Fifty years ago, New York City faced a near-collapse of its finances, saved through decisive action by key stakeholders. This included the creation of the Financial Control Board under the Financial Emergency Act of 1975, ushering in a new era of fiscal discipline and accountability.
Since then, the City has weathered 9/11, the Great Recession, Superstorm Sandy, and, most recently, Covid-19. The city has emerged from the pandemic with more private-sector jobs than prior to the pandemic – though we still face challenges in the shift to remote work, commercial office vacancies, and housing affordability.
Today, however, the biggest threat to our economy comes from the Trump Administration's fiscal policies. Just this week, the City indicated that it would need to pick up the cost of housing subsidies following federal cuts to thousands of emergency housing vouchers. Cuts to Medicaid, SNAP, and other key programs in Trump’s "Big Ugly Bill" also risk grave impacts.
Simultaneously, the Trump Administration’s immigration and trade policies threaten New York City’s economy. Our office projects slow economic growth over the next year nationally and for the City. Case in point: NYC is already experiencing the slowest growth in the labor market, outside a recession and the pandemic, since 2003.
Meanwhile, instead of planning for uncertainty, the Adams Administration has failed to make a deposit into the Rainy Day fund or increase the general reserve – and continues the opaque fiscal practice of underbudgeting. Our estimates suggest that the June Financial Plan underestimates expenditures by $5.15 billion annually.
That is not fiscal discipline — it is fiscal denial. Fifty years after the Fiscal Crisis, we must reaffirm the values of the Financial Emergency Act by:
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Instituting a formal Rainy Day Fund policy and adhering to it;
- Launching a rolling program of efficiency and savings planning;
- Honestly budgeting for known obligations;
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Refusing to let short-term thinking compromise long-term stability.
One bright spot this year is the 10.3% return on pension investments in FY 2025, which will save the City over $2.18 billion over the next five years. Our responsible investment strategies, like the purchase of the mortgages on the 35,000 units of rent-stabilized and rental housing put at risk when Signature Bank failed, contributed to these strong returns.
In 1975, the State stepped in to ensure that New York City would not sacrifice long-term solvency for short-term expediency. Fifty years later, we must honor that promise — not with slogans — but with structure, transparency, and a commitment to the future.
Thanks,
Brad
