Fulfilling the Promise of Opportunity
NYC Budget Watch: FY27 Adopted Budget
Last updated 8/20/2026
FPWA aims to ensure our members and the wider nonprofit community are informed about New York City’s budget negotiations and their potential impact on individuals, families and communities.
At FPWA, we envision a world in which everyone lives in economic security and recognize the role of public funding in ensuring a robust and thriving city. Today, 62 percent of New Yorkers cannot afford their household costs while setting aside modest savings for the future. As the federal government dismantles key parts of the social safety net, New York faces growing pressure to protect the programs and services that help individuals and families meet their needs.
The city budget reflects choices about how public resources are raised, allocated, and used to respond to these growing needs. With this context in mind, FPWA analyzes how the 2027 Fiscal Year (FY27) Adopted Budget advances economic security for New Yorkers, and where significant gaps and fiscal risks remain.
Before July 1, the start of the City’s fiscal year, the mayor and City Council must agree on and adopt a balanced budget. The Adopted Budget establishes planned spending for the fiscal year, although funding levels can change as revenues and expenditures are updated. Specifically, the mayor can approve up to five percent increases or decreases in line-item spending or $50,000 (whichever is greater) without additional City Council approval.
The next major update will come through the Modified Budget (or November Plan), when the City assesses actual spending and revenues and makes needed adjustments.
Note: Unless otherwise specified, comparisons in this analysis are between FY27 Adopted Budget funding and FY26 spending.
Executive Summary
On June 30th, the City Council and the mayor adopted a $125.8 billion balanced budget, closing out a particularly challenging budget season marked by a large projected deficit, significant federal uncertainty, and a 57-day-late New York State budget.
Despite these headwinds, the FY27 Adopted Budget makes several meaningful investments and reverses some of the cuts proposed in the Executive Budget. Between the Executive and Adopted budgets, $1.1 billion in funding was added for City agencies. This increase restored funding for institutions including community colleges and the Commission on Human Rights, and increased investments in the Department of Consumer and Worker Protection, CityFHEPs, and Fair Fares. The City and State also advanced new revenue measures that included a pied-à-terre tax designed to raise revenue more progressively.
These gains exist alongside substantial fiscal risks. Federal cuts to health coverage, housing assistance, child care, and other programs are reducing resources while New Yorkers face rising costs. State investments offset some of these losses but do not fully replace them. Meanwhile, the City balanced the FY27 budget in part by shifting resources across fiscal years and delaying costs, including classroom size reductions and pension plan payments.
These choices make the budget more stable in the immediate term without resolving the City’s longer-term fiscal challenges, adding fiscal precarity to budgetary outyears. Less than a month after adoption, the mayor announced a 2.5 percent agency savings target for the current fiscal year, underscoring the continued pressure on city finances.
These risks are particularly consequential because they are concentrated in the areas that place the greatest strain on household budgets. The True Cost of Living (TCOL) shows that housing, health care, and child care are among New Yorkers’ largest costs. Continued underinvestment in these areas threatens to widen already significant gaps between what households have and what they need to achieve economic security.
The following analysis will break down New York City’s FY27 budget, where it made advancements for New Yorkers’ economic security, and where key fiscal risks remain as we look ahead to FY28.
Revenue
FY27 Economic Context
New York enters FY27 with widespread economic insecurity. 62 percent of New Yorkers cannot cover their household costs while setting aside even modest savings for the future. For the average family with children experiencing economic insecurity, the gap between available resources and these costs is more than $39,000 annually. This gap between need and resources is apparent in the 674,000 New Yorkers who lack health insurance, the 1.4 million New Yorkers struggling with food insecurity, and the 350,000 New Yorkers without a permanent home.
Even so, public investments already substantially reduce economic insecurity. Government support lowers New York City’s economic insecurity rate by approximately five percentage points; without these investments, the TCOL rate would reach 67 percent. However, as families face increasing costs, that support is being reduced.
Health care illustrates the scale of the challenge. Federal changes to subsidies, work requirements, and eligibility are expected to cause 1.8 million New Yorkers to lose access to their current publicly supported health coverage.
