NYC Budget Deficits Forecast to Be Bigger Than Mayor’s Estimate

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(Bloomberg) -- New York City faces wider-than-projected budget gaps in future years as spending on labor contracts and education climbs while federal pandemic aid dries up, the city’s independent budget monitor said Monday.

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The largest US city faces a $5.8 billion deficit in the fiscal year beginning July 1, 2024, or $1.6 billion more than Mayor Eric Adams projected in his April executive budget, the Independent Budget Office said in an analysis. The IBO projected gaps of $7.1 billion and $7.7 billion the following fiscal years.

While the IBO’s projection of tax revenue growth is rosier than the mayor’s, the executive budget understates spending by $10.9 billion over the four-year financial plan, the IBO said.

Assuming deals the city cut this year with two unions set the pattern for collective bargaining with other labor groups, the cost of new contracts will total $17.8 billion over four years, the IBO said. Adams pegged the cost at $16 billion.

Contracts ratified by DC 37, the city’s largest union, and the Patrolmen’s Benevolent Association, which represents uniformed police officers, provide annual raises of roughly 3%.

Read more: New York City reaches $5.5 billion deal with biggest cop union

The IBO also estimated that the city will need to spend an additional $4.1 billion over four years on the Department of Education.

The budget monitor expects the city will support programs currently funded by one-time federal Covid-19 relief. The city will also need to cover perennially under-budgeted costs like school bus contracts and funding for students with disabilities.

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