax reductions, New York should reduce reliance on existing fiscal gimmicks, particularly ones that add to long-term costs.
Any surprise surplus should be used in ways that help lower the upcoming fiscal year's budget gap, such as paying down debt or reversing deferrals, rather than making the gap grow.
The Governor and the Legislature should view any unexpected revenues as a temporary blessing and keep the lid on the piggy bank sealed shut.
To meet the year-end target, the state must achieve the remaining 84 percent of labor savings through concessions from other unions, agency consolidations, and restructuring.
Key Data
$799 million
— Tax collections for the first quarter of the fiscal year came in higher than original projections.
$1.2 billion
— Disbursements for the first quarter of the fiscal year came in below projections.
$351 million
— Receipts came in short for the month of July.
$377 million
— Savings from labor that the Governor and unions still need to finalize.
$2 billion
— Amount of undesirable fiscal gimmicks in the current-year budget.
$2.4 billion
— Minimum budget gap for the start of the next fiscal year.
New York City's fiscal health is threatened by structural imbalances where spending on health insurance, pensions, and debt service consistently outpaces revenue growth, leading to projected budget gaps like the $4.8 billion shortfall expected in fiscal year 2013. To achieve long-term stability, the city must implement structural reforms to these major cost drivers rather than relying on temporary measures or service cuts.
Recommendations related to Revenue Trends
The City’s leaders must work with the Municipal Labor Committee to reform health insurance arrangements by requiring employees and retirees to pay a share of their premiums.
The City Council should join the Mayor in backing the pension reform bill that has been introduced by the Governor to adjust eligibility and benefits for future employees.
The Mayor and City Council should make slowing the growth of debt service a higher priority by downsizing the capital budget and focusing resources on essential infrastructure.
Key Data
$4.8 billion
— The projected budget gap for New York City in fiscal year 2013.
$23.1 billion
— The expected spending on health insurance, pension contributions, and debt service in 2015.
$30 billion
— The total savings over the next 30 years from the proposed pension reform bill.
$5.4 billion
— The amount of projected spending reduced by agencies in fiscal year 2012.
$625 million
— The savings produced in 2012 by adopting a premium-sharing arrangement for health insurance.
$300 million
— The upward adjustment made to revenue forecasts for 2011 to help balance the budget.
New York State's tax collections are highly volatile, with total tax collections falling 20.3 percent between the first quarter of fiscal year 2008-09 and the first quarter of fiscal year 2010-11. To better manage these fluctuations, the state should reform its two rainy day funds by mandating prudent surplus deposits, raising fund caps, and establishing uniform withdrawal and repayment rules.
Recommendations related to Revenue Trends
New York should mandate prudent uses of surplus funds, including rainy day fund deposits.
The state should raise the cap on the size of the rainy day funds to reflect likely needs in times of recession.
New York should set uniform conditions for withdrawal from both funds, with those conditions based on declining economic indicators.
The state should set uniform repayment rules for both funds, with those rules allowing adequate time for economic and fiscal recovery before payments must begin.
New York should define surplus funds from both an accounting perspective and in terms of unusually rapid revenue growth.
Key Data
20.3%
— The decline in New York State’s total tax collections from the first quarter of fiscal year 2008-09 to the first quarter of fiscal year 2010-11.
$10 billion
— The budget gap for the fiscal year beginning April 1, 2011.
4.6%
— The average annual growth rate of state tax collections in New York from fiscal year 1988 to 2009.
60%
— The portion of New York State tax collections comprised of personal income tax in fiscal year 2009-10.
$473.3 million
— The total amount of the 11 loans taken from the Tax Stabilization Reserve Fund for the General Fund.
$1.2 billion
— The negative month-end general fund cash balance that would have occurred in May 2009 without the use of the Tax Stabilization Reserve Fund and the Rainy Day Reserve Fund.
Rent regulation in New York City provides significant but poorly targeted benefits, with an average annual rent reduction of $5,500 per unit, while simultaneously costing the city $283 million in annual property tax revenue. The current system imposes substantial costs on unregulated tenants, who pay approximately $1.9 billion more in annual rent than they would in a fully deregulated market.
Recommendations related to Revenue Trends
Benefits now available to low- and moderate-income households should not be reduced, but the poorly targeted benefits can be removed at an accelerated pace by phasing out regulation for higher-income households.
The long-term contraction in the scope of rent regulation should be accompanied by expansion of other more effective programs to promote affordable housing.
Future policy changes should be designed to retain the benefits of regulation for low- and moderate-income households, reduce the adverse impacts of regulations, and expand and enhance the policy tools available to promote affordable housing.
New legislation should phase out benefits for all high-income households, as regulation of units occupied by such households provides protection to those who do not need it, lowers property tax revenues for the City, and does nothing to help provide low- and moderate-income households with affordable housing.
The role of state and local government should be to evaluate the efficiency and effectiveness of existing affordable housing programs and other policies, such as zoning, that affect housing investment, to experiment with additional programmatic models, and to expand their financial commitment as economic and fiscal conditions improve.
Key Data
$283 million
— Annual decrease in the City of New York's property tax revenue attributable to rent regulation.
$1.9 billion
— Annual amount paid in excess by 669,000 households in unregulated units compared to what they would pay if all units were deregulated.
$2.6 billion
— Total annual rent discount associated with regulation under the assumption that unregulated rents would be 15 percent lower if regulation were eliminated.
$721 million
— Net change in annual aggregate rent if rent regulation were fully eliminated.
$5,500
— Average annual rent reduction per housing unit provided by rent regulation.
The Medicaid Redesign Team's package aims to reduce spending through provider rate cuts, utilization controls, and new revenue measures, including a surcharge on office-based surgery and radiology. While these reforms and a new program-wide spending cap represent significant progress, long-term sustainability will require further efforts to limit excessive utilization and refine payment methods.
Recommendations related to Revenue Trends
Future efforts should be pursued to reverse the new assessments that push up the cost of care.
The state should test the new program-wide spending cap carefully in the coming year to transform the Medicaid budgeting process.
Future savings should be pursued through broad changes in the way providers are paid and greater efforts to limit excessive utilization.
Key Data
16%
— of the 'savings' in the package comes in the form of new revenues to support the Medicaid program.
$370 million
— in unspecified actions in the Health Care Reform Act account.
$58 million and $99 million
— in the next two fiscal years from a surcharge imposed on office-based surgery and radiology.
$50 million and $100 million
— in the next two fiscal years from an initiative to increase federal funding for certain school based health care programs.
17%
— of savings in the coming fiscal year are comprised of revenue enhancements.
New York City has implemented multiple rounds of budget cuts since 2008 to address revenue shortfalls, relying heavily on agency expenditure reductions and revenue-raising measures. To avoid further cuts to essential services like education, the city should pursue structural savings by reforming pension fund contributions and health insurance premiums.
Recommendations related to Revenue Trends
The City should reduce the “all other” category, which consists largely of pension fund contributions and health insurance premiums, through new initiatives.
Unions must be willing to accept changes in collective bargaining over health benefits to help achieve necessary budget savings.
The City must garner wide support 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 the last two fiscal years.
$2.0 billion
— Total agency expenditure reductions from the budget balancing actions.
$593 million
— Revenue raising measures identified in the budget documents.
$2.4 billion
— Projected deficit for the next fiscal year.
274,061
— Number of full-time employees at the end of fiscal year 2010.
$116 million
— Amount cut from the 'All Other' budget category, which includes debt service and pension contributions.
New York City is relying heavily on temporary funding shifts and one-time revenue sources to close its current fiscal year budget gap, rather than implementing structural expenditure cuts. This approach delays necessary fiscal adjustments, as future budget gaps will require significant service reductions unless reforms to employee health insurance and pension costs are enacted.
Recommendations related to Revenue Trends
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
$4.5 billion
— The looming fiscal year 2012 budget gap that the city is attempting to close.