These losses come as health care costs are rising. For families with children, average health care costs were $27,489 in 2022, and they have continued to increase since then. In the most recent year alone, health care costs have increased by 7.1 percent.
These increases are exacerbated by the federal cuts that are decreasing insurance pools and impacting Medicaid billing and State marketplace subsidies. As a result of these changes, insurance companies have requested large rate increases, amounting to an average 20.7 percent increase for individual plans and 25.7 percent increase for small business plans. All these changes are compounding into a vicious cycle that means more families are struggling to cover basic costs. As households divert spending towards healthcare, less money is available for food, child care, housing, or spending on other necessities at local businesses.
These pressures come on top of an already slowing economy. The Office of Management and Budget (OMB) projects economic growth to decline from 2.9 percent to 1.9 percent between FY26 and FY27. At the same time, personal income growth is projected to accelerate from 4.4 percent to 5.8 percent, driven in part by financial-market returns. This divergence underscores an increasingly uneven economy: aggregate income can continue to grow as it is captured by the wealthiest, even as most workers experience slower wage growth (projected to slow from 3.5 percent to 2.5 percent) and elevated unemployment.
For the City, this combination of rising household need, declining federal support, and slowing economic growth creates a difficult fiscal environment in which the demand for support is increasing faster than the resources available to meet it.
Managing the Federal Fiscal Crunch
Federal policy changes are creating significant stress not only for individuals and households, but also for the government. Medicaid and Essential Plan changes alone are expected to reduce federal funding flowing to New York State by as much as $12.5 billion. New York City expects approximately $2.5 billion less in direct federal funding in FY27 than in the previous year.
State support helps offset some of these losses but does not fully replace them. The State increased unrestricted funding to the City, extended several mandates, and made historic investments in child care programs. However, State grants flowing to the City are only about 1 percent higher than in the previous year.
The State made notable cuts to social service grants, including Safety Net funding (a $94.2 million reduction, or 13.1%), which complements Federal Temporary Assistance for Needy Families (TANF), and Preventive Services (a $24.8 million reduction, or 5%), which provide a wide array of services for families and children in foster care.
As a result, the City is relying more heavily on locally generated revenue. City revenues are projected to increase by $3.2 billion in FY27, supported by continued Wall Street returns. However, these revenues are exposed to market volatility, making them an uncertain foundation for addressing growing and recurring need.
To strengthen the City’s tax base, the City worked with the State to pass a number of new taxes, including the pied-à-terre tax and business tax adjustments, designed to bring in revenue while also building equity into our tax system.
Pied-À-Terre Surcharge Raises Revenue More Equitably
The largest increase to the City’s FY27 tax base comes from the new pied-à-terre surcharge that is projected to generate $500 million annually. The surcharge helped the City close its FY27 budget gap without resorting to the general property tax increase considered during the preliminary budget process.
Unlike an across-the-board property tax increase, which would have exacerbated existing property tax inequities, particularly for Black homeowners, the surcharge targets high-value homes that are neither primary residences nor rented for at least six months of the year. It applies to one- to three-family homes valued above $5 million and to eligible condominiums and co-ops valued above $1 million, simultaneously targeting undertaxed asset wealth while also incentivizing needed increases to the housing supply.
This is an important win for advocates who have fought for this progressive tax for over a decade, and follows the example of cities like Vancouver, Singapore, and Paris which have approved similar surcharges on vacant or secondary homes. In Vancouver, these taxes have been proven successful in simultaneously reducing vacant units and raising revenues for the city.
This final structure is more expansive than the proposal initially announced by the governor and mayor in their April agreement. After a comptroller analysis found that the original proposal would cover fewer properties than anticipated, eligibility was expanded to lower-value condominiums and co-ops, and rates were differentiated by property type.
This structure serves both revenue generation and equity goals. Luxury co-ops and condominiums are often significantly undervalued under the City’s current tax system. Moreover, the pied-à-terre surcharge will not be subject to assessment caps, which limit the annual growth of tax assessments, meaning that the tax would be flexible to grow with market housing rates. Higher surcharge rates on these properties begin to address that inequity while generating additional resources from high-value, non-primary residences.
