Budget watchdogs are warning Mayor Zohran Mamdani that his $127 billion spending plan leans too heavily on optimistic assumptions, even as they credit him with presenting more honest expense projections than his predecessor.
City Comptroller Mark Levine and the Independent Budget Office both testified Wednesday at the City Council’s first hearing on the mayor’s proposal, and neither pulled punches about the revenue side of the equation. Mamdani’s plan counts on continued Wall Street strength, potential draws from the city’s rainy-day reserves, and an across-the-board property tax increase to close projected gaps. All three approaches drew sharp criticism.
“The Wall Street boom may continue, and I hope it does,” Levine told the Council. “But we should not count on it.”
The warning carries real weight. Wall Street profits last year are estimated to hit a record $60 billion, generating a surge in bonuses and, with them, a surge in city and state income tax receipts. The Mamdani administration has increased its expected revenue estimate for the 2027 budget by more than $4 billion based largely on that trend continuing. But the S&P 500 is already down 6 percent so far this year, driven in part by market volatility tied to the ongoing war with Iran. If that downtrend deepens into a bear market, the city could face steep tax revenue shortfalls heading into the next fiscal year.
The administration is also projecting significant growth in Wall Street hiring, a bet Levine called problematic given the current climate. He noted that the only sector that added jobs in New York City in 2025 was low-paid home health care work, while employment across every other sector fell by 35,000.
“We are living in unpredictable times,” Levine said, citing economic hesitancy driven by tariff uncertainty and the conflict in the Middle East.
Moody’s added another layer of concern Wednesday, changing its outlook on New York City from stable to negative for the first time since the pandemic. The bond rating agency flagged that the city’s projected spending over the next four years outpaces likely revenues. The move does not immediately affect the city’s credit rating or borrowing costs, but it signals that pressure to close major structural gaps is building.
On the rainy-day fund, Levine was direct: those reserves exist for genuine emergencies and should not be tapped this year. On the property tax hike, he argued it would compound existing inequalities rather than solve them.
The budget debate is unfolding alongside a critical moment in Albany. Governor Kathy Hochul and the state legislature are in the final stretch of negotiating a state budget that will determine how much funding flows to the city and whether Mamdani’s call for higher corporate and income taxes on wealthy New Yorkers has any chance of becoming law. Both the Assembly and Senate included tax hike provisions in their own proposals last week, giving Mamdani’s position some institutional backing. But Hochul has remained opposed, and the pattern from recent years is not encouraging. Both chambers have included similar measures in their initial proposals before, only to see them stripped out in final negotiations.
The stakes are high. If Albany does not deliver the revenue Mamdani is counting on, the gaps in his plan grow considerably wider.
To his credit, watchdogs acknowledged that Mamdani came to the table with expense projections that reflect reality more honestly than what the Adams administration routinely offered. Former Mayor Adams drew sustained criticism for budgets that understated costs and relied on accounting maneuvers to paper over structural problems. That Mamdani avoided those pitfalls is being recognized as progress.
But credit for honest accounting only goes so far when the revenue assumptions underpinning the plan carry this much risk. A city budget that depends on Wall Street staying flush, reserves being raided, and a tax hike on property owners is a city budget built on contingencies. Levine and the IBO are telling the mayor, plainly, that contingencies are not a plan.
The Council’s scrutiny of the proposal is just beginning. With Moody’s watching, Albany in flux, and markets swinging, the pressure on Mamdani to find more durable solutions will only intensify in the weeks ahead.