$585 million
— The total fiscal year 2011 program to eliminate the gap (PEG).
$369 million
— The amount of revenue actions taken in the fiscal year 2011 PEG.
63%
— The share of the fiscal year 2011 PEG that comes from revenue actions.
$14 million
— The amount generated by new and increased fees in the fiscal year 2011 PEG.
$750 million
— The amount of expenditure actions included in the fiscal year 2012 PEG.
New York City's fiscal year 2011 budget relies on the final remnants of past economic surpluses to cover expenditures, masking a structural deficit that will result in a $4.6 billion gap by fiscal year 2012. Without addressing unsustainable growth in public employee fringe benefits and debt service, the city faces significant financial instability as one-time revenue sources disappear.
Recommendations related to Revenue Trends
The City should take a stronger stance on reforming health care and retirement benefits for its workers to bring them in line with the private sector.
The City should require employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees.
The City should scale back the capital commitment plan to focus on key priorities like state-of-good-repair work on aging infrastructure rather than less urgent development projects.
Key Data
$1 billion
— Recurring savings achieved in agency spending for the fiscal year 2011 budget.
6.3 percent
— The rate at which expenditures grew in fiscal year 2011 compared to the previous fiscal year after adjusting for prepayments and drawdowns.
$3.6 billion
— The amount of surplus from fiscal year 2010 used to balance the fiscal year 2011 budget.
$4.3 billion
— The projected budget gap for fiscal year 2011 without the use of surplus funds and Retiree Health Benefits Trust money.
$4.6 billion
— The projected amount by which expenditures will exceed revenues in fiscal year 2012.
$43.5 billion
— The total value of the capital commitment plan for fiscal years 2010 through 2014.
Rent regulation in New York City imposes an estimated $1.9 billion annual cost on unregulated renters while failing to effectively target low-income households. Eliminating these regulations could increase city property tax revenue by $283 million annually, providing funds that could be redirected toward essential public services and more effective housing assistance.
Recommendations related to Revenue Trends
The current rent regulation system requires a massive overhaul because it is poorly targeted and fails to provide adequate relief to the neediest residents.
Policymakers should reform rent regulations to increase property tax revenue by approximately $283 million annually, which could be used to fund essential services.
The city should replace current rent regulations with policies that better-target housing assistance to low- and moderate-income households who need it most.
Key Data
$2,800
— Average amount more per year that tenants in the unregulated rental market pay for their apartments compared to what they would pay without rent regulation.
$1.9 billion
— Total annual cost that more than 669,000 unregulated renters pay as a consequence of rent regulation.
500,000
— Number of households in unregulated units that have incomes below $75,000.
$283 million
— Annual growth in city property tax revenue that would occur without rent regulation.
31%
— Average discount provided by rent regulation based on 2008 data.
New York City's fiscal plan for 2011 faces significant pressure from rising pension costs, which now consume 15 percent of all city revenues, and a growing capital program that has pushed debt service to $8.7 billion. To ensure long-term stability, the city must implement structural reforms to public employee benefits and scale back non-essential capital projects rather than relying on surplus revenues or trust fund drawdowns.
Recommendations related to Revenue Trends
The Council should support the Mayor’s efforts to bargain with municipal labor unions for contributions to health insurance premiums and to lobby the State Legislature for pension reform.
The Council should support reforming the pension package for new employees to require greater employee contributions and a longer vesting period.
The City should require health insurance contributions that are comparable to other public and private sector employers.
The funds in the Retiree Health Benefits Trust should be reserved for their original purpose – to pay for retiree health benefits – not for general budget balancing.
The ambition of the capital agenda should be scaled back to reduce debt service costs.
Key Data
15 percent
— Pension costs as a share of all City revenues.
$3.3 billion
— Surplus revenues in the current year.
$8.7 billion
— Projected debt service increase.
$65 billion
— Accrued future liability associated with retiree health benefits.
$82 million
— Amount drawn from the retiree health benefits trust in the current fiscal year.
Rent regulation in New York City provides significant but poorly targeted benefits, while simultaneously imposing substantial costs, including an estimated $283 million in lost annual property tax revenue and higher rents for those in the unregulated market. Future policy should focus on phasing out benefits for high-income households and expanding more effective programs to promote affordable housing.
Recommendations related to Revenue Trends
Benefits now available to low- and moderate-income households should not be reduced, but the poorly targeted benefits can be removed at an accelerated pace by phasing out regulation for higher-income households.
The long-term contraction in the scope of rent regulation should be accompanied by expansion of other more effective programs to promote affordable housing.
Key Data
$283 million
— Annual decrease in the City of New York’s property tax revenue due to rent regulation.
$1.9 billion
— Total amount paid in excess rent by 669,000 households in unregulated units in 2008.
$2.6 billion
— Total annual rent discount associated with regulation under the assumption that unregulated rents would be 15% lower without regulation.
$5,500
— Average annual rent reduction per housing unit provided by rent regulation based on 2008 data.
$2,000
— The current monthly rent threshold for high-rent vacancy decontrol.
$175,000
— The current income threshold for 'luxury decontrol'.
The New York Power Authority's economic development programs, which provide discounted power to businesses, are currently inefficient and lack transparency, resulting in significant revenue losses. Overhauling these programs by phasing out current subsidies and selling power at market rates could generate between $479 million and $640 million in additional annual revenue for the state.
Recommendations related to Revenue Trends
The state should phase out current economic development programs by allowing existing contracts to expire without reauthorization.
New York should include assistance for firms with high energy costs as part of a comprehensive economic development strategy administered by Empire State Development.
The state should sell power no longer used for economic development at market rates to generate between $479 million and $640 million in additional revenue.
New York should link energy conservation and economic development goals and programs by requiring firms receiving benefits to submit to energy audits.
Key Data
$479 million to $640 million
— Estimated annual revenue loss for the New York Power Authority due to current economic development programs.
2,322 megawatts
— Total amount of power reserved for selected firms under NYPA's economic development programs.
453,914
— Total number of jobs committed by firms participating in NYPA's economic development programs.
$5,836 to $7,883
— Per-job cost range for beneficiaries of hydroelectric power programs.
$390 to $630
— Per-job cost range for beneficiaries of purchased power programs.
New York's public higher education system, which collects $2.7 billion in annual tuition, faces an irrational funding structure where tuition rates are tied to the state budget process and subject to erratic, sharp increases. Reforms are proposed to grant universities control over tuition revenue and rate-setting, capped by inflation indices, while maintaining financial aid through the $827 million Tuition Assistance Program to ensure continued access.
Recommendations related to Revenue Trends
The state should remove tuition revenue from the appropriation process, allowing SUNY and CUNY to control their tuition revenue directly.
The state should transfer the authority to set tuition rates from the Legislature to the colleges' presidents and boards of trustees.
Future tuition increases should be subject to an annual cap of two-and-one-half times the five-year rolling average of the Higher Education Price Index (HEPI).
The state should allow SUNY and CUNY to set differential tuition among campuses and programs to recognize variation in costs and market forces.
If the Legislature adopts the higher education reforms, it should reject the proposed cuts in financial aid to ensure affordability.
Key Data
$2.7 billion
— Annual tuition collected by CUNY and SUNY.
$827 million
— TAP grants awarded to eligible undergraduates during the 2007-08 academic year.
$5,761
— Average tuition and fees for resident undergraduate students charged by New York's four-year public colleges and universities in 2009-10.
$7,020
— National average tuition and fees for resident undergraduate students at four-year public colleges in 2009-10.
$12,870
— SUNY's out-of-state undergraduate tuition in 2009-10.
$13.5 billion
— Total funding size of the SUNY and CUNY system.
The city's improved fiscal outlook, with forecasts showing $1.1 billion more in tax revenue annually from 2011 to 2013, highlights the opportunity to stop using the Retiree Health Benefits Trust to balance the budget. Despite these revenue gains, the city faces unsustainable growth in pension and health insurance costs that require structural reform.