To further prevent tax inequities, the Department of Finance is now finalizing administrative details to ensure that owners cannot evade the tax by using LLCs and trusts to “rent” to themselves.
Notably, the differentiated rate structure is set to expire after two years. Unless further action is taken, higher rates will expire and some properties will no longer be taxed, creating a potential revenue cliff. This temporary surcharge therefore represents meaningful progress but is not a substitute for broader and permanent reforms to the City’s inequitable property tax system. In the future, the City should find ways to correct structural inequities in valuation, rather than relying on surcharge corrections in post.
Reducing Tax Credits for Businesses
The City also took steps to preserve and expand its business tax revenue, receiving State approval to decouple from federal tax provisions that reduce City revenue and reducing tax credits for white-collar businesses. This includes provisions affecting qualified production property and research and development expenses.
Moreover, the City is reducing credits for businesses subject to the Unincorporated Business Tax (UBT). As previously reported by FPWA, the UBT applies a preferential four percent flat tax to a range of unincorporated businesses, with the majority of the tax revenue coming from white-collar businesses. Reducing credits will limit refunds that primarily benefit higher-income filers and bring effective tax rates closer to standard business corporation tax rates.
The City projected that, despite slowing business, the economy will remain robust and revised estimates up by $300 million between the Executive and Adopted budgets.
Despite New Projections, Fiscal Risks Remain
Despite the new taxes and stronger revenue projection, the City’s fiscal capacity remains constrained.
Taxes on general property ($1.8 billion, or 5%), sales ($487 million, or 4.4%), and income ($411 million, or 1.3%) are all projected to grow in FY27, but more slowly than in FY26.
In particular, the City anticipates slowing personal income tax from its historically volatile—and controversial—Pass-Through Entity Tax, or PTET. Created in 2023 as a way to reduce federal tax liability, similar to the now-limited state and local tax (SALT) deduction, PTET primarily benefits high-income New Yorkers, mainly those with more than $1 million in annual income. While the tax is not supposed to reduce local tax liabilities, it is administratively complex and highly volatile, making it harder for the City to predict personal income receipts.
Facing these revenue risks, the City balanced FY27 partially by shifting resources across fiscal years and restructuring future obligations. The City used prior-year resources to prepay future expenses, drew down its collective bargaining reserve, and re-amortized pension obligations over an additional five years, freeing approximately $1.64 billion for FY27.
These actions create near-term budget capacity but do not resolve the City’s structural fiscal challenges. In several cases, they shift costs into future years, when projected budget gaps are already widening. The City’s FY27 budget may therefore be balanced on paper while leaving significant obligations for future budgets to address.
Expenditures
Despite the additional funding negotiated between the Executive and Adopted budgets, several areas central to New Yorkers’ economic security remain below FY26 spending levels.
Despite the additional funding negotiated between the Executive and Adopted budgets, several areas central to New Yorkers’ economic security remain below FY26 spending levels.
Agencies that help New Yorkers most with the cost of living, including health, housing, and child care, face funding reductions from current-year spending. While some reductions reflect revised cost estimates or vacancies—changes that do not directly translate into service cuts—others represent meaningful losses to vital programs and agencies. To better understand the impacts on New Yorkers, FPWA breaks down budgetary impacts by cost and resource buckets.
Impact on Housing
The FY27 budget makes meaningful advances in tenant protections and rental assistance, but federal losses and continued underinvestment in public housing limit those gains.
New York City enters FY27 with stronger tenant protections thanks to ongoing tenant advocacy. The first-ever two-year rent freeze was passed by the Rent Guidelines Board in June, while the State expanded income eligibility for the Senior Citizen Rent Increase Exemption (SCRIE) and Disability Rent Increase Exemption (DRIE) programs from $50,000 to $75,000. However, while significant, the new income threshold is still below the TCOL for disabled and senior New Yorkers. The State also extended and improved the J-51 tax-abatement program to support capital improvements and repairs in eligible rent-regulated buildings, protecting landlords against rising building costs during the rent freeze.
