Budgets are usually about choices, but Mayor Mamdani’s fiscal 2027 budget proposal presents Gov. Hochul and state lawmakers with just one: They can sign off on the suite of tax hikes he’s demanded, or he’ll ask the City Council for a painful property tax increase of almost 10%.
The mayor has complained — not without some merit — that the Adams administration lowballed expenses. If the city’s finances are truly in “crisis” condition, the appropriate response is triage.
But the mayor has yet to administer even basic first aid.
The “chief spending officers” he tasked with trimming spending haven’t yet made suggestions, and the phrase “hiring freeze” hasn’t been uttered.
Instead, he’s sending property owners to the hospital with a 9.5% property tax hike.
Many players and factors brought about the current “crisis”:
Dept. of Education
The DOE is a representative example of what ails city finances.
It’s the biggest part of the budget, and Mamdani would have DOE spend an extra $2.8 billion next year. But enrollment is collapsing amid outmigration and falling birthrates: the city had more than 87,000 public-school first-graders a decade ago. Today it’s around 70,000 — and a bigger share of them are attending charter schools after parents lost confidence in the city’s public-education system.
In total, over that time, DOE has lost about 118,000 students, yet half-empty schools remain open.
As Manhattan Institute fellow Danyela Souza Egorov wrote recently, 112 public schools enroll fewer than 150 students — even as the city borrows money to build new schools. On top of that, underenrolled schools were allowed to keep $250 million from being clawed back last year.
The mayor should close and consolidate underutilized schools and recalibrate school-level budgets to maintain consistent per-pupil spending across the system. The exact savings would depend on how aggressively the mayor pursued such a plan, but they could easily run into the billions over a few years.
Another major education cost driver is the surge in “due process” cases. These arise when the DOE cannot provide the special-education services necessary for students with disabilities to receive an adequate public education.
In response, their parents — often affluent and well-lawyered — enroll their child in a private placement and sue the city for tuition reimbursement.
According to a new paper on these cases by MI fellow Jennifer Weber, as of May 2025 the DOE’s average settlement per student was $101,757.
In fiscal 2019, these reimbursements cost the city roughly $500 million. Mamdani has budgeted $1.55 billion for next year, a threefold increase.
Mamdani could slow this growth by ending the de Blasio-era policy that does not re-litigate reimbursements settled in previous years, which would require parents to sue each year to recover tuition.
He could also save roughly $600 million next year by asking Albany to delay the state mandate to reduce the city’s public-school class sizes. As Weber notes, the law forces the city to hire 6,000 teachers on an accelerated timeline, even though research shows instructional quality — not necessarily smaller classes — drives student achievement.
Dept. of Homeless Services
The DHS has also fueled the city’s recent budget growth. Between fiscal years 2019 and 2027, DHS’s budget has skyrocketed 120%, from $2.1 billion to $4.6 billion.
Mamdani’s revised estimates put next year’s shelter spending at $1 billion above prior projections.
The massive outlays were due to Adams’ decision to house and feed every migrant bused into the city. Yet Mamdani bears responsibility for quietly rescinding the 30- and 60-day shelter limits that Adams secured after protracted negotiations to modify the right to shelter. In doing so, he’s allowed migrants — like the broader homeless population — to remain in shelters indefinitely.
They’re taking the mayor up on his offer. At November’s end, the city had 31,629 migrants in shelters; as of last month, that number barely budged, to 30,813. Exits have slowed to a trickle.
Dept. of Social Services
Two of the largest upward revisions in Mamdani’s budget presentation stemmed from the DSS, the agency that administers public assistance programs. Since 2019, it’s grown by 44%, to $14.6 billion.
Mamdani claims Adams underbudgeted rental assistance by over $1 billion. The reason: the City Council’s 2023 expansion of eligibility for CityFHEPS, a city-funded housing-voucher program.
In an act of brazen fiscal irresponsibility, the council passed the bill without including a line-item appropriation for the expansion — essentially giving it a blank check. Adams vetoed the measure, projecting an untenable $17 billion price tag over five years. The council overrode his veto, and then housing activists sued the city to force implementation.
Although Mamdani promised to implement the law on the campaign trail, he recently backtracked and is now seeking to settle the lawsuit without full CityFHEPS expansion.
Even so, a program that cost only $25 million as recently as fiscal 2019 is now projected to cost $2.2 billion next year.
The mayor should petition the council to pare back the program, even if temporarily, and realize the savings in the meantime.
The second major driver of DSS growth is cash assistance — the foreseeable consequence of Adams sustaining Bill de Blasio’s retreat from work-based welfare reform.
As E.J. McMahon warned in early 2024, Adams expanded the welfare rolls at the fastest clip in decades, and Hochul accelerated the growth by creating a pathway for migrants to qualify.
Though it may be difficult to envision, Mamdani could curb this growth by re-prioritizing work over welfare.
The high cost of operating all city agencies stems partially from New York City employees uniquely contributing nothing toward their health-insurance premiums. Mamdani’s budget expects health insurance costs to spike by 14%, with the entire cost absorbed by taxpayers.
Requiring employee contributions even below the 12% to 31% paid by New York state workers could save an estimated $675 million annually, according to the Citizens Budget Commission.
For a mayor elected on a promise of affordability, Mamdani owes New Yorkers a good-faith attempt to curb government’s spending — before reaching into hardworking property owners’ pockets to foot the bill.
Ken Girardin and John Ketcham are fellows at the Manhattan Institute.
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