Key Data
$1.1 billion
— Amount of additional tax revenue forecasted in each fiscal year from 2011 to 2013.
$2.5 billion
— Amount of surplus revenue deposited into the Retiree Health Benefits Trust over two years starting in 2006.
New York State faces significant fiscal challenges, with employee compensation projected to rise by $3.3 billion over four years and a reliance on speculative revenue sources like fraud recoveries and Indian reservation taxes. To address potential deficits, the state must prioritize $5.1 billion in spending reductions and limit borrowing to well under the $2 billion maximum proposed in the Ravitch Plan.
Recommendations related to Revenue Trends
Achieve the full $5.1 billion worth of spending reductions in the Executive Budget.
Drop the overly optimistic claims to high fraud recoveries and tax collection on Indian Reservations.
Get the borrowing total for this year down well under the Ravitch Plan's $2 billion maximum.
Ensure that the reforms in the Ravitch Plan—a balanced budget requirement and better accounting—go along with any agreed-upon borrowing.
Use the line item veto and the right to suspend funding on State operations to bring spending under control.
Key Data
$3.3 billion
— Employee compensation is expected to jump by this amount over the four-year term of the financial plan.
$2 billion
— The amount of deficit financing proposed in the Lt. Governor's five-year fiscal plan.
$5.1 billion
— The amount of spending reductions in the Executive Budget that should be achieved.
4 percent
— The raise employee unions are poised to get on April 1.
2 percent
— The reduction in per pupil spending proposed in the Executive Budget.
10 percent
— The increase in all funds spending last year.
New York City's debt service costs are rising rapidly, projected to reach $8.8 billion by fiscal year 2014, driven by an expanding capital program. To control these costs, the city must implement significant cuts to the capital budget, specifically targeting non-essential economic development projects while prioritizing essential infrastructure repairs.
Recommendations related to Revenue Trends
A downsized capital program will be necessary if the Mayor is serious about restraining debt service growth.
The same belt-tightening that has occurred with the operating budget should apply to the capital budget, as well.
Cuts should be made starting in fiscal year 2011, with an eye toward abandoning non-essential items, including over $1.0 billion in economic development projects, and preserving key priorities such as repairs of essential infrastructure.
Smarter, more targeted investment will produce real savings in debt service by the end of the Mayor's term.
Key Data
$5.2 billion
— Debt service total in the current fiscal year, representing 12.4 percent of all city-funded spending.
$6.5 billion
— Total debt service including $1.3 billion in costs serviced by the Water Authority.
$6.9 billion
— Projected direct city debt service in fiscal year 2014.
$8.8 billion
— Projected total debt service costs in fiscal year 2014, representing an increase of over 35 percent.
$24.8 billion
— Capital commitments for fiscal years 2002 to 2005.
$38.6 billion
— Capital commitments for fiscal years 2006 to 2009.
New York City's preliminary budget for fiscal years 2010 through 2014 relies on a combination of surplus funds, optimistic revenue projections, and targeted tax increases to close a $4.1 billion gap. While the plan avoids broad tax hikes, it faces significant uncertainty regarding potential reductions in state aid and the long-term sustainability of using the Retiree Health Benefits Trust to balance operating budgets.
Recommendations related to Revenue Trends
The City needs a realistic plan for how to deal with inevitable cuts in State aid rather than relying on optimistic baseline assumptions.
The City should reconsider its decision to use the Retiree Health Benefits Trust as a rainy day fund and instead adopt a policy for its future use that links withdrawals to growth in the current year liability for retiree health insurance premiums.
The City should evaluate whether the highly favored status of 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.
$1.0 billion
— Amount added to next year's revenues through economic projections and new taxes.
$241 million
— Amount of new taxes included in the plan.
$2.6 billion
— Newly identified revenues in the current and coming year from increases in the expected yield from existing taxes and other sources.
$500 million
— Contribution to the current year surplus from 'prior year payables'.
New York State faces a $6.7 billion budget deficit for the 2010-11 fiscal year, which the Governor proposes to address through a combination of spending controls and $1.3 billion in revenue initiatives. While these measures aim to reduce planned spending growth, the state continues to face significant long-term fiscal challenges, with a projected $12.2 billion budget gap expected by fiscal year 2013-14.
Key Data
$6.7 billion
— Budget hole in the 2010-11 fiscal year.
$1.3 billion
— Proposed revenue initiatives to help fill the budget hole.
$216 million
— Proposed increase in gross receipts taxes on health care institutions.
$12.2 billion
— Expected budget gap in fiscal year 2013-14.
$565 million
— Proposed one-shots to close 8.4 percent of the budget gap.
$4.4 billion
— Federal stimulus aid used to sustain the 2010-11 budget.
New York City's economy has performed better than expected during the recession, resulting in higher-than-predicted local tax revenue. Despite this positive trend, the city must avoid using the additional funds to bypass necessary cost-cutting measures, as the budget still relies on one-shot fixes and fails to account for significant mandated expenses.
Recommendations related to Revenue Trends
The city should avoid relying on one-shot measures to balance the budget.
The city must not allow additional tax revenue to serve as an excuse to avoid needed cost-cutting.
Key Data
$4.1 billion
— The currently projected budget gap.
$395 million
— The drawdown from a retiree health insurance trust fund, which is a one-shot measure that should be avoided.
$200 million
— The amount in new pollution-remediation operating expenses that the budget fails to recognize.
$500 million
— The amount in future concessions from labor unions assumed in the mayor's plan.
New York State's reliance on the General Fund for budget reporting creates an artificial and outdated construct that obscures the true fiscal picture, as it represents less than half of total state spending. To improve transparency and accuracy, the state should adopt broader reporting measures like 'State Operating Funds,' separate capital budgets from operating plans, and utilize accrual-based accounting to prevent the concealment of deficits.
Recommendations related to Revenue Trends
The basis for reporting and budget reform should be broadened to encompass all of the activities of state government.
All documents and budget reform requirements should be based on the newly denominated 'State Operating Funds' currently used by the Division of Budget.
The State’s capital budget should be separated from its annual operating budget plan, and it should cover the activities of public authorities as well as State agencies.
More detailed GAAP reporting requirements should be adopted.
A simpler, more transparent budget format that tracks cash disbursements should be developed.
Key Data
$121.6 billion
— The total All Funds cash amount for the previous year.
$54.6 billion
— The portion of the total budget represented by the General Fund last year.
$3 billion
— The amount of personal income tax revenues transferred out of the General Fund for the School Tax Relief program (STAR) every year.
$13.5 billion
— The state's deficit on a GAAP basis reported by the State Comptroller last year.
$1.9 billion
— The positive year-end balance reported on the state's cash report last year.
$175 million
— The deposit made into the new Rainy Day fund in the 2007-2008 budget.
New York State faces a growing budget gap as revenue from sales, personal income, and business taxes declines while spending on Medicaid, personnel, and education continues to rise. To address the projected $18.2 billion deficit by 2012-13, the state must implement aggressive spending cuts rather than relying on tax increases, borrowing, or passing costs to local governments.
Recommendations related to Revenue Trends
New York State must implement aggressive spending cuts to address the growing budget gap.
The state must avoid increasing taxes as a solution to the current economic crisis.
The state must avoid borrowing to cover the budget gap, as it jeopardizes credit ratings and capital investments.
The state must avoid passing costs on to local governments, as the local tax burden is already the highest in the nation.
Key Data
22%
— Personal income tax revenue decline from last year.
36%
— Expected growth in Medicaid spending over the next three years.
24%
— Expected growth in expenses for compensation of state employees over the next three years.
$4.6 billion
— Projected budget gap for the upcoming year.
$18.2 billion
— Projected budget gap by 2012-13.
$58 billion
— Planned outstanding state-supported debt by 2013-14.