To further protect against rent burdens, the City expanded funding for its housing voucher program, CityFHEPS. The Adopted Budget adds $284 million for the program, of which $175 million goes to funding the expansion of voucher eligibility. The new agreement largely advances the CityFHEPs expansion passed by the City Council in 2023, making all tenants under 50 percent area median who are facing eviction eligible for vouchers while also preventing Section 8 and other federally funded voucher programs from being converted into City-funded vouchers. All told, an additional 30,000 New Yorkers may be served by CityFHEPs in FY27.
But the expansion is limited by its funding structure. Eligibility in FY27 will expand only to the extent that funding is available, and funding falls to $125 million in FY28 before disappearing from later financial plan years. Without additional investments, the City’s ability to sustain the expansion will diminish over time.
Effective voucher programs, like CityFHEPs, require strong enforcement of tenant protections. The Adopted Budget restores funding for the Commission on Human Rights, which enforces protections against source-of-income discrimination, and increases funding to Right to Council, ensuring that low-income tenants have housing court representation. The State budget also added legal protections for City tenants, creating new criminal penalties for landlords who engage in systemic harassment of tenants of rent-regulated housing across multiple buildings or who are repeat offenders of existing anti-harassment laws. These investments can help ensure that rental assistance translates into meaningful housing access.
At the same time, federal losses substantially offset the City’s new investments. Reductions in federally funded Section 8 and Emergency Housing Vouchers leave non-CityFHEPs rental subsidies $172.6 million below FY26 levels.
Recently passed federal legislation, the 21st Century ROAD to Housing Act, may create opportunities for the City to access additional Section 8 funding and private financing by transitioning some publicly owned units. But such conversions carry long-term tradeoffs because they reduce direct public control over affordable housing assets. Having a large portfolio of publicly owned units provides the City with greater authority over the use and price of rental units and, while repair needs have added liability to the City’s balance sheet, having a large portfolio of buildings can also act as a fiscal asset for the City, helping it diversify and strengthen the financial position of units. The transition of units from public ownership to private may alleviate some City liability but has the potential for long-term destabilizing impacts on New York’s public housing stock.
The FY27 budget exacerbates this deteriorating financial position by decreasing funding to the NYC Housing Authority (NYCHA) operations by $107 million.
Taken together, the City’s housing investments provide meaningful support to tenants, but they are not sufficient to overcome federal funding losses, declining NYCHA support, and the broader shortage of affordable housing.
Impact on Health
Federal cuts to health coverage will place substantial new pressure of New York City’s health system in FY27 and millions are expected to lose health coverage.
The State protected children’s access to healthcare regardless of immigration status and secured an extension of federal funding for the Essential Plan. However, it failed to provide funding to maintain the COVID-era expansion that provided zero-premium coverage to people with incomes up to 250 percent of the federal poverty level. Approximately 230,000 New York City residents were projected to lose zero-premium coverage as a result. While data is still being analyzed, nearly one-third of people expected to lose coverage Statewide were able to stay enrolled in the Essential Plan because their income plummeted by thousands of dollars, as economic insecurity rises.
The City is unable to step in to stem the remaining losses as its Medicaid spending is capped by State law. At the same time, New York City’s hospital system, H+H, will receive $555 million less under the Adopted Budget than FY26, a 24 percent reduction. With approximately 65 percent of its one million adult patients on Medicaid or uninsured, H+H is particularly exposed to the consequences of federal coverage losses.
The City also reduced funding for programs that bridge the gaps created by insurance losses. Universal home visiting, which provides no-cost, in-home support from nurses, doulas, and community health workers to expectant and new parents, faces a reduction of nearly 10 percent. Funding for the Ryan White program, which provides zero-cost health and social support coverage for low-income people with HIV, also falls under the Adopted Budget (a $24.1 million reduction, or 21.5%).
Mental health funding presents a mixed picture. The City restored funding for B-HEARD, a program that sends health professionals rather than police officers to some 911 calls involving people experiencing mental health crises. However, funding for voluntary mental health programs declined by nearly the same amount, leaving overall investments in mental health interventions unchanged.
As federal coverage is reduced, the City’s public health system and community-based programs will be asked to serve more people with fewer resources.
Impact on Child Care & K-12
Despite historic investments in child care and early childhood education—families’ third-largest cost bucket—much of that funding is being used to replace lost federal support or defer future obligations.
