(Bloomberg) — New York Mayor Eric Adams, bolstered by lower-than-forecast spending on migrants, proposed a $114.5 billion budget that allocates hundreds of millions of dollars in new spending to help pay for social services.
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The spending plan for the fiscal year that begins July 1, which requires approval from the City Council, is more than $2.5 billion larger than the current budget the city approved in June.
It is also the first spending plan since Adams became mayor that hasn’t centered on finding agency savings or included proposed spending cuts, a fact Adams attributed to his administration’s fiscal management and a robust economy. Critics of Adams, who is running for reelection, said the spending plan is more accurately a reflection of years of overly conservative budgeting practices by his administration.
A significant driver of cost savings that allow for more spending, Adams said, was lower-than-anticipated expenses for migrants, more than 230,000 of whom have arrived since April 2022. Since July of that year, the city spent a total of $6.91 billion on costs associated with sheltering and providing services to migrants through December, significantly less than the $12 billion Adams predicted a little more than a year ago that the city would spend by this July.
“The fact that it’s been shown now that they were completely overblowing the cost of the migrant crisis, which is something we’ve been saying since day one, being proven right doesn’t bring us any joy because we had three years of cuts because of this that we now have to rectify,” said City Council Finance Committee Chair Justin Brannan.
Over the past 18 months, Adams implemented time limits on shelter stays and renegotiated contracts with some providers of migrant services, helping to drive down costs. A year ago, there were more than 69,000 migrants living in city-funded shelters. That number has since fallen to fewer than 50,000.
Adams said the city will take in $3.1 billion more in tax revenue than originally forecast, thanks largely to strong business tax receipts. He also forecast tourism to reach pre-pandemic levels in 2025, after 64 million people visited the city in 2024. In 2019, the year before the pandemic began, New York attracted a record 66.6 million visitors. The mayor also predicted the city’s elevated commercial property vacancy rate would begin to fall after this year.
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But property tax revenue is still growing at a sloer pace than it did pre-pandemic, and New York faces budget deficits of $4.2 billion in fiscal 2027, $5.4 billion in 2028 and $5.1 billion in 2029. Left largely unaddressed in Adams’ budget was the question of what, if any, impact the city might feel from the new Trump administration.
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Deputy Mayor Fabien Levy said city officials had been “doing scenario planning for months” to ensure the city continues to receive the roughly $7.9 billion in federal aid it takes in each year, despite the change in administration.
“We’re taking a different tack than previous administrations have with the incoming president, who is the same person, because it’s what’s best for the city,” Levy said, noting that former Mayor Bill de Blasio and former Governor Andrew Cuomo were both “literally punished” under the Trump administration, because each was particularly outspoken in their criticisms of the former president.
With the optimistic tax forecast, Adams is hoping Albany lawmakers will approve a plan he’s calling “Axe the Tax,” which would eliminate city income taxes for families that earn at or below 150% of the federal poverty level. That would cost roughly $63 million in the coming fiscal year and similar amounts each year afterward, he said.
Adams also plans to spend $2.6 billion in the current fiscal year on funding for city services, including $554 million more on shelter costs, a significant increase Adams blamed on a recent surge in the number of homeless people who aren’t migrants arriving in New York City from other states. He also allocated $325 million for rental-assistance vouchers, more than $200 million for nurses in city public schools and $64.2 million for supportive housing.
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