Mayor Adams & Speaker Adams announce a budget agreement, June 2022 (photo: Ed Reed/Mayor's Office)

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As the July 1 deadline looms for New York City’s budget for the 2024 fiscal year, Mayor Eric Adams and the New York City Council must resolve major differences over what will be a roughly $110 billion spending plan.

This year’s budget also closely coincides with this month’s primary elections, which has many City Council members on the ballot and may be delaying a final agreement until just before the start of the new fiscal year.

Among the series of disputes between the two sides of City Hall that are central to city budget negotiations include how much revenue the city will have at its disposal, how much to spend and save in reserve, potential restoration of specific funding cuts Mayor Adams made during a mid-fiscal year budget modification last November, the mayor’s proposals for additional targeted cuts into next fiscal year, and much more.

The City Council is also focused on how to ensure that the mayoral administration improves its personnel retention and hiring practices as more than 20,000 budgeted vacancies remain across city agencies as a number of vital services suffer.

Spending and Saving
Negotiations are based on the proposed $106.7 billion executive budget that Adams put forward in April, the largest in the city’s history. It was a $4 billion increase over his February preliminary budget, in large part due to new labor contracts, but roughly $2.2 billion lower than the projected $108.9 billion in spending for the current fiscal year.

As the city continues to settle municipal labor contracts, the administration allocated about $16 billion from the current fiscal year through fiscal year 2027, accounting for a significant uptick in spending for the next fiscal year. The increased spending is also attributed to the significant costs of the migrant asylum-seeker crisis that continues to confound the Adams administration and stress the budget.

The mayor has continued to institute a Program to Eliminate the Gap (PEG) to slow spending increases and find efficiencies at city agencies, but future budget gaps remain large – $4.2 billion in fiscal year 2025, $6 billion in fiscal year 2026, and $7 billion in fiscal year 2027 as of the executive budget.

Facing criticism over several PEG iterations that have required savings across city agencies, the mayor did not impose any additional cuts at the public library system or the Department of Cultural Affairs. He also reduced the PEG target from 4% for several agencies whose services would have been adversely affected, including the fire department, the sanitation department, the parks department, the Human Resources Administration and homeless services department, and the Department of Youth and Community Development.

But the mayor did not undo cuts imposed in previous iterations of the budget that have already gone into effect — for instance at the city libraries, parks department, and CUNY — and have rankled many critics, forming the basis for negotiations over funding restoration that members of the City Council have in mind as part of the new budget.

The mayor’s budget plan also sets aside about $8 billion in reserves, including $1.2 billion in the general reserve, $2 billion in the Rainy Day Fund, $4.58 billion in the Retiree Health Benefits Trust fund, and $250 million in the Capital Stabilization Fund.

The proposed capital budget for infrastructure is also the largest in city history, with $164.8 billion allocated to the 2024-2033 ten-year capital strategy — a separate but related piece of budget negotiations. The city’s operating budget includes billions of dollars in annual debt service to pay down the costs of the capital program that funds new schools, parks, climate projects, and more.

Though there has been some good news for the city, as tax revenues came in $2.1 billion higher than expected for the current fiscal year, and projected revenues for fiscal year 2024 are $2.3 billion higher than previous expectations  – the mayor’s Office of Management and Budget (OMB) and fiscal experts predict an eventual economic slowdown than will lead to lower revenue in the years to come.

On the other hand, the Council, especially its Progressive Caucus, and citywide officials like Comptroller Brad Lander and Public Advocate Jumaane Williams, are calling for deeper investments in the social safety net and warning against even modest cuts across a number of agencies and programs.

“Since day one, Mayor Adams has focused on making upstream investments to help New Yorkers who need them most, while exercising strong fiscal management,” a City Hall spokesperson said in a statement. “In last year’s Adopted Budget, we were able to reach an early handshake deal with the Council that included record levels of reserves and funding for key priorities to make our city safer, fairer, and more prosperous. In this year’s negotiations, we are looking forward to building on that progress while ensuring we are being realistic about the fiscal and economic challenges we face. The most effective way for the City Council to ensure we can continue funding shared priorities and services that keep New York City clean and safe is to work with us toward an early or on-time budget, and we look forward to that continued partnership in the coming days.”

