NYC Fiscal Year 2025 Budget Overview
Large changes to the cost projections for services to asylum seekers by the Adams administration, in addition to “the typical spending and revenue revisions that have become a familiar part of the city’s budget process” created a “tumultuous year of budget ups and downs” according to the August 14 report released by the New York City Comptroller’s Office. However, on June 28, just days before the July 1st start of the new budget year, an agreement between the mayor and the city council was reached for the $112.43 billion FY 2025 Adopted Budget, which reflected an $809 million increase of the Mayor’s April proposal. Initial response by nonprofit civic organization, the Citizens Budget Commission (CBC) was that “our city leaders did little to ensure priority programs are sustainable by making government more efficient and shrinking lower impact activities.” Efforts by Mayor Adams to balance the FY 2025 budget included a total of $4.025 billion, or $3.86 billion if changes in debt service costs are excluded, through the Programs to Eliminate the Gap (PEGs). Subsequently 7.3%, or $1.1 billion, of the total 5-year proposed PEGs savings of $15.387 billion was restored, of which 6.7%, or $268 million was restored in FY 2025. The CBC indicates that the PEGs were essential, and although some savings would have happened without the PEGs, FY 2025 would have had a $4.7 billion gap, and out-year gaps would be $1.5 billion larger.
Both the Comptroller’s office and the CBC agree that the lack of deposits to the city’s Rainy Day Fund in FY 2024 and FY 2025, which currently has a balance of approximately $2.0 billion, is “wholly insufficient to protect New Yorkers from massive cuts during a recession.” A proposed formula based on the growth on non-property taxes proposed by the Comptroller’s office, indicates a deposit of $150 million should have been budgeted in FY 2025 based on the Office of Management and Budget (OMB) tax revenue forecast,” or $240 million under the Comptroller’s projections. The CBC further points out that the budget fails to include “the full recurring costs of overtime, special education, and other recurring programs funded one year at a time, which per its estimates result in a budget shortfall of $2.6 billion in FY 2025, $3.4 billion in FY 2026, and $3.3 billion in both FY2027 and FY 2028. In addition, the city’s ability to prepay expenses gives the illusion of a fiscal year surplus, the CBC citing the myth that FY 2024 ran a $4.4 billion surplus which was used to prepay FY 2025 bills, when in actuality, spending obligations exceeded revenue by $1.1 billion. Although technically not a deficit, it fails to provide a true picture of the city’s finances. The continued lack of actions to increase budget transparency, sustainability, and reserves underscores the need for the city to update its fiscal framework. Without change, the picture of the city’s finances will remain inaccurate and deceptive, “leading to larger gap estimates than presented by the mayor in each year of the financial plan.”
Source: https://cbcny.org/sites/default/files/media/files/CBC_NYC-FY2025-Adopted_07012024_1.pdf