I. Executive Summary
The Mamdani administration’s inaugural budget is a significantly more transparent and accurate accounting of City expenditures than presented during the Adams administration. By recognizing billions in chronically underbudgeted costs, funding fiscal cliffs for recurring programs, and reflecting other known yet previously unaccounted for obligations, the Mamdani administration has dramatically changed course from the prior administration’s practice of deliberately understating City costs.
Overall, the Mamdani administration increased net spending estimates by $4.14 billion in FY 2026 (3.5 percent), $5.39 billion in FY 2027 (4.4 percent) and an average of $8.46 billion in FY 2028 through FY 2030 (averaging 6.6 percent). These increases largely reflect costs that this Office has long flagged as chronically underbudgeted, particularly shelter, public assistance, rental assistance programs, and special education due process cases.
What the Mayor’s Preliminary Budget and February Financial Plan also lays bare is the stark reality that the City is spending far more than it takes in, a structural imbalance between operating expenditures and revenues that this Office has documented and projected. To close yawning budget gaps in FY 2026 and FY 2027, the Mayor relied on optimistic projections and serious actions. These are:
- $6.58 billion over the two years in higher City tax revenues, which may prove to be a reversal of OMB’s well-established cautious approach to forecasting.
- $3.70 billion from a proposed increase in the property tax in FY 2027, which effectively maximizes the City’s taxing power for operating expenses.
- $2.96 billion over the two years in commitments and favorable tax legislation proposed in the State budget, but not yet enacted, which are only partially recurring.
- $2.56 billion in reserve drawdowns over the two years beyond the typical current year reduction, including from the Revenue Stabilization Fund, the City’s rainy-day fund, and the Retiree Health Benefits Trust.
- $1.77 billion over the two years from recently announced but unspecified savings targets.
The budget for FY 2026 plainly shows by how much expenditures are outpacing revenues. The operating surplus, which is used to prepay next year’s expenses, drops from $3.79 billion in FY 2025 to $238 million in FY 2026, a 94 percent decline. On its face, this means that in FY 2026 expenses are $3.55 billion higher than revenues. However, the budget also assumes a $980 million drawdown of the rainy-day fund. Therefore, in FY 2026 the City’s operating expenses are projected to be $4.53 billion higher than its revenues. Without the $710 million in recently announced but unspecified savings and the $1.01 billion in projected impacts of the yet-to-be-enacted State budget actions, the FY 2026 operating deficit increases to $6.25 billion.
As mentioned above, the property tax increase pushes the tax levy for operating purposes close to the City’s tax limit, effectively eliminating the City’s revenue-raising capacity. At the same time, the Preliminary Budget lowers in-year reserves for unforeseen contingencies in FY 2027 from $1.45 billion to the statutory minimum of $100 million, further eroding budget flexibility. Barring new State actions in the upcoming fiscal year, this means that budget gaps could only be filled by reduced spending or additional drawdowns of the Revenue Stabilization Fund and the Retiree Health Benefit Trust. And, on the flip side, regaining fiscal space in FY 2027 would rely on tax revenues accelerating from already relatively optimistic levels.
All these actions take place at a time of heightened economic uncertainty, leaving the City vulnerable to future turbulence. The biggest near-term risks to the local (and national) economy now appear to be geopolitical. The attack on Iran and subsequent conflict have roiled the financial markets, driving up oil and gas prices. Another risk is that rapidly advancing AI may prove to be more labor substituting, with the potential to rapidly reduce demand for core occupations in the city. Conversely, if AI’s impact on business profitability proves less significant, slower, or differently distributed than anticipated, there is considerable room for downside market risk. To add to the uncertainty, fund redemptions in private credit appear to be accelerating, posing new financial risks. A pickup in inflation, ongoing tariff uncertainty, and the prospect of increasingly widespread deportations due to the Trump administration are also significant risks to the local economy.
While both the U.S. and New York City economies demonstrated some resilience in 2025, growth has been uneven. Outside of healthcare, New York City’s private sector employment declined in 2025. Despite this weak employment growth, overall New York City wages and salaries grew rapidly in 2025. Real wages averaged higher than 2 percent growth during the year. However, large bonuses and wage increases in the Securities, Information, Banking & Insurance, and Professional & Business Services sectors are responsible for all the city’s average real wage growth. In the last year, average wages in all other private industry sectors—accounting for more than two-thirds of the private workforce—barely kept pace with inflation.
OMB’s economic forecast included in the February Plan expects strong wage growth this year, especially in the financial sector, with continued wage and even stronger job growth in 2027. This is a much rosier picture than OMB included in its November 2025 Plan and more optimistic than currently assumed by this Office. Overall, OMB raised its tax revenue forecast to $84.34 billion in FY 2026, $91.48 billion in FY 2027 and reaching $97.41 billion in FY 2030. Relative to the November Plan, this represents substantial upward revisions amounting to $2.59 billion in FY 2026, $8.65 billion in FY 2027, $7.60 billion in FY 2028, and $6.39 billion in FY 2029. As previously mentioned, these revisions result not only from OMB’s forecast of improved economic conditions and updated collection trends, but also from a proposed increase in the property tax rate beginning in FY 2027, as well as the net positive tax proposals in the Governor’s budget that have not yet been enacted. Typically, OMB only reflects the impact of State budget actions after they are legislated.