Child Care
Child care faces some of the largest direct federal funding losses in the FY27 budget. New York City expects to lose approximately $890 million from the Child Care and Development Block Grant (CCDBG), a reduction of more than 60 percent from the previous year. This follows last year’s elimination of the federal Head Start grant to New York City, which had provided more than $70 million annually to support early childhood education for children from low-income families regardless of citizenship status. Together, these federal actions represent nearly $1 billion in lost targeted child care funding.
While the State made historic investments in early childhood education, with $1.1 billion dollars in grants to New York City enabling the expansion of the universal pre-kindergarten (UPK) program and establishment of a 2-K pilot, much of that new funding is offset by the $1 billion in federal cuts.
The same dynamic applies to child care vouchers. The State made up to $475 million in matching funds available for New York City child care vouchers, but federal CCDBG cuts and a voucher waitlist of approximately 25,000 children mean demand continues to exceed available resources.
The City also failed to allocate sufficient funding to claim the State’s full match, only allocating roughly $385 million, leaving an additional $90 million of State funds on the table. When UPK and voucher funding are considered alongside federal losses, the City’s total budgeted investment in child care is $450 million below FY26 funding, despite additional programmatic demands.
K-12 Education
The City is simultaneously shouldering State K-12 education funding losses.
Last year’s changes to the State school aid formula reduced the funding New York City would otherwise have received by more than $314 million. This year’s State budget only partially restored those reductions by increasing funding weights for students experiencing homelessness and English language learners, bringing approximately $168 million back to the City.
At the same time, the City continues to face growing costs associated with education mandates. The City projected $1.5 billion in savings from special education due process cases by relying less on private-school replacements. While the City has provided an additional $38.9 million investment in public special education, it remains unclear whether those savings can be achieved without affecting service quality or access.
The City will also delay the full implementation of State-mandated class size reductions until FY29. This reduces immediate spending pressure but shifts a significant obligation onto future budgets.
Taken together, FY27 investments reduce deeper reductions in child care and education, but they do not close existing gaps. In several cases, new resources are replacing lost funding or postponing costs rather than expanding the overall level of support available to families.
Impact on Food Security
Food insecurity remains widespread as food prices rise and federal nutrition assistance is reduced. Approximately 1.4 million New Yorkers currently face food insecurity, and recent federal changes to the Supplemental Nutrition Assistance Program (SNAP) eligibility are estimated to have caused an estimated 43,200 New York City residents to lose benefits.
The City increased several food-support investments in FY27. The budget provided capital funds for the first-of-their-kind City-run grocery stores, as well as increased funding for SNAP ($5.8 million, or 7.3%), groceries-to-go ($515,000, or 5.4%), centers and home delivered meals ($26 million, or 7.3%) and Community Food Connect (CFC), the City’s food pantry program ($5.8 million, or 7.3%).
These investments will help respond to growing need, but funding remains $15 million below levels sought by advocates. This gap is particularly concerning as monthly food pantry visits are up 84 percent since the start of the pandemic.
Impact on Transportation
The City made significant investments in transportation. The Adopted Budget expands eligibility to Fair Fares, the City’s half-price transit program, from 150 percent to 200 percent of the federal poverty level. The change makes approximately 1.3 million additional New Yorkers eligible and could save participating riders up to $900 a year.
While a meaningful affordability investment, the City failed to establish automatic enrollment for people already participating in other income-tested programs. Without automatic enrollment, many eligible New Yorkers may never receive the benefit, limiting the program’s reach.
Meanwhile, the Mayor’s free bus program remains unfunded, leaving the Fair Fares expansion as the City’s primary transit-affordability investment in FY27.
Impact on Cash
As federal support declines, the family share of government resources will shrink dramatically. The FY27 budget makes several important investments intended to protect household resources and strengthen longer-term economic security.
Most significantly, the City baselined its historically underbudgeted cash assistance program, adding $337 million and bringing total funding to roughly $1.6 billion. This will ensure that funding remains available for those that apply and are eligible for the program.
