NYC’s Growing Budget Gap

Uh-oh: State Comptroller Tom DiNapoli warns that the city’s budget deficit by 2027 could be double what City Hall now estimates, and his arguments are depressingly strong. DiNapoli’s office sees the red ink going as far as a $13.9 billion deficit in four years, vs. the city Office of Management and Budget estimate of $6.5 billion. The key drivers: new contracts with the municipal unions, the migrant crisis and Gotham’s still-lagging post-pandemic recovery.

Mayor Adams’ first contract deal, with the relatively weak DC 37 union, hikes pay more than 16% from 2022 through 2026. That’s likely less than inflation over that period, and so likely less than other unions will demand.

Team Adams also assumes President Biden will deliver at least $1 billion in support for the city’s outlays on migrants, which will likely exceed $4 billion over the next two years; Team DiNapoli doesn’t see it. And Biden hasn’t shown the least sign of actually ending the migrant crisis, so the city will likely see tens of thousands more newcomers in need of assistance.

Nor does the Legislature show any hint it will cover the $1.3 billion a year in new costs it imposed on the city by mandating smaller classes for Department of Education schools. Meanwhile, Gov. Hochul’s budget plan would make the city pay another halfbillion a year to the MTA.

And the future of the city economy is a universal mystery. Even if the nation dodges recession this year, the return of office workers is a slow crawl at best. For decades, the city hasn’t seen major job gains until the rest of the country’s years into a boom — and nobody sees any national boom in the offing.

Another worry: Sky-high state income taxes (which the Legislature is itching to raise more) already have New York’s share of the nation’s gazillionaires falling fast.

Sure would be nice if then-Mayor Bill de Blasio hadn’t spent every possible dollar of federal pandemic relief before he left office, among all the other time-bombs he left for his successor.

Adams has found over $3 billion in savings over his first year. Sadly, it seems he’ll have to keep up that pace for the foreseeable future.