State aid to New York City consists of the various grants, funding infusions, and categorical support provided by the New York State government to help the City manage its operating budget, address fiscal gaps, and fund public services. This page covers CBC’s work on state budget support, education aid, transit funding, migrant and asylum seeker assistance, and the fiscal relationship between the State and the City.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The MTA and the State should adopt at most a $62.4 billion 2025-2029 Capital Program.
The MTA and the State should focus the capital program exclusively on projects to Rebuild and Improve the system.
The MTA and the State should unpause congestion pricing.
The MTA should increase operating efficiency to stabilize its budget and provide resources for capital investment.
The MTA should use recurring revenue to support capital investment on a pay-as-you-go basis.
Key Data
In June 2026, the State's Enacted Budget provided a $2.4 billion infusion to New York City over fiscal years 2026 and 2027, which includes $1.4 billion in recurring aid and $780 million annually thereafter to support ongoing programs.
The State's June 2026 budget reversed previous reductions by restoring $300 million for juvenile justice programs, $101 million for line-of-duty benefits, and $160 million in State education aid.
Historical data from December 2024 shows that State Categorical Grants to New York City grew from $15,334 million in fiscal year 2020 to $19,231 million in fiscal year 2024.
The STAR program, as of August 2024, shifted $3.3 billion of education funding from locally-raised property tax revenue to the State each year, with more money flowing to wealthier districts.
In May 2023, the State's Fiscal Year 2024 Enacted Budget included $1 billion to assist New York City with asylum seeker costs, but shifted hundreds of millions of dollars in State Medicaid costs onto counties and the City.
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 State provided $2.4 Billion in aid to help New York City manage its immediate fiscal crisis, yet this support lacks the necessary accountability to prevent future cycles of financial stress. A sustainable approach requires pairing such financial assistance with clear expectations for efficiency and reform to ensure long-term stability.
Recommendations related to State Aid to NYC
A sustainable strategy for state aid to New York City would combine support with clear expectations for efficiency and reform.
Key Data
$2.4 Billion
— Amount of state aid provided to help New York City manage its immediate fiscal crisis.
New York City's fiscal year 2027 executive budget relies on a $2.4 billion infusion of state aid to help close budget gaps, though this support is largely non-recurring. While this state funding provides necessary relief, the city continues to face significant long-term fiscal challenges that require more sustainable, recurring savings strategies.
Key Data
$2.4 billion
— The State’s Enacted Budget provides a substantial <b>$2.4 billion</b> infusion to the City over fiscal years 2026 and 2027.
$1.4 billion
— Of the total state support, <b>$1.4 billion</b> is provided in recurring aid across fiscal years 2026 and 2027.
$780 million
— The State will provide <b>$780 million</b> in recurring aid annually thereafter.
$300 million
— State support includes <b>$300 million</b> for juvenile justice programs that had been provided to all counties in the State other than New York City.
$160 million
— The budget includes <b>$160 million</b> in State education aid.
$101 million
— State support provides <b>$101 million</b> for the State’s share of line-of-duty benefits associated with September 11th.
$124.7 billion is the amount Mayor Mamdani proposes to spend in fiscal year 2027. The budget process is never simple, but this year the intensity ratcheted up. Revealing a large budget gap, the City administration negotiated with the State for aid to bridge it while simultaneously pursuing its ambitious programmatic…
The New York City Fiscal Year 2027 Preliminary Budget faces a $9.4 billion gap, which the city plans to address through tax increases and nonrecurring resources rather than structural reforms. To achieve long-term fiscal sustainability, the city should prioritize operational efficiency, reduce ineffective spending, and maintain adequate reserves instead of relying on temporary measures.
Recommendations related to State Aid to NYC
The City should reject tax increases that would harm the City’s economic competitiveness and place additional burdens on residents and businesses.
The City should reduce ineffective spending and improve operational efficiency, including spending on education, procurement, and administrative operations.
The City should 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.
The City should build and maintain adequate reserves by not drawing down the rainy day fund or RHBT and including $1 billion of in-year reserves.
Key Data
$1.6 billion
— Total State aid provided to New York City in fiscal years 2026 and 2027.
$9.4 billion
— The combined fiscal year 2026 and 2027 budget gap.
$1 billion
— The amount of in-year reserves the City should include to protect against economic downturns.
$15 billion
— The estimated amount required over two years to mitigate the effects of a significant economic downturn.
$12.3 billion
— The amount added to the updated spending forecast for fiscal years 2026 and 2027.
$7.6 billion
— The amount the tax revenue forecast was increased across fiscal years 2026 and 2027.
New York City faces significant fiscal challenges driven by excessive spending growth that has consistently outpaced inflation over the last decade. To address these gaps, the city should seek greater flexibility from the state, particularly regarding mandates like class-size requirements that limit local decision-making and resource allocation.
Recommendations related to State Aid to NYC
The City should seek greater flexibility from Albany, including relief from the class-size mandate, which constrains local decision-making and requires additional resources be spent on already high-performing schools.
Key Data
$2.3 billion
— The amount the City spent more than it received over the past three years despite strong revenues.
$15 billion
— The amount the City would be spending less today had spending growth merely kept pace with inflation over the last decade.
New York City faces significant risks from potential federal funding cuts, which could lead to reduced state aid and threaten critical services like housing, health care, and transportation. To mitigate these fiscal threats, the city must prioritize spending discipline, bolster reserves, and improve budget accuracy to ensure long-term financial stability.
Recommendations related to State Aid to NYC
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.
New York City's budget faces significant long-term gaps, with recurring expenses exceeding revenues and a reliance on depleting surplus funds to balance the books. While the state budget provides an additional $595 million in funding, the city must implement stricter fiscal discipline, including ending budget gimmickry and increasing reserves, to prepare for potential federal aid reductions.
Recommendations related to State Aid to NYC
The City should 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.
The City should 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.
The City should not fund any new or expanded programs in the Executive Budget or during adoption.
The City should add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
Key Data
$595.0 million
— Net increase in City funding provided by the New York State Fiscal Year 2026 Executive Budget.
$703.0 million
— Proposed increase in State education aid compared to State fiscal year 2025.
$350 million
— Additional funding the City would have received had the State not proposed Foundation Aid formula changes.
$58.0 million
— State resources provided to the City for NYPD subway deployments.
$14.0 million
— State resources provided to the City for enhanced subway outreach.
$12.0 million
— State resources provided to the City for youth services.
New York City received $19,231 million in state categorical grants during fiscal year 2024, contributing to a total operating revenue of $113,181 million. Meanwhile, New York State disbursed $183,176 million in total grants to local governments across the state during the same period.
Key Data
$19,231 Million
— The amount of State Categorical Grants received by New York City in fiscal year 2024.
$183,176 Million
— The total Grants to Local Governments disbursed by New York State in fiscal year 2024.
$722 Million
— The total Aid and Incentives for Municipalities provided by New York State in fiscal year 2024.
The Metropolitan Transportation Authority's capital assets require a prioritized, right-sized investment plan focused on rebuilding and improving existing infrastructure rather than expansion. To finance this, the state and city must unpause congestion pricing, improve operational efficiency, and ensure sustainable funding that avoids excessive tax burdens.
Recommendations related to State Aid to NYC
The MTA and the State should adopt at most a $62.4 billion 2025-2029 Capital Program.
The MTA and the State should focus the capital program exclusively on projects to Rebuild and Improve the system.
The MTA and the State should unpause congestion pricing.
The MTA should increase operating efficiency to stabilize its budget and provide resources for capital investment.
The MTA should use recurring revenue to support capital investment on a pay-as-you-go basis.
