A CITY GOVERNMENT IN DENIAL ON THE BUDGET

To get right to the point, the Mayor and the Office of Management and Budget (OMB) seem to be in serious denial about the size of next year’s budget deficit.

New York City Mayor Eric Adams and the Office of Management and Budget released the November Update to the Fiscal Year 2024 Financial Plan on Nov.15, 2023. The plan forecasts a balanced budget through the Fiscal Year ending next June 30^th, due to a combination of spending cuts and re-estimates of spending, and modest revenue growth, and forecasts a deficit in Fiscal Year 2025 of $7.1 billion. The costs of asylum seekers in the shelter system rise to $6.1 billion next year. I wrote about the impact of the migrant crisis on the City budget in an Oct.12 article.

The budget cuts include cutting the size of the police department, cuts to school, libraries, and other agencies. The deficit next year of $7.1 billion is after the combined two years of budget cuts.

The Citizens Budget Commission, a budget watchdog organization, criticized the forecasts as underestimating spending next year and said the budget deficits could be as high as $10.6 billion. The CBC explained that the extra costs result from a number of school programs are funded by Federal pandemic funds that are expiring, and that the City had not budgeted for City-funded housing voucher programs or for chronic underestimates of overtime spending.

New York State Comptroller Thomas DiNapoli expressed a concern similar to the Citizens Budget Commission, that the City was not budgeting for known spending risks in transportation, education, and social services, or the City-Council driven expansion of the housing voucher program.  A City general obligation bond statement reported the expansion of the housing voucher program could cost the City $ 2 billion next year, although it was not budgeted in the financial update. That would bring the deficit close to $13 billion next year if that forecast was accurate.

It appears that the Mayor and OMB are unable to tell the public forthrightly about this looming deficit.