Mamdani’s $126B budget soars nearly 10% from last year, leaving NYC on verge of fiscal crisis

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Mayor Zohran Mamdani’s inaugural, record-breaking nearly $126 billion budget passed late Tuesday — growing city spending by more than $10 billion from last year despite his past dire warnings about the Big Apple’s financial situation.

The under-the-wire vote by the City Council came just hours before a Wednesday deadline and after frantic last-minute attempts to drum up votes for a spending deal that disappointed lefties and moderates alike.

The budget, which includes no significant cuts, ballooned from last year’s roughly $116 billion spending plan, for an approximate 8.5% increase. It passed 45-6, largely on party lines.

And while the democratic socialist mayor managed to balance the budget, City Comptroller Mark Levine noted that he only did so by using $6.1 billion in one-time tricks and short-term savings.

“This agreement gets the city through an exceptionally difficult year, but it does not resolve the structural challenges ahead,” Levine said. 

“With large out-year gaps, limited reserves and significant economic uncertainty, next year’s budget could be even more difficult.”

The city faces a whopping $8.8 billion shortfall for the next budget, according to the city comptroller’s office — setting up Mamdani and the Council for a potential bruising rehash of this year’s topsy-turvy negotiations.

Full details of the adopted budget were not immediately made public. 

Mamdani and City Council Speaker Julie Menin dutifully smiled for the cameras as they announced their handshake budget deal Tuesday morning, but their grins belied long-simmering tensions.

The budget hit an 11th-hour snag over Mamdani backtracking on a campaign promise to fund the expansion of a housing voucher program — a darling of progressive lawmakers that comes with a hefty price tag.

A skin-of-their-teeth deal preserved the cityFHEPS expansion — adding $175 million to $1.7 billion already on the books — and dropped a contentious lawsuit that Mamdani pursued, much to the dismay of his progressive allies.

And many moderates were blindsided by Mamdani flip-flopping on his promise to add 580 NYPD officers — itself a 180 from his campaign promises that angered his lefty comrades, who mounted a pressure crusade that seemingly led to his reversal.

The final $125.8 billion budget deal for the 2027 fiscal year included several notable funding increases, including:

The budget also puts $350 million in general reserves, a fund that can provide a cushion if belt-tightening is needed last in the year.

But the spending plan ultimately failed to solve the city’s “huge structural budget problem,” said Andrew Rein, president of the Citizens Budget Commission watchdog.

Rein did praise Mamdani’s half-hearted efforts to curb spending growth and waste.

“Unfortunately, that fiscal progress is partly offset by new recurring spending without simultaneous savings to pay for it,” Rein said.

“Two steps forward, one step back slow walks the restructuring needed to stave off a fiscal crisis.”

A fiscal crisis is precisely what Mamdani claimed the city faced after he took office in January, dramatically blaming his predecessor, former Mayor Eric Adams, for leaving him with a $12 billion budget shortfall.

The young mayor revised the estimate to $5.4 billion, contending the gap could be bridged either by taxing the rich or hiking property taxes nearly 10% across the board.

The clear ploy to pressure Gov. Kathy Hochul and the state Legislature to approve a levy on the wealthy dovetailed with Mamdani backing $23 billion in new taxes during his early days in office.

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Few of those taxes came to fruition aside from a pied-à-terre tax on luxury second homes, which officials estimated would generate between $340 million and $500 million in annual revenue.

Mamdani was more successful, however, in securing $4 billion in effective bailouts from Hochul that largely delayed massive spending.

Still, the mayor’s seeming successes weren’t enough for some of his progressive allies.

No Democratic Socialists of America lawmakers were at the Mamdani-Menin handshake photo op, and several progressives also skipped it.

Before the Council voted on the budget, Mamdani’s camp desperately tried to push progressives who were unhappy with the housing vouchers deal to hold their noses and approve the budget, sources said.

Two progressives told The Post the cajoling wasn’t enough, but the whole lefty caucus still backed the budget.