In order to be ready for future shortfalls, the city is preparing early.
“The reality is we have large budget gaps next year and they grow bigger,” said Andrew Rein, president of the Citizens Budget Commission, an independent fiscal watchdog group.
Mayor Zohran Mamdani on Tuesday directed all city agencies to identify 2.5% in savings for fiscal year 2027-28.
“What’s important about doing so now is that we’re also giving agencies and departments time to reflect on it as opposed to having this conversation only in the context of the budget process itself,” Mamdani said.
City Hall is projecting a budget gap of over $6 billion next year.
Rein said the plan is a good start.
“When you start early, you can identify options that reduce spending but preserve critical services,” he said.
Rein added that the projected savings from the directive could be over $1 billion, enough to make a dent in next year’s shortfall.
“Large agencies have more opportunity not because they’re more bloated, but they’re larger. Look at the Department of Education. We have just allocated $400 million in this year’s budget, where the school’s student body is shrinking. We are funding phantom students,” Rein said.
The city’s top fiscal watchdog, Comptroller Mark Levine, also applauded the mayor’s efforts. Levine’s own projections put next year’s gap at more than $9 billion.
“These kinds of measures are never easy. But we face a significant budget gap next year,” Levine said in a statement. “Launching a savings program now, early in the fiscal year, is the right thing to do. Kudos to the mayor for this prudent step.”
City Council members — who negotiate the budget with the mayor — welcomed the move but insisted they will be fighting any proposed service cuts.
“Fiscal responsibility and compassionate governance are not competing priorities, and I look forward to working together to protect our city’s services while ensuring a balanced budget,” City Councilwoman Linda Lee, chair of the Committee on Finance, said in a statement to NY1.
Rein noted that the budget deficit is partly a result of how Mamdani balanced this year’s budget, which included significant state aid, including a new tax on second homes and delayed pension fund payments for city workers.
“One shots patch a hole, but they don’t solve the problem. And it’s part of the reason we have large budget gaps next year. He’s right to find recurring savings and solutions now,” Rein said.
Along with the directive, the mayor launched a voluntary survey that will allow any city employee to weigh in on potential cost cuts.