New York City Mayor Eric Adams said on Wednesday that he was canceling an expected third round of agency spending cuts and allowing agencies to restart some hiring — a move he said was possible due to higher-than-anticipated tax revenues and additional cuts to migrant-related spending.

But he warned the city was “not yet out of the woods” and still needs state and federal assistance to address the migrant influx that began in spring 2022.

“Despite facing a perfect fiscal storm that included a multibillion-dollar budget gap driven by an asylum-seeker crisis, the sunsetting of COVID-19 federal stimulus funding, and the cost of inherited outstanding labor costs, our administration was able to successfully make the strong fiscal decisions to navigate us to prosperity,” Adams said in a statement.

The now-canceled third round of cuts were targeted at 5% of agency spending, in hopes of saving as much as $4.1 billion, according to City Hall officials. Most of the previous two rounds of 5% cuts that were announced in November and January remain, although Adams had recently walked some of those back, too.

The administration said the additional 10% in migrant spending cuts would save $586 million over the next two years. Those savings, which come on top of a 20% cut ordered last year, will be realized by reworking previous emergency contracts and transitioning from using private companies to using nonprofit providers to care for migrants.

Some fiscal watchdogs have argued for months that the mayor’s budget projections were overly grim. The city’s Independent Budget Office released an analysis last week that found the city would see a higher budget surplus and lower costs, including for migrant services, than the Adams administration had forecast.

City Hall’s updated revenue projections have come more in line with the IBO’s analysis. The administration said part of its rationale in retracting the third round of spending cuts was a $2.9 billion increase to its revenue projections for 2024 and 2025.

City Councilmember Justin Brannan, who chairs the Council’s finance committee, said during a Wednesday interview that he wasn’t surprised by the mayor’s reversal.

“We never thought these harsh cuts that were proposed were necessary, and we predicted that once [the budget office] recognized the tax revenue that was there, these cuts would go away, and that’s what we’re seeing now,” said Brannan, who represents parts of southern Brooklyn.

He also pointed to a new report by the state comptroller showing a 3.5% increase in the city’s tax revenue over last year.

But more fiscally conservative budget experts called the canceled cuts ill-advised.

“We identified that next year is $3.6 billion short to continue current services,” said Ana Champeny, vice president for research at the nonprofit Citizens Budget Commission.

She said the third round of cuts was necessary even with continued cuts to migrant services, as the city still has many unfunded programs. She also noted the city added more than $2 billion in spending this fiscal year.

“Our concern is that this is not the most fiscally responsible way to go about budgeting, and we’d rather see greater transparency about what programs are funded, what programs aren’t funded,” Champeny said.

Some advocates said they were grateful for the reversal and that Adams should also restore other cuts.

“We’re relieved that there’s not going to be another round of cuts to [the city Department of Education], but we are deeply concerned about the cuts already proposed,” said Randi Levine, policy director at the nonprofit organization Advocates for Children of New York.

The mayor’s proposed education budget released in January featured $700 million in cuts, including a significant reduction in early-childhood spending. Meanwhile, many initiatives that were funded by expiring federal stimulus funds, including hundreds of school social workers and bilingual programs, are set to unless they receive more investment from the administration.

“This still does not solve the major issue the city has around the expiring federal funds,” said Annie Minguez, director of government and community relations at Good Shepherd Services, a nonprofit focused on children and families.

Immigration advocates also criticized the administration’s previous budget projections, claiming they were exaggerated and scapegoated migrants.

“The mayor tried to reduce the question to ‘all these folks have arrived here and we have to take care of them, therefore we have to cut other programs,’” said Joshua Goldfein, a staff attorney at the nonprofit Legal Aid Society. “And it wasn’t true.”

City Comptroller Brad Lander said he was relieved schools and city agencies would be spared a third round of cuts but added that it was “a little dizzying” to watch Adams do a proverbial “budget dance” alone, instead of with the City Council.

“We need to get control of ballooning costs, like claims against the city, uniformed overtime and emergency procurement, which keep growing with little management,” Lander said.

In a statement, Brannan and City Council Speaker Adrienne Adams welcomed the mayor’s announcement and said they looked forward to reviewing his budget proposal for fiscal year 2025, “including the impact of cuts to services supporting people seeking asylum.”