New York City Comptroller Mark Levine expressed concern over the Zohran Mamdani administration’s inaugural budget, which increased net spending estimates by $4.14 billion in fiscal 2026 and $5.39 billion in fiscal 2027 and an average of $8.46 billion from fiscal 2028 to fiscal 2030.
In his analysis released Wednesday, Levine projected a shortfall nearly $2 billion larger than Mamdani had originally estimated.
‘Spending much more than necessary’
The mayor’s Office of Management and Budget projected a budget gap of $5.4 billion over two years, while Levine estimates it will be at least $7.3 billion.
“The mayor’s preliminary budget and February financial plan also reveal the stark reality that the city is spending far more than it is taking in,” Levine said.
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He blamed it on “the structural imbalance between operating expenditures and revenues that this office has documented and assumed.”
Mamdani’s budget proposals
In February, Mamdani unveiled his spending plans for New York, which showed a significant increase in net spending. That includes funding for teachers needed to meet the state’s mandate to reduce class sizes, reflecting spending previously expected to be covered by the long-depleted and off-budget health insurance stabilization fund, and core funding for some education-related fiscal cliffs. The increase also supports some new programs, including the initial launch of the universal 2-K program announced by the mayor and governor.
The 2026 budget clearly shows how much spending exceeds revenue. The operating surplus, which is used to prepay next year’s expenses, will drop from $3.79 billion in fiscal 2025 to $238 million in fiscal 2026, a 94 percent drop, Levine noted.
Property tax increase
The comptroller was also critical of Mayor Mamdani’s property tax increase proposal, which he said would push tax levies for operating purposes close to the city’s tax cap, effectively eliminating the city’s ability to raise revenue.
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“Raising an already deeply inequitable property tax and tapping long-term reserves to close budget gaps are problematic steps that would harm the city’s most vulnerable residents and the city’s overall fiscal health,” he argued.
Geopolitical risks
Crucially, Levine also pointed out that the city faces increased economic uncertainty that leaves New York vulnerable to future turbulence. According to him, the biggest short-term risks for the economy appear to be geopolitical.
“The attack on Iran and the subsequent conflict have roiled financial markets and driven up oil and gas prices,” Levine noted.
The risk of AI
The statement also highlighted the risk of AI rapidly advancing on the labor market and reducing demand for key occupations in the city.
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If the impact of AI on business profitability turns out to be less significant, slower or differently distributed than expected, there is considerable scope for market downside risk. To add to the uncertainty, private credit fund buybacks appear to be accelerating, posing new financial risks,” Levine warned.
Other threats to New York’s economic plans, according to Levine, were accelerating inflation, continued uncertainty over tariffs and the prospect of ever-larger deportations.
Key things
- The projected budget deficit is larger than originally estimated, raising concerns about fiscal sustainability.
- Rising expenses are outstripping revenue, leading to significant budget challenges for NYC.
- Economic uncertainties, including inflation and geopolitical tensions, pose additional risks to the city’s financial health.
