Adams backs off full 4% cuts for some agencies in executive budget proposal

New York City isn’t cutting budgets just for the sake of it, Mayor Eric Adams said on Wednesday. 

In his 16 months in office, however, the mayor has implemented two citywide savings initiatives – known as Programs to Eliminate the Gap, or PEGs – as well as an additional vacancy reduction initiative last fall. And earlier this month, nearly all agencies were instructed to shave another 4% from their budgets in the upcoming fiscal year, with the Department of Education and the City University of New York told to cut 3%.

City Council leaders and advocates across the policy spectrum warned that further savings mandates would risk going beyond trimming the fat, and actually cut into the bone.

But the fiscal year 2024 executive budget that Adams and the city’s top budget officials unveiled on Wednesday suggested that the administration isn’t dead set on seeing through those 4% cuts fully – at least not for all agencies. A handful of city agencies will face reduced cuts or no new cuts at all, Adams said, because those cuts would have harmed agencies’ ability to deliver key services.

The mayor’s official budget proposal is a starting point for negotiations with the City Council that are expected to continue through May and June. The mayor and the council must reach an agreement before the next fiscal year begins July 1. Meanwhile, the state budget, currently being negotiated by the governor and legislative leaders, is nearly a month late, casting some uncertainty over the city’s process.

Backing down on proposed cuts

On Wednesday morning, prior to his executive budget address, Adams backed off one of his most unpopular proposed cuts amid growing backlash, announcing that he would spare the city’s public library system from the latest 4% cuts, The New York Times reported. Still, library leaders warned the system’s operating hours and programs are still at risk due to the $36 million in previous budget cuts still on the table.

But it’s not just libraries that will be spared. City Hall said that the Department of Cultural Affairs would also fully avoid the 4% cut, while eight other agencies would face a reduced savings mandate. Those agencies include the Fire Department, the Department of Sanitation, the Department of Parks & Recreation, the Department of Youth & Community Development, the Human Resources Administration, the Department of Homeless Services, the Office of Labor Relations, and the Department of Design and Construction. 

Adams said on Wednesday that while all agencies presented savings plans that met the 4% targets, those specific agencies wouldn’t be able to endure 4% cuts without having an adverse effect on public safety, health or other critical services. “We did not take savings that could threaten these critical services,” Adams said on Wednesday. It was not immediately clear how much those agencies were asked to cut.

While all agencies were ordered to make cuts through previous savings initiatives, a couple – the New York City Police Department and the Department of Sanitation – still haven’t met the savings targets for fiscal year 2023. 

What are the cuts?

In a joint statement on Wednesday afternoon, New York City Council Speaker Adrienne Adams and Finance Committee Chair Justin Brannan suggested that the cuts that remain could still threaten service delivery. “The Executive Budget still leaves our libraries facing significant service cuts, agencies that deliver essential services harmed, and programs that deliver solutions to the city’s most pressing challenges without the investments needed,” the statement read. 

The new cuts total $1.6 billion in savings over fiscal years 2023 and 2024, putting total savings achieved through PEGs since last June at $4.7 billion over that time period, according to City Hall. 

Adams said that the latest savings were achieved without layoffs or direct service cuts. In previous PEGs, many agencies removed vacant positions – sometimes in large numbers – from their payrolls in order to achieve savings. There were also major savings found through scrapping a planned expansion of 3-K for All – not technically a cut to an existing city service, but critics haven’t hesitated to describe it that way.

This time around, many agencies appear to have found savings through reestimates to planned spending. That includes a $306 million reduction in anticipated growth in the Department of Education’s budget for paying fringe benefits, and a $5 million reduction in spending on home meal deliveries by the Department for the Aging because of less than anticipated usage. 

The city’s official employee headcount is actually expected to grow by about 1,000 jobs in the executive budget, up to 328,000. But roughly 23,000 of those positions are vacant, due to attrition and the city’s difficulty in hiring for some jobs. Some of the savings in this budget can be attributed to the city not having to pay those empty desks.

Fiscal watchdogs say that Adams is overstating his focus on efficiency in government. ”The vast majority of these savings have been pruning low hanging fruit. Reestimating the costs of what they plan to do anyway,” said Andrew Rein, President of the Citizens Budget Commission. Rein called for the Adams administration to be more ambitious, saying there’s still room to find savings. “Low hanging fruit starts to die on the vine and now you’ve really got to restructure government, or else you start cutting services.”

But some city services have already been reduced by understaffing. For one example, food stamp applicants have not been getting timely service because of staff shortages at HRA. City officials recently testified that fewer than one in five applicants were processed within 30 days in December. 

New needs to fund

Adams and city budget officials have warned that fiscal caution is necessary to combat outyear budget gaps in the billions and impending fiscal risks, including the costs of managing the asylum-seeker crisis – which City Hall estimates will cost $4.3 billion through fiscal year 2024 – new labor agreements, and the possibility of an economic recession. 

The state’s own delayed budget has complicated the city’s executive budget, leaving open questions about state funding going to the city, and how much the city would be asked to contribute to the Metropolitan Transportation Authority, for example. But one major question appears to have been answered; state legislative leaders have reportedly agreed to contribute $1 billion in funding to New York City to help cover the costs of the migrant crisis. Adams said the city will also likely receive about $600 million from a $800 million pot of FEMA grant money set aside for states responding to the asylum-seeker influx. Still, additional federal aid is unlikely and the combined funding from Congress and the state would only cover just under 40% of the city’s projected costs, according to Adams.

“Unfortunately the prospect for additional federal aid or congressional action on comprehension immigration reforms are unlikely given that far right Republicans control the House,” Adams said. “We crafted this budget with full awareness of asylum-seeker costs, labor settlements and other gaps.”

City Council leaders, in statements and in hearings over the past few months since the release of Adams’ preliminary budget, have warned that budget cuts will harm agencies’ ability to provide essential services. While the council has acknowledged some of the same fiscal risks as City Hall, including the asylum-seeker costs and an uncertain economy, they have argued that there is enough money to shore up budget reserves and reverse some cuts to agencies.

The difference in the council’s and City Hall’s outlooks on the budget can be explained in part by a routine mismatch in their respective tax revenue projections. With the release of the executive budget, the Adams’ administrations’ estimates got a lot closer to the council’s. The Office of Management and Budget’s projected tax revenues increased $2.1 billion in fiscal year 2023 and $2.3 billion in fiscal year 2024. 

“Ray Majewski and @NYCCouncil economists currently blasting We Are The Champions,” New York City Council Finance Committee Chair Justin Brannan tweeted after Adams’ budget address, in an apparent reference to City Hall’s tax revenue projections being closer to the council’s. “These guys do not miss.”

Adams gave the council a virtual budget briefing earlier Wednesday afternoon, but members and staff aren’t given much time to dive into the numbers. “People talk about not getting SNAP,” City Council Member Gale Brewer told City & State, referring to the city’s failure to deliver food stamps on time due to staffing shortages. “Does this help? Are people going to be hired to do this? You need to go much more in depth,” she said. So negotiations will continue, as will another round of budget hearings by the council, with the final budget due before July 1. “Questions were answered but not fully,” Brewer said. “A lot will come out in the hearings.”