New York City Update
NYC Closes Budget Gap Through $8 Billion In State Aid, Pied-à-Terre Tax, Other Reforms
NEW YORK –New York City Mayor Zohran Mamdani released the $124.7 billion Fiscal Year 2027 Executive Budget on May 12 after securing another $4 billion in state aid. City officials noted that the budget is balanced without raising property taxes, slashing services or drawing down the city’s Rainy Day or Retiree Health Benefit Trust reserves and makes the largest city capital commitment to the New York City Housing Authority in recent history.
Mayor Mamdani’s office reported that his administration inherited budget gaps that were larger than those seen during the Great Recession. Both the City and State Comptrollers agreed the prior administration had substantially underbudgeted core city services and obligations, increasing budget gaps to more than $12 billion.
As part of the administration’s efforts to restore fiscal transparency and public excellence to city government, the mayor ordered every agency to appoint a chief savings officer. Through this effort, the administration achieved $1.77 billion in gap-closing savings across FY2026 and 2027.
The city secured an additional $4 billion in state support and actions to help stabilize the budget. That includes $352 million in direct aid, $3.2 billion in state authorizations, including pension liability restructuring and class size flexibility, mentioned above, and $500 million in new revenue through a “pied-à-terre tax” on second homes valued above $5 million.
Earlier, Gov. Kathy Hochul announced new state support and actions to help New York City close its budget deficit ahead of the release of Mayor Mamdani’s Fiscal Year 2027 Executive Budget. State lawmakers secured an additional $4 billion in gap-closing support, bringing the total new state assistance to nearly $8 billion over two years.
Priorities include making free universal childcare a reality, investments in education, public safety and infrastructure and providing the city with the resources needed to continue to fund critical services for New Yorkers.
In addition to the pied-à-terre tax, the mayor will work with Speaker Julie Menin and the City Council on their proposal to reduce the unincorporated business tax credit (UBT), which overwhelmingly benefits millionaires. Reducing the UBT tax credit will raise an additional $68 million.
State and city officials projected revenue to be raised by the pied-à-terre tax has been estimated as high as $500 million from second homes with market value of at least $5 million. However, New York City Comptroller Mark Levine recently warned revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax.
The mayor identified an additional $1.2 billion in savings by addressing systemic inefficiencies in critical programs, including improving access for special education students, reaching class size compliance and strengthening CityFHEPS (the City Fighting Homelessness and Eviction Prevention Supplement), which is a rental assistance program that helps individuals and families find and keep housing. The city will also create a more predictable debt payment schedule, resulting in $1.64 billion in savings in FY 2027 alone without impacting retirees, their benefits or current and future employee benefits.
The mayor noted the budget also makes investments to reduce the cost of living, strengthen public services, improve public safety, expand worker protections and support the health and well-being of New Yorkers across the five boroughs.
Among some of the city’s major investments in the budget include $4 billion in capital funding for the Department of Housing Preservation and Development across the five-year plan, plus an additional $500 million in FY31.
The budget includes an additional $500 million in FY28 for comprehensive NYCHA renovations. Combined with existing commitments and investments made in the FY27 Preliminary Plan, these funds will allow NYCHA to rehabilitate and modernize thousands of homes across FY27 and FY28. The city is also investing $256 million over FY26 through FY28—in addition to expense budget funding—to restore vacant NYCHA apartments and return them to tenants.
Published: May 26, 2026.