Taming the Big Apple’s big budget

Over the last two decades, the New York City government’s budget has ballooned at a pace that far outstrips population growth and economic factors. While the city spends more than ever before, few residents would say services and outcomes have improved meaningfully. As the budget grows untethered to performance, swelling in structurally unsustainable ways, New York has been left vulnerable to future economic downturns and potential cuts in state or federal funding.

In 2005, at the end of the Bloomberg Administration’s first term, New York City spent roughly $53 billion. In 2024, the city spent approximately $113 billion, which is more than the entire budget of the state of Florida and nearly ten times that of Miami-Dade County. Over those two decades, the population of New York City grew by about 5% while the budget grew by 113%.

A combination of forces drove this surge: labor contracts with rising wage and benefit costs; rapidly expanding health insurance and pension obligations; massive increases in homelessness and emergency shelter spending; soaring education costs despite declining enrollment; inflation-driven spikes in vendor and service contracts; and, most recently, billions in humanitarian expenditures related to the arrival of asylum seekers. During the COVID-19 pandemic, federal aid temporarily alleviated these structural pressures, but when that aid ended, rather than returning to baseline, budgets remained elevated.

Many vulnerable communities rely on these critical public services. Financial assistance and support for housing, healthcare, food, transportation, and other core needs can be make or break for tens of thousands of New Yorkers. The vital importance of these services underscores the need for leaders to ensure that the programs are effective and the city’s finances are sound, thereby avoiding painful cuts in the future.

Yet even now, with the economy relatively strong, the city faces multi-billion-dollar budget gaps in the near term. If a recession hits or state and federal support weakens, New York will have little cushion. And with so much of the city’s spending tied up in fixed costs, such as pensions, healthcare, labor contracts, and debt service, the flexibility to respond will be severely limited.

The financial fragility of the city’s budget is only half the story. The other concern centers on whether New Yorkers are getting results for their considerable investment of resources. 

Despite record spending, gains in academic achievement remain stubbornly flat. The city invests over $42,000 per student — more than double the national average and three times Florida's — yet half of our students cannot read or do math on grade level. The construction of the Second Avenue subway line cost 12 times more than similar projects in Italy, Paris, and Berlin. Yet, rather than having a fast and reliable system of the future, many subway lines feel old, dirty, and unsafe for too many, and the broader system continues to face financial challenges. Permitting for new construction and small businesses moves slowly and relies on antiquated technology, stymying economic growth and driving up costs.

The issue is not that the city doesn’t spend enough, but rather, it fails to spend strategically, invest in efficiency, and lacks transparency on whether public services are genuinely effective.

New York needs to adopt outcomes-based budgeting — a model successfully used in cities and states across the country that ties dollars to measurable results. Instead of funding agencies based on historic baselines and political negotiations, the city should measure what works, scale what is effective, and eliminate or overhaul what isn’t producing outcomes for citizens.

Mike Bloomberg would often say, “If you can’t measure it, you can’t manage it.” To properly measure results, manage programs, and allocate resources, New York should establish a citywide framework that assesses the return on investment for each agency and service, including student achievement gains, shelter exit rates, response times, street cleanliness metrics, permitting turnaround times, and other relevant metrics. Agencies should be required to justify continued or increased funding by demonstrating impact, not simply by citing need. Programs that do not deliver should be restructured or discontinued, freeing resources for those that do.

Second, the city must identify genuine efficiencies through the use of modern technology, streamlined operations, procurement reform, and enhanced coordination between agencies. Both private companies and high-performing public systems utilize continuous improvement methodologies to minimize waste while improving service delivery. New York can do the same.

Third, the city must build fiscal resilience by moderating spending growth and replenishing reserves while the economy is still strong. That means rejecting the assumption that the solution to every challenge is more money and taxes, and beginning instead with a clear understanding of outcomes and cost-effectiveness. Encouraging agencies at the start of the new administration to identify and report on cost savings could be a good first step in shoring up finances ahead of a rainy day and redirecting resources to new programs.

New Yorkers are generous and willing to invest in their city, exemplified by our vibrant philanthropic sector. But they deserve a government that delivers results for those investments in cleaner streets, better schools, safer neighborhoods, affordable housing, reliable transit, and responsive government. A sustainable and resilient public sector is possible, but only if we stop measuring our commitment by how much we spend and start assessing it by what we achieve.