The mayor and Council must look further than just the next fiscal year, cautioned Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog.

“The straight ahead situation is there is going to be some money in the pocket for the city to have in the short-term, and in the long-term, the budget gaps – especially when you add on the risks, and these aren't just notional risks, these are real – are huge,” said Rein. He added that budget gaps are likely understated because of major fiscal cliffs, including under-budgeted costs of overtime and special education spending, and the cost of expanded rental assistance vouchers, to name a few. “Seven months from now, the mayor has to propose a budget that, as I look at it now, might be having to close a $7 billion gap,” Rein said.

He cautioned against adding more spending for the 2024 fiscal year, which will only lead to larger gaps in the future. “The problem is right now we're building the cliffs bigger…We’ve gone from what used to be the budget dance of [possible cuts to] culturals and libraries to the cliff dance, which is a much more dangerous game.”

Meanwhile, the City Council, nonprofit groups, and progressive advocates have all said the city needs to be spending more for the people who need it most. They have been broadly critical of the mayor’s budget priorities, decrying what they see as unnecessary cuts and misplaced priorities, with core city services for the most vulnerable New Yorkers already hurt. The Council, in its response to the executive budget, identified about $1.8 billion in additional revenue between the current and next fiscal year over OMB’s projections, citing those numbers in opposing the mayor’s cuts. OMB Director Jacques Jiha has, however, continued to argue that the city cannot afford to keep adding spending since the money may not be there in the next fiscal year and beyond, migrant costs are escalating and uncertain, and there are already large budget gaps to close.

At a news conference on June 22, City Council Speaker Adrienne Adams said the brunt of negotiations had to do with restoring enacted and proposed cuts. “It's an uphill battle given what we're up against...and trying to restore things that in essence were taken away from New Yorkers. Services were taken away, promises of other things to be taken away are on the table," she said. “We are adamant about going through these negotiations with true intent to try to preserve as much as we can.”

Asked about the main points of contention with City Hall, a spokesperson for the speaker referred Gotham Gazette back to her comments.

Progressive advocates have similarly been pushing back against the many cuts the mayor has proposed. “With less than 10 days before the budget is voted on, Mayor Adams has still not conceded to rolling back his most unpopular cuts; cuts to CUNY, 3K, libraries, and housing and social services,” said Zara Nasir, coordinator of The People’s Plan, a progressive advocacy coalition, in a text message. “Even congressional democrats today in a letter to the Mayor agreed that care, not cuts, are a must in our next city budget. Our coalition is laser focused on pushing for as many concessions from the Mayor on these resources that New Yorkers rely on. The Mayor should do the smart thing and restore these crucial services.”

As Nasir noted, Democratic Reps. Jerry Nadler, Nydia Velazquez, Alexandria Ocasio-Cortez, and Jamaal Bowman wrote to the mayor last week, urging him to reverse course. “Some of the cuts proposed in your administration’s executive budget are relatively small but troublingly short-sighted,” they wrote, as first reported by the New York Daily News. The letter was also signed by Public Advocate Williams, Comptroller Lander,  Brooklyn Borough President Antonio Reynoso, and 17 Democratic state legislators.

On Friday, the mayor vetoed a package of bills passed by the City Council that were aimed at easing access to housing for people experiencing or threatened by homelessness, setting up yet another contentious battle with the Council. The mayor explained, in part, that the costs of the bills would add too much additional spending to the strained budget. It was just the second veto Adams has issued in his 18-month tenure – his predecessor, Bill de Blasio, didn’t veto a single bill in his eight years in office – and prompted a sharp rebuke from Speaker Adams, who said the Council is prepared to override it.

According to Mia McDonald, New York political manager at the progressive Working Families Party, the veto was just the most recent in a string of bad decisions by the mayor, along with the proposed cuts to education and social services, and his failure to tackle the municipal vacancy crisis. “All of these things are just piling on top of each other and we feel that he's really failed to govern,” she said in an interview.

