New York City Comptroller Brad Lander Releases Annual Report on the State of the City’s Economy and Finances

New York, NY – New York City Comptroller Brad Lander released the annual “State of the City’s Economy and Finances” report. This report provides an analysis of the City’s fiscal health and position ahead of the annual budget process, which begins early in the new year.

“New York City stands on solid ground to face the economic headwinds of the next year. Despite greater than usual uncertainty in the global markets and the city’s commercial corridors, tax revenues continue to come in over expectations and job growth has been strong. Thoughtful, strategic, and careful financial planning is needed to ensure we can continue to meet the myriad of challenges, from rising cost of living, providing care and shelter for the most vulnerable, retaining the workforce that provides core services, and investing in the long-term needs facing the City,” said New York City Comptroller Brad Lander.  

The level of uncertainty in the global and local economies is higher than usual, as a result of the COVID pandemic’s disruption and historic inflation. The Comptroller’s office engaged a diverse set of stakeholders to discuss the future of the New York City’s economy, exchange ideas, and identify critical areas for growth and inclusiveness to add context to this year’s analysis. The picture that emerged from those conversations and reflected in the report’s data is of a strong, but incomplete economic recovery, with key areas of concern surrounding the cost of housing, the outlook for commercial real estate, and strengthening the workforce development system.

According to the Comptroller’s annual report, which is required by the City Charter, Fiscal Year 2023 revenues remain strong due to the continued re-opening of the City’s economy. The Comptroller’s office anticipates additional revenues above the City’s projections. As of October, total tax revenues were above expectations by more than $900 million, after removal of temporary factors affecting the timing of collections.

For 2022-2026, the Comptroller’s Office’s forecast expects the City’s economy to slow its pace of recovery. The change in average annual payroll jobs is forecast to drop to 51.3 thousand in 2023 and 38.7 thousand in 2024, before picking up again in 2025 and 2026. Total wage earnings are also seen slowing to 2.5 percent in both 2023 and 2024 because of job losses in high-pay sectors of the economy and lower incentive compensation in the securities industry.

The forecast also notes that residential and commercial real estate transactions are expected to drop further than previously anticipated and Wall Street profits are projected to drop 57% in 2022 and remain subdued over the forecast horizon. Risks to the City’s commercial real estate include a drop in office-using employment, the prevalence of hybrid schedules, and higher interest rates.

The annual report discusses the City’s November 2022 Financial Plan, which increased the FY 2023 Adopted Budget by $2.88 billion to $104 billion. The review notes that there is a small surplus in FY 2023, but with growing gaps in the outyears compared to the City’s estimated gaps. Revenue is also anticipated to come in higher than the City’s projections. Still unaccounted for in the November Financial Plan is $1 billion in unspent Federal stimulus dollars from the last fiscal year, which will likely be added in the Preliminary Budget.

The analysis also notes that the PEG program, which totals $5.55 billion over the four years of the November Financial Plan period, is offset by a variety of actions and frees up $800 million in reduced City-funded expenditures through a combination of expenditure reductions and funding shifts. However, because the City has provided insufficient information for many PEG initiatives it is difficult to discern budget re-alignments from actual program changes.

To read the full Annual Report on the State of the City’s Economy and Finances, click here.

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