Report City Budget

The Myth of the "Uncontrollables"

Four Ways New York City Can Take Control of Its Financial Future and Save $2.5 Billion per Year

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May 11, 2005

For years New York City Mayors have bemoaned the fact that much of the budget is “uncontrollable.” By this they mean that parts of the budget are not under the direct control of City leaders. The Mayor and City Council cannot act on them unilaterally. Other parties, including State and federal officials, impose important constraints on local officials. For example, the City’s Medicaid bill is determined by State legislation specifying who is eligible and how much doctors and hospitals must be paid.

Different Mayors have used a variety of terms, including “unfunded mandates” and “non-discretionary spending,” to describe these items. Typically they include:

  • Pension fund contributions – because workers have already been promised benefits, and they are protected by the State Constitution;
  • Health insurance – because health care inflation is a national phenomenon, and the City is obligated to insure its employees and retirees;
  • Medicaid – because State law determines the cost of the program; and
  • Debt service – because the City is obligated to pay back money it has already borrowed.

The limited discretion over these items is a problem, because City officials make clear that it causes them to spend more than they otherwise want. In this situation the budget is not a tool for setting priorities but becomes a straitjacket that forces tax increases or cuts in other areas.

The reality is that City leaders have more options for controlling these expenditures than they acknowledge. The fact that other parties play a role does not mean that there is nothing the City can do. It simply means that City officials must be more creative and determined in their thinking and be willing to persevere over a multi-year time horizon. The danger is that the rhetoric becomes accepted as a fact rather than confronted as a difficult but addressable problem. 

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The Myth of the Uncontrollables