By James Fanelli

New York City Mayor Zohran Mamdani said Wednesday that taxes from Wall Street bonuses and aggressive municipal savings would reduce the budget shortfall the city faces by $5 billion over the next two years.

Mamdani told state lawmakers at a hearing in Albany that his administration now predicts the budget gap to be $7 billion for the current fiscal year and the next, down from $12 billion. The new fiscal forecast was based on updated estimates of tax revenue flowing from Wall Street, which is expected to have a strong 2026.

"We've made some meaningful progress towards shrinking the gap. However, New York City is still placed on a ledge," Mamdani said.

The Democratic socialist who made affordability the focus of his campaign must present a balanced preliminary budget next week. The initial financial assessment kicks off months of wrangling with the city council over spending, with the two sides finalizing a budget by June.

Last month, Mamdani sounded the alarm on the city's financial outlook, saying it faced a $2 billion deficit in its current fiscal year and a $10 billion hole next year. He pointed blame at his predecessor, Mayor Eric Adams, whom he accused of underbudgeting, a practice that masks true spending needs and uses potential surpluses to cover costs.

A spokesman for Adams said the former mayor inherited longstanding budget gaps and fiscal pressures when he took office.

Mamdani was in Albany on Wednesday on what is referred to as "Tin Cup Day," when local New York officials make funding requests. He told lawmakers that the city deserves additional state funding because of the large share of tax revenue it generates for the state of New York. The mayor also pushed them to raise the corporate tax rate and approve a 2% personal-income-tax increase on the most affluent New Yorkers.

"Someone earning a million dollars a year can afford to contribute $20,000 more," he said.

Budget analysts say Mamdani will likely need the tax hikes to fund the most ambitious aspects of his affordability agenda, including new affordable housing, a free bus service and the expansion of universal child care.

Write to James Fanelli at james.fanelli@wsj.com

(END) Dow Jones Newswires

February 11, 2026 12:49 ET (17:49 GMT)

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