New York budget watchers were treated to an unusual sight yesterday. Mere hours after Governor Kathy Hochul released a record $232.7 billion executive budget for Fiscal Year 2025, Mayor Eric Adams announced his $109.4 billion preliminary budget and update to the city’s five-year financial plan. The main takeaway from both is that New Yorkers can expect more of the status quo. In the city, the mayor’s suddenly sanguine tax-revenue outlook translates to fewer planned cuts for agencies. The state, meantime, will throw more money into programs like Medicaid and migrant services that are unsustainable over the long-term. Hochul’s numbers represent a $3.7 billion increase over last year’s enacted budget, while Adams’s new budget comes in around $6.7 billion higher than what the mayor proposed this time last year. In refusing to rock the boat in 2024, the mayor and governor both aim to help Democrats win in November.
The softening of Adams’s November budget-cut plans followed up on last week’s minor restoration of funding to fire and police services. Only two months ago, Adams spoke of “significant economic headwinds that pose real threats to our fiscal stability.” He demanded cuts of 5 percent to city-agency budgets to help close a $7.1 billion budget gap in fiscal 2025. This portended everything from fewer street litter-basket collections to freezing police hiring.
Adams’s revision now expects $2.9 billion in higher tax revenues between the current fiscal year and next, surpassing even the city council’s ordinarily rosy estimates. And migrant-related costs will decline by an estimated $1.7 billion across the two years.
Though these developments are welcome in one sense, they unintentionally vindicate those who have doubted the mayor’s top-line figures for months. It’s long been customary for the Office of Management and Budget’s tax-revenue estimates to come in below the council’s. But Adams, having reversed his dour outlook in just a few weeks, will find it harder to convince members that November’s headwinds were merely minor turbulence. Lowering August’s hockey-stick-shaped increase in migrant-related cost estimates likewise undercuts the mayor’s repeated pleas for more financial assistance from Washington and fiscal responsibility from the council.
The city is far from out of the fiscal woods. As the Citizens Budget Commission notes, Gotham still faces out-year budget gaps of more than $5 billion, along with underbudgeted programs. With the worst prospects for austerity off the table, agencies will have little incentive to economize. But Adams is facing record-low approval ratings and the Democrats need votes in November, so short-term considerations trump overdue long-term reforms.
Governor Hochul’s purposefully boring FY 2025 budget is also fine-tuned for election-year politics. Her most noteworthy spending proposal, $2.4 billion on migrants (including $500 million from state reserves), will pay for shelter for single individuals in the city’s congregate facilities, National Guard protection, and legal services to file for asylum and receive work authorization. The state still has a structural spending-to-revenue imbalance, but no matter. Hochul’s assistance may placate Adams and provide cover for President Biden long enough to get through November.
The mayor already appeared to soften his tone on the migrant crisis during yesterday’s press briefing. Adams cheered the fact that the city expects to have only 80,000 migrants in shelters by June and 90,000 by the end of 2024. That figure is lower than the 100,000 previously expected, but Adams seems to be moving the goalposts. In September, when he exclaimed—much to the chagrin of progressives—that the migrant crisis could “destroy New York City,” migrants occupied about 60,000 shelter beds.
If that situation is 50 percent worse by the end of this year, that’s a cause célèbre, not a cause for celebration. With the U.S. immigration-court case backlog now over 3 million (an average of 4,500 cases for each of the nation’s 682 immigration judges), city and state spending looks to be a down payment for the years ahead.
For Hochul, the important thing right now is to reverse congressional Republicans’ gains from 2022, which they earned partly because of her limp performance in that election. Last year didn’t help much, given the historic defeat of her nominee for chief judge and her inability to pass most of her ambitious policy agenda.
Come November, another weak showing would risk undermining her authority for the remainder of her term. With New York’s congressional district lines about to be redrawn almost certainly in Democrats’ favor, Hochul knows better than to get in the way. Fortunately for the city and state’s economic competitiveness, that motivation translated to no new tax proposals.
But even if New York Democrats win big in November, uncertainty abounds. Will they have the opportunity—and political will—to help enact federal solutions for the big-ticket problems dragging down their state?
Photos by Lev Radin/Pacific Press/LightRocket via Getty Images