Key Data
$62.4 billion
— The maximum amount the MTA can commit over six years for the 2025-2029 Capital Program.
$1.5 billion
— The amount of needed operating budget savings to be provided by increasing productivity and reducing fare evasion.
$700 million
— The amount that fare evasion well exceeds annually.
$2 billion
— The amount the MTA could save annually by increasing efficiency with collaboration from labor.
$106.6 billion
— The lower bound of the estimated five-year cost of Rebuild and Improve projects.
$115.0 billion
— The upper bound of the estimated five-year cost of Rebuild and Improve projects.
New York State's school aid formulas, including expense-based aids and the STAR program, currently fail to adequately account for local wealth and student needs, often directing more funding to wealthier districts. Reallocating these funds proportionally to Foundation Aid would better target resources to lower-wealth districts, including New York City, and ensure a more equitable distribution of state education funding.
Recommendations related to State Aid to NYC
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 to better account for local circumstances and actions.
Calculations of local fiscal capacity should account for localities’ other spending obligations—including State mandates such as Medicaid—by adjusting the expected local contribution to reflect actual fiscal capacity.
Indices of need and regional cost should be updated regularly and be sufficiently granular to capture variation in student need and regional costs.
School districts’ building and transportation costs should be explored further to identify reforms that would incentivize efficiency of spending and improve the funding distribution.
Expense-based aids and the STAR program should be distributed proportionally to Foundation Aid to ensure they are better targeted based on student needs and local wealth.
Key Data
152
— Number of school districts that contributed enough local resources to provide a sound basic education before receiving any State aid in the 2023-24 school year.
$8 billion
— Amount of costs for the State-run Medicaid program shifted to counties and local taxpayers.
$6 billion
— Total amount of the two largest expense-based aid categories, Building and Transportation Aid.
$447 million
— Amount allocated in Library, Textbook, Software, and High Tax Aids in the 2024-25 school year without accounting for local wealth.
$501 million
— Amount of STAR funding received by districts in the bottom three deciles of wealth last year.
$1 billion
— Projected amount of aid to the bottom three deciles if STAR funding were reallocated proportional to Foundation Aid.
The New York City Housing Authority faces a persistent operating budget gap driven by rising expenses and stagnant rent collections, while its physical infrastructure requires $78 billion in capital investment over the next twenty years. To address these challenges, the agency must prioritize the conversion of units to Section 8 under the Permanent Affordability Commitment Together (PACT) program and the Preservation Trust to secure necessary funding and management improvements.
Recommendations related to State Aid to NYC
Fix or replace deteriorating buildings with PACT and the Preservation Trust.
Improve management effectiveness and efficiency, and publicly track progress and impact.
Negotiate savings, boost productivity, and modernize property management through collective bargaining.
Overhaul the rent collection process.
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.
$1,510
— Operating expenses per unit per month in 2023.
$60 billion
— Total five-year capital needs for NYCHA developments.
$78 billion
— Total twenty-year capital needs for NYCHA developments.
$511 million
— Federal capital funds diverted in 2022 and 2023 to fill the operating budget gap.
New York City faces a precarious fiscal situation with a $10.6 billion budget gap driven by migrant costs and unsustainable spending, necessitating strategic prioritization rather than tax increases or reserve depletion. The City must engage labor in reform efforts and seek greater financial support from the State to address non-federal burdens effectively.
Recommendations related to State Aid to NYC
The State should shoulder more of any non-federal burden to assist with the City's fiscal pressures.
The City must seek agreed-upon changes to work rules, job titles, health insurance, and other benefit administration structures with labor to deliver services efficiently.
The City should prioritize services with significant impact and increase efficiency rather than focusing on expanding services.
The Council should focus on the data to help make the hard choices and minimize the impact on New Yorkers.
Key Data
$16 billion
— Added costs through 2027 resulting from recent collective bargaining agreements.
$7.1 billion
— Initial budget gap projected for fiscal year 2025.
$10.6 billion
— Accurate budget gap for fiscal year 2025 when accounting for fiscal cliffs and underbudgeting.
92%
— Portion of savings measures in previous programs that did not directly affect program services.
20%
— Portion of savings in the most recent program to eliminate gap (PEG) that will affect current programs.
The Metropolitan Transportation Authority faces significant budget risks, with potential operating gaps projected to grow to $927 million by 2027 due to uncertainties in tax revenue, fare evasion, and rising expenses. While the state's stabilization plan provides $1.1 billion in annual dedicated tax revenue, the agency must continue biennial fare increases and identify further operational efficiencies to maintain fiscal stability.
Recommendations related to State Aid to NYC
The MTA and stakeholders should closely monitor ongoing results because certain risks threaten its projected revenue and expenses.
It is critical that the MTA continues biennial fare and toll increases, implements efficiencies to meet its savings targets, and continues to identify ways to increase productivity and reduce costs.
The MTA should consider whether the General Reserve should be gradually increased to provide a sufficient budgetary cushion against identified risks.
PMT revenues warrant close attention to ensure collections meet forecasts going forward.
The MTA and stakeholders should closely monitor implementation and fiscal impact of operational efficiency savings.
Key Data
$1.1 billion
— Annual dedicated tax revenue provided by the New York State stabilization plan.
$927 million
— Projected operating budget gap in 2027 if all identified 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 for two years.
$185 million
— Amount set aside in the General Reserve in 2023.
$210 million
— Amount set aside in the General Reserve in 2027.
New York City faces a widening fiscal gap of $10.6 billion for fiscal year 2025, driven largely by the costs of supporting asylum seekers and migrants. While the state has contributed some funding, a larger share of financial support is necessary to alleviate the burden on city coffers, which currently cover over 90 percent of these rising expenses.
Recommendations related to State Aid to NYC
New York State should provide a greater share of funding to help cover the costs of serving asylum seekers and migrants.
Key Data
90 percent
— Portion of the $10 billion in increased projected spending on asylum seekers and migrants that is currently covered by City coffers.
$10.6 billion
— Total fiscal year 2025 budget gap, including the fiscal cliff and program underbudgeting.
$7.1 billion
— Widened fiscal year 2025 budget gap, up from the previously estimated $5.1 billion.
New York City faces a potential $13.8 billion budget gap in fiscal year 2025, with less than half of that amount driven by the $6.1 billion cost of services for migrants. While the city is implementing budget savings, increased fiscal support from both the federal and state governments is necessary to address the financial strain caused by the migrant crisis.
Recommendations related to State Aid to NYC
The State’s recently increased commitment to funding the migrant crisis should be expanded to better support the City.
The federal government should provide much more fiscal aid to assist with the costs of serving new migrants and asylum seekers.
Key Data
$13.8 billion
— The potential fiscal year 2025 budget gap facing New York City.
$6.1 billion
— The estimated cost of services to migrants in New York City for the next year.
$13 billion
— The potential fiscal year 2025 budget gap if the City's asylum seeker cost estimate proves accurate.
The Metropolitan Transportation Authority's operating budget is temporarily stabilized by the New York State fiscal year 2024 budget, which provides new revenue streams to address structural deficits. However, long-term fiscal health remains at risk, necessitating operational reforms and labor negotiations to close projected budget gaps that will reemerge after the current financial plan window.
Recommendations related to State Aid to NYC
The MTA should implement one-person train operation (OPTO) on subways and proof of payment on commuter rail, industry standard practices that would increase efficiency.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels.
The MTA should negotiate work rule changes with labor unions to allow the MTA to adjust schedules and services to meet shifting rider needs.
Key Data
$2.6 billion
— The MTA's budget gap for 2023, which widened due to declining ridership, the decision to skip the 2021 fare increase, and increased fare evasion.