Migrant Costs
Over the last year, more than 78,700 asylum-seekers have arrived in the city, with about 48,700 of them still under the city’s care. The administration has repeatedly estimated that the cost of providing shelter and other services to migrants will reach about $4.3 billion by the end of next fiscal year, and that the federal and state governments need to provide much-needed aid to the city.

There have been competing estimates, however, with the Independent Budget Office predicting in an analysis in May that the crisis will cost the city between $2.7 billion and $3.7 billion and Comptroller Lander estimating the costs at about $4 billion.

The state budget approved in May included about $1 billion in aid over two years to cover 29% of the city’s cost of sheltering migrants, the same percentage the state covers of other homeless shelter costs, but the federal government has sent limited financial assistance so far. The mayor’s executive budget is relying on both to cover additional costs past the 2024 fiscal year, after which the city faces a significant fiscal cliff if it does not receive any more aid.

Personnel and Vacancies
The administration continues to struggle to tackle a vacancy crisis across city government as well, which has affected the ability of many city agencies to fulfill their core responsibilities.

When the mayor released his preliminary budget in January, he undertook a vacancy reduction initiative that eliminated roughly 4,300 positions to reduce spending by about $350 million annually. At the time, there were still close to 23,000 budgeted vacancies left unfilled, and the mayor has taken some steps to speed up hiring and attract workers to city government, though critics say he acted far too slowly and did not take sufficient efforts to tackle the crisis. Comptroller Lander even noted in a December report that early steps taken by the administration had exacerbated the problem.

"I think, first and foremost...we have to fill those vacancies," said Council Finance Chair Brannan, in a recent podcast interview with Gotham Gazette discussing the Council's priorities and city budget negotiations, "because we had two weeks of hearings where just about every commissioner alluded to the fact that they're struggling because of vacancies, and then you have OMB come in and say, 'you know, these aren't the droids you're looking for, and these PEGs had minimal impact.'"

Brannan agreed, though, that the massive number of vacancies and their impact on services is more of a management than budgeting issue, and he is among the Council members pushing for the mayoral administration to speed the pace at which it is reevaluating personnel policies to allow some remote work, increase salaries, and make other changes to increase hiring and retention.

It remains to be seen whether the mayor will continue to try to shrink the municipal workforce, or “right size” it, as he has called it, to create a more efficient government. The city currently has about 301,000 full-time and full-time equivalent workers. The budget adopted last year had an authorized headcount of 334,453 for the current fiscal year which has since decreased to 329,962. The mayor’s latest budget proposal sets that number at 327,948 — a workforce size the city has almost no chance to actually hit next fiscal year, even if budgeted, given its challenges with recruitment and retention.

State Budget Effects
Due to delays in passage of the state budget, the mayor’s executive budget was created without being able to account for several state funding streams and cost shifts. The city is set to receive the $1 billion in migrant funding as well as additional funds for prosecutors, public defenders, and the implementation of discovery reform. The state budget also included a new pot of rent relief funding for NYCHA tenants behind on their payments, which will help solidify the public housing authority’s bottom line.

The state budget also included an MTA rescue plan – which includes state assistance, additional funds to improve subway service and to create a free bus pilot in each borough – that requires the city to pitch in an additional $165 million annually to the MTA on top of the $2.4 billion it already contributes directly every year. 

Between the MTA contribution and about $340 million in cuts to Medicaid matching funds, the city is expecting to take a half-billion-dollar annual hit from the state budget.

[Read: How Mayor Adams' Albany Agenda Fared in the New State Budget]

Education
Education funding is likely to be a contentious issue considering last year’s dust up between the mayor and the City Council over school cuts made by the Department of Education. Though the Council voted to approve them as part of the administration’s overall education spending plan (in which overall education funding was up) at the time the budget was adopted last June, members later felt they had been misled by the DOE about cuts to individual schools over decreased student enrollment, and sought to reverse the blow, even unsuccessfully suing the administration for it.

