New York City’s $119.7 billion budget for fiscal year 2026 is balanced at present, but concerns remain about the city’s financial stability due to uncertain federal funding and slowing economic growth, according to a report released by State Comptroller Thomas P. DiNapoli.
“New York City’s finances in fiscal year 2025 benefited from better-than-projected revenues and savings from the lower cost of services for asylum seekers,” DiNapoli said. “Employment and tax revenues continue to grow, buoyed by a financial sector that has generated near-record profits in recent years. While this has enabled the city to fund substantial spending growth, given the systemic restructuring of federal fiscal policy underway and the risk of its lasting consequences, the city is vulnerable to reductions both in federal spending and perhaps from state responses to this retrenchment. It is concerning that the city made no efforts to codify plans to bolster reserves or set aside additional funds in its rainy-day fund.”
The report notes that New York City has spent more than it collected in revenue over each of the last three fiscal years. The surplus used for prepayments declined from $6.1 billion in fiscal year 2022 to $3.8 billion in fiscal year 2025. Some pressures on city finances have eased, such as costs related to asylum seekers, but several under-budgeted items remain. Additional revenues or savings will be needed for future budgets.
For five consecutive years, New York City collected over $3.5 billion more in tax levies during each fiscal year than initially projected when adopting its budget. Since June 2024, revenue estimates—including tax levies and miscellaneous income—have been revised upward by billions across upcoming years.
During fiscal year 2025, nearly $3.9 billion was added for new agency spending and council initiatives planned for FY 2026—an amount greater than increases seen in city-fund revenues over the same period. The budget gap was largely closed through surplus prepayments and a downward revision of asylum seeker spending by $1.8 billion for FY 2026.
DiNapoli’s analysis does not foresee a significant increase in asylum seeker costs above current projections during the plan period but suggests further savings here are unlikely enough to close future gaps.
Projected out-year gaps now total $17.1 billion over three years through FY 2029, averaging about 6.2% of anticipated city fund revenues—a slight improvement compared with last year’s average gap of 6.8%. If contingency funds set at $1.45 billion annually are not otherwise needed, these could reduce average gaps further.
The report points out that addressing recurring costs one year at a time leads to understated out-year gaps in published forecasts; major agencies such as Social Services, Police, and Fire Departments are expected by the city administration to see reduced spending next year—a projection DiNapoli finds unlikely.
The city’s assumptions also include declines in overtime expenses and programs like cash assistance and housing vouchers without specifying how these reductions will be achieved; as a result, actual budget gaps may reach as high as $10.3 billion by FY 2027.
Given unpredictable federal economic policies going forward, DiNapoli recommends limiting new discretionary spending unless funding sources are identified and developing new savings programs focused on efficiency gains.
“New York City’s continued economic growth relies on its ability to provide fundamental public services of high quality, while adapting to manage fiscal challenges that may emerge,” DiNapoli said.
The full report is available: Review of the Financial Plan of the City of New York
A related review can also be found: Review of the Financial Plan of the City of New York (June 2025)
