Would Mamdani proposal eliminate NYC's $12B budget deficit? Yes, if it's approved

After New York City Mayor Zohran Mamdani proposed a budget for the city on May 12, 2026, a rumor spread that he had found a way to eliminate the city's $12 billion deficit. 

A post (archived) on Reddit shared a screenshot of an X post that said "When Mayor Mamdani took office, NYC had a $12 billion deficit. It is now $0." In the screenshot, another X user had quote-posted the claim, adding that Mamdani had done this "without cutting any social services." The Reddit post asked what was stopping "other leaders from working like Mamdani":

Other posts on Facebook and Instagram relayed the claim, and Snopes readers emailed asking us to verify the rumor. 

It is true that Mamdani's budget proposal would balance the budget, erasing the $12 billion deficit he inherited from the administration of former Mayor Eric Adams. However, as of this writing it has yet to be approved by the New York City Council. For that reason, we have not yet rated the claim. We'll update this story if the council approves the budget in its proposed form or if changes are made.

The proposal requires $4 billion in financial help from the state of New York, delaying payment to pension funds for the city's unionized employees and delaying the implementation of a state rule that mandates smaller classroom sizes, which would require hiring more teachers. The plan to delay pension payments still requires approval from pension funds, and the delay in hiring more teachers has yet to receive state approval. 

The budget further relies on a projected tax on secondary homes in the city valued at more than $5 million and on getting rid of a tax credit that mostly benefits wealthy people, the so-called Unincorporated Business Tax. The mayor's team also identified spending cuts within the city's various departments. 

In other words, Mamdani's proposed budget for the fiscal year starting July 1, 2026, and ending June 30, 2027, is still contingent on state approval for one part of the plan and on City Council approval to become effective. Further, it postpones spending obligations that could cause the budget deficit to soar in years to come. 

We have reached out to the Mamdani administration seeking details about some of these measures. We will update this story if and when we receive a reply.

Details of Mamdani's proposal

In February 2026, about six weeks into his term, Mamdani presented a first version of the budget for fiscal year 2027. In the announcement, the mayor's office said it had found a projected $12 billion deficit for 2026 and 2027. The statement said the deficit was the result of mismanagement by the Adams administration:

Upon taking office, the Mamdani Administration identified a pattern of underbudgeted essential services, including rental assistance, shelter operations and special education — that widened projected gaps stated in the November 2025 Financial Plan Update to roughly $12 billion across FY 2026 and FY 2027. 

The announcement also said Mamdani's team had attempted to balance the budget by identifying ways to cut spending but that it still faced "a two-year gap of $5.4 billion." 

On May 12, Mamdani told reporters that his office had found a way to plug that hole:

"Today, after three more months of painstaking work, I am proud to announce that we have closed the gap entirely down to zero," Mamdani said (around the 1:20 mark).

Later, he said he had appointed "chief savings officers" in each city agency to identify ways to "eliminate waste." These "CSOs" had managed to find $1.77 billion in savings. 

A large portion of the budget came in the form of aid from New York state. The announcement said: 

Thanks to Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, the City secured an additional $4 billion in state support and actions to help stabilize the budget. That includes $352 million in direct aid, $3.2 billion in state authorizations — including pension liability restructuring and class size flexibility mentioned above — and $500 million in new revenue through a pied-à-terre tax on second homes valued above $5 million.

(Hochul announced the so-called "pied-à-terre" tax — a tax on secondary homes valued at more than $5 million in New York City — in support of Mamdani's initiative.)

Another large portion of the budget came from delaying payments to pension funds for city employees. The budget summary read (Page 28):

The City also expects State authorization to restructure unfunded pension liabilities, without impacting retiree benefits, through a short extension in the amortization schedule that will result in $650 million in savings the current fiscal year, and $1.6 billion in fiscal year 2027. The authorization is subject to approval by the boards of trustees of each of the City's five public employee pension systems. 

This plan delays payments to pension funds, essentially leaving it for future administrations to deal with. First Deputy Mayor Dean Fuleihan said that the "all five funds are about 86% fully funded" (at 37:40). 

"We're still paying over $8.7 billion in FY 2027 for pensions," Fuleihan said, adding, "What we are doing is to pay a level payment every single year through 2037 to get to the 100%."

In addition, Mamdani is seeking to scrap the Unincorporated Business Tax credit for 24,000 high earners in the city, which the budget summary said would save "$68 million, $69 million, $71 million, and $74 million in fiscal years 2027 through 2030."

Lastly, Mamdani's administration still needed state approval to delay a plan to shrink class sizes by hiring more teachers. The plan would save $500 million. While Mamdani's team did not say how long the delay would be, in March 2026 state Sen. John Liu — who shaped the measure to cap class size — told Chalkbeat, a news outlet focused on education, that he would be open to a two-year delay. We have reached out to the Mamdani administration to inquire how long a delay it is seeking and we will update this report if we receive a response. 

Per city rules, the mayor and council must agree on a budget by June 30. 

For further reading, Snopes debunked a claim that Mamdani was responsible for a fare increase on New York City public transit.