NYC budget deadline nears with $5 billion gap. What's at risk?

New York City's executive budget deadline is almost here, and much is at play.

On Tuesday, May 12, the city is expected to release its 2027 fiscal year budget, but a glaring problem still persists: a deficit of over $5 billion.

Here's what to know about the budget, and what comes next.

What is the total of NYC's budget gap?

The budget gap is currently around $5.4 billion, according to Politico's Playbook.

Late last month, Mamdani asked the state for help in filling the deficit, an idea Gov. Kathy Hochul quickly shot down.

The executive budget was due Friday, May 1. But Mamdani and Speaker Julie Menin extended the deadline through May 12 for the 2027 fiscal year after the city said it was waiting for New York State's budget to be finalized.

When asking the state for budget help, the Mamdani administration suggested that the NYC Passthrough Entity tax credit should be cut from 100 percent to 75 percent, with the city keeping the other 25 percent.

That change would put about $1 billion back into the city’s pocket, “while still allowing New York City residents to save on federal taxes,” the city said in a news release.

In February, Hochul committed to sending an additional $1.5 billion to NYC over two years to assist with the budget crisis. But her office isn't prepared to trim the pass-through credit.

"We're not changing PTET," she said at a news conference. "It's not happening." She then said NYC officials "have to do what every other city's doing" in reviewing spending.

The governor's rebuke followed a partnership between her office and the Mamdani administration on another funding proposal.

Mamdani and Hochul recently revealed a pied-à-terre tax, which will add an annual charge on one to three family homes, condos and co-ops valued above $5 million if owners have another primary residence outside of the city.

"We cannot close this deficit with savings alone. We need new revenue. And we need a structural reset in our relationship with the state," Mamdani said at a press conference in April, asking the Gov. Kathy Hochul for more aid.

"That is the only way to meet our legal obligation to pass a balanced budget, and to do so without imposing a financial burden onto the backs of working people."

The finalized version of the budget is due June 30.

Why does NYC have a budget gap?

The Mamdani administration has claimed that former Mayor Eric Adams' "staggering fiscal mismanagement left a $12 billion hole in NYC budget for the next two fiscal years."

He has referred to the gap as the “Adams Budget Crisis,” and said that in prior years, the deficit was "consistently and intentionally understated."

In January, Adams' spokesman, Todd Shapiro, denied the blame.

“Eric Adams dealt with one of the toughest economic crises in the history of New York City, from Covid, in which the economy was crippled, and brought it back to one of the healthiest, one of the best economies that New York City has seen in years,” Shapiro told the New York Times earlier this year.

What's at risk in the budget?

It isn't entirely clear what the executive budget will entail, and if anything will be cut. But the gap crisis needs a solution.

Reporting by Politico suggests that Mamdani may use placeholder estimates for funding, such as the pied-à-terre tax, which the city estimated could rake in an extra $500 million annually.

Mamdani's administration has tried to look for spending cutbacks within some agencies, alleging that $1.7 billion in potential savings was found, according to Spectrum News.

For now, however, it is still not entirely clear what the budget will look like.