New York faces a potential $3 billion budget gap as tax receipts have fallen 8% below expectations in the first quarter of the fiscal year. To address this, the state must reform unsustainable spending in Medicaid and school aid, implement new pension benefit packages for all public employees, and stabilize the Metropolitan Transportation Authority's finances.
Recommendations related to Revenue Trends
The Legislature should reform New York's Medicaid program to address spending that is 79% higher per beneficiary than the national average.
The Legislature should eliminate the $600 million in school aid that New York continues to send to the wealthiest school districts in the state.
The Legislature should immediately adopt the less costly but still comprehensive package of pension benefits for future public employees.
The Legislature should ensure the new pension package applies to civilian employees, police, and firefighters to provide fiscal relief.
The Legislature should put the Metropolitan Transportation Authority on a firmer fiscal footing to address its debt and budget gaps.
Key Data
8%
— Tax receipts fell short of expectations in the first quarter of the fiscal year.
$3 billion
— Potential current-year budget gap if revenue shortfalls continue.
79%
— Amount by which New York's Medicaid program spends more per beneficiary than the national average.
$600 million
— School aid that New York continues to send to the wealthiest school districts in the state.
New York City faces unprecedented budget gaps reaching $9.6 billion by fiscal year 2013, driven by a severe recession and declining tax revenues. To address this structural imbalance, the city should prioritize cost-cutting measures, such as pension and health insurance reforms, rather than implementing new tax increases that could hinder economic recovery.
Recommendations related to Revenue Trends
The city should implement no new or higher taxes that harm prospects for economic recovery and growth.
The city should reduce operating expenditures in ways that lower the cost of producing services rather than cut the availability of services.
The city should target capital investments to support existing facilities and lower future debt service burdens.
The city should not rely on inappropriate non-recurring revenues to balance the budget.
The city should adopt a policy for the Retiree Health Insurance Trust Fund that links withdrawals to growth in the current year liability for retiree health insurance premiums.
The city should re-examine and eliminate expansion projects that do not have clearly demonstrated economic benefits.
Key Data
$5 billion
— Projected decrease in tax collection compared to fiscal year 2008.
$6.6 billion
— Budget gap projected for fiscal year 2010.
$9.6 billion
— Budget gap projected for fiscal year 2013.
$4 billion
— Amount of income tax increase adopted in the State budget.
$1.5 billion
— Cost to taxpayers of the new regional payroll tax for the Metropolitan Transportation Authority.
$887 million
— Amount of new taxes included in the recently announced revenue agreement.
New York State's 2009-10 budget relied heavily on $8.1 billion in new taxes and fees, including significant income tax increases on high earners, to address a $17.9 billion budget gap. This approach, combined with a reliance on temporary federal stimulus funds, created a precarious fiscal situation that failed to address long-term spending sustainability.
Recommendations related to Revenue Trends
State leaders should have used the $7.4 billion in federal stabilization aid primarily as a substitute for tax and fee increases rather than as a substitute for necessary spending changes.
New York should avoid relying on volatile revenue sources like tax increases on high earners, as these earnings are not assured and the anticipated revenue may be overestimated.
State leaders must prioritize lowering spending in General and State Operating funds to respond to fiscal crises, as current spending levels are ultimately unsustainable.
Key Data
$17.9 billion
— The size of the budget gap created by existing budget gaps and severe revenue losses.
$8.1 billion
— The total amount of revenue-raising measures enacted in the fiscal year 2009-10 budget.
$3.9 billion
— The estimated revenue generated by the increase in personal income tax rates for higher income brackets.
$24.6 billion
— The total expected federal stimulus package for New York over 27 months.
The Metropolitan Transportation Authority faces growing budget shortfalls that necessitate a new funding model balancing costs among riders, drivers, and general tax subsidies. Adopting a 50-25-25 funding split would require moderate fare increases and new revenue sources from drivers, such as congestion pricing or higher tolls, to ensure long-term financial stability.
Recommendations related to Revenue Trends
Fares should cover half of mass-transit operating costs.
We must link fares to costs to create an incentive for efficiency.
Drivers should pay a quarter of the cost of mass transit, in addition to the full cost of MTA bridge and tunnel operations.
A general tax subsidy should cover the remaining 25 percent.
The Ravitch Commission does not need to propose major new taxes dedicated to the MTA, such as a payroll tax or increased sales tax.
Key Data
$1.1 billion
— Original 2009 MTA cash shortfall estimate.
$2.3 billion
— Original 2012 MTA cash shortfall estimate.
$1.2 billion
— Revised 2009 MTA cash shortfall estimate.
$2.7 billion
— Revised 2012 MTA cash shortfall estimate.
46 percent
— Portion of mass-transit operating costs covered by fares in 2008.
15 percent
— Required fare increase in 2009 to reach 50 percent cost coverage.
New York's current circuit breaker program for property tax relief is outdated, with eligibility criteria unchanged since 1985, leaving many residents without necessary support. Replacing the flawed STAR homestead exemption with an expanded, income-based circuit breaker program would more effectively target relief to homeowners and renters.
Recommendations related to Revenue Trends
New York should replace the flawed STAR homestead exemption program with an improved circuit breaker program that more effectively targets tax relief.
The state should update its circuit breaker program, as the current income and wealth criteria have not been modified since 1985, causing the program to shrink and provide relief to fewer residents.
Policymakers should consider a model that refunds property taxes above 5 percent of income for homeowners earning less than $20,000 and above 7 percent for all others.
The state should implement a circuit breaker program for renters that refunds property taxes in excess of 6 percent of income.
Key Data
$2.6 billion
— The estimated cost of a circuit breaker program that refunds property taxes above 5 percent of income for homeowners earning less than $20,000 and above 7 percent for all others.
$2.7 billion
— The estimated cost of a circuit breaker program for renters that refunds property taxes in excess of 6 percent of income.
5.1 million
— The total number of owners and renters that would be reached by the dollars currently planned for the STAR program.
$51,384
— The median household income in New York in 2006, which is far above the current circuit breaker income ceiling of $18,000.
$303,400
— The median home value in New York in 2006, which is well above the program's value ceiling of $85,000.
$875
— The median rent in New York in 2006, which is well above the program's rent ceiling of $450.
The Metropolitan Transportation Authority faces significant operating deficits and capital investment needs that necessitate fare increases, despite arguments that the agency's current cash surplus should preclude such measures. Linking future fare adjustments to the actual cost of a ride, rather than inflation, offers a mechanism to potentially limit increases through improved efficiency and technological advancements.
Recommendations related to Revenue Trends
Future fare increases should be linked to the cost of a ride rather than inflation, allowing for the possibility that fare increases could be less than inflation through increased efficiency and new technology.
Key Data
$222 million
— Cash on hand at the moment for the MTA.
$3.1 billion
— The deficit the MTA will run in 2007.
$4 billion
— The operating deficit the MTA faces next year.
$4.3 billion
— The projected funding gap for the state in the coming fiscal year.
$1.38
— The average price paid per ride in 1996 before widespread use of MetroCards.
In order to promote fiscal reform, the Citizens Budget Commission (CBC) convened three separate agenda-setting conferences for key stakeholders in the state budget process in 2007. Each session focused on one aspect of fiscal reform with a goal of identifying specific changes for the coming budget cycle. The expectation is…
New York State maintains the highest local tax burden in the nation, with high property taxes outside New York City and high income taxes within the City driving the disparity. While state-level initiatives like the STAR program and Medicaid takeovers aim to provide relief, they often shift the burden rather than reducing it, and some programs may inadvertently incentivize increased local spending.
Recommendations related to Revenue Trends
The current unnecessarily expensive pension system should be reformed by converting to a defined contribution rather than a defined benefit system.
State law could require arbitrators to award wage increases that will not necessitate tax increases or require that any wage increase be funded in part by productivity gains.
New York might benefit from using resolution processes other than the current system of arbitration, such as 'last-best offer' negotiations.
