Controller says mayor's forecast reasonable but warns of $500M structural shortfall

Ben Rosenfield, city controller, opened the June 14 Budget & Appropriation Committee meeting with the office's revenue letter, the charter-required review of the mayor's proposed budget. Rosenfield said the administration's economic forecast is reasonable but stressed major risks: continued slow growth, remote-work impacts on taxes tied to downtown activity, and large dependence on one-time solutions and federal reimbursements.

Carol Lou, the controller's citywide revenue manager, laid out key assumptions: economically sensitive taxes such as business gross receipts, hotel and transfer taxes are projected to remain below pre-pandemic peaks, and the budget assumes a mix of one-time fund balance, FEMA reimbursements and reserve draws that together roughly equal $1 billion in the two-year plan. Lou said the city will use about 40% of pre-pandemic reserves over the budget period and that only a portion of reserves are withdrawable for structural needs.

The controller's office flagged an early estimate that, when the one-time fixes expire, the city could face a structural budget gap of roughly $500 million in the year after the two-year budget. Rosenfield and Lou urged the Board to treat the budget as a plan to be actively monitored and adapted rather than a fixed solution, emphasizing the city's sensitivity to future economic shocks and the uncertain pace of federal reimbursements.

The committee took public comment on the controller's letter, then voted to file the hearing. The controller's revenue letter will remain the basis for subsequent budget hearings and for the board's oversight when departments return with more detailed proposals and follow-ups.