Assuming the property tax and State budget proposals are passed, the Comptroller’s Office’s tax revenue forecast is below the Mayor’s in the near term but higher in FY 2029 and FY 2030. This Office projects tax collections to total $83.70 billion in FY 2026, $89.84 billion in FY 2027 and reaching $99.75 billion by FY 2030. Compared to the financial plan this represents lower tax revenues by $640 million in FY 2026 and $1.64 billion in FY 2027, but higher by $2.34 billion by FY 2030.
While this Office estimates some differences in the impact of the Governor’s proposed tax programs and the Mayor’s proposed property tax increase, most of the divergence with OMB derives from each office’s baseline tax forecast. The largest differences in FY 2026 and FY 2027 are due to OMB’s higher personal and business income tax projections. While not unachievable, the relative optimism of OMB’s projections signals a reversal of the clear downward bias that characterized OMB’s previous practice.
On the spending side, as previously discussed, the February Plan reflects significant net expenditure increases compared to the Adams administration’s November Plan. The changes largely address costs identified by this Office as chronically underbudgeted. The February Plan also recognizes other costs, such as funding teachers required to meet the State’s class size reduction mandate, reflecting expenditures previously expected to be paid by the long-depleted, and off-budget Health Insurance Stabilization Fund, and baselining funding for some education-related fiscal cliffs. The increases also support some new programming, including an initial roll out of the universal 2-K program announced by the Mayor and the Governor.
Because the February Plan reflects many of the City-funded expenditure needs previously identified, this Office’s net additional needs total $186 million in FY 2026, $1.22 billion in FY 2027, and an average of $2.21 billion in FY 2028 through FY 2030. These are down from re-estimates of $3.16 billion in FY 2026, $7.04 billion in FY 2027, and an average of $8.54 billion in FY 2028 and FY 2029 relative to the spending amounts in the November plan. While the Mayor resolved most of the chronically underbudgeted costs, the Comptroller’s Office estimates that some additional funding will still be required for rental assistance, overtime, contributions to the MTA, and school custodial costs, particularly in FY 2027 through FY 2030. These estimates do not include the impact of the CityFHEPS expansion—currently in litigation—which this Office has estimated could result in additional net costs of about $6 billion to $22 billion over the first five years of implementation.
This Office’s re-estimates do assume that additional City funding will be required for child care programs. This includes existing child care vouchers beginning in FY 2028 and the new, universal 2-K program beginning in FY 2029, as 2-K funding was only included in FY 2027 and FY 2028 in the February Plan. Other additional City fund needs result from actions of the Trump administration. These include cuts to the Supplemental Nutrition Assistance Program (SNAP), as well as the revocation of funds previously received by the City to reimburse it for services provided to asylum seekers. The impact of larger Federal cuts, including Medicaid and SNAP cost sharing, will first flow through to the State. It is currently unknown if and how they will be passed on to localities, so they are not yet included in these re-estimates.
Taken together, this Office’s spending and revenue re-estimates result in gaps that are higher than currently projected by OMB in FY 2026 through FY 2029. In FY 2030, the Comptroller’s Office gap estimate is slightly below the administration’s. The Comptroller’s Office gaps total $797 million in FY 2026 (0.7 percent of total revenues), $2.85 billion in FY 2027 (2.3 percent of total revenues), $10.06 billion in FY 2028 (7.9 percent of total revenues), $8.58 billion in FY 2029 (6.6 percent of total revenues), and $6.96 billion in FY 2030 (5.1 percent of total revenues).
Without the proposed property tax increase, however, gaps would increase to $6.53 billion in FY 2027, $13.87 billion in FY 2028, $12.53 billion in FY 2029, and $11.09 billion in FY 2030.
Without the assumed additional state aid and tax legislation, citywide savings, and the property tax increase, gaps would total $2.60 billion in FY 2026, $9.26 billion in FY 2027, $16.69 billion in FY 2028, $14.73 billion in FY 2029, and $13.30 billion in FY 2030.
The February Plan also included an update to the City’s Capital Commitment Plan (CCP), which totals $112.96 billion in all-funds authorized commitments from FY 2026 through FY 2030, a $2.21 billion (2.0 percent) increase compared to the Adopted FY 2026 CCP, released in September. Housing and Economic Development-related projects account for nearly half of the increase, driven by additional capital commitments for the New York City Housing Authority (NYCHA). The second largest increase over the financial plan period is for bridges. The February CCP also includes a new $70 million for the Mayor’s City-run grocery store initiative.
Overall, the February Plan reflects a much more realistic picture of City spending than the budgets released by the Adams administration. This transparency must lend itself to a deep and honest examination of where more savings and efficiencies than those already proposed by the Mayor can be found. The State should and can also do more to rectify years of imbalance and unfunded mandates. Raising the City’s already deeply inequitable property tax and drawing down long-terms reserves to close budget gaps, are troublesome actions that would bring harm to the city’s most vulnerable residents and the overall fiscal health of the City, respectively.
With the continued threats posed by the Trump administration, all other levels of government—from the State to City Hall, and the City Council, must now work together to ensure a strong, equitable, and sustainable fiscal foundation for the future of this city.