The State might also benefit from consolidation in its property tax assessment units to improve efficiency.
The State should implement a complete state takeover of local Medicaid expenses to shift financing to a more progressive revenue source.
Key Data
$111 billion
— Total annual amount New Yorkers pay in state and local taxes.
$61 billion
— Total annual amount collected in taxes by local jurisdictions in New York.
$150
— Amount collected by New York for every $1,000 of personal income in fiscal year 2005.
$82
— Amount of local taxes collected per $1,000 of personal income in New York.
$2.2 billion
— Amount required from counties (excluding New York City) for Medicaid mandates in fiscal year 2005.
$4.7 billion
— Total spending on school property tax relief in fiscal year 2007-08.
New York State faces a growing fiscal imbalance where operating spending is projected to grow at 6.9 percent annually while receipts are expected to grow by only 4.5 percent, leading to projected budget gaps rising to $7.6 billion by 2011. To address these structural deficits, the state must implement significant cost-saving measures across major spending areas like education, Medicaid, and employee benefits.
Recommendations related to Revenue Trends
Phase out school aid for the wealthiest school districts to improve equity and reduce unnecessary spending.
Restructure Medicaid to target benefits to the neediest New Yorkers by reducing non-competitive institutional rates and closing eligibility loopholes.
Restructure fringe benefits for employees by bringing state practices in line with private sector norms, such as increasing employee contributions.
Increase the state employee work week to 40 hours to achieve productivity gains and reduce the need for additional staff.
Streamline purchasing and other back-office functions to eliminate duplicative administrative costs.
Reduce and restructure ineffective economic development programs like Empire Zones and Centers of Excellence.
Develop a comprehensive capital plan to provide spending discipline and reduce off-budget capital outlays.
Close unnecessary correctional facilities to align infrastructure with the reduced inmate population.
Streamline the judiciary to reduce administrative costs.
Key Data
$7.6 billion
— Projected state funds budget gap in fiscal year 2011.
$5.4 billion
— Total potential annual savings from implementing all proposed budgetary options.
$334 million
— Potential annual savings from phasing out school aid for the wealthiest school districts.
$1.988 billion
— Potential annual savings from restructuring Medicaid programs.
$1.138 billion
— Potential annual savings from restructuring employee and retiree fringe benefits.
$802 million
— Potential annual savings from eliminating or restructuring ineffective economic development programs.
New York City consistently maintains the highest or second-highest business tax burden across most industries compared to other major U.S. locations, with combined federal, state, and local taxes reducing the rate of return on new business investment by 36% to 50%. While recent state budget changes are projected to lower the average effective tax rate in the city from 42.1% to 40.9%, the city remains the highest-tax location for businesses among those studied.
Key Data
36% to 50%
— The range of the effective tax rate on new business expansion imposed by combined federal, state, and local taxes in 2006.
42.1%
— The average combined federal-state-local effective tax rate in New York City for representative firms in 2006.
40.9%
— The projected average combined federal-state-local effective tax rate in New York City following 2007-08 state budget changes.
0.9 to 1.5 percentage points
— The typical difference in after-tax rate of return between the highest-tax and lowest-tax jurisdictions.
New York City's park system has seen significant growth in facilities and private philanthropic support, yet the Department of Parks and Recreation lacks sufficient incentives to optimize its own earned revenue streams. To address this, the city should implement revenue-sharing models that allow the department to retain a portion of its earnings to fund maintenance and improvements, rather than depositing all funds into the general city budget.
Recommendations related to Revenue Trends
Create a stronger incentive for increasing concessions and other earned revenues by dividing growth in these revenues between the City’s general fund and a new fund dedicated to parks improvements.
Institutionalize responsibility for strategic planning for parks.
Bring all parks to an acceptable condition.
Improve the quality and productivity in parks maintenance and operations.
Encourage preventive maintenance and longer periods of usefulness by funding routine repairs and replacements in the operating budget.
Common principles should guide the relationships between the DPR and its nonprofit partner organizations and the terms of arrangements should be transparent.
Key Data
$81 million
— Total revenue generated by the Department of Parks and Recreation in fiscal year 2006.
$48.1 million
— Revenue generated from concessions in fiscal year 2006, accounting for 59% of total revenues.
$64.9 million
— Total earned revenues (net of governmental and non-governmental grants) in fiscal year 2006.
$40.7 million
— Earned revenue generated in the top 12 parks in fiscal year 2006, representing 63% of total earned revenue.
$8,135,000
— Revenue generated from restaurant concessions in fiscal year 2006.
$7,045,000
— Revenue generated from golf course concessions in fiscal year 2006.
New York's 2007 budget process was marred by secrecy and a lack of transparency, resulting in a $121 billion budget that was reviewed in less than two hours. The state faces significant fiscal challenges, including a $5 billion budget gap and a debt load exceeding $60 billion, necessitating reforms to spending growth, Medicaid costs, and the fiscal year timeline.
Recommendations related to Revenue Trends
The state should move the start of its fiscal year from April 1 to July 1 to allow for more accurate estimates of revenue.
The state should close the loopholes in this year's new budget-reform law to ensure an active role for conference committees.
The state should provide sufficient time for lawmakers to review the budget before voting on it.
The state should reduce the size of its workforce through productivity gains to curb spending.
The state should tighten the eligibility rules for long-term care to control Medicaid costs.
The state should restructure the STAR program to deliver property-tax relief where it's needed most.
Key Data
$121 billion
— The total budget amount that legislators had less than two hours to review.
9 percent
— The rate by which this year's budget inflated spending, which is more than three times the rate of inflation.
$5 billion
— The budget gap the state has to close in just 18 months.
$60 billion
— The amount New York's debt load will soon exceed, which is about $10 billion more than is affordable.
New York City's economic competitiveness is influenced by its tax burden, though the exact impact of tax changes on growth remains a subject of significant debate among economists. To maintain a strong economy, the city should prioritize broad-based tax reform and efficient public service delivery over discretionary tax incentives and ad hoc measures.
Recommendations related to Revenue Trends
The city should support broad-based tax reform rather than the use of ad hoc discretionary tax incentives.
New York City must be ever more diligent in promoting agglomeration benefits through non-tax policies and providing public services efficiently to compensate for its tax wedge.
There is plenty of room for property tax reform, in particular, reducing differentials across property classes.
There is ample opportunity to lower Medicaid costs through programmatic reforms and reductions in fraud.
Key Data
$8
— NYC local taxes absorbed nearly $8 of every $100 of taxable resources in 1997.
90,000 jobs
— The estimated cost to the economy of the 18.5% real property tax increase.
57,000 jobs
— The estimated job loss resulting from a 10% increase in the city's top income tax rate.
$62,000
— The estimated cost per job of the 2006 STAMP model's tax increase.
$15 billion
— Total Medicaid spending on New York City residents in 2000.
$22 billion
— Total Medicaid spending on New York City residents in 2004.
New York State faces significant fiscal challenges, including a tax burden that is 26 percent above the national average and recurring budget deficits that threaten long-term stability. To address these issues, the state must implement binding revenue forecasts, improve multi-year financial planning, and reduce reliance on debt to cover operating expenses.
Recommendations related to Revenue Trends
Reduce State-mandated local government Medicaid costs more than authorized by the 3 percent cap on local growth enacted in 2005.
Redesign State school aid programs including STAR to better serve poorer districts and thereby lower their local school tax burden.
Redesign the State-mandated pension benefits for future state and local government workers through changes such as raising the minimum retirement ages, increasing the required employee contributions, eliminating inclusion of overtime in benefit calculations, and eliminating variable supplements for uniformed workers.
Discontinue issuance of State-funded debt to cover operating deficits.
Integrate public authorities’ proposed borrowing for capital investments with the State’s capital plan in order to prevent inefficient use of borrowing capacity.
