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New York City Comptroller Mark Levine called the new negative outlook a “sobering wake-up call.”<\/p>\n New York City Comptroller Mark Levine called the new negative outlook a “sobering wake-up call.”<\/p>\n
Donna Alberico<\/p>\n
Moody’s Ratings lowered New York City’s rating outlook to negative from stable Wednesday. It’s the latest consequence in the ongoing fallout from the city’s budget gaps.\u00a0<\/p>\n
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Moody’s, which affirmed its Aa2 issuer rating of the city, cited the city’s updated spending projections, which will create larger-than-expected multi-year budget gaps. This is the first negative bond rating action to hit New York City since the COVID-19 pandemic.\u00a0<\/p>\n
“The outlook change to negative reflects New York City’s updated spending projections, which give rise to larger multi-year budget gaps than previously forecast,” Moody’s analysts wrote in its rating report. “That the city projects large and persistent imbalances under still-favorable economic and revenue conditions highlights the extent of its underlying structural budget challenges.”<\/p>\n
In January, New York City Comptroller Mark Levine announced that the city had a combined budget gap<\/a> of more than $12 billion for fiscal years 2025 and 2026. The gap comes from former Mayor Eric Adams’ habit of consistently under-budgeting certain expenses, according to Levine and Zohran Mamdani, who took office as mayor Jan. 1.\u00a0<\/p>\n When Mamdani presented his preliminary budget<\/a> in February, he said the gap had shrunk to $5.4 billion thanks to stronger-than-expected revenue and support from New York Gov. Kathy Hochul.\u00a0<\/p>\n Mamdani has pushed the state to increase the city’s taxes on the wealthy and on corporations. In lieu of income tax hikes, his plan would raise property taxes and spend more than $1 billion of the city’s reserves.\u00a0<\/p>\n “While the mayor’s proposal is technically in balance for FY26, when we account for both the reduced operating surplus and the rainy-day fund draw down, the plan indicates that operating expenses this year exceed revenues by $4.5 billion,” Levine testified before the City Council on Wednesday.<\/p>\n Levine also told the council that Mamdani’s revenue projections were too optimistic.\u00a0<\/p>\n Levine said the outlook cut should serve as a “sobering wake-up call.”\u00a0\u00a0<\/p>\n “I will be pushing hard between now and the June budget deadline to help put the city on a stronger fiscal path,” Levine said in a statement Wednesday. “I am relieved to see that the city’s credit rating remains strong, and I have every confidence that our bonds remain safe and secure.\u00a0 With an economy \u2014 and tax revenues \u2014 that continue to grow, the City’s present financial position is still solid.”<\/p>\n City Hall spokesperson Dora Pekec said the outlook cut was “premature.” She pointed to support for Mamdani’s requested tax hikes in the state legislature.<\/p>\n