The New York City Council and Comptroller Mark Levine aren’t the only ones with concerns about Mayor Zohran Mamdani’s preliminary budget proposal.
Moody’s changed its credit outlook for New York City to “negative” in light of “large and persistent” budget imbalances. The update – which doesn’t yet change the actual rating – just so happened to hit in the middle of the first day of City Council budget hearings, during which Levine noted that another bond agency shared concerns about budget gaps. In a statement not long after, Levine called the Moody’s update a “sobering wake-up call.”
“It is the first negative outlook the City has received since the COVID crisis. The fact that this is happening at a time of relative health in our local economy is all the more remarkable,” Levine said.
The city is still nearly four months out from passing a budget with the City Council, a period of time through which out-year gaps typically narrow. In a statement, City Hall spokesperson Dora Pekec called the revised outlook “premature,” citing state legislative budget proposals that would kick in billions. (Those are still just proposals that need buy-in from Gov. Kathy Hochul.) “These proposals reflect a real commitment by Albany to investing in the services New Yorkers rely on, and the fiscal health of our city. We look forward to continuing our productive conversations with our partners in Albany and the City Council as we work to close the inherited deficit and restore the city to firm financial footing after years of underbudgeting and mismanagement.”
Leaders at the city Independent Budget Office, which testified first and for roughly two hours at the council’s first budget hearing on Wednesday, were careful not to offer opinions or prescriptions, but had a few questions for the administration of their own. Among them: “We are very curious as to why the administration remains optimistic about the national and local economy in light of events such as the Supreme Court decision on tariffs and the war in Iran,” Director Louisa Chafee said.
