NEW YORK CITY — Moody’s Ratings lowered its credit outlook for New York City to negative due to “sizable and persistent” budget gaps.
The credit outlook doesn’t change the city’s actual rating but comes after the first day of City Council budget hearings.
“The negative outlook reflects the emergence of sizable and persistent projected budget gaps that signal underlying structural imbalance and reduced financial flexibility, despite New York City’s still favorable economic conditions,” Moody’s wrote in an analysis on Wednesday, according to Bloomberg.com.
New York City Comptroller Mark Levine called the credit outlook update a “sobering wake-up call.”
It is the first negative outlook the city has received since the COVID crisis.
Levine said the city is spending more than it is bringing in, mentioning that the preliminary budget achieves balance only by drawing down reserves.
“Moody’s negative outlook should sharpen our focus on the task ahead: building a budget based on realistic revenue projections, ensuring that spending growth remains sustainable, securing fair funding from Albany, and strengthening City reserves ahead of potential economic risks next year,” Levine added.
Mayor Zohran Mamdani has warned of an estimated $5.8 billion deficit and weighs tax increases to close the gap.
The mayor presented two options to city and state leaders: raising income taxes on residents earning more than $1 million or increasing the city’s property tax rate to 9.5%.
Mamdani described the property tax increase as a “last resort.”
Moody’s Lowers NYC’s Credit Outlook To Negative Due To Budget Gaps originally appeared on the New York City Patch