Mamdani Tells Agencies to Slash 2.5% Ahead of $6 Billion Gap Next Year

Mayor Zohran Mamdani has directed every city agency to identify 2.5% in savings ahead of an estimated $6 billion budget hole next year, launching his first full cost-cutting initiative weeks after he and the City Council inked this year’s budget. 

The administration said it would survey city workers for inefficiencies across the sprawling city government. Some $1.77 billion in potential savings have already been identified this year by “chief savings officers” the mayor has appointed to each city agency. 

Mamdani in January ordered city workers to find 1.5% savings for the 2026 fiscal year, which ended July 1. Now he’s upped the ante for the 2027 and 2028 fiscal years, seeking 2.5%.

“By setting these ambitious savings targets early, we’re giving agencies ample time to thoughtfully review their operations, eliminate inefficiencies and strengthen the important work they do without compromising service,” Mamdani said in the press release. 

City Hall did not respond to queries about whether the cost-cutting would impact the city’s headcount or services. 

Hard Choices

A similar effort by Mayor Eric Adams — that sought to shave as much as 5% from city spending — saved $2.7 billion in fiscal year 2025 and $1.7 billion in the 2026 fiscal year.

Mamdani’s 2.5% is “a good target that is ambitious, but it’s not wildly so,” said Andrew Perry of the progressive Fiscal Policy Institute. 

Assuming no agency receives an exemption, Perry estimated the targets would produce roughly $2.5 billion to $3 billion in savings for the next fiscal year. City Hall has not responded to questions about whether some agencies are exempt from Mamdani’s budget axe.

Perry said repeated savings exercises by past administrations have identified much of the low-hanging fruit, leaving Mamdani’s administration with harder choices. 

Deficit ‘Large and Growing’

In a statement, Andrew Rein, president of the fiscally conservative Citizens Budget Commission, said the mayor is right to get an early start on finding savings. “The City’s budget gaps are large and growing,” he said. “It will need these savings and even more to balance next year’s budget and become fiscally sound.”  

Councilmember Phil Wong, a Queens Democrat who sits on the finance committee, said this target comes as a surprise. “It’s odd to hear about new savings targets just weeks after we were told the FY27 budget was balanced and everything was on solid financial footing,” Wong said. “The shell game has to end.”

His colleague, Councilmember Frank Morano, a Staten Island Republican who voted against the budget, called the targets a “positive first step,” but questioned why the city is spending $53 million for a new, outreach-focused Office of Mass Engagement when “New Yorkers have been told every agency needs to tighten its belt.”

Morano called for the Department of Veterans’ Services to be exempt from the savings, calling it already among the smallest and most underfunded agencies in city government.

Henry Garrido, executive director of DC 37, the city’s biggest municipal union, said his members are preparing their own list of recommendations. “City workers know how City government works better than any consultants,” he said in a statement.

In June, as the mayor and the City Council agreed on a $125.8 billion spending plan, city Comptroller Mark Levine warned of a significant budget gap for the 2028 fiscal year. “We will face that gap without the option of the many one-shot measures that we used up this year,” he said in a press release. 

On Tuesday, Levine praised Mamdani’s cost-cutting directive. “These kinds of measures are never easy,” he said in a social media post, describing the coming budget hole as “at least $6 billion.”

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