The Big Apple needs to reign in its out-of-control spending by more than $6 billion — including massive cuts to a controversial housing voucher program and school funding, the city’s fiscal watchdog said.
Comptroller Mark Levine said Tuesday that even if Albany swoops in to bail the city out of its budget deficit this year, it still needs to start making cuts to ensure it can pay its bills in the future.
“It’s going to take us giving a really hard look at some of these fast-growing expense lines,” Levine said ahead of his testimony at the City Council’s first budget hearings Wednesday.
The comptroller’s office projects a nearly $7.4 billion budget gap, roughly $2 billion more than Mayor Zohran Mamdani has claimed exists over the next two years.
Without some big-time cost-cutting, Levine said he was “worried” the city would be staring down a similar financial crisis next spring.
Levine said Mamdani needs to cut at least $6 billion from his $127 billion preliminary budget proposal — half in cuts across city agencies and the other through slashing the city’s rapidly-increasing social service programs.
The biggest ticket item continues to be the housing voucher program, dubbed City FHEPs, that has increased by nearly $2.5 billion since 2019 — a staggering 940% — following the last City Council’s waves of expansions to the program.
By 2030, the vouchers are expected to cost nearly $4 billion annually, Levine warned.
The cost could balloon even more depending on the outcome of a lawsuit that the Mamdani administration has continued from his predecessor, Mayor Eric Adams, that attempts to curb the social service.
Currently, roughly 65,000 households use the vouchers to pay for housing, but that figure could explode to more than 110,000 if the full legislation is enacted, potentially adding another $3.4 billion a year in expenses for the city, according to an Independent Budget Office report.
Also in the comptroller’s crosshairs was the Department of Education, which has a whopping $42 billion budget making 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 has had budget costs that have continued to increase,” Levine said.
One of the ever-expanding programs is the DOE covering the cost of private schools for students with special needs when the city can’t properly accommodate them, called Carter Cases, according to Levine.
Those cases are expected to come with a price tag of nearly $1.5 billion, a threefold increase from 2019.
Other areas he called out the city’s mismanagement of funds were shelter services and its MTA contributions.
Mamdani has used the fiscal shortfall as a rallying cry to fulfill his campaign promise to jack up taxes on the rich and corporations, saying if Gov. Kathy Hochul doesn’t buy in, he’ll raise property taxes nearly 10% across the city.
But Levine wasn’t quick to embrace tax hikes on the higher earners or corporations.
“Equity demands that we have a more progressive tax structure and that the wealthiest do more to help us, but we also need to interrogate the extent to which that could undermine the success in the financial sector,” he said, adding his office was looking at those proposals currently.