New Report Recommends NYC Budget Cuts to Prepare for Economic Downturn

By making more strategic cuts now, the city can avoid painful decisions later

NEW YORK, NY — As New York City prepares for the fallout of the current economic downturn, Mayor Bill de Blasio’s proposed budget for the coming fiscal year does not contain nearly enough cost-cutting measures to protect the city from future shocks. In a new Manhattan Institute issue brief, adjunct fellow and former city planner Eric Kober analyzes how de Blasio’s budget stacks up against an analysis by the city’s Independent Budget Office (IBO) and his predecessor’s approach to the similarly uncertain 2009 downturn. He recommends that the mayor take a more aggressive approach to cutting costs to place the city in a stronger fiscal position now and in coming years, especially in light of the uncertainty regarding federal aid. By law, the city’s budget must remain in balance.

Mayor de Blasio’s proposed FY 2021 budget uses rosier estimates for some key tax revenues than the IBO predicts and relies heavily on cutting nonrecurring expenses and drawing down reserves—creating the risk that future years will look even more bleak than the one ahead. As a point of comparison, in 2009, former Mayor Bloomberg was facing a similarly adverse and uncertain economic picture, but in response used more conservative estimates, in percentage terms, of the coming revenue drop and made significant cuts to labor costs and capital spending. This ultimately protected the city from even more difficult choices in later years, and even created a surplus that helped balance the FY 2011 budget.

As the City Council now considers the mayor’s proposal, Kober recommends that its members, and the mayor, evaluate additional cuts that would bring savings closer to the levels proposed by Bloomberg during the Great Recession. He recommends:

• Freezing pay for government employees;
• Offering enhanced benefits if employees retire immediately;
• Reducing the capital program, which would lead to lower debt service costs; 
• Better utilizing labor-saving technology and loosening restrictions on remote work; and
• Asset sales, including the city’s stock of older office buildings in lower Manhattan.

Click here to read the full report.