$900 million
— The projected budget gap the MTA will face in 2029 once the benefit of federal COVID-related aid is exhausted.
$1.1 billion
— The annual revenue generated from the increase of the Payroll Mobility Tax on New York City employers included in the NYS Fiscal Year 2024 Enacted Budget.
$330 million
— The annual amount by which the cost of the Transport Workers Union (TWU) Local 100 collective bargaining agreement exceeds budgeted raises.
$690 million
— The cost of fare and toll evasion to the MTA in 2022.
$442 million
— The annual savings the MTA would realize by expanding one-person train operation (OPTO) systemwide.
The New York State Fiscal Year 2024 budget shifts hundreds of millions of dollars in Medicaid costs onto New York City while providing $1 billion to assist with the costs of asylum seekers. This budget weakens the state's financial footing by increasing long-term structural deficits and failing to address housing production and affordability crises.
Recommendations related to State Aid to NYC
State leaders should enact proven, flexible strategies, like those proposed by the Governor, to streamline environmental review, eliminate the floor area ratio cap, promote transit-oriented development, legalize accessory dwelling units and basement apartments, and extend and enact a successor to 421-a.
The Governor and Legislature should strongly support identifying and implementing productivity improvements during this round of collective bargaining between the MTA and its unions.
The State should prioritize additional deposits to the Rainy Day Fund to protect New Yorkers from an economic downturn or severe emergency.
Key Data
$1 billion
— The budget includes $1 billion to assist New York City in addressing the costs of asylum seekers.
$2.9 billion
— The MTA could achieve up to $2.9 billion in efficiency improvements.
$15 billion
— The budget increases the long-term structural deficit to well over $15 billion.
$5 billion
— The budget widens next year’s budget gap substantially beyond the $5 billion projected in the Executive Budget.
The New York City Housing Authority faces significant financial strain due to a decline in rent collection rates, resulting in over $450 million in arrears. While one-time state aid could address these immediate shortfalls, it must be conditioned on operational improvements and offset by savings to avoid exacerbating the state's $15 billion to $20 billion structural deficit.
Recommendations related to State Aid to NYC
Any such one-time aid should be conditioned on NYCHA devising and implementing a plan—with policymaker support for necessary steps—to return its rent collection rate to pre-pandemic levels.
Given the State’s massive $15 billion to $20 billion structural deficit, any aid provided should be offset by savings found elsewhere so it does not exacerbate the State’s long-run fiscal instability.
NYCHA should fix its deteriorating buildings through the Rental Assistance Demonstration (RAD) and the Preservation Trust, improve property management, and increase productivity through collective bargaining changes in its labor agreements.
The State also could help NYCHA reduce costs by reforming the Scaffold Law, and it should increase the Trust’s unit cap when needed.
The federal government also can support NYCHA by increasing funding for Tenant Protection Vouchers and providing procurement flexibility.
Key Data
90 percent
— The previous norm for NYCHA's rent collection rate before the pandemic.
65 percent
— The level below which NYCHA's rent collection rate fell during the pandemic.
$450 million
— The amount of accumulated rent arrears currently owed to NYCHA.
$15 billion to $20 billion
— The estimated range of the State's structural deficit.
59,811
— The number of households that requested rent decreases between March 2020 and February 2022.
35 percent
— The portion of occupied units that requested rent decreases between March 2020 and February 2022.
New York City's Department of Education budget reached $36.9 billion in fiscal year 2023, even as K-12 enrollment declined by over 141,000 students between school years 2015-16 and 2021-22. With federal pandemic aid expiring and creating significant fiscal cliffs, the city must manage per-student spending and determine whether to replace one-time federal funds with recurring resources or reduce programs.
Recommendations related to State Aid to NYC
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 fiscal year 2023 budget totaled $36.9 billion as of January 2023.
141,000 students
— Between school years 2015-16 and 2021-22, K-12 DOE enrollment declined by more than 141,000 students.
$37,136
— In fiscal year 2022, the DOE spent $37,136 per K-12 DOE student.
$7.0 billion
— New York City has received $7.0 billion in federal education aid since December 2020.
$13.7 billion
— State aid increases to $13.7 billion by fiscal year 2026.
$556 million
— Federal pandemic aid continues to support ongoing programs that face an estimated fiscal cliff of $556 million in fiscal year 2026.
The New York City Department of Education faces a fiscal cliff as federal pandemic aid expires, necessitating a clear plan on whether to replace these funds with recurring City and State resources or reduce programs. With enrollment declining, the City must evaluate spending per student and prioritize programs to ensure fiscal sustainability while maintaining educational quality.
Recommendations related to State Aid to NYC
The City must identify priority programs funded by expiring federal COVID-19 pandemic aid and be transparent about whether it plans to replace the one-time federal funds with recurring City and State resources or shrink or end the programs.
Key Data
$321 million
— The Office of the State Comptroller estimates this amount as the fiscal cliff for fiscal year 2025.
$556 million
— The Office of the State Comptroller estimates this amount as the fiscal cliff for fiscal year 2026.
$20,281
— The amount of pass-through funding provided to charter schools for State mandated tuition and rental insurance in fiscal year 2022.
The Metropolitan Transportation Authority's financial stabilization plan relies too heavily on New York City taxpayers, who face $500 million in annual costs and a significant portion of an $800 million payroll tax increase. A more balanced approach should include recurring state contributions, productivity improvements, and regular, predictable fare increases to ensure long-term fiscal stability.
Recommendations related to State Aid to NYC
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, as the MTA is a State authority and City taxpayers are already major contributors to State receipts.
The balance of the plan should be appropriately allocated among those in the MTA region rather than placing a disproportionate burden on New York City.
The MTA should resume regular biennial fare increases to maintain price sufficiency and ensure the fiscal stability of the system.
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 to New York City's operating budget under the proposed stabilization plan.
$300 million
— One-time appropriation from the State budget to the MTA.
$2.9 billion
— Potential annual savings identified from operational reforms, such as one-person-train-operation.
$640 million
— Estimated portion of the $800 million Payroll Mobility Tax increase likely to come from City businesses.
5.5 percent
— Planned fare and toll increases supported as part of the biennial adjustment policy.
New York City faces significant fiscal challenges, including a $1 billion cost for migrant services that currently relies on unconfirmed federal and state aid. If this external funding fails to materialize, the city will face increased spending pressure, exacerbating existing budget gaps.
Recommendations related to State Aid to NYC
The federal and State governments should shoulder a significant portion of the costs associated with services provided to migrants.
Key Data
$1 Billion
— New spending included in the November Plan for services provided to migrants, which is intended to be funded by federal and State governments.
New York City faces a precarious fiscal outlook with widening budget gaps, exacerbated by the need to fund $1 billion in services for migrants. The federal and state governments must provide significant financial support for these migrant services to prevent further strain on the city's budget.
Recommendations related to State Aid to NYC
The federal and State governments should shoulder a significant portion of the $1 billion in new spending for services provided to migrants.
Key Data
$1 billion
— New spending for services provided to migrants that the federal and State governments should help fund.
The incoming administration must prioritize core services, implement rigorous performance management, and address fiscal instability through budget savings and collaborative labor agreements. Transparency regarding federal COVID aid and state education funding is essential to ensure these resources effectively improve student outcomes and city services.
Recommendations related to State Aid to NYC
Given the growing influx of state education aid, the administration should ensure New Yorkers can see how much pandemic-related learning loss is reversed and whether these funds are accelerating achievement and reducing disparities.
