![\"\"](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/01\/DSC_9630.jpg\" "\\"City")
Comptroller Levine blames years of underbudgeting for the city\u2019s projected budget gaps.Photo by Lloyd Mitchell<\/p>\nNew York City is facing a $2.2 billion budget shortfall in this fiscal year and a projected $10.4 billion gap the following year, according to a new analysis released Friday by new Comptroller Mark Levine, who blamed years of underbudgeting and reliance on one-time fixes.<\/p>\n
Levine said the gaps, the largest the city has faced this late in the budget cycle since the Great Recession, are not the result of an economic downturn, but of spending decisions made under the previous mayoral administration of Eric Adams.<\/p>\n
\u201cThis wasn\u2019t caused by a bad economy \u2014 it\u2019s the result of budgeting decisions from the previous administration that we must now deal with,\u201d Levine said.\n<\/p>\n
The analysis expands on financial data released in December and comes as the city enters budget season, with the state budget due next week and Mayor Zohran Mamdani\u2019s preliminary city budget expected in February. Levine said the scale of the projected gaps presents \u201cserious challenges\u201d for the city\u2019s finances.<\/p>\n
Despite some signs of potential weakness in the labor market, Levine said the city\u2019s broader economic outlook remains relatively strong. Tourism, Broadway attendance, commercial leasing, and a strong stock market have continued to drive revenue growth, undercutting claims that the looming budget gaps are tied to an economic slowdown.<\/p>\n
Instead, Levine pointed to projected spending levels in FY26 that exceed expected revenues and a failure to fully account for known, recurring expenses.\n<\/p>\n
His office identified $3.8 billion in unbudgeted costs in FY26 alone, with even larger gaps projected in subsequent years. Those costs include rental assistance, overtime, homeless shelter expenses, public assistance, special education due process cases at the Department of Education, and contributions to the Metropolitan Transportation Authority.<\/p>\n
Comptroller Levine blames years of underbudgeting for the city\u2019s projected budget gaps.Photo by Lloyd Mitchell<\/p>\n
At a press conference in Lower Manhattan on Friday, Levine said his office\u2019s projections significantly exceed those published by the city\u2019s Office of Management and Budget just weeks earlier, and he warned against continued reliance on one-time budget solutions.<\/p>\n
\u201cWe want the city to end the practices that got us into this mess \u2014 reliance on one-shots, and particularly this long-running practice of underestimating expenses that we know we\u2019re going to incur,\u201d Levine said.<\/p>\n
Levine said that growing the city\u2019s economy is one of the few ways to ease future budget gaps without resorting to cuts or other painful tradeoffs, arguing that increased business investment and job growth would generate additional revenue.<\/p>\n
As City Hall and Albany prepare their respective budgets, Mayor Mamdani has proposed raising taxes to fund major policy initiatives and help close future budget gaps. Mamdani has backed increasing the state\u2019s corporate tax rate for large companies to 11.5%, up from 7.25%, matching New Jersey\u2019s top rate, and imposing additional income taxes on New Yorkers earning more than $1 million annually.<\/p>\n
Gov. Kathy Hochul has ruled out raising taxes on high-income earners in this year\u2019s budget, though she has previously left open the possibility of changes to corporate income taxes. Hochul did not propose any tax increases in her State of the State address this week.<\/p>\n
Following that speech, the Citizens Budget Commission, a fiscally conservative nonprofit watchdog, backed Hochul\u2019s stance, warning that higher taxes could weaken New York\u2019s competitiveness.\n<\/p>\n
\u201cOur future depends on residents and businesses coming, staying, paying taxes, and creating jobs here,\u201d CBC President Andrew S. Rein said in a statement. \u201cThis requires the State to focus its money and management on programs that deliver results.\u201d The group also criticized the governor\u2019s proposals for lacking clear cost estimates, saying the financial impact of new initiatives will only become clear once the executive budget is released.<\/p>\n
Levine cautioned that policy expansions without sustainable funding could further strain the city\u2019s finances. He cited a potential expansion of a housing voucher program \u2014 currently tied up in court \u2014 which his office estimates could cost between $6 billion and $20 billion over five years if implemented. Those costs are not reflected in the city\u2019s current financial plan.<\/p>\n
Healthcare costs pose another growing risk, Levine said, confirming that the city\u2019s Health Insurance Stabilization Fund is insolvent and carries outstanding obligations that will need to be resolved through negotiations with municipal labor unions. While retirees should not worry about losing benefits, he said the city must begin accounting for rising healthcare costs starting in 2027.<\/p>\n
Before leaving office, former Comptroller Brad Lander released an audit finding that the joint health insurance fund was insolvent and mismanaged, with roughly $3.1 billion in unpaid liabilities. The audit recommended dissolving the fund and budgeting for health insurance costs annually.<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/01\/DSC_9700.jpg\" "\\"City")
Photo by Lloyd Mitchell<\/p>\n
Despite the bleak projections, Levine said the city does not need to abandon ambitious goals, though he cautioned that major initiatives may need to be phased in over multiple years and grounded in more transparent accounting.<\/p>\n
\u201cThis does not mean we still cannot act boldly,\u201d Levine said.\n<\/p>\n
Levine framed Friday\u2019s report as an opening step in what will be months of negotiations across city and state government.\n<\/p>\n
\u201cIn February, Mayor Mamdani and his administration will have the difficult responsibility of producing a balanced preliminary budget,\u201d Levine said. \u201cI\u2019m committed to working alongside Mayor Mamdani and leadership in Albany to ensure the city can make good on its financial obligations and deliver a balanced budget this year and next.\u201d<\/p>\n
Separately, Levine was also asked about decisions made under his predecessor, including the city maintaining pension fund investments in\u00a0Palantir Technologies<\/a>, whose software has been used by federal immigration authorities and\u00a0Israeli weapons manufacturers.<\/a><\/p>\n In response, Levine emphasized the comptroller\u2019s role as a fiduciary overseeing one of the largest public pension systems in the world, saying his office favors shareholder engagement over divestment when addressing controversial corporate practices. He noted that the city\u2019s pension portfolios collectively exceed $300 billion and include a wide array of publicly traded stocks, including companies \u201cthat I and others find have objectionable practices.\u201d<\/p>\n \u201cWe are aggressive shareholders,\u201d Levine said. \u201cWe own. We have a vote for the board of directors, and we have the power to engage in shareholder activism.\u201d\n<\/p>\n Levine said his office is preparing its shareholder activism agenda for 2026 and indicated that concerns about federal immigration enforcement would factor into that work.<\/p>\n","protected":false},"excerpt":{"rendered":"New York City is facing a $2.2 billion budget shortfall in this fiscal year and a projected $10.4…\n","protected":false},"author":2,"featured_media":102531,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[7739,46894,10447,18079,9,24,55,54,56],"class_list":{"0":"post-102530","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york-city","8":"tag-budget","9":"tag-budget-gaps","10":"tag-comptroller","11":"tag-mark-levine","12":"tag-new-york","13":"tag-new-york-city","14":"tag-new-york-city-headlines","15":"tag-new-york-city-news","16":"tag-ny"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/102530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=102530"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/102530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/102531"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=102530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=102530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=102530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}