Mamdani the manager should work hard to find savings in the sprawling New York City budget.
Out of the campaign frying pan, into the budgeting fire. Mayor-elect Zohran Mamdani faces the immediate challenge of preparing a Preliminary Budget for the coming fiscal year (July 2026-June 2027) and a Financial Plan for the next four fiscal years by Feb. 1. Although that deadline may be extended by a few weeks, the new mayor has little time to get his budget team in place and specify his fiscal policies.
This is a complex and sprawling task involving more than $115 billion in annual operating expenses of more than two dozen agencies and over 350,000 employees. Mamdani has made the task even more daunting by making some pricey campaign promises — including making buses free ($600 million-$800 million a year) and providing universal childcare (around $6 billion a year). He wants to pay for these and other priorities by raising taxes on New York City’s top earners and corporations, but that could well be a dead letter in Albany, which controls Gotham’s taxes. So if he wants to advance his promises and keep the budget in balance, as required by law, then he’s got his work cut out.
Budgeting is where, to channel Mario Cuomo, the poetry of campaigning runs smack up against the prose of governing. Our new mayor should show all the people of the city, including the one million who did not vote for him, how he will finance his ambitious priorities while continuing to provide and enhance the basic services on which residents and businesses depend. In order to find the billions he wants to fund his priorities and to convince New Yorkers, including those with high incomes (who provide almost half of the City’s personal income tax revenue), that their tax dollars are well spent, the new mayor’s budget must show that he is serious about making City government more efficient and effective.
Mamdani understands this, at least intellectually. He told Derek Thompson, “As someone who is very passionate about public goods, I think that we on the left have to be equally passionate about public excellence … how we can make government more effective, how we can actually deliver on the very ideas that we are so passionate about. Any example of public inefficiency is an opportunity for the argument to be made against the very existence of the public sector. And so to truly make the case time and time again that local government has a role in providing that which is necessary to live a dignified life, you have to ensure that every example of government's attempt to do so is one that is actually successful.”
But theory and practice differ.
Mayor Eric Adams’ latest Financial Plan projects a deficit for the next fiscal year of $5 billion, accumulating over four years to $17 billion, which means even without a single new plan, something would have to give. Making matters more complicated, these projections do not sufficiently take into account the precarious condition of the State budget and the impact of potentially draconian federal funding reductions threatened by Congress and President Donald Trump.
Which is to say, even if — and it’s a big if — Mamdani is able to get the necessary State legislative and gubernatorial approval for the $10 billion in annual tax increases he seeks, City agency expenses must be revamped boldly and dramatically. Not only will this save money, but it will show that a mayor espousing a social democratic philosophy can provide practical as well as aspirational leadership. The imperative of such a revamp becomes even more pressing if Mamdani’s preferred tax increases don’t materialize.
Mamdani has said that he would save money by cutting contracts and consultants at the Department of Education. But this is only a drop in the bucket. There are many additional and larger savings and service improvements to be had. It requires rigorously examining the budget, setting aside ideology and being willing to be a tough negotiator with public sector unions and other vested interests.
What do they include?
Revamping New York City Housing Authority rules and practices, including narrow job definitions, slow work order processing and generous overtime that delay repairs and boost operating costs above those of rent-stabilized units, as well as stronger enforcement of rent and fee collection and eligibility requirements. NYCHA collects less than 70% of the rent it is owed, loses approximately $100 million a year, has more than 6,000 vacant apartments and takes more than 400 days to complete repairs.
Changing the culture of the Department of Correction, which, despite a daily cost of over $1,500 per inmate, leads to violence, mistreatment of inmates and the denial of medical care. The mayor should support the remediation manager, soon to be appointed by the federal court, in overhauling staff training, work practices and supervision. Civilianizing positions and cutting back on overtime could save hundreds of millions. The current plan for closing Rikers requires substantial capital investments but should lead to longer-term operational savings and more humane conditions.
Cutting the high cost — about $750 per ton — of collecting and disposing of recycling and residential trash. Collection costs are high due to decades-old sanitation district boundaries that determine garbage truck routes, outdated “productivity bonuses” for staff on two-man trucks that were adopted 40 years ago and excess collection frequencies in neighborhoods that generate relatively little recycling material. Disposal costs are high due to expensive contracts, totaling more than half a billion dollars a year, for the export of waste to distant landfills in other states, necessitated by the premature, politically motivated closing of the Fresh Kills landfill. Exporting should be phased out in favor of reliance on waste-to-energy plants in the region.
Dealing with the vast bureaucracy of the Department of Education, with more than 140,000 employees serving more than 900,000 students in more than 1,400 school buildings, plus 274 charter schools receiving public support. DOE’s average cost per pupil is about $40,000 a year, well above national norms, but its scores on national performance tests are middling. Moreover, the schools suffer extensive de facto racial segregation. A national academic study found New York to have the most segregated schools in the country.
To improve student performance and revive flagging public support for the system requires strategies opposed by the city’s teachers union: (1) Shifting the basis of teacher compensation from rewarding seniority to a more flexible system that rewards performance and teaching in high-need schools and fields. (2) Deploying teachers more effectively so that fewer teachers have roles outside the classroom. (3) District lines and individual school zones should be revamped, reducing segregation and allowing the DOE to better allocate students to existing schools with excess capacity.
Despite complaints about crowded schools and an unfunded State mandate to reduce class size, the DOE should already have enough space for its students. However, successive administrations have spent billions of dollars building new schools rather than facing the political pressure associated with rezoning. Mamdani can promote integration, reallocate substantial capital resources to other needs and become a national leader of school reform by pursuing new strategies.
Getting control over excessive overtime expenses in the uniformed agencies, notably $1 billion or more at the NYPD alone. Protests, subway personnel surges, parades, United Nations annual meetings and many other events now covered with overtime are not unanticipated and could be built into officers’ schedules. Unanticipated overtime often arises when an officer makes an arrest near the end of a shift and must spend unscheduled time processing the arrest at the station and in court. In this situation, overtime can be avoided with flexible weekly schedules that offset hours worked on one long day with fewer hours on other days to avoid exceeding 40 hours per week.
Since half of all City expenditures are for personnel, and since 90% of those personnel are unionized, this and many other reforms will require collective bargaining. The police officers’ contract has already expired, and the largest civilian union contract expires within Mamdani’s first year in office. There is an opportunity to achieve significant savings early in the new administration.
There are also many savings to be achieved in areas that would not directly affect public employees but have their own strong constituencies. For example, ending business tax incentives like the ineffective Industrial and Commercial Abatement Program (approximately $600 million annually) and limiting property tax exemptions for universities and medical centers to exclude property such as housing that is not directly used for service delivery (approximately $150 million annually).
These reforms have been resisted in the past, but perhaps, just as it took a strongly anti-communist President Nixon to recognize Communist China, the City needs a strongly pro-union and Democratic Socialist mayor to gain cooperation from the public employee union leadership as well as the City Council to make the government upon which all New Yorkers depend perform better and at less cost.