New York City is planning drastic steps to reduce City-funded spending by as much as 15% in response to substantial budget gaps fueled by escalating costs in the years ahead. This report urges the City to provide greater transparency on nondiscretionary costs that it does not have direct control over to help the public, policymakers and its funding partners understand what’s at stake.

As required by Section 196 of the Navigation Law, the Comptroller prepares an annual report to the State Legislature and the Governor. The report includes: a description of the costs and damages paid by and recovered for the Fund; the monies spent pursuant to Section 186 (including amounts spent for oil spill prevention, training activities and equipment purchased), and the economic and environmental impacts on the State.

New York City’s finances continue to benefit from better-than-projected revenues and savings generated through initiatives launched in response to its financial challenges. While many of the fiscal challenges facing the City are not in its direct control — including the continued influx of asylum seekers, elevated demand for City programs due to an uneven recovery and the potential for federal and State actions that could further pressure City finances — preparation remains paramount to navigating this uncertainty.

The Division of the Budget’s State Fiscal Year (SFY) 2023-24 Enacted Budget Financial Plan shows looming budget gaps totaling $36.4 billion through SFY 2026-27. The deteriorating fiscal outlook is rooted in several factors, including anticipated revenue declines from a weakening economy and a volatile stock market, and increases in recurring spending. State leaders must take action to align recurring revenues with recurring spending, with an eye toward preserving the economic competitiveness of our State and equality of opportunity for all New Yorkers.

Stronger-than-anticipated revenue and savings initiatives will allow New York City to maintain budget balance in Fiscal Year (FY) 2024, but the City faces significant financial pressures that are likely to exacerbate already large out-year budget gaps. Budget balance in FY 2024 comes as the City is returning to a revenue composition that more closely resembles pre-pandemic norms, moving away from reliance on federal relief aid.

The $229 billion Enacted Budget for State Fiscal Year 2023-24 includes new recurring spending for schools, mental health services, and health care, as well as resources for the Metropolitan Transportation Authority and for emergency rental assistance. While these and other measures will increase spending, revenues are projected to decrease for the second year in a row, as temporary federal aid is depleted and tax collections decline.

The unemployment rate for mothers in New York City has improved but it remains higher than it was prior to the pandemic. In 2022, 5.7% of City moms in the workforce were unemployed compared to 3.4% nationally. Black mothers in the City are the hardest hit, facing an unemployment rate of 9%. Some mothers in the City appear to be looking for flexible options outside full-time work, especially compared to the rest of the State and the nation.

Escalating debt service costs have long been a source of financial pressure at the MTA. The pandemic exacerbated these pressures causing ridership to drop and tax revenues to dry up. However, new sources of recurring revenue in the enacted State budget and other aid give the MTA an opportunity to ease the pressure that growing debt places on its operations and to stabilize its future finances.

Overtime costs at State agencies rose 47.2% to more than $1.36 billion in 2022, setting a new record. Despite several efforts to bolster the workforce, including salary increases and bonuses for a range of positions including health care workers, attrition of the State workforce accelerated in 2021, and the number of State employees continued to drop in 2022. As the State workforce has been reduced, total overtime hours and earnings have increased.

This snapshot highlights the results for counties, cities, towns and villages that reported for local fiscal years ending (FYE) 2021. Overall, the influx of federal pandemic relief aid and rapid recovery of sales tax revenues were significant factors in lowering many municipalities’ fiscal stress scores in FYE 2021, especially for calendar year local governments.