New York City Council Releases Preliminary Budget Response, Identifying $6 Billion in Resources as Alternative Path to Closing Funding Shortfall

Council's proposals for Fiscal Years 2026 and 2027 would avoid increasing property taxes, drawing down reserves, or reducing critical services for New Yorkers

Council also prioritizes expanding Fair Fares to provide free transit and seed up to $3,000 in college savings account to put every New York family on a clearer path to financial stability

NEW YORK, NY - Today, the New York City Council published its response to Mayor Zohran Mamdani's Preliminary Budget proposal, offering an alternative budgeting path for Fiscal Years (FY) 2026 and 2027. The response provides the necessary resources to fund spending priorities without increasing taxes on property owners and renters, reducing funding for critical services, or drawing down the City's reserves.

The comprehensive plan to address the City's financial challenges closes an estimated $6 billion budget shortfall identified by the Council over the two years, offering dozens of proposals that identify new resources that can be achieved through cost and revenue re-estimates, efficiencies and reforms, and additional revenue-raisers without cutting services or staff.

The Council's full Fiscal Year 2027 Preliminary Budget Response is available here.

"Amid a serious affordability crisis impacting New Yorkers across the city, the Council has a responsibility to act as a strong fiscal steward as we face a significant budget shortfall," said Speaker Julie Menin. "We cannot in good conscience fund the City's needs on the backs of homeowners or renters, by digging into emergency reserves, or by cutting essential programs. Our response offers a clear alternative to taking those steps, puts the City back on stable footing and invests directly in New Yorkers."

The Council's response addresses roughly $1.1 billion in Council priorities that were negotiated into the FY 2026 budget but were not baselined in the Mayor's preliminary budget for the coming fiscal year. The Council's response adds those funding priorities back in by identifying alternative resources to pay for them.

These include a host of vital programs and services that the Council believes should not be subject to the whims of the annual "budget dance." These include:

• $30 million for cultural institutions to provide necessary organizational support to the cultural community
• $30.7 million to support the three library systems' operations
• $16.9 million for housing and domestic violence-related legal services
• $5 million to provide for students' mental health needs
• $7.8 million for CUNY Reconnect, a program providing services and resources to working-age adults who are pursuing their advanced degrees at CUNY

The Council has a robust list of budget priorities from Members that will be negotiated with the Administration over the next two months, once the State has finalized its budget.

"The City Council's Preliminary Budget Response serves to confront the challenges facing our city, while responsibly addressing fiscal uncertainty," said Council Member Linda Lee, Chair of the Committee on Finance. "New Yorkers grappling with an affordability crisis should not see a decline in the quality of the services they receive due to a budget dance, and the City Council is committed to fighting to ensure residents receive the investments they deserve. As the budget negotiations continue, the Council has outlined an alternative path to close the budget shortfall and preserve and expand the services and programs for families across our city."

The Administration's preliminary plan projected expenditures and revenues of approximately $122.4 billion in Fiscal Year 2026 and $127.0 billion in Fiscal Year 2027. The budgets presented were balanced on paper, but only through $3.7 billion in anticipated revenue from a property tax rate hike that the Council opposes, and risky drawdowns of the City's multiyear reserves of $1.2 billion. The $1.1 billion in Council priorities was also excluded, which together totaled $6 billion in funding shortfalls.

That gap can be erased using the following methods:

• Re-estimations of City Revenues and Expenditures:$3.5 Billion
  • The City should recognize an additional $80 million in Department of Buildings (DOB) construction permits and late fee re-estimates in FY 2026. OMB has already recognized $218 million in construction fees and $91 million in late fees, while it is estimated DOB will collect at least $258 million and $131 million, respectively, this fiscal year.
  • The City should rightsize the total wages and salaries budgeted across agencies for what is realistically likely to be spent in FY26. These represent $860 million in savings that have been accrued throughout the year as certain positions, budgeted for in the financial plan, have not been filled, and thus the expenditures have not been made. The Council is not calling for eliminating any vacancies, just to recognize the unspent money to date. To be clear, the Council believes these positions should be filled.
  • The City should recognize an additional $42 million in FYs 2026 and 2027 in rental revenue from the Port Authority. The FY27 Preliminary Plan only includes $162.4 million, down from $204.4 million in FY25. In January, the Port Authority announced it had its busiest holiday travel season ever, suggesting total revenue could exceed prior years.

• Efficiencies and Reforms:$2 Billion
  • The Council estimates the City could save $175 million in FYs 2026 and 2027 by competitively bidding all Department of Education (DOE) contracts, auditing all the agency's non-essential contracts, and rightsizing contracts that are typically underspent.
  • Based on historical savings, and accounting for the re-estimates identified in the budget response, the Council believes the City should be able to find an additional $204 million in FY26 through 2027 debt service savings.

• Revenue Enhancements: $462 Million
  • The Graveyard Trust, which amasses older and harder-to-collect tax liens but only remits them to the City upon request, could provide $74 million in off-the-books funding.

The Council also highlighted three initial priorities for negotiations over the coming months, including the expansion of the college savings program NYC Kids RISE, to significantly grow the allotment of investment funds available for 5-year-olds. The additional funding would provide an initial investment of up to $1,000 for every public-school kindergartener and up to $3,000 for children with the greatest need.

Investment in higher education and post-high school trade schools is one of the best ways to address income inequality, and data shows that college graduates, on average, earn more than double the salaries of those who conclude their education after high school.

The second priority is to expand the Fair Fares program to make subways and buses fully free for households under at least 150% of the federal poverty line, so that the lowest-income New Yorkers can count on accessing public transportation without economic strain. The program currently provides half-price fairs for these households. The Council is also looking at ways to increase Fair Fares enrollment, including through automatic enrollment.

The third priority is achieving increased wages for paraprofessionals, an issue that a supermajority of Council Members has supported.

The Council's budget response is a roadmap for how the City can resolve some of the budgetary issues of the Preliminary Budget and should be incorporated into the Mayor's Executive Budget. The Council credits the Administration with making a number of crucial changes to its budgeting process that increase transparency and accuracy, but there is much more that can be done. The Council is calling on the Administration to agree to several such measures, including:

• Appointing a citywide Chief Savings Officer to determine targeted long-term savings Citywide
• Identifying a Tax Expenditure Chief Savings Officer to identify inefficient or outdated tax breaks
• Partnering with the Council to develop clear guidelines for the future use and replenishment of the City's various reserves.

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