NYC facing more austerity as Mayor Adams demands more budget cuts

NYC facing more austerity as Mayor Adams demands more budget cuts

Mayor Adams on Monday demanded that his agency heads engage in another round of belt-tightening in a directive requiring they find 3% savings in their current budgets — on top of the 3% many were required to shave from his initial spending plan.

In addition to what essentially amounts to a 6% austerity measure, Adams is asking agency heads to find 4.75% in savings in each following year until 2026. And unlike in the first round of austerity, the latest measures will also apply to the NYPD, the Correction Department, the Department of Health and Health and Hospitals among them, according to an official familiar with the plan.

Adams blamed the need for the additional measures on fiscal headwinds that the city and fiscal watchdogs see on the horizon.

“We currently face new costs that will increase the city’s obligations by billions of dollars, including growing pension contributions, expiring labor contracts and rising health care expenses,” Adams said. “In response, we are asking every city agency to tighten its belt without laying off a single employee or reducing services. This Program to Eliminate the Gap savings plan is strong and decisive action that will protect both the city’s financial outlook and funding for critical programs and services, promote efficient government operations and protect the city’s long-term financial stability.”

In a memo to city department heads, Adams’ Budget Director Jacques Jiha lays out the challenges the city faces in more detail, ticking off a list of issues that could adversely impact the city’s economy.

First, Jiha notes, the stock market “was down substantially” in 2022. Second, he writes, “most of the city’s labor contracts have expired or are about to expire.” In addition to those factors, he told the agency heads that health care costs are rising, inflation is still a problem and the city has had to shelter thousands of new asylum seekers in recent weeks.

“These added costs will increase gaps by billions of dollars over the financial plan,” Jiha said. “Making matters worse, an economic slowdown could lead to declining tax revenue.”

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Last week, fiscal watchdogs warned that while the city’s more than $8 billion in budget reserves would help it absorb the financial complications that most likely lie ahead, they also pointed out that in the event of a recession, that might not be enough.

A recession would send city revenue plummeting while also putting pressure on the administration to pour more money into social safety net spending. The last two recessions led to revenues dropping by 4.2% and 5.9%. According to state Comptroller Tom DiNapoli, if something similar were to happen in the near future, that could mean a hit to the budget of between $3 billion and $4.5 billion — on top of the $9.9 billion shortfall that DiNapoli projected could come in 2026.

The latest savings plan, expected to be part of the Adams’ administration’s November budget modification, is aimed at mitigating such an eventuality. Such modifications must be approved by the City Council, though.

The leader of that body, Council Speaker Adrienne Adams, said through a spokesperson that she’s still reviewing the letter, but has “serious concerns,” especially in light of understaffing at several city agencies.

Councilman Justin Brannan (D-Brooklyn), head of the Council’s Finance Committee, said it’s still premature to say whether the city lawmakers would go along with the mayor’s proposal.

“We need to see what these agencies come up with,” he said. “We’ve been anticipating rough waters, but obviously, certain things are non-negotiable … like social safety net programs.”

Councilman Charles Barron, who represents East New York in Brooklyn, took a more scorched earth approach to the administration’s move. He called the mayor’s austerity push a “damn shame,” saying that he understood the need to prepare for rough times, but added: “You gotta handle the rain that’s coming down today.”

“I think the City Council should reject any more cuts,” he said, quickly adding that he doesn’t think that will happen because of what he views as the cozy relationship between the mayor and Council Speaker. “I have no faith in Adrienne Adams.”

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The mayor’s new plan got backing from others, though.

City Comptroller Brad Lander called it a “prudent step” and then proceeded to walk through some areas where the Adams’ administration could make government run more efficiently. One was in how the city’s Sanitation Department conducts its bulk pick-up operation, although Lander did not go into extensive detail on how that would work.

“You look at your operation, and you find something that is inefficient and that you can save money on,” he said.

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