Assessing the Damage of New York City’s Budget

The theatrics of this year’s New York City budget brought to mind the fiscal and political conflicts of the 1970s — and the need to find a new vision for New York beyond austerity.

New York City mayor Eric Adams speaks during a press conference announcing lawsuits the city is filing against e-cigarette companies at city hall on July 10, 2023, in New York City. (Michael M. Santiago / Getty Images)

For those of us who are fans of the annual revue known as the New York City budget, there’s a time-tested and familiar script. In the first act, the mayor appears center stage, delivering grim soliloquies that crescendo to a battery of cuts. Act two is a dirge, as the citizenry lumbers its way to city hall to implore the mayor to relent, the city council forming a mournful chorus. In the denouement, there’s a furious surge of late-June negotiations, with the most outrageous cuts rescinded at the last minute. Everyone declares victory, except the Citizens Budget Commission, whose staccato warnings about fiscal prudence will sound a minor key until it’s time for the whole show to repeat the following year.

This year, the city hit all its cues. Mayor Eric Adams, railing against Washington, DC, and the refugee crisis, started in January by proposing various money-saving measures that made little sense even within the framework of austerity. Most notorious were the library cuts. In a $107-billion budget, the largest in the city’s history, why slash $36.2 million from the library system — an amount that would have forced many branches to reduce service while saving little money overall?

Finally, after extensive public pressure, a budget approved on the second-to-last day of June saved the libraries. The Adams administration has celebrated a budget that they claim manages to achieve savings without any layoffs or any significant reductions in city services; meanwhile, the Citizens Budget Commission warns that the budget doesn’t go far enough toward cuts and that large gaps will appear in future years.

But make no mistake: despite its size, this is a budget that still fails to address the most pressing problems that confront working- and middle-class New York.

It’s hard — way too hard — to get a complete picture of the city’s proposed spending. Sometimes the amount given in the city’s original documents can change as federal grants become available, and the budget is adjusted throughout the year. Funding declines won’t always become service cuts.

This year was especially confusing because of the conflicting political imperatives that face the Adams administration: on the one hand, reassuring the Partnership for a Better New York and other business-driven groups in the city that fear tax hikes and city largesse, while at the same time maintaining the electoral coalition of working-class voters that brought Adams to power. As a result, the budget process has been driven by the need to find “efficiencies,” while also insisting that money can be cut without affecting services at all.

Accordingly, the city started out by proposing a wide range of budget cuts — many of which, like the library cuts, were walked back by the time the final budget was approved. Those that remain are telling: for example, half a billion from “rightsizing” the 3-K early childhood education program, or a cut of $17 million for programs for inmates at Rikers Island long performed by outside social service agencies, justified by the claim that they can be more efficiently provided in-house.

Social service agencies have seen their budgets fall in the cost-saving efforts. These declines may not be drastic and may even out over the course of the fiscal year; nonetheless, they reflect the city’s underlying priorities.

The budget for the Department of the Aging, for example, appears to be declining from $545 million in FY 2023 to $521 million in FY 2024; the Department of Health from $2.9 billion to $2.2 billion; the Department of Social Services from $11.7 billion to $11.4 billion. Many city agencies are understaffed, operating with 10 to 20 percent of positions unfilled.

Libraries, of course, are a treasure for the whole city, not just the wealthy, and in addition to books and movies and story hours for children, they provide a haven for the indigent and countless social services to low-income people. Keeping them open is a clear priority. But at the same time, it would seem that when push comes to shove, it remains easier for the city to find and insist upon “efficiencies” in those programs that primarily affect the poor.

Why is this happening? New York is under pressure to find cuts given the end of the influx of federal funds to help New York (and other cities) cope with the pandemic. The moment in time at the height of COVID-19 when New York’s problems were of national interest has come to an end — just at the very moment when the city’s debt service is rising, as higher interest rates impact the cost of borrowing for New York. The climbing costs of debt service —  which the city estimates will rise to $9.6 billion by 2027, much of which will go to mutual funds and financial companies such as BlackRock and the Vanguard Group  — imperil the city’s fiscal future.

Despite many differences, the politics of this situation echo the 1970s. Today, Mayor Adams has argued that New York is being left alone by the federal government to deal with a rising population of asylum seekers and has sought to weaken the city’s “right to shelter.” While his criticism of Washington is apt, framing the problem this way effectively blames the migrants themselves for the city’s difficulties.

Similarly, in the 1970s, when the city faced a severe fiscal crisis that brought it to the edge of bankruptcy, many political and economic leaders blamed the city’s tender heart, liberal politics, and poor people themselves — eschewing a look at the larger political and economic changes the city was facing at that time, when it lost 10 percent of its population over a decade and hemorrhaged industrial jobs even as rising interest rates, slowed federal spending, and inflation created new financial pressures.

The ’70s hovers over contemporary New York in another way as well. In the aftermath of that crisis, the city’s leaders determined that since they could no longer count on Washington for aid or support, they would have to engineer the reinvention of New York as a city focused on finance, tourism, and real estate development, particularly high-end skyscraper construction. This economic logic has driven the city ever since, in the development of Lower Manhattan, Downtown Brooklyn, and Hudson Yards.

But its problems have become evident. Over the past year, many eminent economists have warned that New York (like other cities) faces a “doom loop:” a euphonious description for a predicted collapse in commercial property taxes brought on by remote work and the crisis of the office sector. Less often asked is why, exactly, the city has so many offices to begin with, with millions of square feet under construction even in 2023.

The “doom loop” has traction because it speaks to the city’s self-image as a haven for the well-off. The early months of COVID raised the specter of a city deserted by its wealthiest inhabitants, as anyone with a house in the Hamptons suddenly vanished. Even as the pandemic ebbs, this fear has lingered.

But the impact of remote work on the city’s finances may well be exaggerated. Overall property tax revenues for the city went up over the last year, and comptroller Brad Lander — an increasingly outspoken critic of Mayor Adams — has released a report arguing that even in the worst-case scenario, the hit to city revenues from a decline in office use will not be severe.

And fretting about the Midtown offices is a distraction. Increasingly, it seems that the real threat the city faces is that middle- and working-class people will flee for smaller, more affordable cities, while new residents won’t be able to afford to come.

How would a city that took their needs seriously and placed them at the center of its politics look different? For one thing, it would relentlessly focus on affordable housing, making this a priority in every possible way: holding down rents, protecting tenants, repairing the public housing authority NYCHA, converting vacant office towers to apartments, and building new housing in the city and suburbs. For another, it would do all it could to invest heavily in transit to make it easy and cheap to get around this magnificent city (congestion pricing is a great start).

For a third, it would devote resources to schools throughout the city to lessen the competitive pressures that cause needless fights over scarce space in a few elite schools, and it would keep investing in the City University of New York to make it possible to hire full-time professors instead of part-timers to provide higher education to the city and make it possible for the city university to live up to its potential as an engine of mobility.

And finally, it might make spending on public health, homeless shelters, and resources that are aimed at the poorest New Yorkers a real priority — not an afterthought, and not something to cut to balance the budget. An egalitarian city would be one in which fewer people are subject to the wrenching personal disasters of eviction and visible penury; it would be one in which the school system would not be so tasked with addressing the divisions that rend the whole society; it would be a city devoted to public safety and security in the largest sense of the word.

As the curtain falls on budget season, Virginia Woolf comes to mind: surely it is time that someone invents a new plot.