City Budget Director Sherif Soliman spent hours in front of the City Council on Wednesday defending the Mamdani administration’s plan to close a $5.4 billion deficit, and he made clear where he thinks the blame belongs: on former Mayor Eric Adams.
Soliman testified that years of deliberate underbudgeting under the Adams administration created the fiscal hole that Mayor Zohran Mamdani now has to fill. Cash and rental assistance programs were underbudgeted by $3.3 billion, he said. MTA subsidies were budgeted at $2.2 billion while the known expense was $3 billion. Those are just the biggest items.
Looking ahead, Soliman described $6.7 billion in “unfunded cliffs and mandated spending” over the next two fiscal years, driven by rising health insurance costs, the state’s mandate to reduce public school class sizes, and Medicaid funding pressures.
“This was out of necessity for what was an inherited significant budget challenge that stems from underbudgeting,” Soliman told the Council.
The testimony came as Speaker Julie Menin and Council members pressed Soliman hard on one of the administration’s most controversial proposals: raiding the city’s reserve fund, sometimes called the “rainy day” fund, to the tune of $980 million. The city has never touched that account before. Menin said the Council is “deeply concerned.”
The mayor also wants to pull $229 million from a retiree health benefit trust fund in the next fiscal year. Menin warned that both moves would force the city to pay more interest down the road and could damage New York’s credit rating. Several major ratings agencies, including Moody’s and Fitch, have already revised the city’s credit outlook from “stable” to “negative,” a step toward a formal downgrade that would make borrowing more expensive.
Soliman acknowledged the risks but said the administration didn’t have many other options. Balancing the budget is required by law, and the revenues aren’t there yet.
The administration’s preferred path to new revenue runs through Albany. Mamdani campaigned on raising taxes on the wealthiest New Yorkers and corporations, and Soliman held to that line Wednesday. But that approach requires approval from the state legislature and the governor, and that approval is not guaranteed.
The other option on the table, raising property taxes, has run into a wall of opposition. Property taxes are the one major revenue source the city controls without Albany’s permission, but nearly every lawmaker in the building has come out against a rate hike. The Council would have to approve such a move, and the votes don’t appear to be there.
Soliman made clear the Mamdani administration doesn’t want to go that route either. The mayor has long argued that the city’s property tax system is one of the most regressive in the country, hitting middle-class homeowners in outer-borough neighborhoods while undervaluing high-end Manhattan real estate. An across-the-board rate increase would make that inequity worse, not better.
“Rather than increase property taxes, our administration wants to finally reform” the system, Soliman said, according to prepared remarks.
The fiscal picture Soliman painted Wednesday is a difficult one for a new administration that is barely months into its term. Whether you accept Soliman’s framing that Adams left the city’s books in shambles, or believe the Mamdani team is using a predecessor as political cover, the numbers are real. The deficit is real. And the path to closing it requires either Albany coming through, or the administration accepting painful choices it has spent months saying it doesn’t want to make.
For New Yorkers who rely on the services buried in those budget lines, the outcome of these Council hearings and the Albany negotiations matters enormously. Rental assistance, school class sizes, transit subsidies. These are not abstractions. They are the difference between a city that works for its residents and one that is quietly hollowing itself out while the credit rating slides south.
