Report: Eric Adams’ administration is ‘unreasonably pessimistic’ in budget projections

New York City’s revenue projections have grown “more pessimistic” under the Adams administration, leading to billions of dollars in “unjustified” budget cuts, according to a new report from fiscal watchdog The Fiscal Policy Institute shared exclusively with City & State.

While the Mayor’s Office of Management and Budget has long released cautious preliminary projections, revenue estimates have become more conservative in recent years. According to the report, the city's actual revenue typically outpaced what the mayor's office estimated by 6-9% in the few years prior to Adams’ tenure. In 2023, the actual revenue number was almost 13% higher than what the Adams administration initially estimated. (Actual revenue in fiscal year 2022 was 18.9% higher than the previous mayor’s office projected, but that particularly lofty number was tied in large part to stronger-than-expected economic recovery and federal relief funding during the COVID-19 pandemic.)

As fiscal year 2024 draws to a close, the city’s latest projections put revenue at $114.5 billion – 11.6% more than the city’s preliminary estimate. The city is currently on track to have a roughly $4 billion end of year surplus, according to OMB figures. Those strong revenues, according to The Fiscal Policy Institute, would allow the city to reverse cuts to programs and services, including the roughly $50 million needed to reverse cuts to library services, restoring the roughly $350 million cut from 3-K and early childhood education, and $1 to $1.5 billion to fill the city’s 16,000 vacancies. 

“There is no sound fiscal rationale for maintaining the city’s harmful budget cuts,” the report says, arguing the city should instead use its “robust revenue” to fully fund programing facing “unnecessary cuts and expiring federal funding.”

Advocates and the City Council have also criticized City Hall for underestimating revenue, attributing the unnecessary budgetary cuts to the lower estimate.

But a City Hall spokesperson touted the administration’s conservative approach. “Thanks to responsible, effective fiscal management, our administration closed an unprecedented $7.1 billion budget gap while facing budget holes left by expiring stimulus funds that had been used to support long-term programs, skyrocketing asylum seeker costs, and labor contracts that went years unnegotiated,” the spokesperson said in a statement. “We must make cautious revenue forecasts because we cannot afford to be wrong.”

Budget forecasting is far from an exact science. While analysts generally rely on similar economic indicators and models, they may weigh indicators differently or use different formulas to calculate their projections. The Mayor’s Office of Management and Budget typically opens the budget process with more conservative estimates, setting a starting point for negotiations with the council that typically fights to spend more. The office is particularly motivated to take care while forming calculations as overshooting may mean the city spends more than it expects to take in. Given the smaller risk attached to inaccurate projections, monitors like the city comptroller, the City Council and the Independent Budget Office tend to have more freedom while calculating revenue estimates, leading them to less conservative figures.