In the mayor’s executive budget released in April, the DOE saw a cut of about $778 million for the next fiscal year compared to the last budget modification in November. Those cuts stem from a number of factors including the mayor’s attempt to ‘right-size’ school budgets as enrollment has declined, his decision to scrap the expansion of the 3-K program, and federal relief funding that is running out.

The mayor and Schools Chancellor David Banks announced last month that they will not cut any school budgets for the start of the new 2023-24 school year, but they left open the possibility that there could be mid-year funding adjustments, either up or down, after enrollment numbers are tallied.

The City Council has already made it clear that they will not brook any further cuts to education. In its preliminary budget response, the Council pushed the mayor to restore $388.1 million in education funding to cover everything from early childhood education, expanded 3-K, pay parity for early childhood education providers, expanded Career and Technical Education, community schools, afterschool programs, and more.

“Early Childhood Education is a huge priority for this council,” said Council Member Brannan, in the June 8 appearance on Gotham Gazette’s Max Politics podcast. “We are very concerned with the fact that there are so many open 3K seats. I think that speaks to some sort of disconnect in the outreach to connect families with those seats. I just cannot imagine that there's 30,000 families in the city of New York who wouldn't love to have a 3K seat for their kid.”

The Council has also pushed back against cuts at CUNY, which has seen its funding drop by about $155 million in the current fiscal year, according to a Council analysis, leading to 235 faculty and staff positions being lost. The mayor’s executive budget would impose another $41 million in cuts annually over the next three fiscal years, largely impacting the CUNY community colleges that the city is mostly responsible for funding while the state supports the senior colleges (and both sets of schools also rely on tuition payments and other sources of revenue).

Adams has also justified CUNY cuts based on decreased enrollment — there were sharp drops during the pandemic, especially at the community colleges, though the Council has helped spearhead efforts to re-enroll many of the students who left the system and wants to keep investing in those efforts.

“Inconsistent state and city funding, unstable tuition revenues, the expiration of federal pandemic aid, and rising costs due to inflation pose serious challenges to CUNY’s finances,” the Council’s May report reads. “For CUNY to remain the world class educational, research, and workforce development institution that New Yorkers need and deserve, the City must restore planned cuts and work with the State to establish more reliable funding streams for the university system.”

Fair Fares Expansion
As the MTA considers increasing the bus and subway fare from $2.75 to $2.90 this year, the City Council and transit advocates are pushing for the expansion of the city’s Fair Fares program, which provides half-priced MetroCards to low-income New Yorkers.

The Council has proposed expanding eligibility for the program to New Yorkers with incomes up to 200% of the federal poverty level, or about $60,000 for a family of four, up from the current threshold of 100% of the poverty level. Roughly 280,000 New Yorkers are enrolled in the program, which is funded at about $75 million annually. The Council’s expansion would require an additional $61.5 million each year and make about 1 million New Yorkers eligible for the benefit.

Cuts to Senior Services
The mayor and City Council have introduced dueling proposals over meal programs for seniors, with the mayor seeking to cut funding based on a less than anticipated appetite for the service and the Council pushing to raise spending. The divergence is emblematic of many other budget battles where the mayor is responding to lower enrollment or uptake while the Council wants to keep or expand funding in order to entice more participants and meet the needs of the most vulnerable.

The mayor's latest spending plan cuts the Home-Delivered Meal Program budget by $5 million and meals in senior centers by $7 million in the next fiscal year and $5.5 million in the outyears.

In total, the executive budget would reduce the Department for the Aging's senior center and meals funding by roughly $18 million.

The Council, on the other hand, is seeking to expand home-delivered meals by $18 million and add $51 million for senior centers, including for congregate meals and outreach.

Cuts to Jail Programs
Adams is proposing to end a $17 million program that offers a range of group sessions in city jails as part of the 4% PEG announced in April. Providers say the program, which includes classes, counseling, and reentry services, helps reduce violence in jails and recidivism. Contracts for the current program expire June 30. The Department of Correction has said they can provide similar services in-house without the outside contract.

On Thursday, the Council's Criminal Justice Chair, Carlina Rivera, Public Advocate Jumaane Williams, and others joined service-providers The Fortune Society and Osborne Association to call for the programs to be preserved.

