The Citizens Budget Commission, a nonprofit fiscal watchdog, acknowledged that there is “some good news” in the financial update, but noted that budget gaps going forward are likely about $750 million higher than stated “because the plan includes illusionary labor and attrition savings.”

“The budget essentially does not include money to pay for the next round of raises for City employees,” said CBC President Andrew Rein, in a statement. Hundreds of millions of dollars more will be needed per year if Adams comes to agreements with modest annual raises for municipal employees, as expected. Adams, a former police captain still part of a city union, received significant municipal and private sector labor support in his campaign.

Rein also noted that some ongoing programs are being funded with non-recurring funding sources, including the one-time infusion of cash from the federal government and the improved pension returns, therefore “creating both near- and mid-term fiscal cliffs.”

“Mayor de Blasio did not take the opportunity to use extraordinary levels of federal aid to help restructure the City’s budget and workforce to be fiscally sustainable with recurring City revenues,” Rein said. “Mayor-Elect Adams should proactively take steps to do so.”

Andrew Rein, president of the Citizens Budget Commission, noted that while the recent flow of cash from the federal government would effectively cover the city until the next budget, the next mayor, Brooklyn Borough President Eric Adams, will be confronted with how to pay for ongoing expenses now being paid for through federal funds, which eventually could dry up.

Those expenses include de Blasio’s expansion of pre-kindergarten education for 3-year-olds and some non-profit funding, which is now being paid for by the city with federal money, Rein noted.

“There are still gaps,” Rein said of the city’s future spending. “Eric Adams has his work cut out for him.”

The city’s pact with its largest union, DC 37, expired earlier this year and others will follow in the coming year, including the United Federation of Teachers contract.

Even annual pay increases of only 2%, far less than the recent rate of inflation, would cost $2.2 billion a year for the fiscal year beginning July 1, 2024, according to the Citizens Budget Commission.

“This round of bargaining can be a budget buster or city saver if the pay increases are funded by efficiencies,” said Rein.

He added: “There is a lot of knowledge in the city from City Hall to the frontline workers on how we can make the city more efficient.”

But, that tally does not include $500 million in still-to-be-negotiated concessions from the city’s labor unions nor does it set aside money for the next round of contract talks with the city’s workforce.

“The gaps appear manageable, but with the next round of collective bargaining unfunded, the budget’s reliance on non-recurring federal and City funds to pay for ongoing programs, and the slow economic recovery, Mayor-elect Adams should actively manage these gaps starting on day one,” warned Andrew Rein, the head of the Citizens Budget Commission, in a statement.

It’s only the second time ever that annual city spending will have exceeded $100 billion mark for the 12 month budget period, which runs from July to June every year.

The Citizens Budget Commission, a business-backed budget watchdog, said future budget gaps appear “manageable,” but warned that the budget relied on federal aid to pay for ongoing programs and didn’t fund the next round of collective bargaining agreements with unions. The city projects budget gaps of $2.7 billion in fiscal 2024 and $2.1 billion in fiscal 2025.

The city would need to raise ongoing revenue if it wants to continue programs such as more-generous housing vouchers, kindergarten for third graders and other programs, according to the CBC. The group projected a “fiscal cliff” of between $1.3 billion and $4 billion starting in fiscal 2025, when federal pandemic aid is exhausted.

“Ongoing programs are currently being supported with non-recurring funds, creating both near- and mid-term fiscal cliffs,” CBC President Andrew Rein said in a statement. Mayor-elect Eric Adams “should actively manage these gaps starting on day one.”

A 2019 report by the Citizens Budget Commission called school projects overseen by the city’s School Construction Authority “slow” and “expensive.” Others point to onerous government regulations. Some cite corruption.

But a 2019 report by the Citizens Budget Commission found that School Construction Authority’s way of building schools was “expensive” and “slow,” using a different metric: dollars spent per new seat created.

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There’s an idea that competent, effective government and bold, progressive government are in some tension with each other,” Lander said at a recent Citizens Budget Commission breakfast meeting.

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