Adams Orders City Agencies to Cut Spending 3% Due to Inflation, Looming Recession

By: Ilana Siyance

On Monday, New York City Mayor Eric Adams ordered all city agencies to cut spending by 3 percent and to get ready for more cuts in the future, as inflation and a possible recession loom.  As reported by the NY Post, a memo was sent out from the Mayor’s Office of Management and Budget, saying Adams is “implementing a Program to Eliminate the Gap” that will require spending cuts in fiscal 2023, which started in July 1 and ends June 30. The memo cited stock market losses, “elevated inflation” and the potential for a recession.  The 3 percent cut directive includes all city agencies– including the NY Police Department.  No agencies will be exempt due to “the magnitude of the threat to our financial stability,” Adams said.   The mayor also demanded cuts of 4.75% in fiscal 2024, “as well as the out years,” OMB Director Jacques Jiha wrote. “If PEG targets are not met, OMB will identify savings opportunities,” Jiha added as a warning.

The dire memo, sent Monday, went on to outline a “partial list of challenges” NYC is facing.  “First, the stock market was down substantially in Fiscal Year 2022. As a result, the city is required to compensate for investment losses by significantly increasing annual pension fund contributions beginning in Fiscal Year 2024,” Jiha wrote.  “Second, most of the city’s labor contracts have expired or [are] about to expire, and we have begun discussions with labor unions.”  Jiha also cited “rising health-care costs, high energy prices and elevated inflation,” and “new needs like shelters for asylum seekers” as well as the loss of pandemic-led federal stimulus funds.  “These added costs will increase gaps by billions of dollars over the Financial Plan,” he wrote.  “Making matters worse, an economic slowdown could lead to declining tax revenue.”

The ordered 3 percent cuts are due to OMB by Sept. 30, and Jiha said they “cannot be reached through layoffs or new fines and fees.”  “We encourage you to find innovative and creative PEG savings opportunities,” Adams wrote.  “Examples of acceptable initiatives include improving productivity through restructuring, finding areas where funding exceeds programmatic needs and identifying new or additional grant funding.”

As per the Post, the cuts come amid a surge in crime, up across the city an average of 35.3%, as of Sept. 4, compared to the previous year.  Adams noted he is committed to “public safety and fiscal discipline”, but stressed that the Big Apple faces “new costs that will increase the city’s obligations by billions of dollars.”  In dollar terms the expected cuts amount to:  $157 million in cuts for the NYPD’s $5.2 billion budget; $435 million cuts for Dept of Education; and $56 million in cuts for the FDNY.

“This Program to Eliminate the Gap savings plan is strong and decisive action that will protect both the city’s financial outlook and funding for critical programs and services, promote efficient government operations, and protect the city’s long-term financial stability,” said Adams.

The president of the independent Citizens Budget Commission, Andrew Rein, agreed that the spending cuts are “a prudent and fiscally necessary step to stabilize New York City’s budget in the long run”.