New York State has enacted several small business recovery programs, including an $800 million grant fund and various tax credits, which risk overlapping with existing federal and proposed city initiatives. To ensure resources are used efficiently, the city should prioritize identifying gaps in current coverage and providing technical assistance to help businesses navigate the complex landscape of available aid rather than creating duplicative programs.
Recommendations related to State Aid to NYC
To maximize impact, City programs should focus on filling gaps left by the federal and State programs, assisting eligible businesses to access programs as needed, and providing additional support for already eligible businesses where the federal and State programs do not provide a reasonable amount of needed support.
It is critically important for the City to identify potential gaps first by determining which businesses are eligible for which existing programs and whether those programs reasonably meet their needs.
As the City adopts its fiscal year 2022 budget and then finalizes program eligibility, it should clearly identify gaps left by the multiple federal and State programs, where federal and State programs do not provide sufficient needed support, and where City technical assistance to leverage those programs would be most valuable.
The City already is supporting small businesses in accessing federal support and should consider whether increasing these efforts may be an efficient use of resources, and whether to expand this to State programs when they begin accepting applications.
Except where additional City funds are required to meet well-justified needs, duplicating federal and State programs diverts resources from efforts that could more effectively support economic recovery and fiscal stability.
Key Data
$377 million
— Initial allocation of State Small Business Credit Initiative (SSBCI) funds to New York State.
$600 million
— Expected total allocation of State Small Business Credit Initiative (SSBCI) funds to New York State.
$935 million
— Total allocation for three New York State small business priority programs.
$800 million
— Total funding for the New York State Small Business Recovery Grant Program (SBRG).
$35 million
— Total cap for the Restaurant Return-to-Work Tax Credit (RTC) Program.
$100 million
— Maximum funding for the New York City Musical and Theatrical Production Tax Credit (TPTC).
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 fails to utilize available federal aid, state education support, and increased tax revenue to stabilize long-term finances, leaving significant budget gaps of roughly $5 billion annually. Instead of implementing structural efficiencies, the plan relies on non-recurring savings and workforce expansion, deferring necessary fiscal adjustments to the next administration.
Recommendations related to State Aid to NYC
The City should be implementing a regular, reasonably sized Program to Eliminate the Gap (PEG); the discipline of regular operational review can help prioritize programs, improve quality, and identify savings.
The City should be budgeting regular deposits into its newly established Rainy Day Fund.
The City should avoid the traditional pattern of increasing City-funded spending during negotiations with the City Council, as this would further exacerbate future problems.
The City should have spread the federal money more evenly over a few years to restructure spending to increase efficiency and preserve services.
Key Data
$15 billion
— The amount of additional federal aid available to the City.
$5 billion
— The estimated annual budget gap in fiscal years 2023 to 2025.
5,000
— The number of additional staff the City plans to add to the workforce.
$1 billion
— The amount of annual labor savings carried in fiscal years 2023 through 2025.
$1.6 billion
— The amount the City reversed its plan to use from the Retiree Health Benefits Trust.
$200 million
— The amount by which the City is increasing its general reserve in fiscal year 2022.
New York City faces a critical opportunity to utilize over $15 billion in new federal and state resources to stabilize its long-term fiscal health while addressing pandemic-related needs. The administration should implement a multi-year plan that prioritizes efficient government services, workforce right-sizing, and the replenishment of financial reserves to avoid future budget gaps.
Recommendations related to State Aid to NYC
The City should use federal aid wisely by spreading it over multiple years, averting unnecessary service cuts, and avoiding the funding of new recurring programs with non-recurring revenues.
To prioritize services and increase efficiency, the City should implement a recurring, mandatory Program to Eliminate the Gap (PEG).
To increase long-run fiscal stability, the City should reduce the number of unfilled vacant headcount in the budget.
The City should phase in employee and retiree contributions to health insurance premiums over three years to reduce recurring labor costs.
To ensure the City is better prepared for the next crisis, it should increase the fiscal year 2022 general reserve to $500 million.
Key Data
$15 billion
— The amount of new federal and state resources available to the City's Executive Budget.
$212 billion
— The total size of the New York State fiscal year 2022 budget.
$7 billion
— The amount of education aid flowing through the State from the American Rescue Plan and the December 2020 stimulus bill.
$6 billion
— The amount of unrestricted American Rescue Plan aid the City is poised to receive.
$2.6 billion
— The amount of the Retiree Health Benefits Trust Fund used by the City in fiscal years 2020 and 2021 that should be replenished.
$500 million
— The recommended annual deposit amount for the City's Rainy Day Fund.
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
New York State’s fiscal year 2021 budget included $8 billion in unspecified cuts to local assistance, creating significant uncertainty for city finances. Since April 2020, the state has been withholding a portion of these local aid payments without providing a clear plan for achieving the necessary savings.
Key Data
$8 billion
— amount of unspecified cuts to local assistance included in New York State’s Enacted Budget for fiscal year 2021
New York City's fiscal year 2021 budget relies on reserves and federal aid to close gaps caused by the pandemic and reduced state support. The city faces significant long-term financial risks, including potential further cuts to state aid and the need for more sustainable, recurring savings strategies.
Recommendations related to State Aid to NYC
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 to offset revenue shortfalls like those from state aid.
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures caused by state aid reductions and other factors; borrowing should be a last resort.
The City should prioritize recurring labor savings as part of its budget balancing efforts to mitigate the impact of reduced state aid.
Key Data
$763 million
— Estimated state aid shortfall for New York City in fiscal year 2021.
$360 million
— Reduction in state education aid to New York City in fiscal year 2021.
$250 million
— Intercepted sales tax revenue from New York City by the state in fiscal year 2021.
$1 billion
— Annual impact of state education aid reductions on New York City's budget in fiscal years 2022 to 2024.
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 fiscal year 2021 executive budget faces significant challenges due to potential cuts in state aid and federal funding, alongside a reliance on non-recurring resources to cover spending. With limited reserves, the city faces projected budget gaps of $5.0 billion in fiscal year 2022, requiring long-term solutions beyond current short-term fixes.
Recommendations related to State Aid to NYC
The City will need to address significant outyear gaps and with fewer reserves.
With just $100 million in the general reserve to hedge against those risks, additional spending cuts may be needed.
Key Data
$4.4 billion
— The amount by which non-City funds are projected to decline in fiscal year 2021, reflecting the absence of expected federal aid and State aid cuts.
$5.0 billion
— The projected budget gap for fiscal year 2022.
$100 million
— The amount currently held in the general reserve to hedge against fiscal risks.
$4.5 billion
— The projected budget gap for fiscal year 2023.
$4.9 billion
— The projected budget gap for fiscal year 2024.
The New York City Housing Authority operates with a $3.2b capital budget, which relies on a mix of funding sources including $450 million from the State. This capital budget is significantly lower than the projected capital needs, with a large portion of the housing portfolio currently at risk of deterioration.
Key Data
$450
— The amount of capital funding provided by the State for NYCHA in CY 2020.
$3.2b
— The total capital budget for NYCHA in CY 2020, which includes funding from the State, City, and Federal government.
The City's fiscal year 2021 preliminary budget avoids new spending programs, but fails to adequately prepare for potential reductions in State aid and other economic risks. To strengthen the City's financial position, officials should prioritize spending restraint and allocate new revenues to reserves rather than increasing expenditures.
Recommendations related to State Aid to NYC
The City Council should follow the Mayor’s lead in holding the line on new spending initiatives to mitigate the risk of potential cuts in State aid.
New revenues should be deposited in the City’s reserves to prepare for potential cuts in State aid.
The City should exercise greater spending restraint to bolster its fiscal position against potential cuts in State aid.
