Comptroller Lander Delivers Testimony on the FY26 Preliminary Budget and January 2025 Financial Plan

New York City’s need for strong fiscal management has never been more urgent. With Donald Trump and his crony Elon Musk slashing federal funding to cities, states, hospitals, human service providers – and even brazenly stealing $80 million already deposited into the City’s bank account, as my office uncovered last month – we need steady, focused leadership. This is no time for the short-sighted, phony budgeting that has unfortunately become Mayor Adams’ calling card.

The FY26 Preliminary Budget sadly continues the Mayor’s pattern of poor transparency and gamesmanship, cutting existing programs like child care that New Yorkers depend on, overstating expenses for asylum seekers, and underbudgeting by billions other known costs – where we know the bills will be coming due. The City’s budget gaps for the years of the financial plan are meaningful, but they are manageable, and the Mayor should be honest with New Yorkers instead of perennially misrepresenting budget needs and threatening cuts to core services.

These recurring budget games distract from the real issues, including the very real dangers from DC.

President Trump’s tariffs, threats of mass deportation, and health care cuts will make life more unaffordable for New Yorkers and undermine the City’s hard-earned economic gains since the pandemic. Indeed, the city has been on a path of stable, moderate, growth leading up to the current moment. While employment has remained largely flat outside of the lower-wage health and social services sector, the commercial office market has continued to improve over the past year, transit ridership is up and traffic is down thanks largely to congestion pricing, and tourism is strong.

But now, we must face our new reality head-on – and actually reckon with it in our budgeting. That is why my office adjusted its economic assumptions to begin to account for higher inflation and slower growth deriving from changes in federal priorities. This less benign outlook lowers the forecast of City revenues in FY 2025 and FY 2026. Still, even with those adjustments, my office estimates that tax revenues will exceed OMB’s by $461 million in FY 2025, $805 million in FY 2026, with the difference growing to nearly $3 billion by FY 2029, due to a combination of higher property, personal income, and business taxes.

The Mayor’s Financial Plan continues to overstate the expenses associated with services for asylum seekers. Given current trends and net of State and Federal aid that is unlikely to materialize, my office estimates budgetary savings of $472 million versus the City budgets for FY 2025, $589 million in FY 2026, and a full $1 billion in FY 2027. The Adams Administration has historically inflated these costs, only to bring them down in subsequent budgets. The Mayor has scapegoated immigrants for his own management deficiencies while showing no urgency in providing clear invoices for what State funding has been allocated to cover actual spending. The result? No commitment of new support in the Governor’s FY 2026 Executive Budget and understandable skepticism from members of the State Legislature.

However, even after accounting for this continued overestimated spending on asylum seekers, and adjusting to higher revenue figures, likely revenues remain insufficient to support the chronic underbudgeting that continues to be embedded in the Adams Financial Plan. The plan fails to account for an average of nearly $4 billion in underbudgeted costs in FYs 2026 through FY 2029 associated with uniformed overtime, rental assistance (i.e. CityFHEPS), special education Carter Cases, public assistance, and similar items. Nearly $400 million in additional annual spending will also be necessary in this budget and the outyears just to maintain service levels for 3-K, Pre-K and preschool special education seats. Additional spending will also be required to implement the State’s mandate to reduce class sizes in city schools, at an additional cost of $168 million in FY 2026 growing to $1.42 billion by FY 2029.

We must also be laser-focused on safeguarding our budget – and safeguarding New Yorkers –  from the worst impacts of the Trump Administration, something Mayor Adams has failed to do. When Elon Musk stole $80 million from New York City last month, the Mayor was nowhere to be found, and it fell to my office to raise the alarm bell and pressure the Law Department into court. As the Daily News reported last week, OMB staff were anxious and even refused to sign the affidavit, fearful that the Mayor would not have their back. Thankfully, the Law Department filed strong papers, and with the Trump Administration response riddled with lies, I’m optimistic we will get the $80 million back. But this is just the beginning of federal funding cuts to New York City that are likely to be severe. We must act more proactively and strategically to prepare.

To help protect New Yorkers from the most immediate effects of potential cuts to federal aid, I am proposing the City add $1 billion to the general reserve fund in FY 2026. While this “Protecting New York City Reserve” may not be sufficient to offset potential cuts to federal funding, it will ensure that we are not caught flat-footed and that resources are available in the immediate term to sustain critical services.

Based on the policy previously proposed by my office to establish annual minimum deposits into the Revenue Stabilization Fund, for which the City has still not adopted a policy, we should also place $847 million into the City’s rainy day fund in FY 2025 – funding that can be deployed in the event of an economic downturn, which has become more likely in light of recent changes in fiscal and international trade policy.

