Ana Champeny, vice president of the non-profit think tank Citizens Budget Council (CBC), testified yesterday that the newly merged categories will also have some side effects, such as removing the current assessed value growth cap for the new residential category, And implement a five-year transition process for market value growth, which means that the land tax of this type of property will increase much faster than the land tax under the current system; "The number of owners may increase.

“Short-term savings should never give people solace when you see the long-term situation getting worse,” said Andrew Rein, president of the Citizens Budget Commission.

Though the original savings mandate warned that noncompliant agencies could be subject to hiring freezes, not every agency complied, and none were penalized.

The New York Police Department only achieved 41 percent of its two-year savings targets, city officials said

Tuesday. The Department of Sanitation achieved only 39 percent. And the Fire Department achieved 98 percent.

Mr. Rein said the city achieved its sought-after savings largely through re-estimates of projected spending, rather than making more lasting structural changes.

The president of the Citizens Budget Commission, Andrew Rein, said, “The city’s long-term fiscal outlet is precarious” and echoed DiNapoli’s concern about the “risk to the city’s finances” if federal or state aid doesn’t cover the migrant crisis.

Rein said “some savings” resulted from the budget cuts Adams ordered, which he called a “good start” but “not nearly enough to stabilize the city’s finances.”

“The city still needs to take a much more serious look at being more productive and efficient and in the long run, it needs to work with the unions, restructure operations, use technology, etc.,” he said.

Ana Champeny, vice president for research at the Citizens Budget Commission, said this year's release will hold more importance than usual.

"While normally a technical update focused on reflecting actual trends to date, this modification is likely to be more substantial and informative due to Mayor Eric Adams' call for a Program to Eliminate the Gap (PEG), a rocky economy with high inflation and danger of recession, and budget risks leading both city and state comptrollers and CBC to warn that future gaps could approach $10 billion," Champeny said in a Monday report.

Three main things that should be taken into account when the revision is released — what happens to the revenue forecasts; how large are and what comprises the PEG savings; and how big are the budget gaps, Champeny said.

“The city’s fiscal situation remains precarious,” said Andrew Rein, head of the Citizens Budget Commission. “The budget gaps in the last two years of this plan are actually bigger than they were in the adopted budget simply because the pension costs are higher because of last year’s poor market conditions. While it’s good that there are savings in the plan, they’re certainly not sufficient to reduce those budget gaps.”

The savings plan also wipes 2,000 vacant positions off the books. However, the Citizens Budget Commission noted that the reduction is only a fraction of the 20,000 positions that are currently vacant. In addition, the group noted that the savings plan relies heavily on expense re-estimates — essentially the city spending less than it had thought on various programs — and not enough on changing the way services are delivered to make them more efficient.

“The best way to preserve services for New Yorkers when they need them most is to improve the quality and efficiency of the city’s operations today,” Andrew Rein, president of the commission said in a statement. “More transformative changes are needed to ensure future stability."

New York City will soon release the first quarter update to the fiscal year 2023 Financial Plan.

States and cities have enjoyed a revenue high from federal pandemic relief and surging capital gains. But the buzz won’t last and the hangover could be painful, as New York’s Citizens Budget Commission warned this week.

The March 2021 American Rescue Plan Act gave states and localities $350 billion, plus $129 billion for K-12 education and $30 billion for mass transit. The putative purpose was to help governments cope with budget shortfalls from the pandemic, but most didn’t need the extra money since their economies were quickly recovering.

The actual purpose was to assist Democratic states and cities with pre-existing budget problems. Consider New York City, which will receive more than $25 billion in federal Covid funds from all sources, according to the Citizens Budget Commission. New York City has been using some of these funds to cover recurring expenses, notably for schools and to cope with rising homelessness.

When Covid funds run out, the city will have to cover these expenses with general tax revenue. This “federal fiscal cliff” amounts to $82 million this year and will grow to $1.1 billion in fiscal 2026, the watchdog warned the City Council. It gets worse. The city comptroller in August projected that the city would face an $870 million budget gap this year, $6.4 billion in 2024, $7 billion in 2025 and $9.6 billion in 2026 as spending increases faster than tax revenue. These projections don’t account for union collective-bargaining agreements that increase public worker pay and benefits.

Democrats may want to raise taxes when the fiscal crisis hits, but the city already squeezes residents with a top tax rate of 14.78%, state and city combined. The top 1% already pay 42% of city income tax, and Mayor Eric Adams can’t afford to lose more of them to Florida.

The watchdog also dinged the city for not reporting the impacts of its federal Covid spending. Maybe because there weren’t any that were positive. New York City’s Department of Education received $4.8 billion from the American Rescue Plan, yet 23% of its fourth-graders scored proficient or better on math this year, compared to 31% in 2019.

Many states face a similar pandemic fiscal cliff, and it will be far steeper in states like Illinois, New York and New Jersey where Democrats have relied on federal pandemic relief to avoid a spending reckoning and reward their public-union friends. This year’s stock market rout will also hurt states with progressive income taxes that rely on high earners to pay their spending bills.

They shouldn’t bet on Washington bailing them out again.

According to the Citizens Budget Commission, New York State spends twice the national average per pupil—$32,757—not including Covid relief aid. Students and taxpayers are not getting what they deserve from that investment. Blame the state’s elected officials, who have stuck to the status quo for too long, boosting investment even as school quality stagnated and then declined.

The YIMBY movement is gaining steam – and New York City Chief Housing Officer Jessica Katz couldn’t be happier about the shift toward more New Yorkers saying “yes in my backyard” to building housing. “I think there was a debate that – I know whose side I’m on – about whether or not supply and demand is the thing that drives the housing market. And I think that question, increasingly, is being settled,” Katz said at a Wednesday breakfast hosted by the Citizens Budget Commission. “And I think it’s across the political spectrum that people are realizing why housing supply is really important.”

The Conservative Party came out against the bond act, and the Citizens Budget Commission warned about getting closer to the state’s debt cap. Paul Rodriguez, who’s running for state comptroller on the Republican and Conservative Party lines, said this not the time to be borrowing more money. His opponent, the Democratic incumbent, Thomas DiNapoli, is for it.

Yet job creation has far outpaced new housing development in the city. A 2020 report from the Citizens Budget Commission found that New York City produced less than 0.2 new units of housing for every new job created between 2010 and 2018. That increases competition for housing and leads to higher rents and sale prices, problems fueled by outside investors scooping up properties.