City Council leaders urged Mayor Zohran Mamdani on Tuesday not to raid the Big Apple’s “rainy day” fund — finding $1.7 billion in savings and revenue that could go toward closing the city’s budget gap.
Budget negotiations ramped up as City Council Speaker Julie Menin and Finance Committee Chair Linda Lee released findings showing the city could have an extra $1.7 billion sitting around from cost-cutting measures and higher-than-predicted tax revenue.
“The Rainy Day Fund was created to help protect New Yorkers during a true fiscal emergency, and has never been tapped,” Menin said in a statement.
“Our analysis suggests we are not in such an emergency position today.”
Mamdani, when unveiling his $127 billion preliminary budget proposal, warned the city faces a $5.4 billion hole over two years — threatening he’d be “forced” to hike property taxes by nearly 10% to make up the cash if Albany doesn’t approve his “tax the rich” pitch.
Hizzoner also claimed the city would need to pull $1 billion from the rainy day pot this year, and around $1.6 billion from other general reserves and saving funds in 2027.
But Menin’s office detailed how the city can at least avoid tapping into the rainy day fund, which was created under former Mayor Bill de Blasio in 2021, and currently has $2 billion. City officials have never tapped into it, including during COVID and the migrant crisis, according to Menin.
The city can save $1.4 billion in various costs, including cutting long-standing job vacancies, said Menin’s office.
“We think that they should be filled, and they should exist, but they were budgeted, and they just simply weren’t filled,” Menin said of the approximately 12,000 empty gigs. “So, it shouldn’t they can’t be really accounted for in the budget.”
Council analysts also believe there is an additional $386 million in tax revenue that the city can expect to collect for the next two fiscal years.
“We are optimistic that the City will be able to preserve the services New Yorkers rely on most, while navigating our ongoing budget process, and we look forward to collaborating with the Administration,” said Lee, a Queens Democrat.
The clashing Council’s outlook came as state lawmakers showed partial support for Mamdani’s proposed tax increases on the uber-wealthy and businesses – a move the mayor cheered even though Gov. Kathy Hochul has made clear she won’t go along with it.
The state Senate and state Assembly each included a hike in personal income taxes for earners making more than $5 million in their largely symbolic “one-house budgets,” and also backed a tax boost on businesses across the board.
They also both would allow New York city to boost its own corporate taxes, including raising levies on financial sector firms from 9% to 10.8% and a tax uptick on non-finance firms from 8.85% to 10.6%.
Assembly Speaker Carl Heastie said his chamber’s proposed tax increases would generate upwards of $4 billion a year.
Both chambers of the Legislature also want to direct around $2 billion in funds to the Big Apple through direct aid and picking up the tabs on various spending, like for homeless shelter costs and reducing school class sizes.
Mamdani said he was grateful that Heastie, State Senate Majority Leader Andrea Stewart-Cousins and other Albany Dems had “taken meaningful steps toward closing the deficit we inherited.”
“New York City is the economic engine of our state — restoring our city’s fiscal health is an investment in the state’s economic wellbeing,” he said.
While his chamber’s proposal championed tax increases, Heastie said his priority was solving the city’s fiscal crisis, not taxing the rich for the “hell of it.”
“I’m committed to making sure that the city and all of the cities around the state are on solid financial ground. So that’s what my commitment is. I’m not committed to any one tax or all taxes,” he said.
Hochul, who is running for re-election this year, has said repeatedly she will not raise income taxes on New Yorkers.