Taken together, comparing revenue and expenditure re-estimates, including shoring up of reserves, my office projects higher budget gaps than OMB by $1.48 billion in FY 2025 (1.3 percent of total revenues), $4.46 billion in FY 2026 (3.9 percent of total revenues), increasing to $7.81 billion by FY 2029 (6.3 percent of total revenues).

As I have advocated many times before, addressing these gaps requires the Administration to strategically implement efficiencies and cost savings with each budget modification. There must be incentives for agencies to achieve structural savings instead of prioritizing short-sighted PEGs that often cut core service delivery. Given the risks on the horizon, it is mind-boggling that there is no savings plan included with the Preliminary Budget.

In the face of Elon Musk’s directives to haphazardly gut agencies, and a Congressional budget resolution to slash federal spending by trillions of dollars, it is incumbent upon us to protect the core services New Yorkers rely on and make strategic investments that will target resources where they are needed most.

That must include services for the communities across the five boroughs who are most vulnerable in the current political and economic climate.

No parent or child in this city should live in fear of family separation. We can begin to restore immigrant families’ confidence that New York City has their backs by putting a total of $20 million to increase support to immigrant and trans communities. This would include $10 million to restore Mayoral funding for the Rapid Response Legal Collaborative; restore ActionNYC in schools, hospitals, and libraries; and provide additional funding for MOIA to support Know Your Rights workshops, as well as resources for street vendors including the issuance of vendor licenses. With the Trump Administration’s relentless and cruel attacks on transgender rights, now is the time to protect and defend our neighbors. I am echoing the call of trans leaders to invest $10 million in a City level trans equity fund, and prioritize funding for trans-led organizations.

Workers across New York City are increasingly vulnerable to exploitation at the workplace due to attacks on federal enforcement agencies including the US Department of Labor and OSHA, and the National Labor Relations Board. Now, more than ever, it’s critical that we fully fund New York City based labor law enforcement, including CCHR, DCWP and the Comptroller’s Bureau of Labor Law in order to ensure that these agencies have the lawyers, investigators and data scientists needed to protect working New Yorkers.

And as we brace for the economic fallout of Trump’s tariffs and budgeting for billionaires, we must do more to help families stay here, to work and build new businesses in New York City and to raise the next generation of New Yorkers. Rather than cutting funding for 3K and Pre-K as the Mayor is insisting, we should be making smart investments now to deliver on the promise of a 3K and Pre-K seat for every child, while sustaining and growing the child care workforce. And, if we are to have any chance of creating a stable pathway to universal child care – an important north star – we must work with the State to ensure sufficient funding for families already eligible for publicly supported child care and early childhood education.

We also cannot ignore the risks this budget poses for services to students more broadly, from early childhood through college. A host of DOE programs previously supported by federal stimulus funds such as community schools and arts programs remain unaccounted for in the financial plan. Though there are mercifully no new cuts to CUNY in this budget, the plan maintains the cuts the Adams Administration has made since February 2022, totaling $95 million per fiscal year.

As the number of unsheltered New Yorkers has risen to all-time highs, I commend the Progressive Caucus for its focus on stopping the hospital-to street-to jail-and-back cycle for people with serious mental illness. My office’s recent report, Safer for All, exposed the City’s inability to coordinate an effective continuum of care, which will only be further undermined by Trump’s cuts to housing services and mental health care, so much of which is financed by Medicaid. In that report, I laid out a concrete, actionable plan to end street homelessness for people with serious mental illness. The Progressive Caucus proposal is aligned with that vision, one that funds supportive housing over sweeps – a strategy our office found to be wholly ineffective.

Ultimately it is people, fellow New Yorkers, who provide the care people with mental illness need to get off the street and into stable housing. Unfortunately, staffing shortages, fueled by low pay, the demands of doing this work, and the City’s utter failure to pay nonprofit contractors on-time undermine our ability to make progress. As we scale up inpatient and outpatient services and build a true Housing-First model, we must therefore also invest in living wages for City-contracted mental health and human services providers and fix our procurement system to get these critical contractors paid on-time and in-full.

I will conclude where I began, which is with the need for strong fiscal leadership during this tumultuous time. The Mayor has done little to prepare the City or shelter its budget from the strong federal headwinds. With greater transparency in budgeting and responsible investments in our reserves, we will be better positioned to weather storms that come.

I look forward to working with you to advance these and other shared priorities, to help our city and our people flourish in the years ahead.