Discover the Beneficiaries of Your City Tax Dollars: Analyzing New York’s Spending Trends
Over the past decade, city spending in New York has risen by 12% above inflation. Compared to other wealthy cities, New York spends significantly more per person. In recent years, the ballooning city workforce, primarily in education, has been the main contributor to increased spending, without substantial improvements in classroom outcomes. However, a notable shift has occurred as the city now focuses on funding social services, rather than simply pouring money into public services. This change in approach is exemplified by Mayor Adams’ decision to indefinitely house migrants, which is leading to a surge in social services costs.
During the final budget of former Mayor Michael Bloomberg’s tenure in 2014, New York spent $99.5 billion after adjusting for inflation. Despite his reputation for austerity, Bloomberg’s spending exceeded inflation by 42%, with a significant increase in teachers’ salaries during his first term. Fast forward to the current fiscal year, and spending is projected to reach $111.1 billion, with city taxpayers funding $82.8 billion after accounting for federal and state grants. This amount surpasses the last Bloomberg and Bill de Blasio years by 13% and 2.4%, respectively. Notably, New York spends far more than comparable cities such as Boston and Miami.
Approximately half of the city’s spending goes toward salaries and benefits for city workers. In 2014, before de Blasio’s tenure, spending on salaries and benefits amounted to $31.9 billion in inflation-adjusted dollars, with worker benefits reaching $23.4 billion. By de Blasio’s final year, salaries increased to $34 billion, reflecting a 7% growth, while benefit spending grew by 2% to $23.8 billion. However, it’s important to note that the workforce expanded by 11% during de Blasio’s term, reaching a record 334,000 employees. Despite this growth, individual city workers did not experience significant improvements in their wages and benefits. The average annual wage and benefits pay was slightly lower in real dollars compared to eight years prior.
Interestingly, while education spending under de Blasio increased by an impressive 27% above inflation from $30.2 billion to $38.3 billion, spending in other core areas remained relatively stagnant. The police budget decreased by 2%, albeit with a minor increase in civilian headcount. Sanitation spending and headcount rose by 4% and 3%, respectively. Additionally, de Blasio did not dramatically increase spending on social services, excluding homeless services, which nearly doubled in real terms. However, due to reduced spending on other social services, the total social-service budget experienced a slight decrease during de Blasio’s tenure.
As Mayor Adams assumes office, a shift is evident. The city’s workforce is projected to shrink from a record high of 334,000 employees during de Blasio’s term to less than 329,000 by the end of the current fiscal year. Apart from Adams’ raises for public-sector workers, salary costs will be 3 to 4% lower than the final de Blasio year, and the education department’s workforce will shrink by 2% to 153,000. Nevertheless, certain areas, such as debt costs, are increasing as interest rates rise. However, the greatest surge in spending can be observed in social services. Adams is proposing a substantial $4.2 billion expenditure on homeless services this year, a 66% increase from the final de Blasio year and more than three times higher than the beginning of de Blasio’s tenure. This increase in spending is solely attributable to housing migrants.
Overall, categorized expenditures such as Medicaid, welfare, and homeless services will reach $12.6 billion this year, an 11% increase above the final de Blasio year after accounting for inflation. Yet, Adams has not presented a clear strategy for addressing the long-term burden of housing an indefinite number of migrants. With the likelihood that many migrants will not qualify for asylum or work legally in the country, New York City is facing a growing social-services spending challenge. It is crucial for the city to confront this issue and establish a comprehensive plan for transitioning migrants out of temporary shelter. Failure to do so may result in a significant burden that is difficult to resolve, reminiscent of the challenges faced during the welfare-reform era.
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