Subject public authority borrowing to more rigorous financial review by an enhanced Public Authorities Control Board or by the Division of Budget.
Reduce the State’s future debt by lowering capital spending and/or increasing pay-as-you-go financing.
Prepare more extensive multi-year financial plans.
Enforce and build upon new requirements for reporting by public authorities.
Require that lump-sum appropriations meet specific program criteria and be subject to sunshine provisions.
Key Data
$131
— State and local taxes per $1,000 of personal income in New York.
$1.1 billion
— Savings for local governments in the current fiscal year from Medicaid cap measures.
$7,912
— Medicaid spending per beneficiary in New York.
$105.8 billion
— Total debt outstanding for the State and its authorities at the end of fiscal year 2004–05.
$4.2 billion
— Projected budget gap for the next fiscal year.
$1.6 billion
— Projected general fund deficit for the current year.
New York State faces a significant fiscal challenge to meet court-ordered education funding mandates, requiring a reevaluation of how school districts are financed. Potential solutions include restructuring existing taxes, tapping into non-tax revenue sources like gambling, or implementing a luxury tax on wealthy districts to redistribute funds.
Recommendations related to Revenue Trends
The State should fully fund education at the state level by setting a per pupil spending level with appropriate weights for different types of students and giving each school district a sum equal to its targeted spending.
New York should adopt school aid formulas that more effectively equalize variations in local wealth by applying a uniform local tax rate across districts and providing aid only to those that cannot meet per pupil adequacy targets.
The State should raise revenue from non-tax sources by pursuing gambling opportunities limited to "destination" type casinos that attract tourists and higher income households.
The State should broaden the base of the current sales tax to include currently exempt items like capital improvements, eyeglasses, newspapers, magazines, and laundry.
The State should impose a luxury tax on wealthy districts by adding a tax surcharge onto local effort above a spending threshold that requires districts to share revenue with less fortunate districts.
Key Data
$4.7 billion to $5.6 billion
— The range of operating aid ordered by the court for New York City public schools over the next four to five years.
$8.4 billion
— The estimated cost of a statewide solution to the CFE-generated mandate.
$3.2 billion
— The amount committed to the School Tax Relief (STAR) program in school year 2004-05.
$950 million
— The estimated annual yield from broadening the sales tax base to include currently exempt items.
$2 billion
— The estimated annual revenue that could be raised from new gambling opportunities.
$559 million
— The amount of state aid received by 91 districts that could reach spending targets solely through taxing their own local wealth.
The Metropolitan Transportation Authority faces growing operating deficits that are projected to reach $3.5 billion by 2009, driven by rising costs and insufficient revenue growth. To address this, the system requires a combination of fare increases, higher subsidies, and a significant expansion of the cross-subsidy from auto users through measures like congestion pricing or increased tolls.
Recommendations related to Revenue Trends
The cost of bridge and tunnel facilities should be paid for entirely through user fees paid by motorists.
User fees paid by motorists should also generate a surplus large enough to cover one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover one-half the operating cost of those services.
State and local subsidies to mass transit should cover one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
Key Data
$3.5 billion
— Projected operating deficit for the MTA in 2009.
$1.3 billion
— Annual revenue needed from auto users to close the budget gap.
46%
— Share of MTA operating costs covered by fares in 2004.
$1.382 billion
— Estimated annual net gain from implementing a London-like congestion pricing plan.
22%
— Minimum fare increase required by 2009 to balance the budget.
New York State faces a critical fiscal challenge with $46.7 billion in outstanding state-funded debt, a significant portion of which is "backdoor" borrowing that bypasses voter approval and has been used to fund operating deficits rather than capital projects. To address this, the state must implement a new constitutional debt limit based on affordability and restrict borrowing to long-term capital investments, while voters should reject new bond referendums until debt is brought under control.
Recommendations related to Revenue Trends
Voters should reject bond referendums such as the Transportation Bond Act of 2005 until debt is brought under control.
The State needs a new constitutional limit that does not require voter approval for every debt issuance, but does impose a binding limit that is linked to ability to pay.
The State must restrict the use of borrowed funds to true capital investments.
The State should apply the debt limit to all forms of state-backed debt, including such bonds issued by authorities.
The State should establish a new debt limit based on the concept of affordability as determined by an independent Debt Policy Committee.
Key Data
$46.7 billion
— New York State's total outstanding state-funded debt as of March 31, 2005.
$43.0 billion
— The amount of 'backdoor' borrowing that does not require voter approval, out of the total $46.7 billion in state debt.
$11.5 billion
— The amount of backdoor borrowing that has been used to underwrite annual operating deficits instead of being invested in long-term capital projects.
$19 billion
— The amount of new debt the State's current plans would add in the next five years.
$2.9 billion
— The amount of borrowing authorized by the Transportation Bond Act of 2005.
New York State's revenue forecast for the 2006-07 to 2007-08 period anticipates annual growth of approximately 5 percent in total tax receipts, with sales and use taxes rising by 3.5 percent and personal income taxes by 6.0 percent. To ensure long-term fiscal stability, the state should avoid relying on one-time revenue sources and instead focus on recurring revenue streams, such as permanently repealing sales tax exemptions on clothing.
Recommendations related to Revenue Trends
The Legislature should permanently repeal the sales tax exemption on clothing and eliminate the two sales-tax free weeks to generate gross revenues of $561 million.
The State should balance its budget without relying on one-shots, borrowing, and gimmicks, instead focusing on recurring revenues.
The Legislature should modify the Governor's proposed changes in the sales tax to yield more revenue.
The State should increase the reliance on statewide revenues to pay for Medicaid and public schools rather than relying on local taxes.
The Legislature should reject the Governor's proposals for expanding the STAR-Plus and Co-STAR programs because they are poorly targeted and costly.
Key Data
5 percent
— The expected annual increase in overall tax receipts for the 2006-07 to 2007-08 period.
$561 million
— Gross revenues that would be generated by re-imposing the sales tax on clothing from June 1, 2005, through March 31, 2006.
$4.2 billion
— The total budget gap in fiscal year 2006 that the Executive Budget proposes closing partially with one-shots and borrowing.
3.5 percent
— The expected annual growth rate in sales and use taxes for the 2006-07 to 2007-08 period.
6.0 percent
— The expected annual growth rate in personal income tax for the 2006-07 to 2007-08 period.
$265 million
— The cost of the combined STAR-Plus and Co-STAR initiatives by fiscal year 2007-08.
The report addresses the fiscal challenge of funding a sound basic education in New York, recommending that the State assume primary responsibility for raising necessary revenues through a combination of educational efficiencies, expanded gambling, and tax restructuring. It emphasizes that beyond funding, the state must implement stronger accountability systems, optimize classroom space through rezoning and year-round schedules, and reform teacher compensation and deployment to improve educational outcomes.
Recommendations related to Revenue Trends
The State, rather than local school districts, should be responsible for raising the additional funds needed for a sound basic education.
The State should also establish a longer-run goal of significantly increasing the share of all public school funds raised from statewide revenues and decreasing the mandated share raised by local school districts.
A significant portion of the resources needed for a sound basic education should be raised through the elimination of inefficiencies in the education system.
Expanded gambling activities should be used to generate about $2 billion annually for improved education, but these activities should be restricted to 'destination' type casinos and should be promoted by the State in a responsible manner.
Improved enforcement of the existing sales tax on remote (including internet) transactions should be used to generate significant new revenues in future years.
Broaden the base of the sales tax to include items currently exempt without a sound basis for the exemption.
Revise the corporate income tax to include certain revenues now excluded and to set a higher alternative minimum tax.
Extend the sales tax to include consumer (not business-to-business) purchases of professional services like law and accounting.
If the Court mandate for a sound basic education requires even more than can be generated by the previous recommendations, then any additional necessary funds should be raised by increasing personal income tax rates.
A new statewide system of accountability for schools should be established.