Key Data
6 percent
— Annual city-funded spending growth in fiscal years 2018 and 2019.
4.0 percent
— Projected city-funded spending growth in fiscal year 2020.
1.7 percent
— Projected city-funded spending growth in fiscal year 2021.
0.4 percent
— Fiscal year 2021 savings as a share of city-funded expenditures.
$1.5 billion
— Lower bound of the amount added to the budget between the Preliminary and Adopted Budgets over the last two years.
$2.0 billion
— Upper bound of the amount added to the budget between the Preliminary and Adopted Budgets over the last two years.
New York City Health + Hospitals faces a persistent operating deficit, averaging $3 billion annually between 2015 and 2017, which necessitates a new approach to financial planning and budgeting based on performance benchmarks. The report urges the State to reform its Medicaid supplemental payment programs and commercial insurance policies to more equitably finance indigent care and reduce the reliance on local tax subsidies.
Recommendations related to State Aid to NYC
The City Office of Management and Budget (OMB) and H+H leadership should develop a new approach to financial planning and budgeting that sets multiyear goals for increasing efficiency and revenue based on benchmarks.
Progress toward the benchmarks should be publicly monitored, and H+H leadership should be held accountable, including compensation incentives for meeting performance targets.
The State should 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.
The State should 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.
The State should 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
— The portion of H+H's operating expenses that the average operating deficit represented in fiscal years 2015 to 2017.
$1.1 billion
— The amount the City provides annually for the nonfederal share of most of H+H's supplemental Medicaid payments.
$5 billion
— The amount the State provides annually in supplemental Medicaid payments to hospitals.
$1.7 billion
— The Independent Budget Office estimate for City support to H+H in fiscal year 2019.
$2.3 billion
— The projected City support to H+H in fiscal year 2023.
NYCHA's strategic plan to address its $32 billion capital need faces significant hurdles, including stalled revenue-raising projects and the need for increased cooperation from local, state, and federal partners. Without additional funding and legislative relief, the authority struggles to meet its goals, leaving thousands of units at risk of further deterioration.
Recommendations related to State Aid to NYC
NYCHA’s federal monitor should work with the new Chair to increase funding for federal operating and capital subsidies to support the authority's turnaround efforts.
The federal government should improve the Rental Assistance Demonstration (RAD) program by lifting the cap on conversions, exempting them from the tax-exempt private activity bond cap, or creating dedicated tax credits.
State and local officials should approve legislation authorizing design-build and construction manager-at-risk methods to allow NYCHA to complete capital projects faster and for less money.
NYCHA must implement collective bargaining reforms to modernize work rules and schedules, which are essential for achieving efficient and effective property management.
The City should allocate more of its robust capital budget for affordable housing to NYCHA to accelerate repairs and the ability to complete RAD deals.
Key Data
$31.8 billion
— Total five-year capital needs for NYCHA.
$450 million
— Amount of capital funding appropriated by the State but not yet released to NYCHA.
$23.8 billion
— Total funding NYCHA 2.0 relies on over 10 years to address capital needs.
$101 million
— Amount included in the City’s Adopted Budget for Fiscal Year 2020 for collective bargaining-related costs.
$288 million
— Amount of City funds the 2019 operating budget relies on to avoid a deficit.
$168 million
— Total capital needs for the Fulton Houses development.
New York City faces a persistent housing affordability crisis where 44 percent of renter households pay at least 30 percent of their income on rent, and 22 percent are severely rent-burdened. Because the city's financial resources are insufficient to address these needs and the $32 billion capital requirement for public housing, meaningful solutions require financial support from state and federal partners.
Recommendations related to State Aid to NYC
Any meaningful response to preserve public housing will require willing partners in Albany and Washington.
Addressing the housing needs of severely rent burdened New Yorkers will require willing partners in Albany and Washington.
Key Data
921,000
— Renter households in New York City, or 44 percent of all renters, that pay at least 30 percent of their income in rent.
462,000
— Families and single adults, or 22 percent of households, that are severely rent burdened by paying 50 percent or more of their income in rent.
$32 billion
— Capital need for the New York City Housing Authority to address the poor physical conditions of its public housing units.
The New York City Housing Authority faces a $32 billion capital needs crisis, with 90 percent of its units at risk of deterioration by 2027 without significant intervention. To address this, the authority must transition to an affordable housing steward model, utilizing public-private partnerships, land assets, and improved management to secure necessary funding and preserve housing stock.
Recommendations related to State Aid to NYC
Fully integrate NYCHA into the City’s affordable housing strategy to ensure a more holistic approach to housing needs.
Transition to an affordable housing steward that manages fewer buildings by converting units to Section 8 funding and transferring senior housing to nonprofits.
Tap underutilized land assets to fund repairs and facilitate redevelopment by selling air rights and allowing infill development.
Improve operations and construction management to lower costs by decentralizing property management and utilizing more flexible procurement arrangements with the City and State.
Key Data
$32 billion
— The total capital needs of the New York City Housing Authority over the next five years.
90 percent
— The portion of housing units at risk of deteriorating past the point of cost-effective repair by 2027.
31 percent
— The portion of capital needs covered by funding during the 2007-2011 period.
11 percent
— The portion of capital needs covered by funding during the 2012-2017 period.
39 percent
— The amount by which the authority's operating costs exceed those of other landlords operating rent-stabilized buildings.
$1.5 billion
— The potential revenue from selling 10 percent of the authority's air rights.
New York City's fiscal year 2019 budget includes $530 million in increased spending driven by state actions, including $254 million for the Subway Action Plan and $108 million for Raise the Age implementation. Additionally, the city is backfilling $140 million in reduced state school aid and $30 million in lost state support for the Close to Home juvenile justice program to maintain existing service levels.
Key Data
$530 million
— The amount of increased city spending in the fiscal year 2019 budget in response to state actions.
$254 million
— The cost the city was forced to provide for the Subway Action Plan.
$108 million
— The cost to implement the first phase of Raise the Age, a criminal justice reform required under state law.
$140 million
— The amount of less-than-expected state school aid that the city decided to backfill.
$30 million
— The amount of lost state support for the Close to Home juvenile justice program that the city replaced.
The New York State Fiscal Year 2019 Enacted Budget and prior state policies impose nearly $1 billion in additional operating and capital costs on New York City. To manage these new financial burdens, the City must exercise fiscal restraint while maintaining the flexibility to fund local priorities like the Fair Fares initiative.
Recommendations related to State Aid to NYC
The City will need to exercise restraint in other areas to manage the additional fiscal burdens imposed by the State.
The City’s budget should retain flexibility to address City Council priorities, such as the $212 million Fair Fares initiative.
Key Data
$970 million
— Total anticipated impact of State budget actions on the City's fiscal year 2019 budget.
$418 million
— City's required funding contribution for the Metropolitan Transportation Authority Subway Action Plan.
$121 million
— Shortfall in education funding due to the City's Preliminary Budget forecast exceeding actual State aid.
$200 million
— Estimated annual cost for the State's Raise the Age initiative.
$150 million
— Remaining sales tax revenue to be intercepted by the State in fiscal year 2019 following the STARC bond refunding.
$30.5 million
— Additional City funds needed next year to continue the Close to Home program.
New York State's current system for distributing hospital aid disproportionately disadvantages the city's public health system, leaving it vulnerable to upcoming federal funding cuts. State leaders must reform these inequitable payment formulas and prioritize directing funds to the hospitals with the greatest financial need.
Recommendations related to State Aid to NYC
The State should follow through on the recommendation to convene a workgroup to evaluate revisions to the methodologies.
