As Budget Deadline Nears, Comptroller Levine Urges Focus on Projected $8.8 Billion FY 2028 Budget Gap

As Budget Deadline Nears, Comptroller Levine Urges Focus on Projected $8.8 Billion FY 2028 Budget Gap

New York, NY - New York City Comptroller Mark Levine today released his analysis of the FY 2027 Executive Budget, including updated revenue estimates, ahead of his testimony before the City Council on the City's spending plan. In his testimony summarizing the report's key findings, the Comptroller commends the administration for balancing a budget without raising property taxes or drawing down the rainy-day fund - outcomes made possible thanks to strong revenue from Wall Street, support from Albany, and efficiencies and savings proposed by the Mayor. However, the Comptroller warns that the budget also relies on one-shot measures, and serious underlying fiscal challenges remain. His analysis projects an $8.8 billion budget gap in FY 2028, exceeding the $7.1 billion forecast in the May Financial Plan, even absent an economic downturn.

"When we plug in our tax forecast and our estimates of underbudgeted costs and unmet program needs, including overtime and childcare vouchers, the FY 2028 gap widens to a daunting $8.8 billion. We will face that gap without the option of the many one-shot measures that we used up this year," Comptroller Levine said.

The analysis provides six key takeaways:

• The economy is strong, but not for everyone: The Office of the Comptroller has revised tax forecast upward by $927 million in FY 2026 and $1.1 billion in FY 2027 since March. However, the private sector has lost 6,000 jobs in 2026, while real wages decline for 2/3rds of private sector workers and local inflation hit 4.6% in April, the highest in three years.

• The budget is balanced with one-time and temporary measures: The May Financial Plan relies on $6.1 billion in one-time measures, including pension re-amortization, accounting adjustments, delaying class size mandates, and lower subsidies to the MTA.

• We are spending more than we take in: The plan dramatically reduces the pre-payment of next year's expenses by $2.8 billion -from $3.8 billion in FY 2025 to roughly $1 billion in FY 2026 - a 72% decline. Taking the reduced prepayment and the re-estimate of prior year expenses together, this means that we are spending $4.4 billion more than we are bringing in this fiscal year.

• The budget gap is widening: Even with extensive one-time measures and booming tax revenue, the City's stated outyear gaps are growing. The Office of the Comptroller estimates an even larger FY2028 gap of $8.8 billion.

• There are risks ahead: The Plan carries roughly $600 million in unallocated savings, plus $1.97 billion over four years in three new "cost-containment" targets for CityFHEPS, DHS shelter, and DOE special-education Due Process Cases - all which require detailed implementation plans. Additionally, the plan draws down the General Reserve in FY 2027 to $100 million (the statutory minimum) and does not prepare for the potential impacts of AI or other economic uncertainty.

• Long-term Reserves should be grown: The City will finish the year with $2.0 billion in the Revenue Stabilization Fund and $5.2 billion in the Retiree Health Benefit Trust. As a share of City taxes, that is well below the 16% the City should target.

In his testimony, the Comptroller calls for a Charter amendment establishing formal rules for the Rainy Day Fund: a 16% target of tax revenues with a 10% floor, a deposit formula when revenues exceed trend, and clear, narrow criteria for withdrawals. New York City's Rainy Day Fund currently has few parameters for making regular deposits or when reserves can be withdrawn, a departure from other major cities.

Read Comptroller Levine's full testimony before the City Council Finance Committee Hearing On the FY 2027 Executive Budget and May Financial Plan,to be delivered today at a scheduled 2 p.m. hearing, at: https://comptroller.nyc.gov/newsroom/testimonies/testimony-of-nyc-comptroller-levine-city-council-finance-committee-hearing-on-the-mayors-executive-budget/

Read the Comptroller's full report on New York City's Preliminary Budget for Fiscal Year 2027 and Financial Plan for Fiscal Years 2026-2030 at: https://comptroller.nyc.gov/reports/comments-on-new-york-citys-executive-budget-for-fiscal-year-2027-and-financial-plan-for-fiscal-years-2026-2030/

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