Mayor Eric Adams is asking all municipal agencies to cut spending over the next four years in a belt-tightening measure he said is intended to address looming budget deficits related to growing labor costs but which could strain the delivery of key city services.
News of the mayor’s ordered rollback on spending was first reported by Politico. The cuts are to be phased in, with agencies – including the NYPD, which is often not subject to reductions – cutting by 3% by the end of the current fiscal year ending June 2023 and 4.75% between fiscal years 2024 through 2026.
The order, which comes under a city budgetary tool known as the Program to Eliminate the Gap, calls for cuts without layoffs or reductions in services. Agency heads must submit their plans by the end of this month.
The announcement comes about a week after Adams met with members of the New York State Financial Control Board, an agency charged with reviewing the city’s finances. During that meeting, budget experts warned the mayor about looming deficits that could arise should the country and city enter a recession. State Comptroller Thomas DiNapoli estimated that the city could face a $10 billion shortfall in fiscal year 2026.
“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 a statement. “This Program to Eliminate the Gap savings plan is a 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.”
James Parrott, the director of economic and fiscal policies at the Center for New York City Affairs at the New School, acknowledged that the city faces real fiscal and economic concerns. But he noted that the latest economic data shows the city has been adding jobs faster than the national average over the last several months.
Parrott argued that there were political dimensions to the mayor’s directive at a moment when some adversaries have been pressuring him to increase spending.
“Budgets are about policy and budget actions are about politics,” he said, adding that Adams was certainly not the first mayor to threaten cuts in this way.
Adams’ $101 billion budget increased overall city spending but has been overshadowed by criticisms of its $375 million in cuts to education. The City Council is demanding that the mayor add back nearly $500 million in funding this year.
At the same time, several city unions, including the teachers union, are seeking contract extensions during a time when inflation is high and many municipal workers have taken on additional risks to keep the city running during the pandemic.
Parrott expressed doubts that the latest directive would translate into across-the-board cuts, similar to the first Program to Eliminate the Gap that the mayor ordered at the start of the budget process.
“This is a mayor that wants to project to budget watchdogs that he’s being very careful and responsible when it comes to budgeting,” he said.
Along those lines, Andrew Rein, the head of fiscal watchdog group the Citizens Budget Commission, applauded the mayor’s action, calling the cuts “a prudent and fiscally necessary step to stabilize New York City’s budget in the long run.”
But many workers at city agencies say that an ongoing municipal labor shortage has hampered their ability to deliver critical services from affordable housing to public health. Among the complaints is that the city is hurting its ability to hire by using a relatively new practice of lowballing new hires.
At an unrelated press conference Monday morning, Adams defended his administration’s approach.
“It's easy to sit in the Council and just say, ‘Let's just spend, spend, spend,” the mayor said. “I must make smart financial decisions so our city can weather these turbulent times.”
Correction: This story has been revised to more accurately reflect by how much Mayor Eric Adams is asking municipal agencies to cut spending.