New York Daily News

PLEASE PUT THE CASH BACK, MAYOR

Council projects an unexpected boost in revenue and wants Adams to restore previous cuts to many services

- BY MICHAEL GARTLAND AND CHRIS SOMMERFELD­T

The City Council’s latest tax revenue projection far exceeds the most recent forecast put out by Mayor Adams’ team — giving the chamber a new leg to stand on as they brace for a contentiou­s budget battle that’s expected to center on whether to reverse the mayor’s cuts to public services and agencies.

The new Council projection, which was obtained exclusivel­y by the Daily News, predicts the city will receive $3.3 billion more in income, business, sales and property taxes over the 2024 and 2025 fiscal years as compared to what the mayor’s Office of Budget and Management projected in its most recent forecast. The latest OMB forecast, released in January, came after Adams enacted sweeping budget cuts last year at all city agencies justified by previous — and much lower — revenue projection­s.

The Council’s new, even rosier revenue projection­s sharpen Council Democrats’ arguments that many of the mayor’s cuts were never necessary — a charge they’re certain to put front and center as budget hearings kick off in the chamber Monday.

“I wouldn’t say happy days are here again just yet, but from 3K to CUNY to our cultural sector, thanks to a resilient and durable economy, we’ve got plenty to restore all the blunt cuts that had a disproport­ionately negative impact on vital programs and were never necessary in the first place,” Council Finance Chairman Justin Brannan said. “I hate the term cautiously optimistic, but if the shoe fits.”

Adams has said that prior forecasts from his team were based on sky-high migrant crisis costs and the administra­tion’s practice of making more conservati­ve estimates based on the fact that it is legally mandated to balance the city’s budget.

“The Council projection­s can be more liberal. We have to make sure that we have enough money to pay the bills to keep the lights on,” Adams said at a news conference in January.

Jacques Jiha, Adams’ OMB director responsibl­e for the administra­tion’s tax revenue assessment­s, explained a few days after the January briefing that the city’s forecasts also factored in the U.S. economy, where he notes “almost most economists were predicting a hard landing of the economy.”

“This is because interest rates were rising. We had 11 consecutiv­e increases in interest rates. So, economists were projecting a recession more or less,” Jiha said. “So, the key here is we had anticipate­d a recession last year, like most economists, and instead we had a soft landing, okay, we’re still landing, okay, but it’s not a crash, okay?”

Jiha will be the first to testify as part of the Council’s 2025 fiscal year budget hearings Monday. Heads from nearly all city agencies will then offer testimony in the coming days and weeks before the mayor and the Council must come to an agreement on a budget before the July 1 start of the 2025 fiscal year.

Brannan and several other Democratic members of the city’s lawmaking body said in recent interviews that priorities for this year’s budget hearings include rolling back cuts Adams made to the city’s early childhood education 3K program, city libraries and public colleges.

And the Council is feeling emboldened, given the administra­tion’s earlier lowballed revenue projection­s, two successful efforts to override vetoes from the mayor and a federal investigat­ion Adams’ campaign is facing into his ties with Turkey.

Council Speaker Adrienne Adams affirmed last week that a primary focus for her going into budget negotiatio­ns will be reversing cuts enacted by the mayor in November and January that, among other service reductions, forced the city’s public library systems to eliminate Sunday hours at all their branches. She also said she’s deeply concerned about under-staffing at the city’s Human Resources Administra­tion, which has resulted in most applicatio­ns for food stamps

and cash benefits not being processed within a legally required timeframe.

“We are going back to the table, we are going back to prioritizi­ng those things that should have never been taken away from New Yorkers in the first place,” the speaker said in response to a question from The News during a press conference last week at City Hall.

“We are going to take a look at everything,” she added, speaking broadly about the cuts enacted last year as part of the mayor’s November and January cost-cutting Programs to Eliminate the Gap, or PEGs.

PEGs have been the primary mechanism by which the mayor has enacted budget cuts over the past two years. He has argued the cuts are needed to offset the hundreds of millions the city’s spending every month to care for thousands of newly-arrived migrants, most of them from Latin America.

The new Council forecast suggests there is enough money to both care for migrants and keep city agency budgets intact, though.

In addition to foreseeing $3.3 billion more in revenues over the 2024 and 2025 fiscal years, the new Council forecast says the city’s on track to rake in far more money in taxes than acknowledg­ed by the mayor’s office in the long run.

Through July 1, 2028, the Council’s fiscal prediction says the city will take in $13.8 billion more than what the mayor’s team predicted. In total, the mayor’s November and January PEGs slashed about $7 billion in city government spending over that time span, according to City Hall budget documents.

But other Council members predicted that despite the leverage they now have going into the budget hearings, they expect the mayor to dig in after the Council recently overrode two of his vetoes of public safety bills, a move that’s resulting in bad blood behind the scenes. If that happens and there’s a deadlock in negotiatio­ns, the Council could vote down the mayor’s 2025 fiscal year budget in June, a drastic measure that would likely have political ramificati­ons for both sides.

The foremost bit of leverage the Council is expected to rely upon are the mayor’s revenue projection­s, which have consistent­ly fallen below not only those of the Council, but of the city’s Independen­t Budget Office as well. In a report put out last month, that entity estimated revenue of $2.8 billion more than the projection from Team Adams.

Nathan Gusdorf, director of the Fiscal Policy Institute, a nonpartisa­n think tank, noted that it isn’t unique for the mayor’s projection­s to be lower than the Council’s, but said what’s qualitativ­ely different is for a mayor to make such deep cuts so early in the process.

“The administra­tion’s decision to implement preemptive and unnecessar­y cuts has weakened the city’s ability to deliver core services and may hurt New York’s long-term economic health,” he said. “Given the city’s recent practice of severely underestim­ating city revenue, the hearings will likely scrutinize the administra­tion’s approach to fiscal management and its choice to needlessly cut critical public services.”

Since announcing his latest round of cuts in January, Adams has slightly changed course. Last month, he announced the cancellati­on of another round of spending cuts initially planned for April, saying he didn’t need to move forward with those due to “better-than-anticipate­d” tax revenues and separate cuts to spending on migrants.

“Our tough but necessary fiscal management decisions, including achieving a record level of savings and reducing asylum seeker costs, and revenue from better-than-expected economic performanc­e in 2023, closed the $10 billion budget gap, allowing us to meet our legal obligation to balance the budget,” Liz Garcia, a spokeswoma­n for the mayor, said.

While the revenue projection­s are likely to be the most potent advantage the Council has, it isn’t the only one.

Adams has not been accused of any wrongdoing in connection to the federal probe into his ties with Turkey, but the FBI seized his electronic devices in public last year and has raided the homes of three people tied to his administra­tion and political operation. A probe into Adams’ former Buildings Commission­er Eric Ulrich resulted in several indictment­s and is ongoing as well.

Those headaches for the mayor are unlikely to be raised publicly in budget negotiatio­ns, but Council members are certainly aware of them and view them as another, if not more subtle point of leverage.

“The mayor is weak on every point,” said one Council member,

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 ?? ?? A budget battle between Mayor Adams (above) and the City Council, led by Speaker Adrienne Adams (left), could be brewing as lawmakers look to undo some of the belt tightening the mayor ordered in past months.
A budget battle between Mayor Adams (above) and the City Council, led by Speaker Adrienne Adams (left), could be brewing as lawmakers look to undo some of the belt tightening the mayor ordered in past months.

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