The original op-ed can be found here.

By Tom DiNapoli and Andrew Rein

As public and private watchdogs over New York City’s fiscal health, our mandate is to alert the public when the city faces an alarming financial situation. That moment has arrived: major looming budget gaps will have serious consequences for New Yorkers, unless action is taken now.

Many New Yorkers already sense the stress given how the staggering influx of asylum seekers and migrants has strained social services and the budget. The city estimates these costs may grow next year to equal what it spends to run the sanitation and parks departments combined.

But the billions of dollars the city will spend to care for these new arrivals is only one significant contributor to the fiscal shortfall — at most, 42 percent of the Fiscal Year 2025 budget gap. Our organizations project that gap for next year could be $9.9 billion and possibly up to $13.8 billion, even with the lower estimate assuming higher tax revenues and lower migrant costs than the city’s Office of Management and Budget anticipates.

The major underlying cause of the budget gap comes from years of added and expanded city programs that — at best — were supported only for a short time by non-recurring revenue or — at worst — not funded at all. City-funded spending has increased more than 50% over the past decade while recurring revenues have not kept pace. Despite the urging of our offices, few efforts have focused on increasing efficiency or shrinking lower impact programs, which could have allowed ongoing revenue to be sufficient to avoid future cuts.

The city and its unions agreed to reasonable raises for city workers, but did not identify how the $16 billion they added to the budget will be funded. The city also used federal Covid aid and a temporary tax revenue surge from record Wall Street bonuses to fund and grow over $2.5 billion of programs, from housing vouchers to education for 3-year-olds. Spending on overtime, special education and other services also regularly exceeds the budget. We are now facing what we call a “fiscal cliff,” because when funds dry up, the budget gap expands or programs must be cut.

What to do now? Knowing a reckoning is approaching, Mayor Eric Adams has rightly called for immediate action to stabilize the budget, directing city agencies to propose one round of 5% savings and be prepared for another two, amounting to nearly 15% in total. This is not easy, and must be done right to minimize impact on critical services. And it would be a futile task if city leaders continue to add spending: Adams’ four previous savings plans were helpful, but new spending that was simultaneously added amounted to more than double the planned savings.

To stabilize the budget and minimize any pain from cuts, the most impactful programs should be prioritized first, allowing the city to end programs meant to be temporary and consolidate duplicative efforts. Doing this well relies on the city greatly improving its data on program efficiency and effectiveness, and implementing a performance management and accountability process.

Second, agencies should implement changes to deliver services more efficiently and help the city run better. Given how inefficiencies are marbled throughout the city’s and its contractors’ operations, many of the best ideas will likely come from management and labor collaborating to change processes and enhance workers’ skills. Opportunities to use technology and reorganize functions can be pursued. The city also should examine how it uses space and vehicles, and identify savings through centralized procurement. Per the mayor’s directive, this savings effort will include migrant-support services, many of which have outlived any emergency rationale for higher costs.

Finally, city headcount should be managed smartly. Certain areas need more staff to get the job done. Less discussed have been the operations that have sustained staffing losses but are, or can be, managed well with leaner teams. The mayor’s office should take a hard look at staffing and performance, and make nuanced decisions to ensure city government can function well.

The challenges are real, the solutions tough, but a path is at hand. It relies not only on the hard work of management and labor, but also on a transparent, sober discussion of program priorities, impacts, savings efforts and costs. To help this transparent effort, strong consideration should be given to reviving the Program to Eliminate the Gap (PEG) monitoring function that the New York State Financial Control Board provided years ago.

Fiscal stability underpins the city’s ability to provide core services to New Yorkers and is fundamental for economic growth. Those preferring to avoid major steps like these are inadvertently harming the city’s capacity to serve those in need in the future. Compassionate, creative New Yorkers have no shortage of ideas that may help our neighbors and the city thrive. Hard choices must be made, with the needs of New Yorkers — today and in the future — at the center.

Thomas P. DiNapoli is the 54th comptroller of the State of New York. Andrew Rein is president of the Citizens Budget Commission.