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Transcript: Mayor Adams Presents FY25 Budget

January 16, 2024

Mayor Eric Adams: Good afternoon, New York. Our administration came into office with a clear mission: to protect public safety, revitalize our economy, and make all five boroughs more livable for the 8.3 million people who call New York City their home. 

For the last two years, we have worked every day to make our vision a reality, and I'm proud that we are heading in the right direction. Jobs are up, crime is down, tourists are back, our streets are cleaner. Our children's test scores are better. 

Every day, we are delivering for working class New Yorkers, and all this has occurred while we fed, clothed and cared for more than 170,000 asylum seekers who entered our care since the spring of 2022. That's over one and a half times the population of Albany. 

More importantly, we have put migrants on the path to self‑sufficiency by helping them submit over 27,000 applications for asylum, work authorization, and temporary protected status. We have also helped more than 60 percent take the next steps in their journeys. As we often say, only in New York. 

These accomplishments are the results of our administration's careful fiscal planning and steady management. They also would not be possible without the hard work and dedication of every city agency and the many New Yorkers who strive each day to deliver a safer, cleaner and fairer New York. 

As we crafted the Fiscal Year 25 preliminary budget, asylum seekers have come through our shelter system in record numbers. They have been legally paroled into the country and have the potential to contribute so much to our city. 

Currently, more than 68,000 are still in our care. The course of sheltering migrants before they take the next steps in their journey has significantly increased the city's spending. This along with Covid‑19 stimulus funding drying up, tax revenue growth slowing and unsettled labor contracts that we inherited. It widened the Fiscal Year 25 budget gap to a record level. 

But through responsible and effective management, we've been able to provide care for asylum seekers and balance the budget. We did not drag our feet or waver on our values. We made tough but necessary decisions about spending and savings early in the budget cycle. 

We took steps like implementing a hiring freeze and a Program to Eliminate the Gap — or PEG savings program — setting us up to succeed. These actions along with an unexpectedly strong economy help balance Fiscal Year 25. 

Let's be clear: we balanced the budget without unduly burdening New Yorkers with tax hikes or massive service reductions and without laying off a single city worker. 

But we're not out of the woods. While we have stabilized our fiscal picture and put New York City on the right track, to keep moving forward we still need help from the federal and state governments. 

Last September, we announced that without additional assistance we would need to take PEG savings in our November, January and April budgets. While we still need to review the details of the governor's executive budget that was just released, if we receive sufficient funding from the state we will be able to cancel the April PEG savings program and avoid the possibility of service reductions in the future. 

The surge in asylum seekers is a national crisis that requires a national strategy, coordination and funding. New York City cannot manage the effects of this surge on its own. 

I have been to Washington D.C. more than 10 times to advocate for the needs of New Yorkers, particularly as it relates to this humanitarian crisis. But as I left Washington last month I was again reminded that the cavalry is not coming, at least not yet. 

We cannot wait endlessly for the federal government to do their part. If they won't act, we must. That means containing costs now to prevent more serious consequences for taxpayers in the future. 

Our strategy had two parts. Part one, help asylum seekers in our care take the next step in their journey towards self‑sufficiency and achieving the American dream. Part two, provide services to those still in these cities care, but do so more efficiently and in a more cost‑effective manner. 

With the new strategy implemented over the last two months, we bent the curve. We are lowering spending and preparing to use resources more efficiently in the future. Although we continue to experience extremely high numbers of new arrivals, we provided 30 to 60 days of intensified case work management to help asylum seekers move towards independence, just as other cities have done. 

For the sake of both asylum seekers and longtime New Yorkers, we are confident that this is the responsible course of action. Approximately four out of five adults who receive a 30‑ or 60‑day notice are now out of shelter and on the path to self‑sufficiency; and, daily growth for the number of migrant households in our care has slowed by nearly 60 percent since we implemented these policies. 

At the same time, we took steps to manage the cost of providing services for new arrivals. We also created a shelter system for those arriving in New York City, and we did so virtually overnight. That infrastructure was necessary, but we will now transition to a more efficient model of providing care. 

Going forward, we will reduce daily household costs by modifying the services and staffing models in our 18 Humanitarian Emergency Response and Relief Centers, and we are negotiating and renegotiating rates and rebidding contracts and shelters run by for‑profit benches. 

Further, because humanitarian relief centers are costly, over time we will be transitioning to a new model of care managed by non‑profit service providers. Last August I stood here and told you that we are, and we were projecting that more than 100,000 individuals would be in our city's care by mid‑2024, and that cost would exceed $12 billion over three fiscal years if circumstances did not change. 

The state and the federal governments did not give us the necessary support, so we took action. By lowering the daily household costs and stabilizing the number of asylum seekers in our care, we can now lower our forecast. While we are still seeing high rates of arrivals, instead of 100,000 migrants by mid 2024, we expected to care for 80,000 by June and 90,000 by the end of the year. 

