State giving $1.5 billion to NYC to help fix massive budget gap
New York City will be getting $1.5 billion from the state to help address a budget gap that officials say is the largest shortfall since the Great Recession.
The money will be allocated over the next two years to help with the city's financial crisis, according to an announcement Monday from Gov. Kathy Hochul and Mayor Zohran Mamdani.
The new funding includes $510 million to cover expenses the state used to pay for but has shifted to the city -- $300 million for youth programming, $150 million in sales tax receipts and $60 million for public health.
The remaining $500 million will be targeted to "shared priorities," which officials will discuss.
"Working New Yorkers did not create this budget crisis, and they should not be the ones to pay for it. After years of staggering fiscal mismanagement under the previous administration, our city deserves responsible and collaborative leadership," Mamdani said. "I am heartened by this budgetary progress and Gov. Hochul's partnership at this critical moment. This is what it looks like to begin a new, productive and fair relationship between City Hall and Albany -- focused on delivering for working New Yorkers."
Hochul also expressed the importance of supporting the five boroughs.
"A strong New York City means a stronger New York State. This investment protects services and puts the city on stable financial footing," she said. "New Yorkers expect the state and the city to work together, and I'm proud to partner with the mayor to deliver for working families."
Mamdani said the deficit was lowered from $12 billion to $7 billion while seeking approval for his agenda from lawmakers on Wednesday in Albany.
Will Mayor Mamdani still try to tax the rich?
When asked if the mayor will still call for new taxes in the fiscal plan he unveils Tuesday, Joe Calvello, his press secretary, said, "The city still has a $5.5 billion budget gap, and the mayor is deeply committed to bridging it by taxing the rich and changing the structural relationship between Albany and New York City."
At a January town hall, Mamdani demanded state approval of new taxes, which Gov. Hochul has already said no to. CBS News New York's Marcia Kramer asked budget expert Andrew Rein if the mayor's insistence on holding to his campaign promise to tax the rich was politically smart.
"I don't have an answer on whether it's politically wise. I know that raising taxes risks our competitiveness, so it's not the smart thing to do for New York in the future," Rein said.
And while Hochul's move shows the traditionally frigid relations between Albany and the city are thawing out, Rein said the real answer is to cut waste.
"What we need to do is control our spending and get it in line, so focusing on programs that work and shrinking those that don't," Rein said.
Largest budget gap since Great Recession, comptroller says
New York City Comptroller Mark Levine said on Jan. 16 that the city faces a budget shortfall of $2.2 billion this fiscal year and $10.4 billion in the 2027 fiscal year -- the largest gap since the Great Recession in 2008.
Both Levine and Mamdani have blamed the issue on former Mayor Eric Adams' administration.
"We're also calling out the cause of this gap, which was the budget practices of the previous administration, over-reliance on one-shot financial measures, such as drawing down on prepaid expenses, and especially by underaccounting for expenses that we know the city will [incur], such as overtime pay, such as shelter costs," Levine previously said.
"This crisis has a name and a chief architect. In the words of the Jackson 5, it's as easy as ABC. This is the Adams budget crisis," Mamdani said in January. "He systematically under-budgeted services that New Yorkers rely on every single day."
The mayor has also blamed former Gov. Andrew Cuomo.
A spokesperson for Adams said the former mayor inherited a $10 billion debt that was compounded by the COVID-19 pandemic. Cuomo's spokesperson said Mamdani could have fixed any inequities during his time as a state legislator.
