Comptroller Lander Presents Analysis of New York City’s FY 2025 Adopted Budget to Financial Control Board

Comptroller Lander Presents Analysis of New York City's FY 2025 Adopted Budget to Financial Control Board

New York, NY - At the annual meeting of the New York State Financial Control Board, New York City Comptroller Brad Lander presented his office's comprehensive analysis on New York City's Fiscal Year (FY) 2025 adopted budget. The report sees an economy with many core strengths and a continuing recovery, but also significant challenges, most prominently the crisis of housing affordability. The Comptroller's report criticizes the Adams Administration's chronic underbudgeting and calls for a stronger fiscal framework.

"The City can and must do more to confront our fiscal challenges and put New York City on a more solid economic foundation for the long term," said Comptroller Brad Lander. "The Charter Revision Commission's failure to adopt our recommendations to ensure adequate reserves in the rainy day fund, mandate efficiency reviews and long-term savings targets, keep debt service under control, and improve capital budgeting was a very large missed opportunity. These steps can still be implemented by local law and executive order, and I urge the Mayor and City Council to do so."

Lander's remarks to the Financial Control Board focused on three primary themes, with further detail in the Comptroller's Office's report, which was published today:

While New York City's low unemployment rate, rising job openings, and historically high labor force participation rates are encouraging, significant challenges to the city's economy remain.

• Private employment has been growing solely on the strength of relatively low-wage sectors, particularly in health services and social assistance.

• Major industry sectors including business services, financial activities, and information technology posted year-over-year job losses.

• Housing affordability remains the number one issue facing working families, with rents up 20% from already record high pre-pandemic levels.

• After a period of decline, local inflation has picked up in the past few months and surpassed the nation's.

• Recent data show consumer debt burden and delinquencies rising, after significant declines that were likely the result of federal pandemic stimulus.

The City's fiscal outlook is muddied by underbudgeting in the financial plan projections. The report estimates a manageable gap of $1.59 billion in FY 2025, but much larger gaps of $9.18 billion in FY 2026, $10.49 billion in FY 2027, and $12.70 billion in FY 2028.

Comptroller Lander calls on the City to be more transparent about chronically underbudgeted costs, costs that are expected to be incurred and are tied to ongoing programs but that are not realistically budgeted-such as uniformed overtime, special education Carter Cases, contributions to the MTA, public assistance, and the City's rental assistance programs-and it should work to control those within its purview with proper planning and stronger management.

The report highlights that budgeted costs for services to asylum seekers in FY 2025 are likely overstated: the population of asylum seekers in City shelters has stabilized, and a shift away from emergency contracting should result in lower costs than currently planned. Conversely, mandated class size decreases could require additional yearly funding of over $1.5 billion at full implementation in FY 2028.

The City must confront these economic and fiscal challenges by adopting a stronger fiscal framework. Building on the Financial Emergency Act's (FEA) pillars established nearly 50 years ago, in June, the Comptroller's Office recommended that the Charter Revision Commission (CRC) appointed by Mayor Adams place five items on voters' ballot this fall:

1. The adoption of a policy to govern the target size, deposits, and withdrawals from the City's rainy day fund.

1. Mandating regular efficiency reviews and long-term savings targets, rather than only conducting PEG exercises sporadically, and providing a regular opportunity for oversight bodies to assess whether savings plans are actually achieved.

1. Capping debt service at 15% of City tax revenues and using the Capital Stabilization Reserve to ensure that this target is maintained.

1. Modernizing the City's approach to infrastructure assessment, capital planning, and budgeting to comply with Government Finance Officers Association (GFOA) best practices.

1. Mandating timeframes for each stage of the contracting process, to ensure that the City's vendors are paid on a timely basis.

The Charter Revision Commission failed to adopt any of the Office's recommendations in its final proposals, which Comptroller Lander called "a cynical effort to distract New Yorkers and an affront to the tenets of good government in the New York City Charter that they were supposed to heed and improve." However, the Comptroller's recommendations can still be implemented by local law and executive order, even without Charter revision; Lander called on the Mayor and Council to do so.

In addition, the Comptroller encouraged the passage of State legislation to make the core features of the FEA permanent, and to update and strengthen the fiscal monitoring provided by the Financial Control Board (FCB). The FEA established the pillars of the City's current fiscal framework: budgets balanced according to Generally Accepted Accounting Principles, four-year financial plans, the prohibition of borrowing to cover operating deficits, and the retention of property tax revenues to pay General Obligation bond debt service. However, the FEA is set to expire in 2037. The full set of recommendations for a stronger fiscal framework are available here.

Comptroller Lander continued, "With an appropriate and codified structure in place, we can - 50 years on - implement the post-emergency phase of the FEA. In doing so, the City will better deploy its sizable but nonetheless limited resources - taxpayers' dollars, federal and state funds, and other revenues - to most effectively meet the needs of all New Yorkers for a safer, thriving, healthy, well-educated, affordable, and well-managed city; and strengthen the City's fiscal resilience for the years ahead."

Read the full analysis on New York City's FY 2025 adopted budget here.

###

Public link

Please use the above public link if you want to share this noodl on another website.