This is a $1.7 billion change. You can see that in this chart. We have reduced asylum seeker cost from more than $12.2 billion to $10.6 billion over Fiscal Year 23 through 25. And as a result, we did not have to cut an additional $1.7 billion from agency budgets and from services New Yorkers rely on. The $1.7 billion is new savings we will achieve over the next 18 months. 

In addition to reducing costs, we are fighting on behalf of New Yorkers against Texas Governor Greg Abbott and anyone who seeks to hurt New York City by breaking our laws. Last month, I issued an executive order that requires coordination by charter buses bringing asylum sinkers to our city. These new rules help protect the safety and well‑being of both asylum seekers and city employees. 

Two weeks ago, we also sued 17 transportation companies that have been bringing migrants to our city as part of Governor Abbott's bad faith plan to overwhelm our social services system. Our lawsuit seeks to recover the approximately $700 million we have already spent to care for these new arrivals. 

Governor Abbott and these transportation companies have used asylum seekers as pawns for their own political and monetary gain. This is inhuman, and it's against the law. The lawsuit seeks to recover part of the cost since we have been left to resolve this crisis virtually on our own. 

For today, New York State had committed $1.8 billion in asylum seeker assistance over three fiscal years. The federal government has committed just $156 million, the majority of which we have yet to receive. 

In contrast, over the same period, we have committed $6.9 billion, that is 78 percent of the total asylum‑seeker funding commitments made over three fiscal years. And the reality is that we cannot achieve enough savings to fund these costs on our own. 

The state and federal governments must do more to help asylum seekers take the next steps in their American journey. Without real immigration reform and a decompression strategy at the border, there will be no end in sight. 

I want to again urge all of our elected officials and all New Yorkers to tell Washington that this is a national issue that demands a national solution. But even as we navigate this crisis, we have not taken our foot off the gas in driving the city's economic recovery. 

The national and local economies exceeded expectations in 2023, and most economists believe we have avoided a downturn. But experts also expect the economy to slow in coming years. While there was solid growth in 2023, the economy will cool this year. 

Similarly, job growth across the country last year beat expectations. But as you can see, this pace is slowing. We are seeing similar trends here in the five boroughs. Here in New York City, we have seen strong job growth over the past two years. We have recovered all of the nearly one million private sector jobs lost during the pandemic, more than one year ahead of expectation and projections, and we now have more private sector jobs than at any other time in New York City's history. 

However, as this chart shows, while they are good reasons to be proud of this recovery, private employment gains have slowed, mirroring the national trend. Meanwhile, we welcomed nearly 62 million tourists last year, a number that is expected to increase to 64 million in 2024. More tourists mean more hotel room rentals. 

And increased demand has already driven room rates above pre‑pandemic levels. As I like to say, there are two kinds of people in this country, those who live in New York and those who wish they did. 

Wall Street activity is also a significant driver of city tax revenues through the year, and though profits have declined from record levels, the sector remains strong. 

But our economy is not the same as it was before the pandemic. Changes in work patterns have caused commercial vacancy rates to soar nationwide. Our vacancy rates are equivalent to every single office building in downtown Manhattan sitting empty. It's hard to imagine our core business district without employees and business, but that accurately portrays the challenge we currently face. Property taxes are the city's single largest revenue source, so high vacancy levels drag down our tax revenue base. 

To counter this trend, we put forward a bold proposal in our City of Yes for Housing Opportunity Plan that would make 136 million square feet of vacant office space eligible to convert into housing. 

We launched the Office Conversion Accelerator, and with the partnership of Governor Hochul and our colleagues and state lawmakers, we can pass a tax incentive program to ensure that office conversion projects deliver affordable housing for New Yorkers. 

At the same time while rising interest rates may have successfully calmed inflation, they drove up mortgage rates. This led to a significant decline in sales of co‑ops, condos and multifamily homes last year. What does this mean? Unanticipated economic growth in 2023 generated better‑than‑expected tax revenues. 

Although this is welcome news, we cannot rely on revenue growth alone to solve our current fiscal challenges. We must stay focused on strong fiscal management by achieving savings and closely monitoring spending. 

As I have made clear, our city faced an unprecedented Fiscal Year 25 budget gap of $7.1 billion in the November 2023 financial plan update. By law, that gap must be closed in this preliminary budget. 

So, we developed our plan early, and I am proud to report that it has succeeded. The Fiscal Year 2025 preliminary budget is balanced at $109.4 billion. We closed the Fiscal Year 25 budget gap without additional federal aid or raising taxes. 