Reforms to the State’s DSH program should be enacted in the current legislative session to revise the distribution formulas—particularly that for the Indigent Care Pool—to direct DSH payments to the hospitals with the greatest need.
State priorities for distributing DSH payments should be adjusted so they do not leave New York City Health + Hospitals to suffer DSH cuts alone.
The State should make payments promptly; after DSH funds have been earned and cash is available, the State should disburse the funds without delay.
Key Data
$3.6 billion
— Annual amount of DSH payments distributed to hospitals across New York State.
$1.8 billion
— Amount of federal funding New York receives annually for the DSH program.
$724 million
— Loss of federal funding New York’s hospitals would suffer in federal fiscal year 2020 under the latest schedule of DSH cuts.
$1.4 billion
— Annual amount of other supplemental payments the State makes through the UPL, VAPAP, and VBP QIP programs.
73 percent
— Share of Medicaid patients comprising New York City Health + Hospitals' inpatients.
$759 million
— Losses reported by the 11 hospitals of New York City Health + Hospitals from serving the uninsured.
The New York State executive budget proposes increasing school aid to $26.4 billion, exceeding the established school aid cap for the first time. While the proposal aims to direct more funding to high-need districts, the current distribution formulas fail to account for enrollment changes and continue to send aid to wealthy districts, necessitating comprehensive reform of the Foundation Aid formula.
Recommendations related to State Aid to NYC
The State should reform the Foundation Aid formula to address the flaws that distort the total distribution of $17.5 billion in Foundation Aid.
The State should distribute expense-based aid funds through a revised Foundation Aid formula to encourage districts to allocate funds to the highest priority needs.
The State should reform the Foundation Aid formula to ensure the highest needs districts are properly funded without unnecessarily sending aid to the wealthiest districts.
The Governor should limit school aid growth and make reforms to the distribution of aid to better direct it to the neediest districts.
Key Data
$26.4 billion
— Total New York State school aid proposed in the Fiscal Year 2018-2019 Executive Budget.
$17.5 billion
— Total amount of Foundation Aid distributed to school districts.
9.9 percent
— The portion of the calculated Foundation Aid increase that New York City will receive.
$769 million
— The total increase in school aid proposed in the Fiscal Year 2018-2019 Executive Budget.
$651 million
— The increase in formula-based school aid proposed by the Governor.
$338 million
— The increase in Foundation Aid dedicated to school districts.
New York City's Fiscal Year 2019 preliminary budget maintains a cautious approach that fails to address potential fiscal risks from federal tax law changes and pending state actions. The plan lacks progress in building reserves or reforming the capital plan, while spending growth continues to outpace inflation.
The New York City Housing Authority faces a massive capital funding gap, with needs exceeding $25 billion, while relying on limited federal subsidies and inconsistent state and city grants. To address these shortfalls, the authority has increasingly turned to alternative strategies like public-private partnerships and rental voucher conversions to secure necessary funding for building repairs.
Key Data
$377 million
— The amount the City actually contributed in capital grants over the 2012-2016 plan period, exceeding the anticipated $164 million.
$100 million
— The amount appropriated in the Fiscal Year 2016 Adopted Budget by the State for capital projects at NYCHA.
$17 million
— The amount the 2012 Capital Plan anticipated New York State would provide during the plan period.
$164 million
— The amount the 2012 Capital Plan anticipated in City funding for capital projects.
The fiscal year 2017-2018 state budget increased school aid by $1.1 billion, yet failed to reform the distribution formula, resulting in an inequitable allocation that continues to favor wealthier districts over those with higher needs. By prioritizing guaranteed minimum increases for all districts rather than targeting funds based on student poverty and local wealth, the budget exacerbates existing disparities in educational funding.
Recommendations related to State Aid to NYC
The state should reform the Foundation Aid formula to ensure that all students receive the resources necessary to achieve a sound basic education regardless of their district's wealth.
Policymakers must implement comprehensive modifications to the school aid formula to adequately fund education in all districts without excessive state spending.
The state should eliminate wasteful minimum increases for all school districts that exacerbate existing inequities in educational funding.
Key Data
$25.8 billion
— Total school aid authorized in the Enacted State Budget for Fiscal Year 2017-2018.
$1.1 billion
— Increase in school aid over the previous year.
$130 million
— Total amount of 'Additional Increases' provided to 507 of 674 school districts.
$2.8 billion
— Amount of funding that would have been directed toward low-wealth, high-need districts under proposed formula reforms.
$118 million
— Total savings for state taxpayers that would have been achieved under proposed reforms.
$1.9 billion
— Additional funding that would have been driven to low-wealth, high-need districts under proposed reforms.
New York State's Foundation Aid formula for distributing school funding is flawed due to outdated data and arbitrary adjustments, leading to misallocated resources. Reforming this formula would redirect $2.7 billion to needy districts while requiring only $569 million in additional annual state funding.
Recommendations related to State Aid to NYC
A single method should be used that applies a uniform local tax factor and adjusts only for one other factor – the local Medicaid financing burden.
Hold harmless provisions, phase-in percentages, caps, and other adjustments in the current formula should be eliminated.
Increasing the weighting for poverty from 0.65 to 0.75 in the calculation of the PNI incorporated in the formula would more appropriately distribute Foundation Aid.
The current system can and should be improved in order to promote the wisest use of tax dollars by local school boards and administrators; this means promoting use of evidence-based strategies and requiring quantifiable results.
The Foundation Aid formula should be revised to better target school aid to support a “sound basic education” in all districts.
Key Data
$24 billion
— Total state aid provided to local school districts in the current school year.
$3.8 billion
— Additional funding advocates claim is necessary for the Foundation Aid program.
$569 million
— Additional annual state funding required to support a sound basic education under the proposed reformed formula.
$2.7 billion
— Amount of funding that would be redirected to needy districts under the proposed reformed formula.
$645.5 million
— Increase in Foundation Aid for New York City under the proposed formula.
$16.5 billion
— Total Foundation Aid in school year 2016-2017.
New York's requirement that local governments fund a significant portion of Medicaid costs creates an inequitable financial burden on taxpayers in lower-income areas and misaligns incentives for cost control. The state should assume full responsibility for these Medicaid costs over a four-to-five-year period to provide local tax relief and better align fiscal responsibility with state-controlled program administration.
Recommendations related to State Aid to NYC
The State should assume responsibility for the local share liability over a period of four or five years.
Full state financing is the best way to achieve continued cost control in a program fully controlled by the State.
New, statewide revenues will be required to replace the current local share in a way that relieves the disproportionate burden placed on taxpayers in low income counties.
Key Data
$7.1 billion
— Amount New York's counties will pay for Medicaid in state fiscal year 2012.
13 percent
— Portion of total expenditures that New York's counties will pay for Medicaid in state fiscal year 2012.
$6.5 billion
— Amount New York's counties paid for Medicaid in fiscal year 2008.
16 percent
— Portion of total expenditures New York's counties paid for Medicaid in fiscal year 2008.
$4.6 billion
— Total local Medicaid payments made by New York City in 2007.
The Metropolitan Transportation Authority's updated financial plan faces a worsening fiscal outlook due to increased labor costs and reduced state subsidies, resulting in a projected $372 million cash deficit by 2020. While the agency has secured $100 million in insurance proceeds and expects savings from efficiencies and capital financing adjustments, it may require new policy actions or the use of general reserves to avoid significant long-term deficits.
Recommendations related to State Aid to NYC
The MTA should utilize a 1 percent annual general reserve to provide $650 million over the plan period if the funds are not needed for other purposes.
The agency must implement new policy actions to avoid serious red ink, as current measures like unspecified efficiencies and one-time insurance recoveries are insufficient to address the projected 2020 deficit.