The Council is also seeking nearly $58 million for Justice Involved Supportive Housing, which offers housing and social services for people cycling through the jail and shelter systems.

Police Spending
The executive budget allocates $10.8 billion to the NYPD between the department's operating budget and centralized costs, according to an analysis from Citizens Budget Commission.

While that proposed funding remains relatively flat with the current fiscal year 2023 budget, CBC estimates both budgets fall short of actual spending because they fail to account for excessive overtime costs and a new collective bargaining agreement with the Police Benevolent Association. On June 15, Adams announced another tentative contract agreement with 11 uniformed unions, including four police unions, that will cost the city roughly $4 billion over five years.

The size of the NYPD budget has been a particular flashpoint in city budget negotiations in recent years, including a focus on its overtime spending, which routinely balloons well beyond the adopted budget allocation. Mayor Adams has expressed few qualms about those runaway OT costs, saying he will not put a cap on public safety.

“We care about responsible budgeting, and the fiscal health of our city, and allowing an agency’s overtime spending to routinely go beyond its budgeted amount year after year is not responsible budgeting," said Council Speaker Adams at a press conference after the executive budget was released.

The fiscal year 2024 executive budget allocates uniformed police overtime spending at $372 million, the same as the previous year's adopted budget. A report from Comptroller Lander's office estimates that figure will underestimate uniformed overtime by $278 million in the next fiscal year. By comparison, the April spending plan increased uniform overtime spending to $598 million (again, from $372 million at adoption) with the comptroller's office estimating it will reach $725 million by the end of the fiscal year later this month.

According to the report, police civilian overtime is expected to be $37 million over budget by the end of the current fiscal year, and $20 million over what is included in the executive budget for the next fiscal year.

Overtime Spending
The NYPD isn't the only city agency with overtime spending, but it is by far the biggest.

In total, the fiscal year 2024 executive budget includes a total overtime budget of $1.26 billion, a drop from the $1.94 billion budgeted in fiscal year 2023, according to the comptroller's office, which estimates the total price tag will reach $2.23 billion. Lander has attributed the increase to greater NYPD deployments, including a plan last fall to surge officers into the subway system, and on other agencies relying on overtime to fill gaps caused by staff vacancies.

Like the NYPD, other uniformed workforces are also expected to exceed the mayor's proposed overtime budget in fiscal year 2024, including the FDNY and Department of Correction, according to Lander. Civilian overtime is on track to reach $680 million this fiscal year, "at least" in line with fiscal year 2022 spending ($660 million) if not greater.

The comptroller projects total overtime to exceed the current executive budget allocation by more than half-a-billion dollars in fiscal year 2024.

Parks
At $610.4 million, the proposed operating budget for city parks falls just short of 0.6% of the overall executive budget, significantly lower than the 1% advocates have sought and Mayor Adams promised on the campaign trail in 2021. The proposed funding is higher than Adams' preliminary budget proposal in January, but roughly $37 million lower than spending for the current fiscal year.

Facing shortages of key staff, including lifeguards and tree-pruners, the executive budget adds 112 budgeted positions from the January plan – far less than the 1,000 new roles sought by the Council at a cost of approximately $46 million.

Human Services COLA
Nonprofit human services providers contracted by the city are seeking a 6.5% cost-of-living adjustment (COLA), or roughly $200 million, according to the Human Services Council, an association of providers, in the next fiscal year. This funding would largely go toward increased wages for human services workers who run city-contracted safety net programs.

Adams' preliminary budget included $60 million for the providers, who operate myriad services from meals for seniors to homeless shelters and more. The City Council, in its response to that spending plan, sought to double that funding to $120 million, but less than the $200 million providers are seeking as part of a campaign known as "Just Pay." The executive budget didn't budge on Adams' preliminary figure, leading providers to halt non-lifesaving services for a day in May to demonstrate the impact of the lower COLA.