Key Data
$8.6 billion
— The high end of the range for combined annual operating and capital expenses required to provide a sound basic education.
$1.2 billion
— Annual savings generated by making more efficient use of teacher time, consolidating small school districts, and reallocating State aid.
$2 billion
— Annual revenue that could be raised by authorizing new sites for housing video lottery terminals and taxing spending at the terminals.
$950 million
— Estimated annual yield from broadening the sales tax base to include items currently exempt.
$320 million to $435 million
— Estimated annual yield from revising the corporate income tax to include certain revenues now excluded and setting a higher alternative minimum tax.
$175 million to $595 million
— Estimated annual yield from extending the sales tax to include consumer purchases of professional services like law and accounting.
Expanding gambling opportunities to fund education carries significant risks, including questionable long-term revenue sustainability and a regressive tax impact that disproportionately affects lower-income residents. Furthermore, the expansion of gambling venues is likely to increase social costs, which already total $1.1 billion annually in New York due to issues like problem and pathological gambling.
Recommendations related to Revenue Trends
The state should implement age restrictions for participation in gambling activities.
The state should enforce the exclusion of individuals from gambling venues to mitigate social costs.
The state should impose a limitation on the dollar amount of bills that machines will accept.
The state should require that pay out winnings over a certain amount be made by check.
The state should establish limitations on the number, location, and maximum withdrawals of ATMs at gambling facilities.
Key Data
$1.1 billion
— The estimated annual social cost of gambling in New York State.
$9 billion
— The annual spending on legal gambling in New York State combined with casino gambling by New Yorkers.
$2 billion
— The projected annual revenue from video lottery terminals in five years.
$2,945
— The estimated annual cost to society of a problem gambler.
$10,330
— The estimated annual cost to society of a pathological gambler.
$5.4 billion
— The total lottery ticket sales in 2003.
New York State can generate significant revenue to fund court-ordered education initiatives by broadening the tax base for sales and corporate income taxes, including taxing remote and internet sales, retail services, and professional services. Implementing these reforms, alongside closing corporate tax loopholes, would provide a more stable and equitable revenue stream while aligning state practices with those of other jurisdictions.
Recommendations related to Revenue Trends
The State should embrace the national Streamlined Sales Tax Project to ensure that taxes on internet and remote sales can be collected in the future.
The State should broaden the base of the sales tax to include many retail services that are not currently subject to tax.
The State should apply the sales tax to professional services when they are sold to consumers rather than businesses.
The State should reform its corporate income tax laws to capture income on which corporations are currently able to avoid paying taxes.
The State should establish a "throwback" rule to enable the state to capture revenues by disregarding "nowhere" income in apportioning corporate tax liability.
Key Data
$40 million to $590 million
— Estimated annual increase in state sales tax collections if the state embraces the national Streamlined Sales Tax Project.
$950 million
— Potential additional annual revenue from broadening the sales tax base to include retail services not currently subject to tax.
$175 million to $595 million
— Estimated annual revenue from applying the sales tax to professional services sold to consumers.
$320 million to $435 million
— Estimated annual revenue from reforming corporate income tax laws to capture income currently shielded from taxation.
$1.5 billion
— Potential annual revenue if currently exempt retail services were subject to taxation.
$220 million
— Estimated additional annual corporate income tax revenue generated by adopting mandatory combined reporting.
The New York-New Jersey region's transportation system faces significant financial challenges, with mass transit operating deficits totaling $1.2 billion and a reliance on inconsistent, politicized pricing policies. To ensure long-term viability, the region should adopt a unified policy that increases user fees to cover a larger share of operating costs, dedicates these revenues to transportation, and accelerates the elimination of maintenance backlogs.
Recommendations related to Revenue Trends
The governors of New York and New Jersey should create a new entity with authority to set and enforce regional transportation policies and priorities.
The region’s transportation agencies should have sufficient resources to meet all necessary operating expenses.
Motor vehicle user fees should be dedicated to transportation agencies to cover the operating costs of roads and bridges and provide a cross-subsidy to mass transit.
Mass transit riders should pay a fare sufficient to cover one-half the transit agencies’ operating costs.
New capital for improvements and expansions should be generated by borrowing and ensuring that contributions to capital from third parties are used for this purpose.
The existing backlog in maintenance and repairs caused by a history of under-funding and neglect should be eliminated at an accelerated pace and be financed by general fund appropriations.
Key Data
$13 billion
— Combined annual operating expenditures of the 25 transportation agencies in the region.
$9.4 billion
— Total operating expenditures for mass transit in the region.
$5.7 billion
— Total user fees collected from auto users in the region.
$4.1 billion
— Total expenditures for roads and bridges in the region.
$1.2 billion
— Total mass transit operating deficit in 2001.
$1.7 billion
— Total contributions to capital for mass transit.
New York's Medicaid spending has grown at an annual rate of over 9 percent, significantly outpacing total state spending growth and consuming nearly 40 percent of state expenditures. Implementing proposed reforms to eligibility, payment rates, and utilization patterns could save approximately $4.6 billion annually, freeing up resources for other public services or tax relief.
Recommendations related to Revenue Trends
The State’s medically-needy eligibility rules should be tightened, with spousal refusal permitted only under limited circumstances and the three-year look-back provision relating to asset transfers applied to home care and enforced more vigorously.
New York State should limit Medicaid provider payments to rates based on competitive costs to save about $2.5 billion annually.
New York should build the capacity among managed care organizations to manage care for elderly and disabled groups effectively, with a goal to enroll about one-third of these eligibles in a managed care plan.
New York should bring the use of personal care services more in line with national norms to save about $1.0 billion annually by reducing the average number of hours of personal care authorized for clients.
State leaders should negotiate with federal officials to incorporate some “budget neutral” arrangement with the federal government to allow New Yorkers to share the benefits obtained by the federal government as a result of the State’s efforts.
Key Data
$4.6 billion
— Annual savings possible by reversing the trend in Medicaid spending.
$7,646
— New York's cost per person enrolled in the Medicaid program annually.
$3,936
— The national average cost per person enrolled in Medicaid annually.
$36 billion
— Total spending for Medicaid in New York in fiscal year 2003.
40 percent
— Share of total State expenditures represented by Medicaid spending in fiscal year 2003.
64,000
— Estimated number of jobs statewide that would be reduced by non-eligibility-related savings.
New York's budget process is plagued by persistent lateness and conflict, largely due to a disjunction between the state's constitutional structure and contemporary political realities. Reforming this system requires constitutional changes, such as establishing a consensus process for revenue estimating and implementing legislative redistricting by commission, to ensure greater accountability and fiscal responsibility.
Recommendations related to Revenue Trends
The state should establish an authoritative – and perhaps politically disinterested – consensus process for revenue estimating.
New York should retain a constitutionally-based executive budget, but New York should also recognize and incorporate in its constitution the legitimate and hard-won role of the state legislature in budgeting.
Two less draconian but still fundamental steps are the adoption of legislative redistricting by commission and serious reform in campaign finance.
Public financing of legislative election campaigns, with concomitant limits on direct and indirect (through legislative campaign committees) private funding, would be salutary.
Constitutionalization of the beginning of the fiscal year might be a first step toward establishing a real budget deadline.
Key Data
$10,750,658
— The proposed budget for legislative fiscal staffs for 2003-2004.
$170 million
— The total amount controlled by the leaders of each of the houses in 2003 to fund projects advanced by Senate Republicans and Assembly Democrats.
$7,506,885
— The amount raised by Democrats in the Assembly in 2002 to defend and extend their majority.
$14,736,106
— The total raised by Republicans in the Senate in 2002.
New York State faces significant fiscal challenges, including the highest combined state and local tax burden in the nation and a history of recurring budget gaps that are often managed through short-term, unsustainable measures. To address these issues, the state should implement structural reforms such as adopting generally accepted accounting principles for balanced budgets, establishing an independent legislative budget office, and creating a more robust rainy day fund.
