Days before announcing a round of steep budget cuts across all New York City agencies last week, Mayor Eric Adams described the cuts as “probably one of the most painful exercises” he’s been through in his time in government.
The 5% across-the-board cuts detailed last week are the latest round of savings initiatives – or so-called “Programs to Eliminate the Gap” – that Adams has implemented while in office. The steep costs of providing shelter and services to tens of thousands of asylum-seekers, Adams has said, will necessitate another two rounds of 5% cuts by next spring if the state and federal government don’t step in to pay for more of those costs.
Following through on that promise, days after releasing agencies’ plans to slash 5% from their budgets, Budget Director Jacques Jiha directed all but a few city agencies to start planning for another 5% cut in January with the release of the fiscal year 2025 preliminary budget.
The administration’s budget cuts have been met with sharp scrutiny by some advocates and lawmakers who argue that deep across-the-board cuts aren’t how the city should contend with budget gaps in the coming years. City Council Speaker Adrienne Adams and Finance Committee Chair Justin Brannan, for example, have suggested that the city could find some savings by shifting more of its asylum-seeker contracts from private companies to nonprofits, and by working with Albany to identify additional revenue. “It is also essential that the city explores new revenues that can support our budget without impacting working-class New Yorkers, which in some cases will require authorization from Albany for the city to reduce ineffective tax breaks and have revenue options to preserve our fiscal health,” the two said in a joint statement last week.
City & State reached out to several experts to explain the state of the city’s budget crisis and explore how the city should be dealing with it. Several people weighed in, including James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at The New School; Martha Stark, former finance commissioner of New York City and a professor of public service at New York University; and Ana Champeny, vice president for research at the Citizens Budget Commission.
Responses have been edited for length and clarity.
New York City agencies are making 5% budget cuts under the Adams administration’s Program to Eliminate the Gap this month, and the city has just instructed most agencies to make additional 5% cuts in January. Are these cuts necessary? Why or why not?
Ana Champeny: There should be no question that the city needs to restrain spending. It is facing massive budget gaps; the fiscal year 2025 gap is reported to be $7.1 billion, but CBC’s analysis shows it could be as high as $10.6 billion after including ongoing programs that will fall off fiscal cliffs and those that are under budgeted.
The simple truth is that city-funded spending increased rapidly to unsustainable levels; even after this PEG round, between fiscal years 2017 and 2024, city-funded spending will have increased $21 billion dollars, a 35% jump. In fact, accounting for inflation, fiscal year 2024 spending is still 10% higher than fiscal year 2017.
The just-announced PEG actions include some savings that will directly impact services, but much of the savings will not reduce services, such as eliminating vacant positions, re-estimating agency costs, and identifying additional state and federal resources.
With substantial budget gaps looming, the city needs to rein in spending. There is a clear need for a citywide zero-in on program impact and efficiency to prioritize services that matter most and identify opportunities to reduce costs without cutting critical services.
Martha Stark: A budget is a plan! When what you hoped for in your original budget plan changes, it is essential that you develop an updated plan sooner rather than later to address those changes. The mayor has asked agencies to propose additional changes – new revenue or reductions – in case they are needed. New York City agencies are not making the budget cuts immediately – they are making suggestions per the budget director’s new request.
That is responsible since the city’s budget must be balanced each year. I believe the hope is that the state and federal government will do its part to help bear some of the unprecedented costs, but if not, the mayor and the agencies will have a plan for what will need to be done to address any shortfall. And, it is an invitation to those who think the cuts are untenable to urge the federal and state governments to support the city’s efforts to provide support for migrants.
To what extent are the city’s outyear budget gaps related to the costs of providing shelter and services for people seeking asylum?
James Parrott: The asylum-seeker influx is a hugely vexing federal problem that New York City has been forced to shoulder – but it is not the sole factor driving the city’s outyear budget gaps.
Ana Champeny: The costs for supporting migrants and people seeking asylum are a significant factor in widening the gaps, and the city is right to call on the federal government to pay its fair share. But they are not the sole cause. During COVID, city-funded spending increased by $11.3 billion between fiscal year 2020 and fiscal year 2024, supported in large part by a temporary influx of tax revenue due to strong Wall Street performance. But as ongoing programs were expanded with temporary money and labor contracts that granted reasonable raises were signed without productivity enhancements or another way to pay for them, budget gaps increased.
Martha Stark: It is important to remember that the city started the fiscal year projecting a $5 billion-plus budget gap for the next fiscal year. Since adoption that gap has grown to $7 billion-plus. Based on information from the state comptroller’s office, the gaps are driven by costs of providing sanctuary for migrants at primarily these agencies – Department of Homeless Services/Department of Social Services, New York City Health + Hospitals, New York City Emergency Management, and the Department of Housing Preservation and Development. Based on information from the New York City November Plan budget documents, the cost of providing sanctuary to migrants represents $4.8 billion of the $3.2 billion in changes to expenses for the next fiscal year.
Do the across-the-board cuts that the Adams administration has identified make sense? Are there alternative ways the city should be identifying savings or seeking revenue-raising options?
Martha Stark: There are few easy answers. The city’s taxes are high. Expenses are high. Needs are high and growing. The public has questions about whether the agencies are operating efficiently. The key is setting priorities that balance those needs and ensuring that all levels of government share in costs – the city should not have to bear the burdens alone.
Ana Champeny: The focus should be on prioritizing high-impact services, increasing efficiency, and reducing or eliminating less-effective programs. City leaders and managers should make concerted efforts to reduce costs by working with labor to improve efficiency while sparing critical services. Productivity efforts, such as civilianization in the uniformed agencies (where uniformed staff are shifted out of administrative roles that could be filled by civilian staff) can reduce costs. Consolidating welfare benefit funds, for example, could save $150 million without cutting actual benefits. In addition, there are always opportunities to look beyond spreadsheets and work with agency staff at all levels to streamline processes and leverage technology.
James Parrott: It makes sense for City Hall to figure out how to bring down migrant shelter and related costs, but the state has a fundamental responsibility in our federal system to assist the city. The state has adequate reserves that make possible a greater degree of state aid for that purpose. Many of the mayor’s recently proposed budget cuts to child care, schools, libraries and workforce programs will jeopardize the city’s lagging and highly uneven economic recovery. An equitable and more complete New York City economic recovery is equally vital for the state.