New York State Comptroller Thomas P. DiNapoli issued the following statement regarding the agreement announced today on New York City’s November Financial Plan.
“The release of the city’s November 2022 Financial Plan update raises concerns about the city’s outyear budget gaps at a time of continued uncertainty. New sources of spending and revenue pressure highlight the missed opportunity to set aside additional monies in its Revenue Stabilization Fund in Fiscal Year 2022 when revenues significantly exceeded projections. A systematic approach to setting funds aside is critical.
“The city has reflected the impact of pension returns falling below projections in Fiscal Year (FY) 2022, offset in part by savings though the Program to Eliminate the Gap (PEG) initiative. PEG savings made use of both agency vacancies and a reduction in funds for 3-K, which the Office of the State Comptroller has noted as potential areas for savings in recent reports. The PEG program is expected to provide about $2.5 billion in savings through FY 2024; however, this figure is lower than initially requested. The city’s lower estimate may reflect its attempt to balance savings with the delivery of services at a critical point in the city’s recovery and future cost reduction initiatives.
“The November Plan also highlights new and recurring risks the city faces that could quickly reduce the size of the budget surplus from levels it has reached in the last two years. Most notably, the city is anticipating the receipt of $1 billion in federal relief that has not yet been approved for managing the cost of sheltering and providing services to asylum seekers, which we view as a material risk to its budget in the current fiscal year, and which could create spending pressure in the outyears.
"In addition, despite a substantial worsening of the economic outlook since its last update in April 2022, including on Wall Street, the city is not yet projecting a further softening in revenues, which is likely to lead to a reduction in projected revenues in its preliminary FY 2024 budget early next year. Recurring risks, such as overtime and Carter cases, also remain in the current year.”