August 12, 2026<\/p>\n
Good morning.\u00a0I\u2019m\u00a0grateful to join Governor Hochul, Mayor Mamdani, Comptroller DiNapoli,\u00a0former Comptroller Bill Thompson\u00a0and\u00a0board members\u00a0Marjorie Henning and Kathryn Wylde.\u00a0It\u2019s\u00a0great to see\u00a0all of\u00a0you,\u00a0and\u00a0thank you for the opportunity to share my Office\u2019s assessment of New York City\u2019s Fiscal Year 2027 Adopted Budget.\u00a0<\/p>\n
Let me begin by\u00a0acknowledging that\u00a0Mayor\u00a0Mamdani and his administration\u00a0have\u00a0taken\u00a0important steps to provide a more honest and accurate picture of the City\u2019s finances than we have seen in\u00a0recent\u00a0years, in particular by\u00a0largely\u00a0ending the practice of underbudgeting known costs and\u00a0by\u00a0adopting revenue forecasts that are, on the whole, reasonable.\u00a0These actions have helped\u00a0establish\u00a0a more credible foundation for the City\u2019s financial plan and for the budget decisions that lie ahead.\u00a0<\/p>\n
I also want to thank Governor Hochul for providing\u00a0additional\u00a0State\u00a0aid and flexibility that helped the\u00a0City\u00a0address important fiscal challenges this\u00a0year. I am grateful to Comptroller DiNapoli for his continued partnership and for his responsible stewardship of the State\u2019s finances. I also want to thank the\u00a0private\u00a0members of the Financial Control Board for their\u00a0service and\u00a0ongoing engagement.\u00a0<\/p>\n
The City\u2019s fiscal health depends on continued partnership\u00a0with\u00a0the State, and\u00a0with\u00a0its fiscal oversight institutions. That partnership is especially important as we work to preserve the City\u2019s economic strength while addressing the longer-term challenges that\u00a0remain\u00a0in the financial plan.\u00a0<\/p>\n
A Strong Economy \u2014 But No Room for Complacency\u00a0<\/p>\n
New York City\u2019s tax base\u00a0remains\u00a0strong and is\u00a0in fact\u00a0at record levels. I know there has been some attention paid to\u00a0a\u00a0recent\u00a0increase\u00a0in the City\u2019s bond yields, so let me address that directly: that movement does not reflect an eroding tax base or an expectation of a rating downgrade.\u00a0The\u00a0yields simply\u00a0followed\u00a0broader market dynamics and the\u00a0City\u2019s credit\u00a0remains\u00a0strong.\u00a0<\/p>\n
The\u00a0strength of our city\u2019s\u00a0economy, and the financial industry in particular,\u00a0has provided a major boost to our\u00a0budget: from\u00a0business income, to bonuses, to\u00a0capital gains, the City\u2019s coffers are the beneficiaries\u00a0of the\u00a0bull market\u2014and specifically the AI investment boom.\u00a0Indeed,\u00a0this year\u2019s\u00a0revenues exceeded what the\u00a0Mayor\u00a0himself had characterized back in February as an \u201caggressive\u201d projection.\u00a0This\u00a0momentum\u00a0makes, in my Office\u2019s and most fiscal monitors\u2019 views,\u00a0the\u00a0administration\u2019s forecast for FY 2027 and beyond\u00a0a\u00a0reasonably cautious\u00a0foundation for the upcoming budget cycle.\u00a0\u00a0\u00a0<\/p>\n
But we should not take\u00a0economic strength\u00a0for granted: the\u00a0City must support\u00a0and cultivate\u00a0the conditions that allow\u00a0us to achieve greater\u00a0competitiveness,\u00a0and robust expansion.\u00a0<\/p>\n
We\u00a0must recognize that economic conditions can change\u00a0quickly. Periods of strength, such as that which we enjoy now,\u00a0should be used\u00a0to improve the City\u2019s long-term fiscal position and prepare for uncertainty\u00a0ahead.\u00a0The unpredictable federal policy environment, a geopolitical climate that moves oil prices daily, and the still-unresolved question of\u00a0the extent to which\u00a0the\u00a0artificial intelligence\u00a0investment boom\u00a0will\u00a0disrupt labor markets or\u00a0is running on inflated expectations,\u00a0are all downside risks to the City\u2019s projections.\u00a0\u00a0<\/p>\n
