Greg David, The City
With one month to go before the city must enact a budget, the distance between proposals by Mayor Eric Adams and the City Council is its widest in years, caused by differing ideas about what to do with a recent surge in revenues.
The Council wants to spend the money on new city programs, while the mayor says his executive budget factors in unexpected expenses, including the cost of aiding tens of thousands of asylum-seekers.
The mayor’s budget director, Jacques Jiha, accentuated the tensions at a Citizens Budget Commission event Wednesday while speaking about the challenges of reaching a deal.
“When we put together the executive budget we knew we had an economy that was going to generate more revenue, and that was going to create a problem because the Council pays attention only to the revenue side,” said Jiha. “So it’s going to be extremely difficult in this environment to get a budget.”
In late April, the mayor’s executive budget proposed spending $107 billion for the 2024 fiscal year, which begins July 1 — $4 billion more than his preliminary proposal earlier in the year. With Adams having just inked precedent-setting deals with the city’s largest municipal workers’ union, DC 37, and with the Police Benevolent Association, the proposal accounted for the $16 billion raises will cost the city over the next four years.
Since then, Council leadership has been arguing that because tax revenues have remained strong, the city has more money to spend. Late last week the Council’s finance staff issued a new forecast that put revenues for the current fiscal year and the one that begins July 1 at $1.8 billion higher than the mayor expects. Money for preschool education and rental assistance have been among top Council priorities in the current budget negotiations.
But Jiha said that any additional money will need to go to unexpected expenses, especially the costs the city is incurring because of the flood of asylum-seekers. While the state has allocated $1 billion to help the city, money from the federal government will fall far short of the city’s requests, meaning the next city budget will include at least another $500 million to house, feed and assist the migrants, he said.
In addition, the recently enacted state budget requires the city to assume a separate new $500 million in costs, mostly for the MTA and Medicaid, Jiha added.
The budget director’s comments drew a tart response from Council Finance Committee Chair Justin Brannan (D-Brooklyn), who said the Council would not “respond to arrogance or tolerate disrespect,” and insisted there is a need to increase spending.
“Over the last two weeks of budget hearings, we heard directly from city agencies who simply don’t have what they need to effectively respond to the multiple crises facing our city. Further cutting these agencies is not fiscally responsible,” Brannan said in a statement.
Big Housing Bills
The mayor and the Council are also at odds over the outlook for the city’s finances. The executive budget projects the city will need to close budget gaps totaling $17 billion in fiscal years 2025-2027. The Council says the gaps will only amount to $12 billion because of projected higher revenues.
Looming over future projections are four bills passed by the Council to greatly expand the availability of city rent vouchers for low-income people. The Council claims the cost will be paid for by reducing the number of people in homeless shelters. The administration argues the bills, if they become law, would add $17 billion to the budget over the next four years.
Yet Jiha also noted Tuesday that 8,000 people already living in shelters have city vouchers they can’t use because they are unable to find an apartment to rent — leaving the money unspent.
“We are considering our options,” Jiha said, “but I hope they don’t become law.”
While the Council typically adds several hundred million dollars in spending to each year’s budget, the mayor has the upper hand in negotiations, because in the end he sets the amount of money available, said George Sweeting, former deputy director of the Independent Budget Office and now a fellow at the Center for New York City Affairs at The New School.
“There is a lot of uncertainty about the city’s fiscal condition in the coming years that could result in smaller changes than usual,” Sweeting said.
One twist this year is that members of the Council face primary elections on June 27 to retain their seats, turning up the heat to reach a deal before that date.
Meanwhile, City Comptroller Brad Lander has already set his sights on winning a tax increase on the wealthy to fund future budgets, which he projects would yield an additional $1 billion in city income taxes. Those making more than $5 million a year would see their rate increase from 3.9% to 5%, and those making more than $25 million to 5.5%.
“At some point new revenues will be required,” Lander told THE CITY in an interview last month.
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