Mayor Eric Adams’ doomsday outcry about the impact of the increasing numbers of migrants coming to New York City, that “this issue will destroy New York City,” brought national attention to the unforeseen plight of the migrants and their effect upon the City of New York.
I winced when I saw the Mayor’s over-the-top rhetoric; he didn’t really mean the City would be destroyed, did he? Was this a panicked over-reaction ? Or a purposeful cry of alarm? If one cooled off the Mayor’s rhetoric into some practical understanding, I think he meant sheltering the migrants would overwhelm the City in terms of space and money in a not-too-distant future.
WILL THE COST OF SHELTERING MIGRANTS TRULY BANKRUPT THE CITY? WHAT’S BEING DONE?
In August, the Mayor had said sheltering the migrants could cost the City $12 billion over three years and $6 billion in next year’s budget.
The Citizens Budget Commission (CBC) confirmed the Mayor’s numbers and added more context, saying next year’s budget, FY 2025, would have a deficit of $ 13.8 billion (and pointed out that more than half the deficit had nothing to do with the migrants). A deficit of that size is more than 11 % of the City’s $112.7 billion current year budget. If the increase in migrants keeps pace, the Mayor might be right that sooner or later the City government’s capacity to cope could get overwhelmed.
The Mayor’s comments provoked Federal reaction. Less than two weeks after those remarks, the Biden administration announced it would allow nearly a half-million more Venezuelans in the United States to get work permits, which the Mayor and the Governor requested.
How many Venezuelans eligible for the new work permits (TPS, or Temporary Protected Status) are actually among the 60,000 migrants in the City shelters is a matter of some controversy, with estimates ranging from 15,000 to 39,000. How quickly could Venezuelans getting work and leaving the shelter system bring relief to the City’s finances is unknown, but a major impact quickly is unlikely.
Increasing national turmoil about the migrants has caused the Biden Administration to announce more aggressive actions to control the situation at the border, including building more of the border wall, deporting newly entering Venezuelans, and expediting administrative immigrant removals. But to what extent these national actions will slow the flow of migrants to New York City and elsewhere across the nation is also unknown.
The New York City government is taking its own more aggressive actions to cope with the challenges it faces from the flow of migrants. Two days after saying the impact of the migrants could destroy the City, the Mayor ordered City agencies to cut 15% of their budgets over the year, in intervals of 5% every three months in his Program to Eliminate the Gap (PEG).
On October 3rd, the City’s lawyers sought to modify the consent decree “right to shelter” under which the City operates, to allow the City to deny shelter to single adults pursuant to criteria involving an overflow of shelter capacity. Governor Hochul supported the City’s request on October 11th. Nonetheless, about ¾ of the migrants being cared for now are in families, not single adults, and the City has indicated it has no plan to deny shelter to families at this time.
It will take some time for the Adams’ administration’s request to modify the right to shelter to work its way through New York’s court system. Whoever loses at the lower Court level will appeal, and the litigation will work its way to New York’s highest Court, the Court of Appeals. Even if the Court of Appeals ultimately agreed with the Adams administration and curbed new entries of single adults to the shelter system, that might have little impact on how much the City might need to spend next year for migrants who have already arrived and are in care.
CAN THE STATE HELP MANAGE THE SITUATION?
Governor Hochul announced on October 4th that the State Labor Department had identified 18,000 jobs with employers willing to hire persons with legal work status in the State. Over the past two months the Governor has indicated that she might commit another $1 billion in aid to the City next year to help cover the costs of sheltering the migrants. The Governor has also contracted with legal service providers to aid the migrants with getting work permits and helping with asylum claims.
The State, however, has its own financial problems. The State’s enacted Financial Plan projected next year’s budget deficit would be $9 billion, meaning the State’s capacity to help is limited. The State still has major financial Reserves, but it wants to hold on to them to provide help with increased deficits projected beyond 2025. The State might be hard-pressed to give the City much more than the $1 billion next year that the Governor indicated.
State Comptroller Thomas DiNapoli’s analysis of the City budget, released in August, reported the risks to the City budget for FY’2025 could bring the deficit to almost $10 billion. The Comptroller’s assessment projected the number of migrants in the shelter system would level off in the current fiscal year, and City revenues would improve about $1 billion over the City’s projections for next year. The Comptroller’s report acknowledged but did not analyze the Mayor’s August forecast that sheltering migrants would cost $6 billion in next year’s budget, or the CBC’s assessment that the deficit would reach $13.8 billion in FY’ 2025.
The State Comptroller’s Office, in a follow-up report on the Program to Eliminate the Gap, expressed concern about the City’s budget cuts because so many expenses are obligatory, like interest on the debt, pensions, Medicaid, public assistance, and other services. As a result, the Office urged the City to be fully transparent about what it was doing to cut the budget because of the potential impact on important services like education and public safety.
The City has been put in an incredibly challenging situation because so many actions that could bring relief to its reeling future deficits are beyond its control, including efforts by the Biden administration to slow down migration at the border, or change in the City’s legal obligations to assist the migrants.
The City and State have no short-term alternative except an all-hands-on-deck effort to manage the shelter system as effectively as possible. That means helping the migrants get their work permits, apply for asylum, look for housing, and helping the nearly half the shelter residents who aren’t migrants get housing or jobs themselves. The City’s public assistance system has been criticized for its failure to process benefits like food stamps, public assistance, and emergency allowances. That must be fixed. Aiding poor persons, generally, prevents homelessness, or could help them gain independence. The eviction prevention programs are also a priority because entry to the shelter system from evictions needs to get slowed down. The City must double down on all the normal homelessness prevention efforts that were in place before the migrant crisis despite the staffing strains associated with these programs.
IS THERE ANY HELP COMING IN NEXT YEAR’S BUDGET?
The Citizens Budget Commission extrapolated the Mayor’s August shelter expense forecast, based on rising numbers of migrants, to predict a $ 13.8 billion deficit in Fiscal Year 2025, beginning on July 1st of next year for the City. The Comptroller’s risk assessment showed a $10 billion deficit, based on no rise in the number of migrants beyond the current year. The City’s request to modify the right-to-shelter, however, indicated there is no let-up in the number of migrants arriving.
The next update to the FY’2024 Financial Plan of the City should be published around November 15th, and the Governor’s Executive Budget and the Mayor’s Preliminary Budget will be released in January 2024.
The City’s current Financial Reserves, from its adopted budget, are $8.3 billion. They consist of $1.5 billion in the General Reserve for FY’2024, $2 billion in the Rainy Day Fund, and $4.8 billion in the Retiree Health Benefits Trust, a set-aside to cover in cash the health care obligations of retirees. This set-aside does not begin to fully cover those expenses but could be used in an emergency. Of course, using all the Reserves leaves nothing left just two years out.
The State Comptroller’s call for increased transparency takes on great importance for the November Financial Plan. There is no room for further surprises given the immensity of the deficits. How much money the PEG will save must be known.
The City could raise property taxes next year. That will not be popular.
SOLUTIONS ARE DESPERATELY NEEDED
There is a Catch-22 in the shelter system: if the migrants are helped as they arrive, they will keep coming. For every person the City helps leave the shelter system, right now it looks like someone else, or maybe two people, will replace them. Local solutions are essentially managerial; the fact that people keep coming is a national issue.
Will the national political turmoil on immigration come to a head soon with both political parties agreeing on anything? Anything? Immigration has never been my area of expertise, nor has breaking political deadlock. But I am going to keep searching for answers