The Financial Plan: Real Progress, Real Gaps\u00a0<\/p>\n
The administration has\u00a0achieved\u00a0some\u00a0progress\u00a0in addressing\u00a0the\u00a0structural imbalance between revenues and\u00a0expenditures, but\u00a0that\u00a0work is not done.\u00a0\u00a0Unfortunately,\u00a0the financial plan\u00a0leans\u00a0heavily on short-term\u00a0and one-time\u00a0measures \u2014 $6.1\u00a0billion between\u00a0the\u00a0re-amortization of the pension liability, State\u00a0aid, and\u00a0extraordinary\u00a0accounting\u00a0adjustments. These measures\u00a0closed\u00a0gaps in the\u00a0near\u00a0term\u00a0but\u00a0did not resolve the underlying imbalance between what the City spends\u00a0and\u00a0what\u00a0it\u00a0takes in\u00a0every year.\u00a0\u00a0<\/p>\n
This imbalance is\u00a0evident\u00a0not only in the financial plan, but also in the\u00a0necessity of\u00a0increasingly active management\u00a0of\u00a0the City\u2019s cash position. Just last June the City used the Retiree Health Benefits\u00a0Trust\u00a0to delay the annual payment of retiree health benefits\u00a0in order to\u00a0disburse\u00a0contractual advances to not-for-profit vendors. This should not become a\u00a0reoccurring\u00a0practice.\u00a0\u00a0Instead, we must improve our structural imbalance, pay vendors on time rather than relying\u00a0on\u00a0large\u00a0advances, and avoid\u00a0shifting the\u00a0timing of other\u00a0outlays\u00a0to manage cash flow.\u00a0\u00a0\u00a0<\/p>\n
While these challenges\u00a0remain, the City\u2019s fiscal outlook has\u00a0benefited\u00a0from some important\u00a0and\u00a0good news.\u00a0The\u00a0returns on the\u00a0portfolios\u00a0constructed\u00a0by our Office\u2019s investment professionals\u00a0for the\u00a0pension systems\u00a0have once again\u00a0exceeded their target\u00a0and will\u00a0therefore lower the City\u2019s pension\u00a0costs.\u00a0In FY 2026, the combined return\u00a0across the five pension funds was\u00a013.0%, well above\u00a0the 7.0% actuarial assumption.\u00a0\u00a0This will lower\u00a0the City\u2019s pension contributions by $6.3 billion between FY 2028 and FY 2032\u00a0and\u00a0will\u00a0provide\u00a0$600 million in\u00a0additional\u00a0budgetary savings beyond what\u00a0has already been incorporated\u00a0in the Financial Plan.\u00a0\u00a0\u00a0<\/p>\n
Inclusive of these\u00a0pension\u00a0gains,\u00a0the outyear gaps are not as large as those we projected\u00a0in early June, but they\u00a0remain\u00a0significant:\u00a0$7.25 billion in FY 2028, narrowing to $6.84 billion by\u00a0FY 2030.\u00a0\u00a0<\/p>\n
It is true that should\u00a0the economy continue to expand\u00a0at the current pace\u00a0tax revenues could exceed projections, but the potential upside\u00a0must be balanced against significant\u00a0spending\u00a0risks. The financial plan does not account for the potential costs of future labor agreements,\u00a0or the possibility that spending on\u00a0CityFHEPS, overtime or\u00a0due process cases will\u00a0prove\u00a0hard to control\u00a0and\u00a0contain.\u00a0<\/p>\n
The Savings Program\u00a0<\/p>\n
These risks increase the importance of achieving recurring savings and engaging in long-term fiscal planning, and I was heartened by the\u00a0Mayor\u2019s\u00a0newly announced savings target for City\u00a0agencies\u00a0\u2014 2.5%\u00a0of City\u00a0tax levy\u00a0funding\u00a0annually through Fiscal Year 2030 \u2014\u00a0which\u00a0is an important step in the right direction. Announcing it early gives agencies real time to find genuine efficiencies rather than one-time cuts dressed up as savings. By our preliminary estimate, a target of this size could save the City\u00a0up to\u00a0$1.5 billion a year, depending on how exemptions are applied.\u00a0<\/p>\n
