Smart savings are needed now in the city budget: The Citizens Budget Commission notes six concepts that must be reckoned with

When Mayor Adams’ budget director recently instructed agencies to find ways to save 3%-4% of their budgets, critics decried it as service-decimating austerity, and a manufactured crisis unnecessary given higher tax revenues.

Ignoring six sobering realities, the critics ignore the call to smartly restrain spending growth, improve management, and speed hiring. The truth is that city government can’t do everything for everyone; but prioritizing and managing the most impactful programs well allows it to ensure New Yorkers and the city thrive. Failure to act threatens critical services much more than this Program to Eliminate the Gap.

The first reality is this is not austerity budgeting. With the proposed savings, city-funded spending would be 5.5% higher next year than last, and then grow 4.8% annually over the next three years.

Second, the administration’s three prior savings plans barely affected services. More than $200 million of the annual savings — only 0.3% of the $107 billion budget — may affect actual services to be delivered. Instead, nearly all the savings came from re-estimating costs, debt service, leveraging federal or other funding, and increasing efficiencies designed to preserve programs.

Third, these savings plans did not cause the city’s staffing shortages. Attrition and slow hiring during the pandemic shrunk the number of city employees on board from 327,000 to 300,000. While the savings plans eliminated 11,386 vacancies, there still are 23,000 vacant full-time positions possible to fill.

Still, staff shortages hurt services — longer waits for housing vouchers, public assistance, permits, inspections and rezonings, among others. The city’s hiring woes are due to its slow, bureaucratic hiring process and the tight labor market. Improvement efforts underway should help, but radical reforms are needed.

Fourth, the budget gaps are huge. The city and union leadership agreed to employee raises that add $17 billion of spending over five years. Layer this onto previously identified budget shortfalls, underbudgeted spending for programs like special education, support for asylum seekers, and federal and city fiscal cliffs, and gaps grow to $9.7 billion in fiscal year 2025 and $14.5 billion in fiscal year 2027.

Fifth, the gaps will not magically disappear. The City Council, Independent Budget Office and city and state comptrollers each project annual revenues will be $2 billion to $5 billion higher than the city’s reasonably conservative forecast. Perhaps right, but erasing up to one-third of the future gap is helpful, not mission accomplished. Furthermore, a recession could make the current forecast seem optimistic.

Sixth, adding programs without offsetting savings exacerbates problems. The Council’s optimistic revenue forecast would fund this and next year’s employee raises, reserve deposits, and new programs for next year. However, many of the new programs would keep going, adding perhaps $1 billion to the already huge gaps; that’s before the potential cost of migrants, new state budget mandates, housing vouchers, and more.

The Daily News Flash

Weekdays

Catch up on the day’s top five stories every weekday afternoon.

Facing these realities, the city must thoughtfully rein in its spending by restructuring and prioritizing high impact services, not by slashing programs or pruning low hanging fruit. Increasing efficiency and quality takes a continuous and thoughtful effort. The city started this cycle late, but should be supported to do this right, not stopped.

Unfortunately, the city failed to use the latest labor agreements to change work rules to increase efficiency. One agreement will pilot a shift change for police, but locked in no savings. This may save money, but could increase costs if poorly managed. The agreements also did not include health savings, but efforts reportedly are underway. We found that consolidating welfare-benefit funds would save $150 million from efficiency and purchasing power. More is needed.

While the city should reduce costs of centralized services — like space for fewer employees — most savings should come from reorganizing operations, streamlining bureaucracy, and leveraging technology. Since increasing government productivity has not been a focus for the past decade — during which private-sector productivity rose 12% — great potential exists.

Increasing sanitation productivity could save $100 million annually; additional savings across government is possible through overtime caps, ambulance staffing changes, and more. Imagine the potential when commissioners, managers, and front-line staff engage in identifying improvements.

These six realities should galvanize those who fear wrenching cuts to critical services — fears likely realized if added spending and unproductive programs accelerate the city into a fiscal wall. Better to support efforts to streamline and prioritize services than sap the energy needed to fix the city’s fiscal problems and improve services.

Some believe that raising our nation’s-highest taxes again would solve all fiscal problems without consequence. New York already is the country’s outmigration leader; raising taxes — like avoiding the hard work to prioritize and deliver efficient, high-quality services — would be the wrong direction.

Rein is the president of the Citizens Budget Commission.