Moreover, the Adopted Budget reversed cuts proposed in the Executive Budget to the Department of Consumer and Worker Protection (DCWP), restoring $54 million or 66 percent of the agency’s budget. The restoration protects the agency’s ability to enforce worker and consumer protections, including implementation of the City’s new “click-to-cancel” rules targeting junk fees and subscription traps, which the mayor’s office estimates will save New Yorkers up to $162.5 million per year.
Furthermore, the City expanded the NYC Kids Rise program, increasing the contribution to 529 college savings accounts from $100 to $1,000 for every public school kindergartener. This is a meaningful long-term investment in children’s economic opportunities.
These gains are offset by reductions elsewhere. The City eliminated its Guaranteed Income Pilot Program and reduced funding for the Home Energy Assistance Program (a $24 million reduction, or 38%) that helps residents with lower incomes pay their utility bills. The reduction in Home Energy Assistance Program funding is likely due to projected reductions to energy costs, as the US remains in a tentative truce with Iran, but these costs are liable to fluctuate and could indicate underbudgeting.
Impact on Human Services Organizations
Overall, the gaps in funding for child care, housing, and related programs will impact human service provider financing. On top of high costs and grant losses, community-based organizations continue to face payment delays from the City that strain organizations’ ability to pay workers and provide services. As recently as last year, nine out of 10 human service contracts were registered for payment late. Rather than invest in administrative improvements, the FY27 budget reduces funding to the Mayor’s Office of Contract Services (a $3.2 million reduction, or 7.4%), potentially worsening payment issues and compounding wage issues for a sector that is predominantly women of color.
These financing challenges are inseparable from the sector’s workforce crisis. The State provided human service organizations with a 2.7 percent cost-of-living adjustment, below the approximate 3.4 percent inflation rate in FY26. The State also did not fund the $500 million sought to improve wages for nonprofit child care workers, whose pay remains substantially below other public sector workers and below what New Yorkers need to reach the City’s True Cost of Living.
The City did make some progress by allocating $40 million to raise funding by 2 percent for community-based organizations and 5 percent for family child care providers. But these increases remain far below the investment required to achieve salary parity. According to Center for New York City Affairs (CNYCA) estimates, the cost of providing salary parity between public sector and non-profit child care workers would cost between $965 million and $1.35 billion.
Wage pressures extend beyond the nonprofit sector. In the Adopted Budget, the City only includes funding for a 1.25% cost-of-living increase to public employee salaries. Simultaneously, the City drew down its reserve for collective bargaining by $300 million. In doing so, the City does not ensure funding for adequate wage increases for employees, despite upcoming labor negotiations this summer with DC37, the City’ largest public sector employee union, and others. The City will need to find additional funding to finance wage increases, as each additional percentage increase to the City’s wage rate could conservatively cost the City $550-600 M.
At the same time, the City has reduced investments that help workers increase their earning potential. While the City restored community college funding following proposed cuts in the Executive Budget, Small Business Services funding was slashed (a $86 million reduction, or 24%) and workforce credentialing programs, like Advance and Earn, have been eliminated (a $25 million reduction, or 100%).
Taken together, these choices narrow the pathways available for New Yorkers to increase earnings.
Key Takeaways
The FY27 Adopted Budget is materially stronger than the Executive Budget. Negotiations restored some proposed cuts, expanded programs including CityFHEPs and Fair Fares, strengthened civil rights and consumer and worker protections, and secured new progressive revenue streams. These investments matter and demonstrate that policy choices can protect New Yorkers even in a difficult fiscal environment.
However, the Adopted Budget does not resolve the larger structural challenges facing the City. Federal cuts are removing billions of dollars from programs that support health care, housing, child care, and food security. State investments replace some, but not all, of those resources. Additionally, the City has balanced FY27 partly by shifting costs into outyears rather than fully funding long-term obligations.
As a result, the areas most important to New Yorkers’ economic security remain among those facing the greatest fiscal pressure. Housing, health care, and child care costs already exceed the resources available to many households, and reductions in public support risk widening these gaps.
Looking to FY28, advocates will need to focus not only on restoring individual programs but on growing revenues to meet the scale of investment needed for New Yorkers. This will require using the full power of New York—tapping on the State as a grantor, a tax authority, and a political entity capable of working with the Federal level—to generate the resources needed to support New Yorkers.
