New York City’s potential $10B deficit has it at fiscal cliff

New York City’s potential $10B deficit has it at fiscal cliff

(The Center Square) – Saying he’s been told of a looming “fiscal typhoon” that will hit New York City, Mayor Eric Adams on Monday defended the decision to request city agencies to reduce their spending by 3% for this fiscal year and by even more in the years ahead.

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In the last month, City Comptroller Brad Lander and State Comptroller Thomas DiNapoli have issued assessments of the city’s budget that indicate New York City faces a budget deficit of up to $10 billion by the 2026 fiscal year.

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Last week, Jacques Jiha, director for the mayor’s Office of Management and Budget, sent a letter to department leaders requesting they reduce city-funded costs by 3% this year and by 4.75% next year and in the upcoming years included in the city’s November financial outlook.

The deadline to submit the proposed cuts is Sept. 30.

Speaking at an event where he announced the city would provide free broadband internet and basic cable for 300,000 residents living in city housing units, Adams said the decision to make budget cuts should not come as a shock since he campaigned last year on making New York fiscally sound without cutting services or jobs.

“Every expert said that we are getting ready to enter a financial typhoon … so, if I don’t make the smart decisions now, am I going to wait until we’re at the cliff or do I prevent the cliff?”

In the letter sent to city agencies last week, Jiha said significant drops in the stock market in the past year are forcing the city to compensate by spending more on pension plan contributions starting in the 2024 fiscal year.

On top of that, the letter acknowledged that the city has contracts with labor unions set to expire and is experiencing higher health care costs and energy costs. Jiha also noted the costs of “new needs,” such as providing assistance to asylum seekers and reducing fiscal cliffs as federal stimulus funds expire.

Adams’ plan to head off the deficit was met with praise last week by the Citizens Budget Commission, which called for a 3% to 5% reduction in June. CBC President Andrew S. Rein said Jiha’s letter gives city agencies enough time to adjust their operations to meet the city’s targeted cuts.

Rein also pointed out that with 28,000 vacant positions in city government, the Adams administration should still be able to hire essential personnel and meet the budget-cutting goal.

“Importantly, the city is currently negotiating its next round of labor contracts,” Rein said. “Changing work rules and other contractual components to increase efficiency and provide PEG savings is the best way for the city to raise employee salaries without creating an unsustainable fiscal burden.”

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