The Citizens Budget Commission, a nonprofit fiscal watchdog group, on Wednesday predicted the financial toll on the MTA could last far beyond the pandemic, including in the form of a prolonged ridership decline, a worsening of its reputation on the bond market, and a deferral of federal funding for infrastructure megaprojects, like the extension of the Second Avenue Subway.

Yet de Blasio’s plan relies heavily on short-term patches — back surpluses, raiding reserves, re-estimating costs downward and federal aid not likely to recur. And his revenue projections are rosier than other budget experts’.

As the Citizens Budget Commission puts it, the plan uses “optimistic assumptions” about federal and state aid and fails to aim for sufficient “recurring savings.”

And it’s $3.5 billion smaller than the $92.8 billion budget approved last year for 2020.

One leading budget expert said de Blasio would likely be forced to go further with spending cuts.

“There should be no illusion that spending reductions will be easy or painless, but they are possible and necessary to stave off more painful actions later,” said Andrew Rein, the president of one of the city’s leading government watchdogs, the Citizens Budget Commission.

Much of the de Blasio budget’s savings and cuts come from reduced costs caused by the virus outbreak, such as school closings, suspension of a $124 million summer jobs program in for more than 74,000 youths, and millions of dollars in reduced transportation costs, including $65.5 million from lower use of transit discounts for the needy.

Andrew Rein, the president of Citizens Budget Commission, a business-funded nonprofit watchdog group that has criticized de Blasio for not stashing enough emergency reserve funds in the past, said the mayor has found more savings than he has before, yet not enough to provide fiscal security in future years.

“His economic and federal aid assumptions may be too optimistic and he should find more recurring spending cuts,” Rein said. “He’s left himself a very thin margin for next year.”

The expectation of federal funding is baked into the revenue projections, as is the prediction that the economy will begin to recover later this calendar year. For fiscal year 2022, which will be de Blasio's final budget before leaving office, the city is predicting a 7.4 percent increase in tax revenues that will still leave municipal coffers $5 billion short. The Citizens Budget Commission said those projections — along with the assumption that state aid will not decrease further — could easily turn out to be too rosy, making the future financial picture even more precarious.

"While the city is to be commended for balancing the budget without tax increases or borrowing, it has used a short-term strategy that leaves a significant gap in fiscal year 2022, which could be worse if the economy does not rebound as the city projects," the organization's president, Andrew Rein, said in a statement.

Andrew Rein, president of the Citizens Budget Commission, said that Mr. de Blasio needs to make deeper cuts to the city’s work force, which has grown to a record number of employees during the mayor’s tenure, or face large budget deficits in upcoming fiscal years.

“The budget provides stark evidence that we are not only in a health and economic crisis but that the city is facing a fiscal crisis,” Mr. Rein said.

Mayor de Blasio said that he considered employee layoffs a “last resort” that he would only contemplate if the city does not receive enough federal aid.

The MTA estimates it could lose $4 billion over the next 12 months, but budget watchdogs estimate, worse case scenario, it could be double that.

Either way, the MTA is already changing its plans. Like shelving its agency-wide reorganization for now. And rethinking the massive Capital Plan to modernize the subways.

“The MTA’s fare, toll, and tax revenue, historically, is in the worst shape that it’s ever been,” Denise Richardson, Vice President for Research with the Citizens Budget Commission, said Wednesday.

That means any revenue that comes in, from federal stimulus aid or congestion pricing, will likely go toward just keeping the system running.

Next week, the MTA board will have to approve the payments. The agency will also outline the expected costs of the payments. While the MTA is expecting $4 billion in federal funding, the full extent of the economic impact from COVID-19 is still uncertain. Questions remain when riders will return and what the loss of taxes revenue will be on the agency’s finances. Loss to revenue could be as low as $576 million or as high $4 billion the Citizens Budget Commission estimates.

“The MTA has never experienced a lengthy, almost total shutdown of the region’s economy in the way that they are facing it now,” Denise Richardson, Vice President for Research at the Citizens Budget Commission, said Wednesday. Based on previous recessions Richardson said, “The MTA’s fare, toll, and tax revenue historically, is probably in the worst shape that it’s ever been.”

When it comes to the city’s fiscal health, Mayor Bill de Blasio has led a charmed life. Each year, when it came time to put together his budget for the next year, he had more tax revenue to spend than expected.

Now, with virtually no experience in dealing with tough choices, he confronts a challenge that resembles the traumatic fiscal crisis of the 1970s. Whether he can make the tough choices necessary will be seen next week, when he presents his financial plan.

The numbers just keep getting worse. The Independent Budget Office on Wednesday predicted the city would see tax revenues plunge by $9.7 billion from projections for this fiscal year ending June 30 and by the same amount in 2021. Adding 2022 to the equation, the Citizens Budget Commission estimated the city would lose $14 billion in revenue.

The Citizens Budget Commission, a nonpartisan group that advocates for businesses, said that wasn’t enough. The group’s president, Andrew Rein, called the mayor’s imminent budget proposal “the greatest test the mayor will face.”

“I understand the need to protect the vulnerable, but you must also look for cuts big and small throughout city operations,” Rein said in an interview. “He should find more efficiencies in sanitation routes, absentee teacher reserves, procurement reforms -- areas all over the city where there are programs that can be cut or dropped entirely.”

Borrowing to pay for operating expenses, a practice that precipitated the city’s crippling fiscal crisis of the 1970s, “should be at the bottom of the list,” Rein said.

“Borrowing funds is the last resort,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit watchdog organization. “The first step is to look at savings and make significant changes. That certainly hasn't been the pattern in this administration but we need bold action now.”

Rein said the mayor should deliver, at minimum, a $3 billion savings plan for the next fiscal year focused on agency efficiencies, with savings that will recur year after year. “This is not a one year problem,” he said.

The outyears will also be impossible to predict, since there’s no telling when people will be able to go back to work and when major industries that the city relies on like tourism, food service, and hospitality will recover. “We haven't experienced a shock of this kind before so it’s not readily clear what the response from tourists, from New Yorkers, from businesses will be in terms of how quickly people get back to normal,’ said Ana Champeny, Citizens Budget Commission’s director of city studies.

It’s the kind of rainy day that budget watchdogs including City Comptroller Scott Stringer and organizations like the Citizens Budget Commission and the Manhattan Institute had been sounding the alarm about for years, insisting that the city’s reserves, just under $6 billion currently, would be completely wiped out in the face of a sustained economic downturn. And none of those predictions came close to imagining a scenario where the city would be the country’s epicenter of a viral outbreak wreaking havoc across the world.