As City Council Executive Budget hearings wrap up, signaling the next stage of New York City budget negotiations, the Citizens Budget Commission’s (CBC) two new releases, Spending In Perspective and PEGs In Perspective, reveal that:

• Massive federal COVID aid and strong tax revenues, mainly from a record 2021 on Wall Street, helped the City boost its total budget by 21 percent between fiscal years 2019 and 2023, despite weathering the pandemic and recession;
• Even with the Administration’s three Programs to Eliminate the Gap (PEGs) and a Vacancy Reduction Initiative, City-funded spending from fiscal year 2024 through fiscal year 2027 is scheduled to grow 3.9 percent annually—hardly austerity;
• The PEGs mostly trimmed low hanging fruit;
• PEGs that may affect services were only 0.3 percent of the total budget;
• More needs to be done to significantly narrow budget gaps that may approach $11 billion in a few years; and
• Absent significant action, the City may face massive service cuts or counterproductive tax increases, harming the City’s attractiveness to a broad range of residents and businesses.

CBC’s examination of the four rounds of savings plans also found:

• 91 percent of the savings come from actions that should not reduce services, instead coming primarily from re-estimates of program costs, elimination of vacant positions, and increases in efficiency;  
• Cumulative recurring savings total $4.1 billion per year, 3.6 percent of the total budget; and 
• Revenue raisers have become an increasing share of the PEGs, totaling nearly $180 million in recurring annual revenue over the four plans.

CBC’s examination of spending found:

• City-funded spending increased 6.1 percent in fiscal year 2022 and is currently projected to increase 10 percent in fiscal year 2023;
• While the Executive Budget projects City-funded spending in fiscal year 2024 will decline 2.2 percent from fiscal year 2023, it will still be 7.5 percent higher than fiscal year 2022 and 15.4 percent higher than fiscal year 2019; and
• Spending growth through the pandemic was enabled by strong revenues despite the recession and pandemic; tax revenues over fiscal years 2020 to 2024 are currently projected to be $1.0 billion higher than the pre-pandemic forecast.
• The City’s economic outlook remains precarious and its budget gaps approach $11 billion including the fiscal cliffs for housing vouchers and early childhood education programs, and underbudgeted spending for special education and overtime. As the City grapples with how to prioritize impactful programs and increase efficiency to preserve critical services, policy makers and the public should keep in perspective that this is not an austerity budget, with strong spending growth and the vast majority of savings not affecting programs.