[Read: 'A Day Without Human Services': Nonprofits Protest Lack of City Funding]

“Our City’s human services workers, primarily made up of women of color, provide essential services to New Yorkers but are woefully underpaid," wrote a City Council spokesperson in an email to Gotham Gazette. "It is a priority of the Council's to advance a multi-year plan that provides overdue pay increases for this workforce. Budget negotiations are ongoing, and we hope the Administration will agree in supporting our human services workers.”

The spokesperson would not say what specific dollar amount the Council was seeking but noted a COLA of 6.5% in the next fiscal year, and 5.5% and 4.5% in the subsequent years, would keep nonprofit pay increases in line with contracts recently negotiated with District Council 37, the largest municipal employees union. The Council recently called for a COLA in a Twitter post from its official account with the hashtag "#JustPay."

A parallel fight in the state budget earlier this year resulted in a 4% COLA for state-contracted providers, higher than the 2.5% proposed by Governor Kathy Hochul but less than the 8.5% advocates had sought in Albany.

The Council is also seeking an additional $117.4 million for mental health services as part of a push for pay parity for the contracted behavioral health workforce. The mayor's executive budget added a fraction of that, $40 million, for B-HEARD, a crisis response program, youth telehealth programs, clubhouses, and a digital hub to access services.

Rental Assistance Vouchers and Housing
In May, the City Council passed a package of bills to expand eligibility and loosen restrictions on a city-subsidized rental voucher, known as City FHEPS, that helps low-income New Yorkers access market-rate apartments. The package, recently vetoed by Mayor Adams despite passing with a veto-proof majority, would eliminate a rule requiring individuals to stay in a shelter for 90 days before becoming eligible for vouchers, expand eligibility to people at risk of eviction, remove income and employment requirements, and limit utility spending for voucher-holders.

Speaker Adrienne Adams and other Council members have pledged to override the veto, arguing the changes would help low-income New Yorkers find homes amid an affordable housing shortage and alleviate pressure on the city's shelter system, which has seen record high usage in part due to the influx of asylum-seekers over the past year.

The Adams administration estimates it could cost the city $17 billion over the next five years. The Council estimates the net cost to be lower, $10.6 billion over five years, which accounts for annual shelter savings of $402 million. Another analysis from Community Service Society, a nonprofit focused on economic mobility that supports the reforms, estimates the package will save the shelter system $5.6 billion over five years for a net cost to the city of $3 billion.

The executive budget includes baseline funding of $133.4 million for rental assistance programs, a number likely to increase throughout the year. In the current fiscal year, the city had budgeted $700 million for rental assistance, a majority of which ($570 million) will go to City FHEPS, according to a Council spokesperson.

In June, Adams eliminated the 90-day rule by executive action, while adding additional employment requirements, in an apparent attempt to placate the Council and advocates. Council leaders have indicated the measure falls short and strongly opposed the new requirements, further setting up the potential veto-override as budget negotiations unfold.

At the same time, housing advocates and members of the City Council have objected to Mayor Adams’ proposed cuts to the city's affordable housing agency amid the city’s ongoing housing crisis and the mayor's "moonshot" goal to build 500,000 homes over the next decade.

The executive budget includes $1.35 billion in operating funds for The Department of Housing Preservation and Development (HPD), the agency responsible for affordable housing creation and preservation. While an increase from the fiscal year 2023 adopted budget, the allocation would represent a cut of $95.7 million from current HPD spending. The City Council is calling for an additional $318.3 million for affordable housing, and economic and workforce development.

The Capital Budget
Separate from the proposed expense budget is the capital budget, which pays for long-term infrastructure projects and includes more than $10 billion in allocations each year. The proposed capital budget in the mayor's latest spending plan is $164.8 billion over the next decade.

The plan includes $627 million for NYCHA in the next fiscal year and roughly $1.8 billion for HPD to create and preserve affordable housing. The Council has called for more housing spending, including $3.3 billion for affordable housing preservation and construction in its preliminary budget response.

The Council is also seeking greater capital funding for a host of other priorities including $400 million for energy-efficiency upgrades in schools, $240 million more for libraries, $200 million for H+H care centers, and millions more for surveillance cameras for the departments of Sanitation and Parks, meal-delivery vans for the Department for the Aging.