By Michael V. Cusenza
City Comptroller Brad Lander on Monday blasted Mayor Eric Adams’s Fiscal Year 2025 Preliminary Budget.
In January, Adams released the City’s balanced $109.4 billion Preliminary Budget.
“Rather than the Adams administration’s unpredictable approach to the budget process, sound management and strategic investments are required to face the City’s fiscal challenges, confront the affordability crisis, and ensure strong economic growth in the years ahead,” Lander said.
According to Lander, here’s how the Adams administration screwed up the latest Preliminary Budget:
Lack of transparency in City finances
There are two ways in which the Adams administration’s approach has unhelpfully muddled the budget process. For starters, there’s been a lot of unnecessary budget whiplash in the last few months.
Last June, at the time of the FY 2024 budget adoption, the Administration presented the FY 2025 budget gap at $5.1 billion. In November, it increased that projection to $7.1 billion, even after one round of proposed cuts. Then just a few weeks later, in January, the FY 2025 budget was presented as balanced.
These shifts are caused in part by the administration’s swinging cost estimates for asylum seeker services. Last June, it projected the cost at $3.91 billion. Just two months later, it increased that projection to $10.82 billion. More recently, it got lowered to $9.09 billion. We’ve got to get this under control.
Secondly, the significant underbudgeting of many predictable expenditures, particularly special education Carter Cases and uniformed overtime, further clouds the picture. This pattern of underbudgeting expenses is a routine part of the City’s budgeting—and it’s not a good practice. Additionally, the Mayor has not been clear on which Federal Stimulus funded programs will continue at current levels or face reductions as these funds expire.
Where does this leave us? All in all, the Comptroller’s Office projects a budget gap of $3.30 billion in FY 2025 – with more outyear gaps on the horizon.
Stronger fiscal management will reduce the need for big cuts
How should the City approach these budget gaps?
We shouldn’t respond with shortsighted, drastic cuts to vital City services and programs like CUNY, libraries, alternatives-to-incarceration, and more. Instead, we should work harder to cover outyear budget gaps through stronger fiscal management.
We can achieve long-term savings by reeling in areas of overspending, like uniformed overtime. We can reduce pricey Carter Case settlements by providing better special education services in our public schools, as my office has previously suggested. By making agencies responsible for car crash claim and settlement payouts (as recommended in our report on traffic collisions), we could further increase our savings.
We can also save money with stronger management of emergency procurement. In a report released last week, my team found that the Adams Administration’s haphazard approach to emergency contracting (and its failure to compare or control prices) resulted in City agencies overpaying MILLIONS of dollars to staff asylum seeker services. We compared the City’s top 4 emergency contracts for staffing asylum seeker facilities, like welcome centers and HERRCs, and found drastic discrepancies in pricing. In one comparison, compensation ranged from $58 to $201 for the same service.
Finally, rather than evicting asylum seekers and families from shelter just 30 or 60 days after they’ve arrived, we should invest in legal services, case management, and assistance to obtain work authorizations. This is the most cost-effective, compassionate approach to helping immigrants get on their feet, move out of shelter, and find employment.
Affordable housing should be the No. 1 priority this year
Everywhere across the City, rent remains incredibly high, burdening New Yorkers. Unfortunately, the FY 2025 Preliminary Budget does not do nearly enough to finance the production and preservation of truly affordable housing—one of the most powerful tools the City has to stabilize neighborhoods and protect low-income and working families from displacement.
We urgently need a deal in Albany that increases housing supply across income levels, with a focus on affordability, good cause protections, and housing vouchers to help people escape homelessness and secure permanent housing.
We also need much larger City investments in deeply affordable, community-controlled rental and limited-equity cooperative homeownership housing. All the while, we must ensure that the Department of Housing Preservation and Development has additional resources to clear its backlog of affordable housing projects, develop and train new staff, and expand the City’s social housing footprint (as covered in our recent report, Building Blocks of Change).
Our short-term budget decisions must not short-change New York’s future. With sound management and strategic investments, we can tackle outyear budget gaps, confront the affordability crisis, and ensure strong economic growth in the years ahead.
The City Office of Management and Budget overall tax forecast is now more closely aligned with the Comptroller’s Office’s. The Comptroller’s Office expects more modest job growth in coming years than OMB. Payroll growth in New York City has mostly been occurring in lower-paying sectors, such as health services. In the higher-paying service industries, there have been employment reductions that are expected to last at least a few years. NYC’s limited housing supply, particularly at affordable levels, acts as a constraint on population and job growth.
With that history and context, the Comptroller’s Office projects that the City will end the current fiscal year in June with a small surplus of $214 million. However, where OMB projects a balanced FY 2025 budget, the Comptroller’s Office projects a gap of $3.30 billion in FY 2025 (3.0 percent of total revenues).
In the longer term, structural underbudgeting, as well as some other expenditure re-estimates, are compounded by two significant risks: the unpredictability of spending for asylum seekers mentioned above, and the State’s mandate to reduce class size, which remains unbudgeted. Because of these uncertainties, as well as the lack of transparency and data on the costs of services to asylum seekers, the Comptroller’s Office restates the City’s gaps and surpluses both with and without these two costs.
Excluding these costs, the Comptroller’s Office projects gaps of $8.58 billion in FY 2026 (7.9 percent of total revenues) and a comparable $8.61 billion in FY 2028 (7.5 percent of total revenues). Including estimates of asylum seeker costs and class size mandate increases, the restated gaps grow to $10.54 billion in FY 2026 (9.6 percent of total revenues) and reach $13.50 billion in FY 2028 (11.7 percent of total revenues).
Closing these gaps will require strong fiscal management, which should include reining in the ballooning costs of uniformed overtime and special education Carter Cases, and making agencies responsible for claim and settlement payouts, as already recommended in the Comptroller’s Office analysis of collisions. As this Office has advocated for before, the City’s fiscal health would be better served by planning and implementing efficiency and cost savings in each budget modification to achieve structural and long-term results without cutting core services. The Office also continues to recommend establishing a formula for deposits in the City’s long-term reserves, which still do not have sufficient funding to weather the length of an average recession.
The Preliminary Budget also included an update to the City’s Capital Commitment Plan totaling $88.46 billion from FY 2024 through FY 2028, a decrease of $5.88 billion (6 percent) compared to the September Capital Plan over the same fiscal years, and a decrease of $11.6 billion over a 10-year horizon. The Plan does not reflect needs for the School Construction Authority, borough-based jails, and the portion of the Brooklyn-Queens Expressway owned by the City, which may require an increase in debt-incurring capacity, as was included by the Governor in the State FY 2025 Executive Budget. A detailed analysis of these issues is forthcoming shortly.
Nor does the Plan include sufficient funding to adequately expand the City’s affordable housing stock. As this Office regularly highlights, housing affordability remains one of the most critical issues facing New Yorkers and should be prioritized in the capital plan. These investments in housing, infrastructure, and schools are critical to allowing New York City to continue to be a place where New Yorkers of diverse income backgrounds can live, work, and thrive.
