New analysis by the Citizens Budget Commission underscores this new reality, as the CBC argues that the state will run a $5.9 billion surplus in the next two fiscal years and that updated tax revenue estimates and federal aid money promises offset at least 94% of the $61.8 billion revenue shortfall initially projected for the next four years.

“We really aren’t in the hole we thought we’d be, at all,” said Andrew Rein, president of the CBC. “The starting point is a heck of a lot better than any of us imagined, even a few months ago.”

Tax receipts in the next four fiscal years are estimated to be $32.6 billion higher than projected, according to the CBC, which will eliminate 53% of the anticipated revenue shortfall; $23.8 billion in federal relief from the American Rescue Plan Act will cover the other 42% of those projections.

“And that’s a conservative estimate because there’s more money in other pots,” Rein said.

The CBC called the passage of the $1.9 trillion relief package “a game changer for New York state” even as the Legislature in Albany debates adding tax increases on the wealthy into a fiscal 2022 budget, which could further pad the state’s coffers.

On Thursday, 17 budget watchdog groups including the Citizens Budget Commission, Reinvent Albany and the Regional Plan Association urged the governor and the legislature to make budget cuts transparent and not enact extraordinary executive budget powers for fiscal 2022.

“Compared to last year, the state’s economic conditions and tax revenues are more favorable and clear,” the watchdog groups said, citing the new federal aid. “The state has not provided complete details on withholdings and payment adjustments, having only disclosed details of about 25% of funds withheld during fiscal year 2021 in formal notices to the legislature.”

So far, Adams has adopted a moderate position when it comes to the city’s workforce and finances. Speaking at a mayoral forum hosted by the Citizens Budget Commission, a nonpartisan budget watchdog nonprofit, Adams talked about reducing the size of the city’s workforce through attrition, while also seeking 3-5% annual cuts across agencies.

DC 37 represents a cross-section of city workers across multiple agencies and functions, including essential workers like the city’s paramedics, EMTs and 911 operators; clerical and administrative staff; certain health and hospital workers; as well as several positions in schools, libraries, CUNY, and cultural institutions across the city.

The overarching fear New York fiscal experts hold: The high tax policies will drive the wealthy to other states.

"The risk is the mobility of high-income earners," said Andrew Rein, executive director of the Citizens Budget Commission. "Potentially their businesses can move and have an economically deleterious effect."

“The real imperative is to use federal money wisely because we're not out of the woods and we've got a long-run problem,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog group. He said the state and city should spend those funds on direct relief and costs stemming from the pandemic, while also using it to bridge gaps across future years and restructuring their finances. Otherwise, “we have the budget problem that is staring us in the face today, just another year or two down the road,” he said.

“Stabilizing the finances allows us to take care of New Yorkers over time and doesn’t just kick a bunch of problems down the road,” he added.

CBC has for years been calling on the mayor to identify deeper efficiencies and recurring savings at city agencies to restrain spending. But while the mayor has made some attempts at savings programs, even instituting a Program to Eliminate the Gap (PEG) last year and for the coming fiscal year, they have been criticized as insufficient by watchdogs like CBC, the City Council, and City Comptroller Scott Stringer.

“This level of aid will allow the state to restore spending cuts and balance its budget through fiscal year 2023 even without increasing personal income taxes or delaying the middle-class tax cut,” said Andrew Rein, president of the Citizens Budget Commission.

The mayor wouldn’t be specific Monday about the impact on the city budget, but he promised details soon.

“We’ll be talking about it more in the days ahead as we wait, of course, for it to be 100% signed, sealed and delivered with the president’s signature,” he said.

This year, the fiscal picture is much clearer and “relatively favorable,” said Andrew Rein, president of the watchdog Citizens Budget Commission.

“The current projected tax revenue shortfalls are half of what was assumed last April and existing and anticipated federal aid will provide significant relief," he said. "Given this clarity, the executive [branch] does not need extraordinary authority. The executive should not be granted extraordinary power to reduce or hold back spending, transfer appropriations unilaterally, or issue debt for operating purposes.”

The next mayor will take office in January, halfway through the fiscal year and will quickly have to provide a plan to fill those gaps. At Wednesday’s forum, hosted by Citizens Budget Commission, a nonprofit fiscal watchdog group, and moderated by CBC President Andrew Rein, the candidates showed key differences in their approaches to the problem and visions for the city’s recovery.

Though they generally seemed to agree on some matters, such as limiting the size of the municipal workforce (which has grown significantly under Mayor de Blasio but recently reduced through attrition) and avoiding mass layoffs, their positions varied on raising revenue and cutting spending. Some offered specific proposals with price tags while others floated broad ideas with few concrete details or avoided the specific questions asked by Rein.

Of the endless forums that are being held in the mayoral primary race, the only one that has specifically focused on the City’s fiscal situation and budget was the one last week held by the Citizens Budget Commission, my former organization. (You can watch it here, or read Gotham Gazette’s detailed summary here.)

The event, with candidates appearing one by one, revealed a range of reactions to the fiscal challenge one of them will likely find him/herself tasked with solving when they take office in January. Some candidates seem not to understand the problem, others don’t take it seriously, and still others may understand it but don’t want to really talk about it.

One can only hope that the main question CBC President Andrew Rein posed to each of the eight candidates will cause them to think in greater detail about how they will deal with the budget if elected. He asked:

If you take office next January, you will have about three weeks to submit a preliminary budget for fiscal year 2022-23 to the City Council. With a deficit now projected at $5 billion that could well grow, how will you balance the budget? What combination of spending cuts and revenue increases will you propose?

A year from now holes could start to open in the budget Albany will be working on for the 2023 fiscal year, said Doulis. The gap between projected revenues and spending could be as large as $10 billion a year starting in 2024, she added.

“Wise choices on federal aid and spending reductions will allow the state to preserve critical services and stabilize its finances without having to delay the pending middle-class tax cut or increase high-earner taxes,” said Citizens Budget Commission President Andrew Rein.

The CBC has opposed higher taxes as unnecessary and argued for temporary reductions in economic development spending and borrowing to cover more long-term infrastructure projects.

New York City public schools have long struggled with overcrowding and small classrooms with the Department of Education reporting that out of its 1,413 school buildings 618 are crowded, according to a Citizens Budget Commission report released in 2019. The report adds that the buildings can hold 520,000 out of the city’s over 1 million public and charter school students but that capacity is 95, 984 seats fewer than required.

In addition to precipitating a jump in Medicaid enrollment, the pandemic also caused shifts in care. In the executive budget released in January, the state noted that it had gained savings from lower utilization, yet total Medicaid spending is still projected to grow 8.4% this fiscal year – with New York on the hook for 3.6% of that increase – which raises concerns about how the state will fund the program once the enhanced federal matching comes to an end.

“That is obviously fiscally unsustainable – our revenues don’t grow like that – but what is the cause?” said Andrew Rein, president of the Citizens Budget Commission, a nonpartisan fiscal monitor. “Because the information is not being provided in detail, we can’t separate it into its components to see what has to do with care cost increasing, and what has to do with the number of people we’re serving.”

Rein said that in areas such as long-term care and personal-care services, New York bore unusually high costs when compared with other states, but a lack of transparency around the program prevented outside observers from being able to make any assessments.