New York City needs to rein in more than $6 billion in out-of-control spending, including massive cuts to the controversial housing voucher program and school funding, the city’s fiscal watchdog said.
Even if Albany swoops in to save the city from its budget deficit this year, it still needs to start making cuts to ensure it can pay its bills in the future, Comptroller Mark Levin said Tuesday.
“It’s going to require us to take a hard look at some of these fast-growing expense lines,” Levin said before his testimony at the City Council’s first budget hearings on Wednesday.
The Comptroller’s Office projects a budget gap of about $7.4 billion, nearly $2 billion more than Mayor Zahran Mamdani claimed would exist over the next two years.
Without some significant cost cuts, Levin said he is “concerned” that the city will face a similar financial crisis next spring.
Levin said Mamdani needs to cut at least $6 billion from his initial $127 billion budget proposal, half from cuts across city agencies and the other half from cuts to the city’s rapidly expanding social service programs.
The largest ticket item remains the housing voucher program, called City FHEPs, which has increased by nearly $2.5 billion since 2019 — a staggering 940% — following recent waves of City Council expansions of the program.
Levin warned that by 2030, vouchers are expected to cost nearly $4 billion annually.
The cost could balloon further depending on the outcome of a lawsuit pursued by the Mamdani administration from his predecessor, Mayor Eric Adams, that is trying to rein in the social service.
Currently, approximately 65,000 families Use vouchers to pay for housing, but that number could rise to more than 110,000 if full legislation is enacted, Adding another $3.4 billion annually in expenses CityAccording to a report by the Independent Budget Office.
Also in the comptroller’s crosshairs was the Department of Education, which has a massive $42 billion budget that makes up about a third of the city’s entire spending plan.
“The education budget has a system that has lost 100,000 students since 2020, and budget costs have continued to increase,” Levine said.
One expanding program is where the Department of Education covers the cost of private schools for students with special needs when the city cannot properly accommodate them, called Carter cases, according to Levin.
The cost of these cases is expected to reach approximately $1.5 billion, a three-fold increase from 2019.
Other areas he cited mismanagement of city funds included shelter services and MTA contributions.
Mamdani used the fiscal deficit as a rallying cry to fulfill his campaign promise to raise taxes on the rich and corporations, saying that if Gov. Kathy Hochul is not convinced, he will raise property taxes by nearly 10% across the city.
But Levin was not quick to embrace tax increases on higher earners or corporations.
“Fairness requires that we have a more progressive tax structure and that the wealthy do more to help us, but we also need to ask how this affects success in the financial sector,” he said, adding that his office is currently studying these proposals.