NEW YORK — After months of doom and gloom, New York City Mayor Zohran Mamdani unveiled a dramatically sunnier fiscal picture for the city Tuesday: A $124.7 billion executive budget that is balanced without drawing down reserves, increasing property taxes or cutting into service delivery.
In large part, he has Gov. Kathy Hochul to thank.
A $5.4 billion budget gap projected in February is no more, having been filled with several new revenue streams and savings programs — most of which came from Albany — including a new tax on wealthy homeowners.
“Through new revenues, savings and a renewed partnership with the state, we pulled New York City back from an existential fiscal brink,” Mamdani said at a City Hall budget presentation.
In a direct form of aid, Hochul has agreed to provide $1.4 billion in fresh funding for city programs over this fiscal year and the one beginning July 1 — including $600 million for youth initiatives and $202 million for reimbursing families of public safety officers who die in the line of duty, according to Mamdani’s plan. Those pots of funding used to be covered by the state, but were shifted over to the city’s tab, mostly under former Gov. Andrew Cuomo’s administration.
Mamdani’s executive budget also pencils in $500 million in annual revenue from a yet-to-be-finalized pied-à-terre tax on pricey properties in the city — another measure contingent on state permission. When another $150 million in yet-to-be-finalized school aid from the state is added to a previous $1.5 billion allocation of direct state aid and $1.2 billion in child care funding, Hochul will have played a major role in rightsizing the city spending plan.
“Today, we are fulfilling the promise to make free universal child care a reality, making significant investments in education, public safety, and infrastructure while providing the city the resources they need to continue to fund critical services for New Yorkers,” Hochul said in a statement.
Tuesday’s spending deal is also likely to temper criticism of Mamdani’s budgetary chops that might have otherwise come from multiple directions: ratings agencies who threatened a downgrade over his use of reserves during an economic expansion; Black homeowners furious over the prospect of increased property taxes; his base, which might have revolted at the prospect of service cuts; and those in the business community who felt a thirty-something democratic socialist was ill-suited to rescuing the city from near-financial ruin.
But for all the improvements Mamdani has made to the city’s fiscal health since February, his executive plan is still shored up by a raft of short-term measures and payment deferrals that are making budget watchdogs uneasy about the city’s long-term fiscal health.
As part of her lifeline to the city, Hochul is providing a state approval allowing Mamdani to extend the period over which public pension contributions are made, a change expected to save the city $1.6 billion in the upcoming fiscal year but provide diminishing returns in out-years. Such a move will require support from four of the city’s five public pension funds, adding a potential obstacle to getting it across the finish line.
Andrew Rein, president of the fiscally hawkish Citizens Budget Commission, panned the pension contribution delay, arguing it saddles future generations with an unfair burden.
“We have to solve this budget gap today, and basically by stretching out pension payments we’re asking people in the mid-2030s to solve the 2027 budget gap, and that’s simply not fair,” Rein said. “We’re going to ask people who don’t even live here yet to help us balance the budget now.”
Earlier this year, Mamdani lambasted former Mayor Eric Adams for under-budgeting city programs, which resulted in the massive deficits Mamdani’s administration is now contending with. But in stretching out the timeline for city pension payments, Mamdani may also be saddling a future mayor with the tab for his decision to kick the can down the road.
City Comptroller Mark Levine told reporters after being briefed on the budget that he did not necessarily oppose the pension contribution adjustments but would like that revenue to be saved instead of spent.
“If you refinance your house, you have a big windfall. Maybe you put it into your college fund for the kids as opposed to spending it right away,” he said by way of analogy.
In another can-kicking exercise, Mamdani’s plan banks on $500 million in savings from delaying implementation of a state law mandating smaller class sizes in city public schools. While pushing off the deadline will give the city some temporary reprieve, Mamdani will eventually have to comply with the requirements.
The class size implementation delay requires state action, and Mamdani offered a vague answer when asked how he can guarantee the projected savings before a deal has been reached in Albany: “That’s an active conversation with our partners in Albany, as well as in labor, and we are confident.”
