New York budget deficit projected to be about $14 billion by 2027: state comptroller

New York’s budget deficit could reach $13.9 billion by 2027, more than double the deficit projected by Mayor Eric Adams, thanks to new and costly labor contracts, the migration crisis and the slow economic recovery from COVID-19, according to a new Albany report. .

The forecast released Thursday by State Comptroller Thomas DiNapoli far exceeds the city’s Office of Management and Budget forecast of the deficit rising to $6.5 billion over the next four years.

Adams unveiled his record $102.7 billion budget proposal in early January, which DiNapoli predicts will rise to $104.8 billion before the June 30 deadline.

The Controller released the 51-page study days after City Hall struck a tentative deal with one of its largest unions – District 37 Council, which represents 90,000 municipal employees – for a 3% pay increase between 2022 and 2025 and by 3.25% in 2026. .

The new spending, DiNapoli estimates, will mean the city will spend $4.7 billion a year on all labor costs by 2027, a figure that could rise to $5.4 billion a year.

Adams and DiNapoli agree that spending such as housing, food and legal services for thousands of incoming migrants could cost the city $4.2 billion over the next two years.

However, a state study casts doubt that Hizzoner’s recent $1 billion request from President Biden to help ease the burden will be granted, and it is projected that New York City will likely receive only a fraction of the nearly $800 million in the Federal Agency’s grant. on emergency management, approved last year to help cities around the world. national fee for asylum seekers.

The report also notes that the city has yet to budget for migrant shelters beyond mid-2024, although the influx of nearly 30,000 people since last spring has already overwhelmed the Big Apple’s shelters, forcing some of them to operate at full capacity.

The analysis also predicts that seven Emergency Response and Relief Centers (HERRCs) are likely to remain open after July 1.

DiNapoli warns City Hall should save more money in the face of future budget deficits and federal aid cuts in the pandemic era that former Mayor Bill de Blasio spent on favorite projects rather than saving for a rainy day, even as tax revenue remained strong .

Adams has already cut vacant city agency positions and ordered belt-tightening measures, but his chief budget officer said more cost-cutting measures are being taken to help pay for key items like open labor contracts.

“The City must take care to balance any additional savings generated through staffing changes against the risk of deteriorating essential services and timely assistance to those in need, which are fundamental to the recovery of its economy,” the report said.

One area where the city will continue to spend funds is in schools, DiNapoli said. After Gov. Kathy Hochul signed into law last year a law mandating a reduction in the number of children in classes in five boroughs, it will increase the Department of Education’s spending by at least $1.3 billion a year.

The state’s goal of reducing classes will also require the Department of Education to hire 7,000 additional teachers despite shortages and declining enrollment.

“In the Fiscal Year 2024 Provisional Budget, Mayor Adams continued his successful track record of responsible financial management, which is especially needed in light of the ongoing financial and economic challenges the city is facing. Since June, the city has achieved more than $3 billion in savings for fiscal years 2023 and 2024 without laying off a single employee or reducing service levels,” Mayor John Allon’s spokesman said in a statement.

“At the same time, as the mayor said in his testimony to state legislators last week, the city remains concerned about the potential impact of $4.2 billion in spending related to asylum seekers over fiscal years 23 and 24, as well as proposed state cuts and spending. shifts that could amount to over $1 billion a year, further draining our limited resources. The mayor will continue to budget responsibly and ensure the city spends during these challenging times, and we appreciate the partnership of Comptroller DiNapoli.”