New York City’s economy has recovered more strongly than expected, but serious long-term challenges loom
Housing affordability and the cost of shelter for asylum seekers without adequate State and federal support identified as two of the most pressing issues
As the City moves into fiscal year 2024 (FY 2024), New York City Comptroller Brad Lander paints a picture of an economy that proved to be more resilient than anticipated just half a year ago, in a comprehensive analysis released today. While growth projections for this year suggest a modest slowdown compared to the previous fiscal year, the City rebounded remarkably in key sectors coming out of the pandemic. The report underscores both the present strengths and the pressing need for sustained planning to navigate an uncertain future.
The revival of private sector employment to pre-pandemic levels—with office-using jobs now at an all-time high and the resurgence of tourism with hotel room demand rebounding—is decidedly positive. However, looming challenges—especially housing affordability and the cost of providing shelter and services to asylum seekers without adequate State and federal support—underscore the necessity for timely and prudent measures.
“Rumors of New York City’s demise are greatly exaggerated. New York City’s strong recovery from the pandemic is not only a testament to our resilience, but an affirmation that an economy built around diversity, density, and creativity—an open and welcoming city—is the best way to face the future. Still, we face serious impending challenges: the rising costs of providing shelter and services for asylum seekers without adequate State or federal support puts a real strain on the City’s budget. Washington and Albany must do more to help New York City meet the federal obligation to provide safe refuge for those seeking asylum, along with the right-to-shelter, which is grounded in the State constitution,” said Comptroller Brad Lander.
The FY 2024 Adopted Budget of $107.12 billion is $3.71 billion less than the FY 2023 budget, predominantly due to a reduction in federal COVID relief and lower tax revenue projections. Notably, the FY 2024 Adopted Budget increased by $426 million compared to the Mayor’s Executive FY 2024 Budget.
While the Comptroller’s Office projects higher revenues than the Mayor in each year of the financial plan, these higher revenues are outstripped by higher expenditure estimates. The report projects that gaps will total $1.96 billion in FY 2024, $9.65 billion in FY 2025, $12.62 billion in FY 2026, and $13.98 billion in FY 2027. Reserve funds included in the City budget could nearly close the FY 2024 gap, but the outyear gaps underscore the importance of implementing long-term strategies that address these financial challenges and stabilize the City’s fiscal trajectory.
One of the largest fiscal risks remains that the costs of shelter for people seeking asylum will be higher than budgeted especially in the out-years FY 2026 and FY 2027, where the financial plan does not yet include any projected expenses. In Comments on the Executive Budget, the Comptroller’s Office modeled several scenarios of potential costs of shelter provision to people seeking asylum. In this report, the Office used the mid-range of the estimates with annual costs of $3.65 billion starting in FY 2024. This model implies risks to the financial plan of $750 million in FY 2024, $2.94 billion in FY 2025, and $3.65 billion in FYs 2026-2027. As of July 30, the growth in the number of households in the City’s shelter system exceeds the Comptroller’s Office’s highest projection, while cost per household settled at the high-end of the range. The Comptroller’s Office is not yet increasing the risks to the financial plan as these new data are measured over a relatively short period of time. However, they indicate that annual costs may exceed the previously estimated upper bound of $4.43 billion.
The report also notes the escalating costs of rental assistance and specialized education services, as well as under-budgeted areas like police overtime, public assistance, and contributions to the Metropolitan Transportation Authority (MTA).
Rent prices citywide significantly increased over the past year and are now much higher than before the pandemic—rents are up 8% in Manhattan, 7% in Brooklyn, 14% in Queens, and 30% in the Bronx. Although selling prices for homes decreased from their peak in 2022, they remain elevated compared to 2019. Additionally, the rise in mortgage rates over the last year worsened housing affordability.
“We simply must do more to address the crisis of housing affordability: both by building much more housing at all income levels across the metropolitan region and by protecting tenants from eviction without good cause. The housing crisis is not only a severe strain on New York families, but also a threat to our city’s future economic thriving,” Lander continued.
Comptroller Lander urges the City to develop a comprehensive strategy to address these significant risks without compromising critical services through a thoughtful savings program, sustainable planning for the City’s budget, and generating additional revenue streams to pay for strategic investments in affordable housing, mental health, child care, and climate resilience that are essential for the City’s future.
Read the full analysis on New York City’s FY 2024 Adopted Budget.
