New York City Watch: Fiscal Emergency?
Or is there a need for excuses: for more taxes and not to fulfill campaign promises?
UPDATE: Fixed the video embed — sorry about that.
As much as I would like to beat up on Chicago right now, I can always return to that. I hear that the new mayor of NYC has decided to put out an announcement:
28 Jan 2026, NYC Office of the Mayor video: Mayor Mamdani Details “Adams Budget Crisis”
This is the point that they want you to take away from the following video/transcript:
What you should know
Adams’ staggering fiscal mismanagement left a $12 billion hole in NYC budget for the next two fiscal years
Here is the video: [update: retrying the embed]
I asked Gemini to take the transcript and give me a summary: [I did not edit]
Based on the transcript provided on the page, here is a summary of Mayor Zohran Mamdani’s press conference detailing the “Adams Budget Crisis.”
The Core Issue: A $12 Billion Deficit
Mayor Mamdani announced that New York City is facing a $12 billion budget shortfall over fiscal years 2026 and 2027. He described this deficit as a “historic challenge” with gaps larger than those seen during the Great Recession and 300% higher than pre-pandemic averages.
Causes of the Crisis
Mamdani attributed the fiscal emergency to two primary sources:
“Staggering Mismanagement” by Former Mayor Adams:
Under-budgeting: Adams is accused of systematically under-budgeting for essential services to artificially balance the FY26 budget.
Specific Examples: Cash assistance was budgeted at $860 million despite projections of nearly $1.7 billion. Shelter costs were under-budgeted by approximately $500 million.
kicking the can: Mamdani claims Adams ignored projected expense increases totaling nearly $8 billion.
State-Level Disinvestment (The “Cuomo Era”):
Mamdani highlighted a long-term fiscal imbalance fostered under former Governor Andrew Cuomo.
The “Chasm”: In FY22 alone, NYC sent $68.8 billion in revenue to Albany but received only $47.6 billion back—a $21.2 billion gap.
Revenue vs. Return: Between FY2010 and FY22, NYC generated 64% of the state’s revenue growth but received only 42% of the expenditure growth.
Mamdani’s Proposed Solutions
The Mayor promised to deliver a balanced preliminary budget by February 17, 2026, using an “all-of-the-above” approach:
Taxing the Wealthy: He called for raising income taxes on the top 1% of New Yorkers by 2% and increasing taxes on the most profitable corporations. He argued this would not drive wealthy residents away (citing a $20k increase for a millionaire as manageable).
Efficiencies, Not Austerity: Mamdani rejected “austerity” cuts to essential services but promised to root out waste. He cited a $500,000 unusable AI chatbot from the previous administration as an example of waste.
Resetting the State Relationship: He plans to aggressively advocate for the funds NYC is “owed” by Albany, distinct from the “imbalanced” relationship of the past.
Disbanding the SRG: When asked about cost-cutting, Mamdani confirmed plans to disband the NYPD’s Strategic Response Group (SRG), not just for fiscal reasons but to decouple counterterrorism from protest response.
I removed bits Gemini generated at the end about the winter storm. I have something to say about that in a future post.
None of this is an “emergency” inasmuch this is not a surprise.
This was known last year during the mayoral campaign.
Separately, there is the “NYC gives tax revenue to Albany” talk… as if the city itself gave that money.
Ahem.
I believe he’s counting money from various taxpayers, many of whom don’t even live in NYC. Some of whom don’t even live in New York state.
Let us walk through the issues.
Warning Warning: NYC’s Well-Known Financial Issues
Let’s take a look at the warnings that were given last year (and earlier) about the financial situation Mamdani was walking into.
New York State Comptroller Reports
Let’s start with the New York State Comptroller. While I have issues with the governance structure of the Office of the NYS Comptroller, they’ve been very good about getting their reports out regularly.
So I have THREE reports on NYC finances from that office to excerpt from 2025.
February 2025 Report
February 2025, Office of the NYS Comptroller, Report 23-2025: Review of the Financial Plan of the City of New York
Note that the FY2025 and FY2026 plans are filled out to show balanced budgets, but future FY2027-2029 years to have shortfalls of $4-$5 billion. Those are the numbers from New York City’s own reporting — not the Office of the NYS Comptroller. So I’m not going to keep reporting these.
The next part is from the Office of the NYS Comptroller:
So there are the gaps the NYC folks have already factored in… and then the amounts the OSC (the Office of the State Comptroller) have projected.
Here are their graphs:
The red bit is the stuff the OSC has estimated. For clarification: the fiscal year ends June 30 — so FY2025 ended on June 30, 2025 (which is why the June 2025 report below has a 2026 report number). Fiscal year 2026 will end on June 30, 2026.
The gaps people are talking about now are the FY2027+.
June 2025 Report
June 2025, Office of the NYS Comptroller, Report 6-2026: Review of the Financial Plan of the City of New York
I will not repeat the NYC-reported portion. Let’s look at OSC’s estimated potential gaps:
Oooh, they grew by a few billion of dollars each year. Both the February and June reports preceded the election.
There is a graph for those who have trouble reading numerals.
