GDP: Zohran Mamdani’s ‘big government’ bet may run into New York City’s budget deficit challenge

As he took charge, he doubled down on his promise during his inaugural address. “In writing this address, I have been told that this is the occasion to reset expectations… I will do no such thing… To those who insist that the era of big government is over, hear me when I say this: No longer will City Hall hesitate to use its power to improve New Yorkers’ lives.”

Mamdani’s critics — within his own party, among the Republicans as well as those in India (many of whom liken him to Arvind Kejriwal) — argue that his policy choices will wreck the city’s budget. They say higher taxation on the rich will only achieve one goal: Make the rich leave NYC and thus slow down the growth engine necessary to bring prosperity to the 8.5 million residents. It is only a matter of time before critics argue that Mamdani has overspent and racked up debts.

As such, it matters to look at where the city’s finances stand just before Mamdani took charge. NYC’s fiscal year (that is, the year for the purposes of the government’s finances) runs from the start of July to the end of June. Typically, every June, the Mayor and the City Council negotiate and pass the city’s budget; this is called the June Plan. Every November, the Mayor provides a mid-year update, and this is called the November Plan.

The table above shows NYC’s finances after taking into account the last November Plan (under the previous Mayor Eric Adams). The source for this analysis is a December report by the Office of the New York State Comptroller (OSC).

The main worry about any set of government finances is whether the budget is balanced or not. In other words, does the government have the money it intends to spend? If not, it means a budget deficit and forces such a government to borrow. If there is a surplus, such governments are well-positioned to handle a crisis such as a recession or a health emergency (like a pandemic).

Here are the key takeaways from the OSC report about where NYC finances stand just before Mamdani took charge:

1. OSC has noted that the city is already on the path to a budget deficit in the following three years (see table’s row 3).

“While FY 2026 remains balanced, several concerns have arisen throughout 2025, including the continued growth in city-funded safety net programs, slowing economic growth and the ongoing restructuring of the funding relationship between the federal government and states and localities like New York City,” stated the report.

It said the city ignored these trends. “Despite these known issues, the City did not take significant steps toward preparing for, or providing clarity on, the fiscal challenges it faces as it nears the middle of the fiscal year.”

2. The bigger issue is that the city underestimates the budget gaps because it “assumes a decline in costs that are not substantiated,” according to the report. In the table’s row 4, OSC shows how big the deficits are likely to be in its estimation. The city’s budget gaps can touch $10 billion in FY 2027 and $13.6 billion by FY 2029.

Alluding to the possibility of the Trump administration holding back funds to NYC and the possibility of economic downturn, State Comptroller Thomas DiNapoli concluded the following: “Mindful of the current economic trajectory and what is transpiring in Washington, the City must make balanced and sustainable fiscal choices this year to manage its substantial operational needs and encourage employment and business growth.”

In other words, NYC finances are already set to tread into deeper budget deficits just as Mamdani attempts to enlarge the scope of government (read expenditures). That sets the stage for the challenge in the years to come, not just for Mamdani but also for Democratic Party hopefuls such as Alexandria Ocasio-Cortez, who might run for the White House in 2028.