Recommendations related to Revenue Trends
Require that the adopted budget be balanced in accord with generally accepted accounting principles.
Require a four-year financial plan with quarterly modifications.
Replace the constitutional requirement for voter approval of general obligation debt with a constitutional limit on the amount of all state debt that is set based on relevant, changing economic factors.
Create a professional, non-partisan Legislative Budget Office to provide fiscal information to both houses of the Legislature and to the public.
Require that independently prepared revenue projections be used in the adopted budget, if the Governor and Legislature do not agree on revenue projections in a timely way.
Require a “rainy day” fund larger than the current Tax Stabilization Reserve Fund.
Eliminate the use of “off-budget” accounts.
Change the budget calendar to allow more time for deliberation on the Executive Budget by the Legislature.
Strengthen the committee process of the State Legislature to allow more participation by members in budgetary decisions.
Key Data
$141
— New York raises $141 for every $1,000 of personal income in combined state and local taxes.
$9.4 billion
— In fiscal year 1999-00, State taxes were $9.4 billion less than they would have been without the tax cuts authorized in the previous five years.
$38 billion
— New York's long-term debt exceeded $38 billion in fiscal year 1999-00.
$9.3 billion
— In the 2003-04 fiscal year, the State faced a budget gap of $9.3 billion.
$5.7 billion
— The State relied upon $5.7 billion in one-time actions and disappearing revenues to close the 2003-04 budget gap.
$170 million
— From 1984 to 2003 the amount appropriated for 'member items' increased from $26 million to $170 million.
New York State faces a severe fiscal crisis with a projected $9.3 billion budget gap for fiscal year 2003-04, which is expected to grow to $11 billion by fiscal year 2005-06 due to rising baseline spending. To address this, the state should implement a three-year plan that includes temporary tax surcharges, significant expenditure reductions, and a shift toward more transparent, GAAP-based budgeting practices.
Recommendations related to Revenue Trends
The State should bring the budget into balance over three years by reducing expenditures to what the current revenue system supports by making productivity gains and by cutting services in a way that protects the neediest New Yorkers.
The State should close the gap between spending and revenues in the three-year, interim period by imposing a temporary and declining tax and by avoiding borrowing.
The State should be required to balance its budget based on Generally Accepted Accounting Principles (GAAP) in order to prevent the accumulation of a deficit.
The Division of Budget should be required to prepare a four-year financial plan with quarterly updates to improve transparency.
All off-budget accounts should be brought on budget to ensure a unified statement of all planned revenues and expenditures.
The State should pursue a long-run effort to lower total Medicaid costs and finance them more from statewide sources to reduce the local tax burden.
Key Data
$4.4 billion
— The deficit incurred by New York State in the fiscal year that ended March 31, 2002.
$5 billion
— The amount by which outlays and recurring revenues are expected to differ in the current fiscal year.
$5.6 billion
— The amount of spending cuts proposed in the Governor's Executive Budget for fiscal year 2003-04.
$9.3 billion
— The total gap identified in the Executive Budget for fiscal year 2003-04.
$11 billion
— The projected gap in fiscal year 2005-06 due to baseline spending increases.
New York City faced an $8.8 billion budget gap for fiscal year 2004, driven by a combination of declining tax revenues and rising expenditures following the September 11 attacks and the national recession. To address this shortfall, the city relied heavily on revenue increases, including property and personal income tax hikes, which accounted for over half of the gap-closing plan.
Key Data
$2.9 billion
— Estimated revenues for fiscal year 2004 have declined by this amount compared to the assumption in the fiscal year 2002 Adopted Budget.
$2.4 billion
— The shortfall in tax revenues contributing to the decline in estimated revenues for fiscal year 2004.
$4.8 billion
— The amount of revenue increases, accounting for 54 percent of the City's gap closing plan.
$3.6 billion
— The total amount of recurring revenues identified to help close the budget gap.
$1.7 billion
— The yield in fiscal year 2004 from the recently enacted increase in the property tax.
$962 million
— The amount the City is counting on from reform of the personal income tax, including a new tax on commuters.
New York City faces unprecedented budget gaps that cannot be solved by economic growth alone, necessitating structural changes rather than temporary borrowing or gimmicks. To address these fiscal challenges, the city must implement efficiency measures, such as streamlining procurement and restructuring special education, while also reevaluating its tax structure to remain competitive.
Recommendations related to Revenue Trends
Those civilians not working a 40-hour week should be required to do so to lower the cost of government.
Replace the Mayor’s Office of Contracts with a new procurement entity that offers 'one-stop' oversight to streamline procurement and reduce costs.
Move students from more restrictive to less restrictive environments to reduce special education costs.
Reschedule the police officers’ work day to increase time in law enforcement and decrease paid time for changing uniforms to achieve more rational staffing.
Responsibility for energy conservation in City agencies should be centralized within the Office of the Mayor to increase energy savings.
Key Data
$6.4 billion
— Projected budget gap for fiscal year 2003-04.
$1 billion
— Annual savings from the five proposed ideas to lower the cost of government.
$498 million
— Annual savings from requiring a 40-hour work week for civilian employees.
$197 million
— Annual savings from streamlining the City's procurement process.
$267 million
— Annual savings from restructuring special education services.
$251 million
— Annual savings from more rational staffing at the Police Department.
New York State and New York City have experienced rapid growth in debt, often circumventing constitutional limits through the use of public authorities and appropriation-backed debt. To ensure long-term fiscal health, the state and city should establish independent debt policy committees and amend the constitution to create more effective, transparent debt limits based on affordability rather than outdated procedural or property-value constraints.
Recommendations related to Revenue Trends
New York State's elected leaders should bring the State's debt burden below the danger zone threshold identified in this report, and New York City's leaders should keep their debt below the relevant danger zone threshold.
New York City and New York State should create Debt Policy Committees to recommend long-run debt strategies and annual debt issuance limits.
The State Constitution should be amended to establish new limits on State and City debt.
Key Data
$35.8 billion
— State debt at the end of the 1999 fiscal year.
$46.8 billion
— City debt at the end of the 1999 fiscal year.
$63.8 billion
— Total non-State-supported authority debt at the end of 1998.
$36.8 billion
— Projected State debt at the end of fiscal year 2000.
$36.6 billion
— Projected City debt at the end of fiscal year 2000.
New York's transportation infrastructure requires significant investment to achieve a state of good repair, with the Comptroller estimating billions in funding gaps for both highways and mass transit. Future competitiveness depends on balancing these maintenance needs with strategic capacity expansions and innovative fare policies to improve system efficiency and ridership.
Recommendations related to Revenue Trends
New York's leaders should address the issue of how to improve transit system efficiency and ridership to lower unit costs.
The city must determine how rapidly to achieve a state of good repair for existing highway and transit infrastructure to prevent further deterioration.
Policymakers need to decide how much new mass transit capacity is necessary to accommodate future job growth and alleviate rush-hour crowding.
Transit leaders should identify modern human resource measures to help enhance future competitiveness and lower operating costs.
The city should continue innovation in fare policy to make New York competitive with other world cities in terms of efficient mass transit operation.
Key Data
$12.2 billion
— The amount estimated by the Comptroller as needed for highway and related facilities over the ten-year period spanning fiscal years 1998 to 2007.
$20.4 billion
— The amount estimated by the Comptroller as needed to achieve and maintain a state of good repair for facilities operated by the Transit Authority as of 1998.
$1.71
— The revenue per passenger generated by the London rapid rail system, the highest among the regions studied.
$3.72
— The average revenue per passenger for New York's commuter rail system, which is significantly higher than in Chicago, Tokyo, or Paris.
$81
— The per capita annual investment in New York's rail transit, which exceeds that of domestic competitors but trails international rivals.
$1.14
— The average revenue per passenger for New York's rapid rail system, which is higher than the average in Tokyo, Paris, and Chicago.
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