Key Data
$271 million
— Total reduction in dedicated tax and State subsidy revenues over the financial plan period.
$704 million
— Amount of previously appropriated capital funding the State Division of the Budget agreed to accelerate to support the MTA capital program.
$100 million
— One-time insurance settlement proceeds from Superstorm Sandy claims used to support operations in 2017.
$116 million
— Unfavorable fiscal impact of the new labor contract and reduced health benefit savings over the plan period.
$650 million
— Potential funds available over the plan period if a 1 percent annual general reserve is not utilized.
$175 million
— Total favorable impact expected from unspecified operating expense efficiencies.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
The State Budget for fiscal year 2016-2017 impacts New York City by withholding $600 million in sales tax revenue, including $200 million annually for debt refinancing. Conversely, the city receives a 5.7% increase in school aid, with $160 million of that funding previously unaccounted for in the city's budget.
Key Data
$600 million
— Amount of City sales tax revenue withheld by the State Budget.
$200 million
— Annual amount of City sales tax revenue withheld related to a debt refinancing for the Sales Tax Asset Receivable Corporation.
5.7%
— Increase in school aid provided by the State Budget.
$160 million
— Portion of the school aid increase that was not previously included in the city’s budget.
The dispute over $600 million in sales tax revenue between New York City and the State should be resolved by using the funds to pay down long-term debt rather than being claimed by either entity. This approach would provide lasting relief to both city and state taxpayers by reducing future debt service obligations.
Recommendations related to State Aid to NYC
The best outcome of this dispute would be to return the contested money to City and State taxpayers in the form of long-term savings.
The resolution of the current controversy should be neither in favor of State’s or City’s claim to the contested $600 million, nor a “splitting of the baby” to give half to each.
The money should be put to a use that yields longer term savings for taxpayers, an appropriate goal of a bond refunding.
This can be achieved by paying off outstanding debt that requires debt service payments over a period longer than three years and closer to the duration of the STARC bonds.
A negotiated division between the City and State should be reached, to give relief to city and state taxpayers over the longer term.
Key Data
$600 million
— Amount of New York City sales tax revenue the Governor’s Executive Budget proposes to divert to the State.
$2.5 billion
— Amount of outstanding Municipal Assistance Corporation (MAC) debt that STARC was created to pay off.
$500 million
— Annual debt service burden the City faced over five years prior to the STARC arrangement.
$170 million
— Annual amount the State guaranteed to repay the debt service on the STARC bonds.
$2.7 billion
— Total amount borrowed in October 2004 to repay the City for MAC debt service, pay off remaining MAC bonds, and cover other costs.
$637 million
— Amount the City borrowed in excess of what was needed to pay off outstanding bonds during the 2014 STARC refunding.
The proposed state budget shifts over $2.3 billion in expenses to New York City by transferring CUNY senior college costs and rescinding the state's takeover of Medicaid growth payments. Additionally, the budget plans to divert $600 million in local sales tax revenue from the city to the state, creating a significant and inequitable financial burden on the municipality.
Recommendations related to State Aid to NYC
The state should reject the proposal to shift CUNY senior college costs and Medicaid growth payments to New York City, as this shifts more than $2.3 billion in expenses from the State to New York City over three years.
The state should reject the proposal to shift $600 million in sales tax revenue from the City to the State through the Sales Tax Asset Receivable Corporation.
State aid should give priority to school districts with the greatest need and fewest resources rather than providing the wealthiest decile of districts with a larger percentage increase in aid.
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.
Key Data
$2.3 billion
— Total expenses shifted from the State to New York City over three years due to CUNY and Medicaid proposals.
$600 million
— Sales tax revenue shifted from the City to the State over three years through the Sales Tax Asset Receivable Corporation.
$991 million
— Increase in school aid on a school year basis.
$24.2 billion
— Total school aid amount after a 4.3 percent increase.
New York State's recent legislative package adds $1.5 billion in annual obligations, including a property tax rebate program that excludes New York City homeowners and relies on optimistic budget surplus projections. These new expenditures exacerbate existing fiscal gaps, which are projected to reach $4.2 billion by fiscal year 2018-2019, necessitating future cost-saving measures to maintain financial stability.
Recommendations related to State Aid to NYC
Lawmakers must now be prepared to enact cost-saving measures to produce the “surpluses” they just spent.
Key Data
$1.5 billion
— New state obligations added annually by the legislative package.
$1.3 billion
— Annual cost of the new property tax relief rebate program when fully implemented.
$4.2 billion
— Projected out-year budget gap in fiscal year 2018-2019.
$250 million
— Increase in aid to nonpublic schools.
$2.0 billion
— Projected out-year budget gap for the upcoming year.
$1.6 billion
— Projected state financial plan surpluses in fiscal year 2019.
The Metropolitan Transportation Authority requires a sustainable funding model that balances fare revenue, motorist fees, and tax subsidies to cover its $14 billion annual operating costs. Establishing a clear framework where users, motorists, and government subsidies each contribute a defined percentage of costs is essential to addressing projected multi-billion dollar deficits.
Recommendations related to State Aid to NYC
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.
$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 governments from general funds.
$2.1 billion
— Unfunded deficit projected for 2018.
The fiscal year 2016 state budget increased annual formula-based school aid by $1.3 billion, yet this funding was not targeted to the neediest districts and instead perpetuated spending disparities by favoring wealthier areas. The state failed to address systemic issues in aid distribution, including hold harmless provisions and reimbursement formulas for transportation and construction that misdirect resources.
Recommendations related to State Aid to NYC
The legislature should address long-standing problems with the distribution of school aid, such as hold harmless provisions.
The state should reform generous reimbursements for school transportation and construction expenses that misdirect aid.
Policymakers should address fundamental issues with the aid formulas in the coming year.
Key Data
$1.3 billion
— The amount by which school aid grew in the fiscal year 2016 state budget, exceeding the statutory growth cap.
$603 million
— The amount of funding steered to wealthier districts through restorations to the Gap Elimination Adjustment.
$75 million
— The amount allocated for grants to persistently failing schools in the adopted budget.
$30 million
— The amount of bullet aid to be allocated by resolutions approved in the Senate and the Assembly.
$8 million
— The total amount in line item grants for specific school districts.
$1.5 million
— The specific amount of line item grant funding allocated to New York City.
The fiscal year 2015 budget for New York City incorporates $500 million in new state education aid to expand prekindergarten and after-school programs. This budget reflects a 2 percent increase over the previous year, driven largely by labor costs and new service initiatives.
Key Data
$500 million
— New State education aid used to expand prekindergarten and after school programs in the fiscal year 2015 budget.
New York City's budget faces structural deficits driven by escalating costs for state-mandated items like Medicaid and pensions, which require state-level action to reform. To address these gaps, the city has relied on temporary measures and funding shifts, including transferring costs to state and federal sources.
Key Data
$6.3 billion
— Annual cost of Medicaid payments, which are mandated by the State.
$8.0 billion
— Annual cost of pension contributions, for which changes require State approval.
$134.4 million
— Funding shifts in fiscal year 2013 consisting of transferring costs to the state or federal government.
$186.3 million
— Funding shifts in fiscal year 2014 consisting of transferring costs to the state or federal government.
New York City contributes approximately 45 percent of state revenue payments while receiving 40 percent of state-funded expenditures. This fiscal imbalance, particularly regarding Medicaid and other local assistance, highlights the complex regional distribution of state resources and the ongoing debate over what constitutes a fair share of state funding.
Key Data
45%
— New York City's share of state revenue payments.
40%
— New York City's share of state-funded expenditures in fiscal year 2010.
