NYC’s Adopted $115.9B Budget is Short-Sighted with Future Gaps Expected to Widen

On Monday, June 30th, the New York City Council voted unanimously to approve a $115.9 billion budget for Fiscal Year (FY) 2026. Despite looming cuts to federal aid, which makes up about 8% of the city’s budget, and economic uncertainty, the Adopted Budget not only increases the $115.1 billion proposal that Mayor Adams put forward in April by $800 million, but according to the statement by fiscal watchdog the Citizens Budget Commission (CBC), “increases spending more than twice the rate of inflation and leaves future budget gaps of more than $9 billion, after accounting for underbudgeted expenses.” According to the press release by city council, “over $41.6 billion of the council’s priorities were added for inclusion in the Adopted Budget,” contrary to CBC’s “Smart Choice” recommendations of “putting aside $3 billion to soften the first blows of federal cuts and protect against a future recession.” Although the city’s reserves currently stand at $8.5 billion, “including its $1.2 billion general reserve, $2 billion rainy fund, and $5 billion in the Retiree Health Benefits Trust Fund that functions as another next egg, the CBC points out that a typical recession “would sap $11 billion of revenue over two years, which would swamp the city’s reserves.” It was further noted in the article by Crain’s New York that “projected gaps between future years’ spending and revenues have grown by a combined $1 billion compared to two months ago, now pegged at $5 billion in 2027, $6.1 billion in 2028, and $6 billion in 2029;” and although city hall forecasters indicate the “tax revenue growth will be $600 million stronger than previously expected between the current and next fiscal years, those revenues are expected to slow over the next three years.” While recognizing that the addition or expansion of many of the various programs related to a wide range of areas may be beneficial, including education, public safety, mental health, libraries and cultural institutions, and generational projects, they require additional funding when instead, the city should be addressing the need “to stabilize the budget and secure the future by increasing efficiency and shrinking low impact programs” per the preliminary statement by the CBC. Currently awaiting full budget information for further analysis, the CBC continues to reiterate uncertainty about the level of transparency presented on paper since it is “unlikely to represent the full fiscal picture given underbudgeted expenses and looming federal cuts.”