Ten months ago, New York City Mayor Eric Adams warned of the need for “painful” cuts to the city’s budget, affecting everything from early education to trash pickup. He spoke of a looming fiscal crisis spurred by the cost of caring for tens of thousands of migrants flooding the city from the Texas border.
Turns out, those fears were dramatically overstated. Spending on migrants leveled off after the city began limiting their stays, and an economic recession that was poised to curb tax revenues never materialized. On Sunday, the City Council finalized a $112 billion budget for the fiscal year that started Monday that restores hundreds of millions of dollars in cuts that Adams once said were necessary to help address a $7 billion deficit that’s since been wiped away.
It marks a fourth year that the city’s official revenue projections were markedly underestimated. It also comes after months of contention between officials over a disruptive round of cuts already implemented in November. The
New York Public Library, which suspended its Sunday service, pleaded for donations to help offset the loss in funding, while some museums and cultural institutions that rely in part on the city struggled to maintain staff and programming.
“The smaller organizations, some of them were just devastated,” said Lucy Sexton, the executive director of New Yorkers for Arts and Culture. She cited Kyoung’s Pacific Beat, a small theater reliant on public funding, which
dissolved itself earlier this year. “Many got zeroed out, so they got nothing. They’d received tens of thousands of dollars for many years in a row, and they got nothing.”
Under the new budget, public libraries will be able to remain open seven days a week and the city’s cultural institutions will recoup $53 million dollars slashed from their operating budgets. New recruit classes for the police department are going forward and trash pickup at thousands of litter baskets has been restored. Early childhood education programs will recover three-quarters of $400 million in cuts that have been made since Adams took office.
While the reversal was first signaled in a preliminary proposal Adams put forth in January, the finalized budget is far rosier, and larger, than even the most optimistic prognosticators estimated. A mix of cost reductions related to sheltering migrants, other money that was budgeted but unspent, and a windfall of almost $7 billion in higher than anticipated revenues from taxes and fees for the two years ending July 2025 have virtually wiped away the $7.1 billion deficit the city faced this coming year.
“You always want to do things differently, but life is not about looking in the rearview mirror. It’s the front windshield that matters,” Adams said in a television interview on PIX 11 Monday. “We sit in a room and we look at the money coming in and the money coming out, and then we make these tough decisions.”
The alarm-ringing began in the middle of last year, when Adams warned the city faced
dire financial circumstances and the potential for multibillion-dollar deficits because of its legal obligation to provide
shelter for the migrants. Officials resorted to unprecedented measures to reconcile with a surge of what is now more than 200,000 people in two years, including setting up a 2,000-person shelter tent complex on Randall’s Island and opening hundreds of emergency shelter sites.
Soon after, the Adams administration began implementing time limits on shelter stays and struck a deal to temporarily modify the city’s right-to-shelter mandate, allowing officials to deny housing extensions on a case-by-case basis. The number of migrants in the city’s care has since leveled off — at about 65,000 — as have the costs.
Meanwhile, nearly every category of tax revenue — personal income, corporation, property and sales taxes — has performed better than anticipated, an outcome budget and city officials attribute to expectations of a recession that never materialized.
Too Conservative
City budget officials tend to budget conservatively, a practice that has helped ensure the city’s financial stability since the fiscal crisis of the 1970s, and many economists were still predicting a national recession last fall, when Adams first proposed his drastic budget cuts.
But revenue forecasts have also been consistently understated by a larger degree since the Covid-19 pandemic, according to data compiled by Bloomberg of projections from 2012 through 2023. Under director Jacques Jiha, the Office of Management and Budget has underestimated city revenue by about 10%, or about $7 billion, each year since 2020.
ok on that point
