New York City Mayor Zohran Mamdani is set to roll out his first preliminary budget on Tuesday as officials and watchdogs warn that rising costs, especially in housing and education, are pushing the nation's largest city toward multibillion-dollar budget gaps that threaten to narrow the expansion of services he promised voters.
NYC is legally required to balance its budget, and its fiscal year runs from July 1 to June 30, with the final spending plan typically adopted by late June after months of negotiations with the City Council.
The Wall Street Journal reported that city officials are confronting a potential $12 billion gap over the next two years as spending grows faster than tax revenue, with particular strain from rental vouchers, public assistance, the school system, overtime, and required payments tied to the state-operated transit system.
Mamdani has said his administration has made progress in narrowing the shortfall, citing expected revenue from Wall Street bonuses and internal savings, though the Journal reported that he provided few supporting details.
The same report said his agenda includes free bus service, expanded child care, and new housing initiatives that would require additional funding.
Outside fiscal monitors have issued sharper projections.
New York City Comptroller Mark Levine said in January that the city faces a $2.2 billion shortfall in fiscal 2026 and a projected $10.4 billion gap in fiscal 2027, calling it an unusually large imbalance this late in the budget cycle.
At the state level, New York State Comptroller Thomas DiNapoli's office has also warned that gaps could reach about $10 billion in fiscal 2027 and grow further in later years, citing risks tied to slowing growth and rising costs.
Costs tied to housing vouchers have drawn sustained scrutiny.
DiNapoli's office said in a January audit release that weak oversight and administrative lapses in the city's CityFHEPS voucher program are contributing to rising costs.
Education is another pressure point.
State documents show New York City must phase in smaller class sizes under state requirements, a shift that can require additional staffing and space.
The Journal also reported that budget analysts faulted former Mayor Eric Adams for underestimating future expenses.
Adams has pushed back on the idea that his administration created the current squeeze, with a spokesman telling The Wall Street Journal it is wrong to blame the former mayor for "longstanding" budget gaps and fiscal pressures he inherited when he took office.
When Eric Adams took office in early 2022, New York City already had projected out-year budget gaps.
The city's November 2021 financial plan update listed City Funds "gaps to be closed" of $2.882 billion for fiscal 2023, $2.731 billion for fiscal 2024, and $2.140 billion for fiscal 2025, after accounting for a fiscal 2022 prepayment.
The Citizens Budget Commission summarized the same plan as reducing the out-year gaps to about $2.9 billion, $2.7 billion, and $2.1 billion.
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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