Mark Levine, the Comptroller of New York City, has expressed concern over the Zohran Mamdani administration’s inaugural budget, which increased net spending estimates by $4.14 billion in FY 2026 and $5.39 billion in FY 2027 and an average of $8.46 billion in FY 2028 through FY 2030.
Levine, in his analysis published on Wednesday, projected a deficit nearly $2 billion larger than what Mamdani had initially estimated.
‘Spending far more than it takes in’
The mayor’s Office of Management and Budget has projected a $5.4 billion budget gap over two years, while Levine estimates it to be at least $7.3 billion.
“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,” Levine said.
He blamed it on “a structural imbalance between operating expenditures and revenues that this Office has documented and projected.”
Mamdani’s budget proposals
In February, Mamdani unveiled his spending plans for New York, which showed a significant net expenditure increase. This includes 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.
The budget for FY 2026 plainly shows by how much expenditures are outpacing revenues. The operating surplus, which is used to prepaid next year’s expenses, drops from $3.79 billion in FY 2025 to $238 million in FY 2026, a 94 percent decline, Levine noted.
Increasing property tax
The Comptroller was also critical of Mayor Mamdani’s proposal to increase the property tax, which he said would push the tax levy for operating purposes close to the City’s tax limit, effectively eliminating the City’s revenue-raising capacity.
“Raising the City’s already deeply inequitable property tax and drawing down long-term 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,” he argued.
Geopolitical risks
Crucially, Levine also pointed out that the City is facing heightened economic uncertainty, which is leaving New York vulnerable to future turbulence. According to him, the biggest near-term risks to the economy appear to be geopolitical.
“The attack on Iran and subsequent conflict have roiled the financial markets, driving up oil and gas prices,” Levine noted.
Risk of AI
The statement also highlighted the risk of rapidly advancing AI on the labor market and reducing demand for core occupations in the city.
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,” Levine warned.
Other threats to New York’s economic plans, according to Levine, were a pickup in inflation, ongoing tariff uncertainty, and the prospect of increasingly widespread deportations.
Key Takeaways
- The projected budget deficit is larger than initially estimated, raising concerns about fiscal sustainability.
- Rising expenditures outpace revenues, leading to significant budgetary challenges for NYC.
- Economic uncertainties, including inflation and geopolitical tensions, pose additional risks to the city’s financial health.