To\u00a0build on\u00a0its\u00a0progress in improving budget transparency, the administration should commit to clear, regular public reporting\u00a0on these and\u00a0its\u00a0previously announced savings plans.\u00a0My Office\u00a0would\u00a0welcome the opportunity to partner with the administration and other fiscal monitors, as we did in years past, to assess\u00a0implementation\u00a0progress.\u00a0Regular and transparent reviews\u00a0will help\u00a0identify\u00a0what is working, where\u00a0additional\u00a0action is needed, and whether planned savings are being achieved.\u00a0<\/p>\n
The\u00a0Rainy Day\u00a0Fund\u00a0<\/p>\n
A\u00a0strong economy is not\u00a0a time to\u00a0relax.\u00a0\u00a0It\u2019s\u00a0not\u00a0a time\u00a0to let our fiscal guard down.\u00a0It\u2019s\u00a0a time\u00a0to prepare for the moment when conditions turn \u2014 and they always eventually do. Well-funded reserves are what stands\u00a0between an economic downturn and cuts to the essential services New Yorkers depend on. That is why my Office has spent this past year pushing for clear, formal rules governing\u00a0how\u00a0reserves are built\u00a0and\u00a0when they may be used.\u00a0<\/p>\n
Unfortunately,\u00a0no\u00a0deposit was made into the\u00a0Rainy Day\u00a0Fund in Fiscal Year 2026 \u2014 this, in a year of record tax revenues.\u00a0Using\u00a0the formula my Office put forward,\u00a0the deposit\u00a0for FY26\u00a0would have ranged between $1.4 and $1.7 billion,\u00a0depending\u00a0where tax revenues\u00a0ultimately\u00a0settle.\u00a0\u00a0\u00a0<\/p>\n
I welcome the Charter Revision Commission\u2019s attention to this issue and the proposal it has advanced represents substantive progress. But the commission\u2019s proposal is weaker than what I and many other advocates had pushed for: the construct gives leeway to commingle the Rainy Day Fund with other reserves, and the framework for the deposit formula could make it too easy to circumvent. There is also no improvement in the withdrawal rules already in effect in State law. Nonetheless, I believe the proposed Charter amendment represents an important step in the right direction, and should it be enacted, I look forward to exercising my Office\u2019s influence and consultative role in the derivation of the Fund\u2019s governing methodology. Getting this right is one of the most consequential things we can do to ensure that vital City services can continue in an economic downturn \u2013 when New Yorkers need them most.\u00a0<\/p>\n
Closing\u00a0<\/p>\n
I\u2019ll\u00a0end with this: New York City enters this budget year from a position of real economic strength. This administration deserves credit for meaningful progress toward a more transparent and responsible budget. But significant work\u00a0remains\u00a0to reduce reliance on temporary measures, to convert savings targets into real savings, to build adequate reserves, and to prepare for economic uncertainty.\u00a0<\/p>\n
If we do that work now, we can protect both the City\u2019s fiscal health and the essential services New Yorkers rely on through whatever challenges come next.\u00a0My Office looks forward to continuing to work constructively with the\u00a0Mayor,\u00a0the Governor, City and State legislators, and with this Board to build a fiscally sustainable future for New York City.\u00a0<\/p>\n
Thank you.\u00a0<\/p>\n
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