NYC’s $105B budget barely nods at soaring inflation despite boost in reserves
No city budget is inflation-proof. But in the $104.9 billion budget deal he made with the City Council last Friday, Mayor Eric Adams is making the budget slightly more inflation-resistant, with higher rainy-day reserves. That’s better than nothing.
But the numbers nevertheless show the scale of the catastrophe that’s about to hit the city, as the cost of day-to-day living soars nationwide.
Adams is a unique modern mayor, in that he has no signature big-ticket spending item. By contrast, Bill de Blasio had pre-K; Mike Bloomberg lavished new funds on the Department of Education; Rudy Giuliani and David Dinkins spent big on cops; Ed Koch poured rebuilding funds into the South Bronx.
For a guy who associates himself with public safety, it’s slightly strange that Adams hasn’t even added Police Academy classes, an easy tried-and-true law-and-order signal. But strange doesn’t mean bad: Adams continually says the police should be more efficient, and that’s probably true.
Similarly, he has responded to the fact that public-school enrollment has plummeted with the crazy notion of actually cutting planned DOE spending, by $215 million, less than 1%. Amazingly enough, the council has rightly gone along with this.
The only exception to this trend was Adams’ proposal to add nearly 600 more correction officers, despite the fact that Rikers Island has more officers per inmate to any other jail in the country. But the council, also rightly, shot that idea down. (Sometimes, the “defund” ideology has its uses.)
The detailed spending proposals are mostly modest.
The biggest is $226 million to bring people living in the subway into homeless shelters with more privacy and support services than traditional ones, via more mental-health outreach underground conducted by civilians, not cops.
If that’s part of the price to pay for safer subways, fine — if it works (although much of it will end up in the pockets of opaque homeless-service contractor “providers” with little accountability).
There’s $101 million for summer enrichment for schoolkids, and $79 million for summer jobs. Beyond that, there’s a slew of smaller-scale items, from $6.7 million for adult literacy to $2 million to clean the streets more often.
So why, then, is city spending going up so much — from a planned $101 billion in February to a planned $103.6 billion in April to the $104.9 billion planned now (once small-scale deficits and surpluses transferred from year to year are taken into account)?
All told, the city will spend $78.8 billion in city taxpayer dollars for the fiscal year that starts July 1, 5.9% higher than the final de Blasio budget. In February, by contrast, Adams proposed to increase city-funded spending by just 1%. (The balance of the money comes from federal and state taxpayers.)
And Adams, to his credit, is “spending” to sock away money to account for this higher cost of living: He’s adding $2 billion this year in reserves. That’s supposed to go to future raises to employees and contractors and for higher fuel and other costs.
Yet: In the face of 8.6% inflation, $2 billion is very little. As Adams’ budget director said Friday, even with these new reserves, the city has enough money only to give out raises to union workers of about 1.25% annually.
But workers are inevitably going to be asking for raises of not double or triple — but seven times that.
Raises to keep up with inflation would cost the city more like $4 billion in their first year, and, if inflation keeps up, $8 billion in the second — blowing through reserves that total about $3.8 billion, with Adams’ newest additions.
One hope is that the tax revenues needed to pay for these raises also keep up with inflation — indeed, they’re still coming in strong. But that may be a short-term phenomenon: Inflation is tanking Wall Street, with the market down 880 points on Friday.
Is your income, on which your taxes are based, keeping up with inflation? If not, then general tax revenues won’t — and so they can’t pay for inflationary raises.
As Adams said Friday, “We’re gonna . . . sit down and negotiate” with the unions. Those negotiations will have a far bigger impact on the city budget than his latest deal with the City Council.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.