Council Analysis Identifies Nearly $1.7 Billion in Potential Resources for FY 2026

Findings suggest the City can avoid tapping the Rainy Day Fund

Separate Council forecast shows relatively stronger revenue outlook than the Office of Management and Budget for FY 26 & 27

City Hall, NY - Speaker Julie Menin and Finance Chair Linda Lee today released the New York City Council's March 2026 Economic and Tax Revenue Forecast, alongside an initial analysis identifying nearly $1.7 billion in potential savings and additional revenue for Fiscal Year (FY) 2026, which ends June 30.

The Council's analysis suggests the City can maintain fiscal discipline and protect critical services without drawing down New York City's Rainy Day Fund (formally the Revenue Stabilization Fund). In its Preliminary Budget released in February, the Administration of Mayor Zohran Mamdani proposed utilizing nearly $1 billion from the fund in the current fiscal year.

The proposed drawdown of the Rainy Day Fund would lead to a vote by the Council by the end of March through a Revenue and Expense Modification to the FY 2026 budget sent by the Administration on February 24.

The Rainy Day Fund was created in 2021 by the Administration of Mayor Bill de Blasio. Since its launch, it has gradually climbed to $2 billion and has never been drawn down, even during the recent migrant funding crisis.

Among the resources identified in the Council's preliminary analysis, beyond current projections from the Office of Management and Budget (OMB), are nearly $1.4 billion from debt service adjustments, reductions in long-standing agency vacancies that remain unfilled, and unrecognized interest earnings from entities such as the Retirees Health Benefits Trust and cash holdings.

"The Rainy Day Fund was created to help protect New Yorkers during a true fiscal emergency, and has never been tapped," said Speaker Julie Menin. "Our analysis suggests we are not in such an emergency position today. The Council believes there are additional savings and revenue opportunities that can be identified through the budget hearing process, both for FY 2026 and 2027, and we will continue working with the Administration to ensure the City's finances remain strong while protecting this critical safeguard."

The Council's March economic forecast estimates $386 million more in tax revenue than projected by the Mayor's OMB for fiscal years 2026 and 2027, reflecting a stronger long-term outlook for the City's finances. That difference excludes any increase to the City's overall property tax rate.

The forecast projects the City's tax revenues will continue to grow at an average of 4.7 percent annually from FY 2026 through FY 2030, which is lower than the 5.5 percent annual average tax revenue growth experienced over the decade of FY 2010 to FY 2019.

The full economic forecast report can be found here.

"Today's analysis reinforces the City Council's commitment to being a responsible financial steward of our city's budget," said Council Member Linda Lee, Chair of the Committee on Finance. "Since the beginning, the Council has advocated for a holistic approach to identifying revenues and finding savings to close our spending gap. With the release of today's findings, 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."

As for the bigger picture, the national economy continues to grow, with real gross domestic product (GDP) rising 4.4 percent in the third quarter and 1.4 percent in the fourth quarter of 2025. The Council anticipates real GDP to grow at 2.5 percent in 2026. At the same time, the forecast notes that growth remains uneven across the workforce, with job gains concentrated in lower-wage sectors.

Employment growth in the city has been primarily driven by the home healthcare and social assistance subsectors, which together added 53,000 jobs, though these positions typically pay lower wages. Excluding these sectors, total employment in the city declined by 22,900. The Council's forecast projects employment to start rebounding in late 2026, but lackluster job growth is anticipated through 2030. Average wages, on the other hand, grew robustly at a 5.9 percent annual rate in the last reported four quarters, with the average wages of the securities industry going up by 12.9 percent.

New York City's real estate market continues to show signs of rebounding, with Manhattan's high-end offices recording the largest annual leasing activity since 2019 as of December. Manhattan office vacancy rates continue to decline, supported by strong leasing activity in the Class A office space and increasing office-to-residential conversions. Residential sales volume continues to increase modestly, while sales value appreciation has been more pronounced due to limited inventory and continued elevated mortgage rates.

Fiscal Year 2027 budget negotiations are underway, as the Council hosts a series of oversight hearings from March 11 through March 25 to examine the Mayor's Preliminary Budget and agency spending plans for FY 2027 and beyond.

The Council will release its formal response to the Mayor's Preliminary Budget by April 1, outlining priorities for the FY 2027 Adopted Budget.

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