We reduced agency and asylum seekers spending and recognized better than expected revenues. We also utilized some current year reserves, which is customary practice at this point in the budget cycle. Our year gaps are reduced to $5.2 billion, $5.1 billion and $6 billion over the Fiscal Years 26 through 28, respectively. 

Thanks to our local economy's unexpected strength in 2023, tax revenues were revised up by $1.3 billion in Fiscal Year 24 and $1.6 billion in Fiscal Year 25. Savings were a critical part of our plan to stabilize the budget. To be clear, 99 percent of agency PEG savings had no impact on services. They were achieved by making service delivery more efficient and finding programs where we spent less than anticipated. 

NYPD, Fire, and Department of Sanitation were exempted in this preliminary budget to protect public services. safety and cleanliness. Every other agency met their PEGs saving targets. And after reviewing agency submissions, we determined that some agencies could only meet their targets by significantly disrupting service. 

So, we made adjustments for the Department of Education, Social Services, Youth and Community Development and Aging. These adjustments protect our kids, older adults and all our neighbors. In addition, our administration fully exempted all of the public libraries from the PEG savings and this plan to avoid further reduction in service hours, programming or collections. We made these adjustments because we know that these are the services that are important to New Yorkers, and they're important to this administration. 

We achieved almost $3.1 billion in PEG savings over Fiscal Years 24 and 25. This includes more than $1.7 billion in asylum seeker course savings. Total PEG savings over these two years is nearly $6.6 billion since June. This is a record level. 

Safeguarding our city's recovery and being fiscally responsible includes maintaining budget reserves that shelter us from the unexpected. In the preliminary budget, we have near‑record reserves of $8.2 billion. Some have called for us to use our Rainy Day Fund to help cover asylum seeker needs. We do not agree, and neither do our city and state comptrollers, as well as bond‑rating agencies and fiscal experts. Our Rainy Day Fund was created to address our needs during a recession. We should not use a fixed pot of money to pay for ongoing expenses. 

As I announced last week, we're restoring PEG savings that impacted services to New Yorkers. This includes funding for the April police academy class, which means 600 additional officers out on our streets this fall. And we have been able to restore the fifth firefighter at 20 of the city's engine companies. 

We'll also maintain 23,000 litter baskets across the five boroughs and continue to restore the award‑winning litter basket of the future so we can keep fighting those rats. These, together with our Parks Opportunity Program, continue to keep our public spaces clean and green while helping our neighbors find job opportunities. 

In addition, we have been able to restore funding for 170 community schools so that students and families can continue to get the support they need both in and out of the classrooms. 

Fiscal planning and discipline are not just about numbers, they are about keeping our city safe and clean and opening the doors of opportunity for everyone. Strong fiscal management means reducing budget risk and increasing transparency. 

For too long, administrations have not reflected long‑term funding needs in the budgets. We still have far to go to address this challenge, but improving the planning process and giving New Yorkers an accurate picture of our financial position is important. 

So, we are starting to make that change now. In the preliminary budget, we addressed cliffs in the Department of Education that have typically been funded to meet needs one year at a time. Now, charter school costs and student transportation are all funded at a realistic level in each year of the financial plan. 

We continue to make real progress towards meeting Carter Case needs, and for the first time ever our city will fund the DOE's $80 million portion of the Summer Rising program which they run jointly with DYCD. Previously, the DOE's portion of the program was funded with temporary Covid‑19 stimulus funding; now, that funding is ending, and our administration is stepping up to fully fund Summer Rising. 

We are also addressing this shortfall of nearly 900 million in our cash assistance and CityFHEPS rental assistance programs to reflect a more accurate cost in the current year. These are all big-ticket items. Now, New Yorkers have a better sense of the true course of these needs, and a more accurate view of our financial picture. 

In this plan, we have increased our assessment of the amount of asylum seeker aid we expect to receive from the stated Fiscal Years 24 and 25. This will reduce the city share of asylum seeker costs over those years. 

We also added $500 million of city funds in Fiscal Years 26 and 27, which reflects a more realistic assessment of our out-year exposure. However, we will likely have to add more in coming years. Running a city of any size is never easy and balancing the many competing needs of a city like New York requires strong and creative management. 

Everything we do is about making this city safer and making it work better for working‑class New Yorkers today and in the future. 

I would like to take a moment to acknowledge the contributions of our non‑profit sector. From stepping up during the pandemic to helping our most vulnerable and sheltering many of the asylum seekers in our care, their participation has been essential. 

We will continue to find ways to partner with and fund the important work of those front-line organizations. Our team is experienced and dedicated. We care deeply about the people who already live here and those who will someday call the five boroughs their home, as many of our parents and grandparents have done. 

This carefully planned and disciplined budget allows us to keep helping working families, keep providing opportunities for all New Yorkers and deep our city the beacon of hope while we honor our commitment to deliver a safer, cleaner and fairer New York. Thank you. 


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