New York City’s adopted $98.7 billion FY 2022 budget, beginning July 1, 2021, highlights the critical role a continued economic recovery and sound fiscal management will play in enabling long-term budget balance for the city. Fueled by a record level of personal income taxes ($14.9 billion) and corporate taxes in FY 2021, in addition to federal aid, the adopted budget takes important steps to increase reserves, including a $500 million deposit into the Rainy Day Fund, a first of its kind.
“New York City’s economy is bouncing back. Federal funding has provided a lifeline to the city but fixing the damage from COVID-19 will take time,” DiNapoli said. “While I am encouraged by the deposit to the Rainy Day Fund, long-term risks remain, especially using non-recurring funds to pay for ongoing spending commitments. Going forward, the new mayor and city council should look to further boost reserves to better prepare for unforeseen circumstances and identify cost efficiencies to achieve budgetary balance.”
The adopted budget also restores previous cuts and cements a number of new programs and investments in important services that have recurring spending implications for the city that are paid for with one-time federal funds, which will increase budget risks in the outyears of the city’s financial plan.
However, the better-than-expected short-term revenue picture provides time to identify alternative resources for recurring funding for its new service expansions as the temporary federal funds wind down.