The mayor also found around $1.2 billion in unused salary money as a result of the city’s smaller-than-expected headcount in the current fiscal year, which the budget office is using to fund recurring expenses.
These measures come as the city is facing a challenging fiscal environment going forward: Personal income taxes are projected to dip slightly in the current and next fiscal years while outyear budget gaps are expected to climb to around $7 billion in fiscal year 2029 and north of $9 billion the year after that.
Though the governor has played a critical role in helping Mamdani balance the city’s books, she held firm against his push for increasing income taxes on millionaires and business taxes on major corporations this year. Her resistance on that front marked a setback for Mamdani, whose successful 2025 campaign was centered on the idea that those two core taxation policies could help bankroll his costly proposals to greatly expand free child care programs and make public buses free.
Mamdani has still taken a tax-the-rich-related victory lap over the pied-à-terre surcharge, which is expected to impact people who own secondary homes in the city worth more than $5 million. His executive budget banks on generating $500 million in annual revenue from that new surcharge, even though the specifics of its implementation remain unclear as state budget negotiations continue in Albany.
In an apparent effort to keep momentum going on the taxation front, Mamdani’s executive budget includes a proposal to decrease the credit individuals receive for paying the city’s Unincorporated Business Tax, or UBT, a move that would generate $68 million in new revenue. The UBT credit benefits about 24,000 high-income earners in the city, according to Sherif Soliman, Mamdani’s budget director, who noted that it can be scrapped by the city without state intervention.
Council Speaker Julie Menin — whose body will use Mamdani’s executive proposal as the basis for the final round of budget talks before a June 30 adoption deadline — included a proposal to phase out the UBT credit for high-income earners in the Council’s spending plan from last month, making its adoption likely.
In a statement after a private budget briefing with the mayor, Menin and Council Finance Committee Chair Linda Lee said they will “closely review” his latest proposal and hold hearings on it in the coming weeks.
“We appreciate that the administration has moved toward an approach championed by the Council that identifies savings and avoids raising property taxes or raiding reserves,” they said.
When it comes to slashing city spending, Mamdani is projecting more than $500 million in savings that come from curtailing the cost of housing vouchers and homeless shelters — a move that runs counter to his pledge to expand the voucher program during his 2025 campaign. Savings goals incorporated into Mamdani’s last spending proposal were set to trim around another $1.7 billion, with Tuesday’s budget proposal listing off a raft of belt-tightening at agencies, such as trimming $100 million in “unnecessary” non-salary expenses at the Department of Education. Additional savings will come from investments in special education in the hopes of staving off legal costs.
One of the largest allocations in Mamdani’s plan is $40 million for his signature Office of Community Safety, with $26 million of it being set aside for hate crime prevention.
The new investment will go to staffing and contracting at the office, which is a pared-down version of the department of community safety that Mamdani floated during last year’s campaign. Even with the new funding, the office — which is supposed to spearhead the city’s responses to mental health, homelessness and hate crime crises — only has a budget of about $300 million (most of it repurposed from existing programs), a far cry from the $1.1 billion Mamdani pledged during the campaign.
Thanks to the newly identified savings and funding commitments from the state, Mamdani’s plan is also expected to reverse cuts to the city’s public libraries and parks that he included in his first budget proposal in February. Still, he falls short of his campaign promises to dedicate 1 percent and 0.5 percent of the city’s overall spending to libraries and parks, respectively.
Between all the cost cutting, Mamdani’s executive proposal clocks in at $3 billion less than the preliminary plan he rolled out in February, when he issued a clarion call about the city facing its “biggest budget gap since the Great Recession.” At the time, Mamdani said he would need to increase the city’s property taxes and raid its budget reserves unless Hochul caved to his demands for income tax hikes on millionaires and business tax hikes on corporations.
Both of Mamdani’s drastic contingency proposals were met with fierce pushback, and ultimately he was able to produce an executive budget without taking either step.
“It has not been easy,” Mamdani said. “But we have balanced the budget, and we have done so without placing the burden on the backs of working New Yorkers.”
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