62%
— Share of state-funded Medicaid expenditures that went to New York City in fiscal year 2010.
$4.1 billion to $6.1 billion
— Estimated amount New York City would have received in additional state-funds expenditures if its share matched its share of state-funds revenues.
$10 billion
— Amount New York City would 'gain' in Medicaid expenditures if all federal funds were included in the analysis.
New York City faces a budget gap that relies on $600 million in state aid, and if that funding is not restored, the city should avoid depleting its retiree health insurance trust fund to cover the shortfall. Instead, the city should implement structural reforms to retiree health benefits, such as eliminating Medicare Part B reimbursements and requiring premium sharing, to generate recurring savings.
Recommendations related to State Aid to NYC
The City should protect the retiree health insurance trust fund from any further drawdowns to avoid relying on short-term budget relief.
The City should eliminate reimbursement of Medicare Part B premiums to generate savings of $240 million in the current year that can help close the budget gap.
The City should pursue general reform of retiree health insurance by increasing vesting requirements and instituting premium sharing to reduce the need for additional service cuts if State aid is not restored.
Key Data
$600 million
— Amount of State action required to close the budget gap for fiscal year 2012.
$1.2 billion
— Amount the City is planning to withdraw from the retiree health insurance trust fund for general budget relief.
$883 million
— Cost of retiree health insurance in 2005.
$1.5 billion
— Cost of retiree health insurance in the current year.
$2.2 billion
— Projected cost of retiree health insurance by 2015.
$70 billion
— Unfunded accrued liability for retiree health benefits.
New York City faces significant budget deficits exacerbated by anticipated reductions in state aid, necessitating a strategic shift away from repeated agency service cuts. Instead of targeting education and social services, the city should pursue structural savings by reforming pension fund contributions and employee health insurance premiums.
Recommendations related to State Aid to NYC
The City should identify and approve ways to reduce spending for pension fund contributions and health insurance premiums for employees and retirees to avoid substantial new cuts in agency budgets.
City leaders should pursue new initiatives to reduce the “all other” budget category, which consists largely of pension fund contributions and health insurance premiums.
Unions must be willing to accept changes in collective bargaining over health benefits to help achieve necessary budget savings.
The City must garner wide support to push the State Legislature to authorize changes in future pension benefits.
Key Data
$3.4 billion
— Total value of budget balancing actions (PEGs) proposed in the last two fiscal years.
$2.0 billion
— Total amount of agency expenditure reductions achieved from the proposed budget balancing actions.
$593 million
— Amount of revenue-raising measures identified in the City's PEG documents.
$2.4 billion
— Projected deficit for New York City in the next fiscal year.
274,061
— Number of full-time city employees at the end of fiscal year 2010.
New York City is relying heavily on temporary funding shifts, including federal and state grants, to close a $585 million budget gap in fiscal year 2011 rather than implementing structural expenditure cuts. These one-time revenue sources, which include $51 million in additional state aid, are largely non-recurring and leave the city facing a much tighter expenditure squeeze in fiscal year 2012.
Recommendations related to State Aid to NYC
The city must pursue reforms to reduce employee health insurance or pension costs to avoid relying on harmful service cuts as efficiency savings are exhausted.
Key Data
$51 million
— Additional state aid used to sustain 4,000 teacher positions until fiscal year 2012.
$10.6 million
— One-time revenues from the state for Social Services used as a funding shift.
$3.7 million
— State funds allocated for transportation projects.
$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).
New York City's budget relies on $11.9 billion in state aid, yet the city's financial plan unrealistically anticipates this funding will grow to over $12.3 billion despite the state facing a $6.7 billion budget gap. The city must develop a realistic contingency plan for inevitable state aid reductions rather than relying on an advocacy-focused document that assumes massive job losses and service cuts.
Recommendations related to State Aid to NYC
The City needs to develop a realistic plan for how to deal with inevitable cuts in State aid rather than relying on an advocacy-focused contingency plan.
The Mayor should fight hard for more State aid while simultaneously preparing for the likelihood of reduced funding.
Key Data
$11.9 billion
— Amount of aid the City expects from the State in the current fiscal year.
$12.3 billion
— Amount of State aid the Mayor's plan anticipates the City will receive next year.
$6.7 billion
— Size of the budget gap currently faced by the State.
$1.3 billion
— Estimated loss in aid to the City in fiscal year 2011 according to the Mayor's contingency plan.
19,000
— Number of jobs the contingency plan anticipates losing due to the reduction in State aid.
The MTA faces significant financial deficits and capital investment needs, necessitating a fare increase to maintain operations and infrastructure. Future fare adjustments should be tied to the actual cost of a ride rather than inflation to incentivize efficiency and provide transparency during labor negotiations.
Recommendations related to State Aid to NYC
Future fare increases should be linked to the cost of a ride rather than inflation, as this approach allows for the possibility that increased efficiency and new technology could keep fare increases below inflation.
Key Data
$3.1 billion
— The MTA's projected deficit in 2007.
$4 billion
— The MTA's projected operating deficit for the following year.
$4.3 billion
— The state's projected funding gap in the coming fiscal year.
New York State's fiscal policies, including inequitable school aid distribution and high Medicaid mandates, place an excessive tax burden on local governments. To address these issues, the state should reform school aid programs to better support poorer districts and reduce state-mandated costs that drive up local taxes.
Recommendations related to State Aid to NYC
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.
Lower Medicaid expenditures by eliminating long-term care eligibility loopholes that extend benefits to middle-class residents.
Key Data
$3.4 billion
— Annual appropriations for the School Tax Relief (STAR) program in the current fiscal year.
51 percent
— Proportion of non-federal revenue New York State provides to its local school districts.
28 percent
— Amount more that wealthiest districts receive in STAR aid per pupil compared to the poorest districts.
$582 million
— Annual appropriations for the School Tax Relief (STAR) program in 1999.
New York City faced an $8.8 billion budget gap for fiscal year 2004, which it addressed primarily through tax increases and shifting costs to other levels of government rather than service cuts. The city sought nearly $500 million in intergovernmental aid, though state officials did not include this assistance in their executive budget proposals.
Key Data
$500 million
— The amount of intergovernmental aid the City is seeking to help close the fiscal year 2004 budget gap.
$252 million
— The amount of revenue the City expects to receive from a menu of State actions to help close the fiscal year 2004 budget gap.
$105,064,000
— The amount of agency savings achieved through a funding shift to State government.
New York City faces a significant budget gap that cannot be solved by relying on state or federal aid, as the state is also experiencing its own fiscal crisis. Instead, the city should focus on measures that do not cost the state money, such as lifting legal mandates, reauthorizing a commuter tax, and implementing Medicaid cost controls.
Recommendations related to State Aid to NYC
The City should seek assistance from the State through measures that do not cost the State money, such as lifting legal mandates.
The City should pursue re-authorizing a commuter tax to help close the budget gap.
The City should work with the State to implement Medicaid cost controls that benefit both the State and City.
The City should focus on implementing expenditure reductions and revenue enhancements with recurring value rather than relying on borrowing to close the budget gap.
The City should seek federal aid vigorously but not count on it, as most federal funds are committed to specific projects or recovery efforts.
Key Data
$62 billion
— The size of the State budget, excluding federal aid.
60 percent
— The portion of the State budget that represents aid to local governments.
$278 million
— The aid increase New York City anticipated in fiscal year 1991-92.
$76 million
— The actual aid cut New York City received in fiscal year 1991-92.
$198 million
— The aid cut New York City anticipated in fiscal year 1995-96.
$351 million
— The actual aid cut New York City received in fiscal year 1995-96.
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