As NYC cuts spending on migrants, Hochul backs a boost in state aid

A boost in tax revenue and support from Gov. Kathy Hochul takes some despair out of New York City’s budget projections.

Gov. Kathy Hochul announced $2.4 billion to pay for costs related to the influx of asylum-seekers in New York City.

Gov. Kathy Hochul announced $2.4 billion to pay for costs related to the influx of asylum-seekers in New York City. Mike Groll/Office of Governor Kathy Hochul

After months of warning that the influx of asylum-seekers to New York City will endlessly drain city coffers and necessitate ongoing rounds of citywide budget cuts, Mayor Eric Adams painted a sunnier picture of the city's budget on Tuesday – an outlook that brightened a little further as Gov. Kathy Hochul backed an increase in state funding to help pay for migrant-related costs.

Hochul and Adams each unveiled their respective budget proposals for fiscal year 2025 on Tuesday. The state’s fiscal year starts on April 1, 2024 and ends on March 30, 2025. The city’s fiscal year 2025 starts on July 1, 2024 and ends on June 30, 2025. 

Just two months ago, the city projected a $7.1 billion budget gap in fiscal year 2025 – notably higher than the city Independent Budget Office’s projected gap of $1.8 billion. On Tuesday, though, Adams proposed a preliminary budget that fully closes the gap. 

The city’s spending on shelter and other services for asylum-seekers over the last 18 months has widened existing budget gaps, and the Adams administration has pointed to those costs as the impetus for multiple rounds of citywide budget cuts, also referred to as Programs to Eliminate the Gap. All city agencies, with the exception of the New York City Police Department, Fire Department and Department of Sanitation, were set to undergo a round of 5% cuts as part of this year’s budget. In the days leading up to his preliminary budget address, however, Adams reversed some specific cuts to agencies, citing higher than expected tax revenue estimates, cuts to spending on asylum-seekers, and overall “strong fiscal management.” 

Under the mayor’s preliminary budget for fiscal year 2025 announced on Tuesday, additional agencies will avert the full planned budget cuts this month, and all agencies could avoid another round of 5% cuts planned for April given sufficient state aid, Adams said. 

That’s possible, City Hall said, thanks to higher than expected tax revenues, additional aid from the state and actions the city has taken to whittle down its spending on shelter and other services for migrants. Rather than spending a projected $12.3 billion on the migrant crisis from fiscal year 2023 to fiscal year 2025, the city now expects to spend $10.6 billion.

Details on how exactly the city is achieving a roughly 20% reduction in spending on migrant services were sparse on Tuesday, but Adams broadly described efforts to renegotiate rates with providers, and transition some of the larger and more expensive Humanitarian Emergency Response and Relief Centers to a nonprofit shelter model. The city has also said that its controversial policies limiting how long asylum-seeking individuals and families can stay in shelter before they have to move out and reapply have resulted in more than 60% of asylum-seekers who have come through the city’s care leaving shelters.

Earlier in the day, Adams praised Hochul’s commitment in her budget for migrant services, though he said they’re still reviewing the details of her $2.4 billion proposed allocation – a move Hochul characterized as necessary because the influx of asylum-seekers shows no signs of stopping.

While Adams championed the city’s management of the crisis, he also continued to call for federal action to help manage and pay for the influx of asylum-seekers to New York City since last spring. “We still need help, we’re not out of the woods,” he said in a press briefing on Tuesday. “We’re still getting thousands of people per week.” More than 170,000 migrants have come through New York City since spring 2022, and more than 68,000 of them are still in the city’s care, according to the mayor’s office. 

Hochul is also looking for federal assistance. The governor announced plans to travel to Washington D.C. this Friday to advocate for immigration reform and additional aid to New York – a quest Adams has repeatedly made to little avail, and which he continues to call on other elected officials to make. 

The city projected roughly $3 billion in additional tax revenue since the last budget update in November, leading some critics to allege that the administration was low-balling revenue estimates and attempting to draw more attention from the federal government. Adams and New York City Budget Director Jacques Jiha both batted back that claim on Tuesday.

The city is routinely more conservative than the City Council on tax revenue estimates, but City Council Member Justin Brannan described some of the mayor’s reversals of his earlier planned cuts last week as “doing a budget dance with himself.” “I know I spent six months running for office with people yelling at me saying we’re firing cops because of the migrants,” Brannan said. “That was never true, and it’s really not true now. So that narrative is just not helpful.” 

Hochul backs a funding boost to New York City

After largely ignoring the asylum-seeker crisis in her State of the State address last week, Hochul covered the subject in a little more depth in her own budget address on Tuesday, proposing an increase from what the state has already committed in the current fiscal year. Hochul’s fiscal year 2025 executive budget would match the $1.9 billion committed for the current fiscal year and add an additional $500 million from state budget reserves to pay for one-time costs related to the migrant crisis. In total, that’s $1.9 billion in fiscal year 2024 and $2.4 billion in fiscal year 2025. 

The extra $500 million from reserves was a decision made somewhat late in the game, Hochul confirmed on Tuesday. As late as Tuesday morning, several outlets reported that there would be closer to $1.9 billion for migrants again in the next fiscal year, based on conversations with the state budget director. “I wanted to make sure that we at least let the city know that there will not be cuts,” Hochul said, when asked by City & State about that earlier reporting and when the decision was made to add on another $500 million. Hochul said that she is cautious about touching reserves, but she made the decision to set aside the additional $500 million for the migrant crisis after receiving additional information about interest earnings and seeing that reserves were set to be above the state’s goal to maintain reserves equal to 15% of the operating budget.

“Until we see a change in federal policy that slows the flow of new arrivals, we’re going to be swimming against the tide,” Hochul said on Tuesday, explaining the impetus for dedicating additional funds in the coming year. “We’re doing this not just because it’s the right thing to do for the migrants and for the city of New York. We also know that companies won’t do business in New York if there are thousands of people sleeping on the streets, or the quality of life is dramatically impacted because the city is forced to cut essential services.”

The state did not detail a cost breakdown of what that $2.4 billion would be spent on, but a briefing book describes it as including humanitarian aid to New York City to help cover the costs of providing shelter and services to asylum-seekers, including costs at large shelters like the ones at Randall’s Island and Floyd Bennett Field, funding for health and legal services, and spending on deploying National Guard troops to help in the city’s response.

Though Hochul’s executive budget would provide a boost in funding to the city on migrant-related costs – assuming the Legislature also backs it – there is no sign that the governor will be taking up any major new policy proposals or calling for other parts of the state to play a greater role in sheltering asylum-seekers.

Despite referring to “one-time costs” on migrant services, Hochul acknowledged that the city could be in a similar position next year. “Getting them to work helps solve the other crisis I have of a shortage of workers. Hopefully the border gets resolved better,” Hochul said, describing her “laser focus” on getting asylum-seekers into jobs and out of shelters. “But I’m not pie in the sky. I know that we could be in the same place a year from now. I’m not taking my reserves below 15%, so interest rates will continue to grow. If I have to, I’ll use it for an emergency again, but that is a last resort for me.”