New York City Comptroller Mark Levine on Jan. 16 announced that the city is facing a $2.2 billion budget shortfall for Fiscal Year 2026, with a projected $10.4 billion gap in Fiscal Year 2027, marking the first time since the Great Recession that deficits of this scale have emerged this late in the fiscal year.
According to the Comptroller’s latest fiscal analysis, the size and timing of these gaps present serious challenges for the city’s financial stability. The assessment builds on data released in Dec. 2025 and points to budgeting practices under the previous mayoral administration as the primary contributors to the projected deficits.
Levine noted that as state and city budget cycles begin, the city must contend with a multi-billion-dollar imbalance that is not the result of economic decline. Instead, the gaps stem from spending decisions and long-standing failures to fully budget for recurring costs. He emphasized that the upcoming preliminary budget, expected in February from Mayor Zohran Mamdani’s administration, will require difficult choices to bring spending in line with revenues.
“As the state and city budget cycles begin, we find ourselves confronting a $2 billion deficit for the current fiscal year and a $10 billion gap for the coming year. This wasn’t caused by a bad economy—it’s the result of budgeting decisions from the previous administration that we must now deal with,” said Levine.
Despite signs of potential weakness in the labor market, the broader economic picture does not account for the shortfall. The U.S. economy continues to grow. New York City remains buoyed by strong tourism, Broadway attendance, commercial leasing activity and stock market–driven revenues, pointing to a structural rather than economic deficit.
The comptroller highlighted that FY2026 spending levels adopted under the Adams administration exceed projected revenues and failed to account for known, recurring expenses. Chronic underbudgeting in areas such as rental assistance, overtime, shelters, public assistance, Department of Education due process cases, and required contributions to the MTA has resulted in roughly $3.8 billion in unbudgeted costs for FY2026 alone, with even larger gaps projected in subsequent years.
Levine said his office will work closely with the Mamdani administration to close the current budget gap and address the projected FY2027 shortfall. He is also scheduled to meet with state lawmakers in Albany next month to discuss the city’s fiscal outlook.
Additional details are available in the Comptroller’s Jan. 2026 edition of New York by the Numbers.
