In mid-May, after extending the executive deadline, New York City Mayor Zohran Mamdani released his $124.7 billion Fiscal Year (FY) 2027 Executive Budget.
After warning that NYC faces a budget crisis of “historic magnitude” in late April, Mamdani now assures the 8.5 million residents of the Big Apple that the city is on “firm financial footing” after he “balanced the budget” “without raising property taxes” or “slashing services.”
While it is certainly true that Mamdani did not slash services or raise property taxes even higher than they already are, it is ludicrous for him to declare that NYC’s budget is sound and sustainable.
Aside from Mamdani’s smoke-and-mirrors budget summary, the harsh reality is that the Big Apple is bankrupt.
According to NYC Comptroller Mark Levine, the “$2.2 billion budget shortfall for FY2026 and projected $10.4 billion gap for FY2027… is the first time since the Great Recession that the City faces a budget shortfall of this magnitude.”
Based on Mamdani’s “balanced budget,” the FY 2026 and FY 2027 deficits are no longer a concern.
Much of the gap has been taken care of by what Mamdani calls a “partnership with Albany.” New Yorkers outside of the Big Apple call it a bailout.
“Thanks to Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, the City secured an additional $4 billion in state support and actions to help stabilize the budget,” Mamdani bluntly put it.
However, Albany could not supply enough money to make the short-term math work.
Thus, Mamdani’s balanced budget relies upon accounting gimmicks and “new tax revenue.”
“A considerable amount of savings comes from a delay of payments into New York City’s municipal pension funds, a measure that Mamdani said could save $1.6 billion in the upcoming fiscal year,” reports TIME.
In budget parlance, this is known as “restructuring unfunded pension liability.” It is also referred to as kicking the can down the road.
In this case, it is an accounting atrocity because NYC miscalculated the return on pension investments for years, thereby creating an additional $27 billion unfunded pension liability on top of the enormous amount of money NYC has already promised to current and future public employees.
For context, NYC spends nearly $30 billion per year on pension payments and debt service compared to about $95 billion for all agencies and services.
In the NYC budget pie chart, two agencies, the Department of Education and Department of Social Services, eat up approximately two-thirds of the $94.7 billion in spending.
Meanwhile, the uniformed agencies (NYPD, FDNY, DSNY) are allotted 12 percent of the total budget, health 5 percent, and transportation 2 percent.
NYC spends more than $42,000 per student, the highest in the nation, but NYC public schools are failing to teach students how to read or write.
ALSO SEE: Because of Course: NYC Throwing Tax Dollars at Public Schools While Enrollment and Test Scores Tank
I highlight this to demonstrate that spending more money on services like public education by no means guarantees better services.
Although Mamdani claims that he achieved his miraculous balanced budget via “strong fiscal management” and “aggressive savings,” that could not be further from the truth.
Austerity measures are like kryptonite to the democratic socialist agenda.
Already, after being in office less than six months, Mamdani has turbocharged the NYC nanny state with “free childcare” and government-run grocery stores.
His FY2027 budget is chock-full of new public programs and more money for existing programs, especially “help for homeless” people. In 2020, NYC spent $200 million on homeless programs. In 2027, it will likely exceed $2 billion.
Predictably, Mamdani repeatedly referred to “taxing the rich” as the magic budget bullet. However, his proposed pied-à-terre-tax, which needs to be approved by the NYC Council, would amount to just a drop in the revenue bucket.
As Mamdani and the NYC Council squabble over the FY 2027 budget, the real story is that even under Mamdani’s dream budget scenario, NYC faces projected budget shortfalls of $7 billion in FY 2028, $9 billion in FY 2029, and $9.7 billion in FY 2030.
Meanwhile, Albany does not have the wherewithal to provide future Big Apple bailouts because the Empire State is also on the verge of bankruptcy.
In February 2026, the New York State Comptroller warned that “the trajectory of projected State spending is estimated to increase at a rate faster than expected revenues, creating cumulative outyear budget gaps estimated by the Division of Budget to total $27.5 billion through SFY 2030 while reserves remain stagnant.”
Unlike the federal government, which can run giant annual deficits by printing money, states and cities must balance their budgets, eventually.
The oldest trick in the book, raising revenue, is already producing diminishing returns in NYC and New York because most of the revenue generators have skipped town and state for locales that welcome them with very low taxes.
Earlier this year, Mamdani alluded to the fact that he thinks property taxes would need to be raised again, possibly to 9.5 percent, to keep New York City afloat.
New York City deserves better than this. New York City residents should demand a freeze on new spending; waste, fraud, and corruption investigations into existing programs; accountability for those who misspent public funds; and at least a 9.5 percent across-the-board cut from the bureaucratic management levels at both the Department of Education and Department of Public Services.
Chris Talgo ([email protected]) is editorial director at The Heartland Institute.
Editor’s Note: New York City is now facing the consequences of Mayor Zohran Mamdani’s socialist takeover.
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