Mayor Eric Adams latest round of spending reductions—the Program to Eliminate the Gap (PEG)—only moderately affects direct services to New Yorkers and chips away at the City’s massive and still-troubling budget gaps.  

CBC’s “Unpacking the PEG” reveals that while spending reductions are starting to affect direct services to New Yorkers more than previous PEGs, approximately 80 percent of the latest PEG actions should not affect services.

Approximately half of the 20 percent of PEG actions that are expected to affect services come from the cancellation of five classes of police officers.

The 80 percent of PEG actions that are not expected to impact services come from: 

• re-estimates and underspending (31.8 percent);  
• efficiency savings (16.7 percent); 
• funding shifts (12.4 percent); 
• vacancy reductions (10.5 percent); 
• increased revenue (5.4 percent); and 
• debt service savings (3.2 percent). 

“Unpacking the PEG” shows that most City agencies reduced their budget by at least 4.5 percent (the PEG target is 5 percent) and includes a table detailing the highest and lowest agency PEG percentages.

However, the latest PEG amounts to a 2.2 percent reduction of total City-funded spending and 1.7 percent of the overall City budget because an estimated 58 percent of the City’s fiscal year 2025 spending, such as costs for employee benefits and pensions, Medicaid, and services for migrants and asylum seekers, is not subject to PEG actions.

Even after the PEG, the November 2023 Financial Plan projects out-year budget gaps of $7.1 billion in fiscal year 2025, $6.5 billion in fiscal year 2026, and $6.4 billion in fiscal year 2027, which do not include the impacts of the federal and City fiscal cliffs or potentially higher revenues. 

To close the remaining gap and present the legally required balanced Preliminary Fiscal Year 2025 Budget this month, Mayor Adams has ordered another 5 percent PEG and a 20 percent reduction in spending on asylum seekers and migrants. Agencies now face a heightened challenge of finding efficiencies while protecting core services.