Amid much better revenue flow than predicted, Mayor Adams announced Tuesday that the city won’t be cutting funding to its agencies as deeply as initially expected.
Adams’ preliminary budget for the 2025 fiscal year, which comes in at $109.4 billion, includes revised revenue projections totaling an additional $2.9 billion over the next two years — $1.3 billion in additional cash flow to the city in 2024 and $1.6 billion in added revenue in 2025 compared with projections his administration released in November.
Adams and his budget director, Jacques Jiha, attributed those more optimistic fiscal forecasts largely to the improving economy, which ultimately upended previous predictions that a recession was coming.
“Most economists were predicting a hard landing of the economy,” Jiha said Tuesday during a City Hall press briefing. “We had 11 consecutive increases in interest rates. So economists were projecting a recession more or less. Fortunately, we managed to avoid that recession. We had a soft landing.”
That, Jiha noted, led to higher than expected revenue.
The projections released by the administration Tuesday flew in the face of its previous, much more conservative estimates and ended up being about double what the City Council had predicted. On top of that, the Council’s predictions were higher than initial estimates from the Adams administration, sparking a war of words that’s dragged on between the two branches of city government for weeks.
What does it all mean for the city? Here are some takeaways from Tuesday’s news on the city budget.
More cuts
After Adams’ budget announcement, Council Finance Chair Justin Brannan said it confirmed what the Council’s budget team has forecasted and pointed to what he views as the administration’s efforts to convince the federal government to pony up more financial aid.
That didn’t work, he said, which will, in part lead to the mayor’s Office of Management and Budget to make more cuts.
“We have nihilist House Republicans who would rather see the city burn to the ground than help us out,” Brannan said, referring to the relatively paltry amount of federal aid the city has received. “We’re on our own here. The mayor and our side agree on that. We’re thankful that we’re finally getting some help from Albany, but this is not something that we can manage on our own. There’s still going to be cuts ahead. This isn’t ‘Happy days are here again.'”
Some cuts will be smaller than expected
The next round of cuts to some city agencies will be lower than the administration initially expected.
The last round of the austerity measures, known as Programs to Eliminate the Gap or PEGs, were rolled out by Adams’ team in November. At the time, 5% cuts were expected across the board for this month.
But on Tuesday, city officials said those percentages were lowered to 0.6% for the Education Department, 2.7% for the Department of Social Services, 1.8% for the Department for the Aging and 0.5% for the Department of Youth and Community Development.
Albany help for the migrant crisis
Exactly how much financial aid from Albany the city can expect in the coming months is not entirely clear, based on what city officials said Tuesday.
Hours before Adams’ budget announcement, Gov. Hochul unveiled her $233 billion fiscal plan, which includes $2.4 billion to the city to assist with the migrant crisis.
But, according to Jiha, the city’s new spending plan only includes $1.5 billion in expected money for migrants coming in from the state during the 2024 and 2025 fiscal years.
“We’re still reviewing the governor’s proposal,” Jiha said Tuesday, adding that it’s unclear to him if the $2.4 billion reflects, in part, previous financial commitments Hochul made to the city.