December 2025 Report
December 2025, Office of the NYS Comptroller, Report 18-2026: Review of the Financial Plan of the City of New York:
Okay, FY2025 ended, so we’re not including that in a “plan” anymore.
The future gaps have increased for the NYC-reported gaps. I’m not even getting into sources. Just that NYC-reported plans saw larger gaps by December.
The numbers are bigger. No surprise.
Again, the graph.
(Yes, there’s a “rainy day fund” to the right… but what value of that, given it would be eaten up immediately by the projected deficits?)
No Surprise
That’s the deficit and budget talk.
I have an even nastier take:
Financial State of the Cities: Truth in Accounting
In the 75 cities that Truth in Accounting has tracked for the Financial State of the Cities for some years…
…New York City has ranked dead last each year.
There are a lot of reasons for that.
Similar to Chicago (and other cities), it has been losing population in the pandemic era (whoops!), and there are large amounts of debt accumulated over the decades.
NYC never actually went through municipal bankruptcy in the 1970s, despite all the headlines as shown above. That is a complicated story (somewhat), but it’s also a very simple story:
NYC spent more money than it had. Not everything that it spent money on was needed.
Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
The pull quote above is the “Micawber Principle”, named after Mr. Micawber from the Charles Dickens novel David Copperfield. Micawber was a stand-in for Charles Dickens’s own father, John Dickens, who was hopeless with money and business endeavors.
A city can continue for a while with a lot of debt, but there is a limit to both debt and lack of cash flow.
Savings!
29 Jan 2026, Office of NYC Mayor: Mayor Mamdani Signs Executive Order to Require Chief Savings Officers Across City Agencies, Bolster City Performance
NEW YORK, NY — Mayor Zohran Mamdani today signed Executive Order 12 to designate an existing senior employee as “Chief Savings Officer” at every city agency and strengthen the long-term performance of city government. The Chief Savings Officers will report directly to the head of the agency and will have 45 days to review agency operations, determine services that deliver the strongest results for New Yorkers, and locate opportunities to streamline processes and eliminate waste. Chief Savings Officers will help protect the city services that New Yorkers rely upon and improve the efficiency of city government for years to come.
“Delivering public goods requires public excellence. That means a government that respects New Yorkers by using every dollar wisely. By designating a Chief Savings Officer at every agency, we’re taking direct aim at waste, cutting through bureaucracy, and making city services work. These Chief Savings Officers will help ensure that every dollar we spend is in service of a safer, cleaner, and more affordable city — and that our government meets the standard New Yorkers deserve,” said Mayor Zohran Kwame Mamdani.
Under Executive Order 12, each city agency will have five days to appoint a Chief Savings Officer and ensure they are empowered with the relevant staff and data to meet Mayor Mamdani’s mandate. Chief Savings Officers will have 45 days to complete a comprehensive assessment of their agency’s spending — analyzing the most expensive programs to understand major drivers of cost as well as the highest-performing programs to register services with clear and meaningful results. Additionally, they will determine opportunities to consolidate services, insource programs, and reduce wasteful expenses such as duplicative programs.
Chief Savings Officers will present their findings to the Offices of the First Deputy Mayor and Budget Director. In order to meaningfully stabilize the City’s finances and lay the foundation for lasting government excellence, Chief Savings Officers will not focus on one-time accounting measures but rather on recurring savings and sustainable efficiencies. Additionally, Chief Savings Officers will complete updated assessments every six months, evaluating progress and identifying new opportunities for savings and efficiency.
Executive Order 12 follows yesterday’s announcement that severe fiscal mismanagement by the Adams administration left New York City with a $12 billion budget shortfall over fiscal years 2026 and 2027.
Will those Chief Savings Officers include firing people? Like…. the CSOs at all the agencies?
Want to know how many agencies there are?
Wikipedia: List of NYC Agencies
In the government of New York City, the heads of about 50 city departments are appointed by the mayor, who also appoints several deputy mayors to oversee entire city agencies and handle specific tasks and projects within their designated portfolios.
Hmmm, 50? Maybe we don’t need 50 CSOs?
MAYBE THE ONE COMPTROLLER IS GOOD ENOUGH?
As I snarkily remarked to someone, perhaps Mamdani has 50+ unemployed friends.
The “savings” are unlikely to provide the $5-$10 billion in cuts needed to get to where they need to be.
There are proposed taxes … but I will get to that another time, as many different politicians in different places want to “tax the rich….. [more than we already do]”. It’s not just a NYC thing.
What Constitutes a Fiscal Emergency?
But I want to get back to the core question.
Look.
We all know this is bullshit.
The reason I am being crude about this is that this is going to be played out not only in New York City… and Chicago… and California… and then public pensions… and Social Security and Medicaid and Medicare…
And in every single case, there have been reports for years, if not decades, where multiple people running the numbers have shown the problem.
The issues have been known.
The trade-offs have been placed in front of the people who were elected to supposedly take care of the problems…. but their concept of their jobs was to smile at cameras, make speeches, and fundraise.
Then pretend it’s an emergency all of a sudden, when the cash flows go negative, as had always been predicted.
I understand why various people are not interested in dealing with the consequences of the decisions they had agreed with… but guess what?
Choices have consequences.
Pretending ignorance isn’t going to stop them from showing up.