New Report Presents Budget Plan for New York City’s Future

Steven Malanga recommends a six-point plan to increase long-term saving and decrease the budget gap

New York, NY — With more high-income taxpayers working remotely, a persistent pandemic, and declining civic order, the next New York City mayor faces a difficult task. And stabilizing the city’s finances should be at the top of the to-do list. The Financial Control Board (FCB) estimates that there will be a $5.4 billion deficit in 2022, $4.5 billion in 2023, and $4.7 billion in 2024. With a growing deficit and few plans for long-term saving, the city can’t sustain itself for long. Mayor de Blasio has proposed several short-term, one-shot budget reductions like cutting NYPD overtime and taking largely from reserve funds for health care coverage to close the gap. However, the next mayor needs to find ways to save long term. A new Manhattan Institute (MI) report—part of MI’s A Policy Playbook for New York’s Next Mayor series—by George M. Yeager fellow Steven Malanga proposes a six-point budget plan to reduce spending next year and in the years to come.

Among the report’s recommendations are: 

• Accelerate the PEG (Program to Eliminate the Gap);
• Bring the cost of health care for public employees and retirees in line with costs in other governments;
• Bring city pension costs in line with state costs;
• Reduce the size of the workforce through cuts, attrition, and productivity gains;
• Accelerate the privatization of the NYC Housing Authority (NYCHA) and explore other avenues of privatization to boost investment in the city;
• Ask the state to invoke the Financial Control Board (FCB) to make cost-cutting easier.

During his first seven years in office, Mayor de Blasio grew the budget by 30 percent by both increasing worker pay and benefits and the overall size of the city’s workforce. If voters elect a mayor with the wherewithal to challenge the forces that shape the city’s budget, there is room for cuts and realignment, as Malanga proposes. If not, unlike the aftermath of 9/11 when resolute New Yorkers pulled together to save their city, we face the real possibility of an exodus of high-income taxpayers, a decline in civic order, and a fiscal crisis like no other.  

About New York City: Reborn

New York City: Reborn is a Manhattan Institute project that encompasses research, journalism, and event programming. Through this initiative, the institute convenes business, civic, academic, and civil-society leaders from around the city with MI scholars to discuss issues key to the city’s recovery. Post-coronavirus, MI envisions a growing New York City with a thriving economy, healthy finances, accessible housing, effective infrastructure, flourishing education, safe streets, and increasing competitiveness. New York City: Reborn will help turn that vision into reality. Click here to learn more.

Click here to read the full report