The state’s top money manager has sounded the alarm over New York City’s dire financial situation, arguing in a new op-ed that the Big Apple is “teetering on a fiscal cliff” due to the escalating migrant crisis and years of increased city spending.
State Comptroller Thomas DiNapoli warned this week that the fiscal year 2024-2025 budget gap for the city could reach as high as $13.8 billion unless Mayor Eric Adams quickly implements cuts to city programs and curbs new spending.
“As public and private watchdogs over New York City’s fiscal health, our mandate is to alert the public when the city faces an alarming financial situation,” DiNapoli wrote in the Crain’s op-ed co-authored by the Citizens Budget Commission’s Andrew Rein.
“That moment has arrived: Major looming budget gaps will have serious consequences for New Yorkers, unless action is taken now.”
The billions the city will spend to house the tens of thousands of asylum seekers pouring in will be a “significant contributor” to that fiscal shortfall — accounting for an estimated 42% of the budget gap, the Empire State’s chief fiscal officer said.
“Many New Yorkers already sense the stress given how the staggering influx of asylum seekers and migrants has strained social services and the budget. The city estimates these costs may grow next year to equal what it spends to run the sanitation and parks departments combined,” DiNapoli said.
The mayor has already estimated the city could fork over up to $12 billion on the asylum seeker crisis by July 2025.
The budget gap’s major underlying cause, however, will come from the years of spending on programs that were either only funded for a short time or not at all, the comptroller said.
“City-funded spending has increased more than 50% over the past decade while recurring revenues have not kept pace,” DiNapoli wrote.
“We are now facing what we call a ‘fiscal cliff’ because when funds dry up, the budget gap expands or programs must be cut.”
He acknowledged Hizzoner’s prior warnings that all city agencies may have to slash 15% from their budgets in response to the ever-growing costs of the migrant crisis.
Adams had given all departments until this month to cut 5% from their budgets — and told them to brace for an additional two rounds in the future.
“Knowing a reckoning is approaching, Mayor Eric Adams has rightly called for immediate action to stabilize the budget,” DiNapoli said, adding that any cuts “must be done right to minimize impact on critical services.”
He called on the city to end programs that were only meant to be temporary and consolidate duplicate ones, as well as manage city headcount “smartly.”
City Hall said DiNapoli’s warning was spot on. “As the op-ed says, ‘Hard choices must be made, with the needs of New Yorkers — today and in the future — at the center.’ Mayor Adams has been up front with New Yorkers about the fiscal challenges the city is facing — largely but not only due to the migrant crisis, which will cost $12 billion over three fiscal years with the support we need from the state and federal government,” an Adams spokesperson said..
“That’s why he directed all city agencies to find efficiencies and reduce city-funded spending by 5 percent in the upcoming November Plan and again in both the preliminary and executive budgets, minimizing disruption to services and without layoffs. The op-ed praised Mayor Adams for making these hard choices, and we will continue to do so with New Yorkers at the center,” the mayor rep added.
Separately, the comptroller launched a data tracker on Thursday to monitor spending and staffing data trends for the Big Apple’s more than 40 agencies in a bid to help identify areas of potential risks to the budget.
He noted in particular how the Department of Education, which accounts for 36% of citywide expenditures, was facing several issues — including low enrollment and the state-enforced class size mandate.
Public school enrollment fell nearly 9.2% between 2019 and this school year, with some projections expecting it to decline further.
DiNapoli pointed to how most education aid is calculated on a per-pupil basis, which would mean the city might have to adjust its funding support expectations from the feds and state.
Schools Chancellor David Banks acknowledged earlier this week that mergers could be on the table given low enrollments at many public schools.
“It’s hard to figure out how people can run a full comprehensive high school with 80 kids as your entire school. And we have schools with those numbers,” Banks said in a Chalkbeat interview.
“The notion of some level of consolidation is something that I think we would be irresponsible if we were not looking at that, particularly in light of the fiscal challenges that we’re having,” he continued. “So we’re looking at it — nothing definitive yet.”
Another watchdog group, the city Independent Budget Office, warned back in May that projected budget gaps would widen in the coming years as federal pandemic funds dry up and costs increase more than revenues.
“IBO reported on fiscal risks to New York City, addressing some of the issues that the Citizens Budget Commission and Comptroller DiNapoli cited in their editorial. IBO will continue this reporting once the Administration’s November plan is issued,” said IBO Director Louisa Chafee.
The looming budget crisis is something the City Council also will have to tackle, the head of its finance committee said.
“The Council has been sounding the alarm about this for quite a while. We’re talking about permanent programs that were created with temporary money,” said Councilman Justin Brannan (D-Brooklyn).
“The need for crucial programs like 3K, Summer Rising, community schools, preschool special ed, and academic recovery will not end when federal COVID relief funds finally expire in October 2024. It is something we will continue to examine this month,” added Brannan.
