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New York City Comptroller Mark Levine was sworn in on Jan. 1. <\/p>\n New York City Comptroller Mark Levine was sworn in on Jan. 1. <\/p>\n
Bloomberg News<\/p>\n
New York City is staring down a $12 billion budget gap, Comptroller Mark Levine announced Friday.\u00a0<\/p>\n
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The freshly-inaugurated comptroller’s projections are more dire than the most recent forecasts from the city’s Office of Management and the Budget; they’re even more dire than those of the watchdog group Citizens Budget Commission. Levine predicts a $2.2 billion shortfall for fiscal 2026 and a $10.4 billion shortfall for fiscal 2027.<\/p>\n
Levine was inaugurated Jan. 1, along with Mayor Zohran Mamdani.<\/p>\n
Levine attributed the gap to the bad budgetary habits of Mamdani’s predecessor Eric Adams, including under-budgeting for certain expenses. Mamdani will need to address the gap when he submits his first executive budget at the end of the month.\u00a0<\/p>\n
Out-year budget gaps are not new territory for New York, but $10 billion is nearly 9% of the current year’s budget. And having a significant shortfall mid-year is uncommon, Levine said.\u00a0<\/p>\n
“What we’re seeing here is remarkable \u2014 unique, I believe, since the 2008 financial crisis,” Levine said.\u00a0<\/p>\n
The shortfall does not stem from lower-than-expected revenues, Levine said \u2014 tax receipts are actually up \u2014 but from higher-than-expected expenses.<\/p>\n
For years, he said, the city has under-budgeted costs for police overtime, shelters, public assistance, Department of Education due process cases, and a rental assistance program called CityFHEPS.\u00a0<\/p>\n
This under-budgeting grew worse throughout Adams’ tenure, and for fiscal 2026, Adams’ last budget, under-budgeted expenses reached $3.6 billion, according to Levine.\u00a0<\/p>\n
Levine drew special attention to CityFHEPS, formally the City Fighting Homelessness and Eviction Prevention Supplement. The cost of the Section 8-style program has been growing at roughly 4% each month, he said. But when New York City writes its budget, city councilors always assume the cost will be flat.\u00a0<\/p>\n
“This is a really important program for New York City. It’s helping families leave the shelter system and keeping them in their apartments at a time when we do have a housing affordability crisis,” Levine said. “But we’re not honestly accounting for [the cost].”<\/p>\n
In fiscal years 2028 and 2029, CityFHEPS is likely to cost $3 to $4 billion more than the city projected in its most recent financial plan, Levine estimates.\u00a0<\/p>\n
Neither the city’s projections nor Levine’s projections include the potential cost of expanding CityFHEPS; a policy to do so is held up in court, and, if the court allows, he expects the expansion could add $6 billion to $20 billion to the city’s budget over the next five years.\u00a0<\/p>\n
The comptroller took swipes at other budgeting practices of the Adams administration, such as a reliance on one-time revenue sources to cover recurring expenses. Under Adams, the city also shrank its pre-pays for future expenses, which is akin to spending down reserves.\u00a0<\/p>\n
On the bright side, Levine said the budget gap has nothing to do with the city’s revenues. Economic indicators seem good, he said, noting fast-growing commercial leasing, rebounding tourism numbers and a very strong stock market. The one caveat: the city’s only job growth has been in low-paying jobs in the social services sector.<\/p>\n
New York Gov. Kathy Hochul and Mamdani recently announced that their FY 2027 budgets will include the first phase of a universal childcare<\/a> program. Hochul stressed in her State of the State address that she was not willing to permit tax hikes<\/a> in New York City.<\/p>\n