In his preliminary FY 2027 budget briefing, Mayor Zohran Mamdani describes how his administration addressed the inherited deficit: "our aggressive savings plan, daily incorporation of updated revenue and bonus estimates, and our deployment of in-year reserves in tandem with more than a billion dollars in additional aid from Governor Hochul have lowered that deficit from an initial $12 billion to $5.4 billion." He repeatedly distinguishes **"in-year reserves"** from the separate Rainy Day Fund and Retiree Health Benefit Trust reserves, and says to fully close the remaining $5.4 billion gap without more aid, the city would have to follow a second path that "requires us to raid our reserves," involving a "withdrawal of $980 million from our city's rainy day fund in fiscal year 2026 and $229 million from the Retiree Health Benefit Trust in fiscal year 2027"—a scenario he frames as undesirable and not yet enacted.

Coverage of Mayor Mamdani’s first preliminary budget explains that he proposed a contingent plan to use emergency reserves if state aid and other revenues fell short: "In his first preliminary budget, Mayor Zohran Mamdani on Tuesday presented the specter of raising property taxes and dipping into New York City reserves to close a $7 billion budget gap if Gov. Kathy Hochul doesn't raise taxes on wealthy individuals or corporations." The article notes that under this backup scenario "He would draw down $980 million from the city's Rainy Day Fund and another $229 million from the Retiree Health Benefits Fund," but presents this as a last-resort option rather than a step already taken.

City & State reports that the New York City Council’s own analysis challenged the need to use the Rainy Day Fund in Mayor Mamdani’s preliminary plan: "In presenting his preliminary budget, Mayor Zohran Mamdani proposed drawing down nearly $1 billion from the Rainy Day Fund to balance the budget for this current fiscal year, which runs through June 30." The article then notes that Speaker Julie Menin said the council’s revenue forecast "shows that the city does not need to tap the city’s reserves in the Revenue Stabilization Fund, known as the Rainy Day Fund" and quotes her: "The Rainy Day Fund was created to help protect New Yorkers during a true fiscal emergency, and has never been tapped… Our analysis suggests we are not in such an emergency position today."

Reporting on the executive budget, the article notes: "New York City Mayor Zohran Mamdani released a city budget on Tuesday that completely eliminates what he has described as a $12 billion deficit left over from the Eric Adams administration, the largest gap since the Great Recession." It emphasizes his claim that the gap was closed without austerity: "The budget does not include the property tax increases Mamdani threatened earlier in the year or any new taxes on ordinary New Yorkers, and the mayor’s office says there are no cuts to city services for those in need." On reserves, the piece indicates the administration is adding to them rather than using them: "The proposed budget also restores $2 billion to the city’s rainy day fund and adds $5.2 billion to the Retiree Health Benefit Trust." The article attributes much of the closure to state support and savings: "Earlier on Tuesday, Mamdani and Gov. Kathy Hochul announced a total of $8 billion in state assistance for New York City over the next two fiscal years… Another significant chunk of the deficit is reduced by making city government more efficient."

In February 2026, City & State reported that the administration used some current‑year reserves as part of an interim reduction in the projected gap: "New York City’s $12 billion two-year budget gap – presented by Mamdani just two weeks ago – has been significantly revised down to $7 billion. That’s due to an updated economic forecast including Wall Street bonuses, tapping in-year reserves and what Mamdani described as an ‘aggressive posture on savings’ in the city’s own budget." Budget Director Sherif Soliman is quoted on how the gap shrinkage was achieved: "As for the rest of the money the city found in the last two weeks, $3 billion came from an increased revenue forecast … and the remainder is from this year’s reserves, Soliman said at a press gaggle after Mamdani’s testimony." The piece notes that it was not clear how much of the overall reserves would ultimately be drawn down: "It’s also unclear how much the city will draw down from in-year reserves, which is a typical practice. Using in-year reserves is generally not a problem as long as there is a ‘sufficient cushion’ left for fiscal year 2027, the Citizens Budget Commission’s Ana Champeny told City & State."

In the recorded preliminary budget presentation, Mayor Mamdani lays out two paths for closing the remaining deficit. Around the 10‑minute mark he says that without additional help, "we would have to raise property taxes. We would also be forced to raid our reserves," specifying a "withdrawal of 980 million from our city's rainy day fund in fiscal year 2026 and 229 million from the Retiree Health Benefits Trust" as part of this second path. Later he stresses that thanks to state aid and other measures, the deficit has been reduced and "we are now going to use every single tool at our disposal" to avoid going beyond "responsible use of in‑year savings" and into the reserve‑raiding path.

In a video message posted for executive budget season, Mamdani states: "New York, it's executive budget season, and I'm proud to announce that our city's budget is fully balanced." He describes the inherited situation and the size of the original gap: "We inherited a 12 billion budget deficit. We are speaking about a fiscal crisis at the scale greater than the Great Recession." He then asserts that the deficit has been eliminated: "After months of painstaking work, that deficit is now zero. Our city is now on firm financial ground." On the method, he points to revenues and savings: "We achieved this in two major ways. Increasing revenue and support from Albany and cutting waste and finding savings here in New York City." The video does not mention using or drawing down the city’s long‑term emergency reserves; instead, it emphasizes new tax revenue on the rich and state assistance.

Reason describes how "New York City’s budget has been balanced, boasted Mayor Zohran Mamdani," after the city "was expecting a $12 billion budget deficit." The article says the administration credited the result to cost savings and state aid but argues that "one of the largest 'savings' items is not a saving at all. It is a delay in paying the city’s public pension debt." Citing city budget documents, Reason notes that the budget credits "$1.64 billion in savings to 'restructuring unfunded pension liability'" and explains that "the city plans to cut crucial contributions to pay down its $27 billion in pension debt" by extending the amortization period by five years. The piece stresses that the administration's own slides say the restructuring "has no impact on retirees and their benefits or current employees and their future benefits" while critics characterize the move as a budget gimmick that "will reduce immediate pension debt payments and lead to higher payments in the future."

In a local TV segment, CBS News New York reports that "New York City Mayor Zohran Mamdani unveiled a new budget that taxes the rich, forgoes a property tax hike, and depends on the generosity of Gov. Kathy Hochul to fill a budget gap Mamdani called historic." The reporter notes that the budget seeks savings from city voucher programs and other efficiencies and that state actions are expected to provide more than $500 million in savings. The segment highlights Mamdani's claim that the budget is balanced and includes new investments, while emphasizing that he "is not touching the city’s emergency reserves" as part of the plan.

New York City’s Charter requires that the city adopt a balanced budget each fiscal year; technically, the "administration" (mayor and supporting agencies) proposes and negotiates budgets, but the City Council adopts them, and the mayor cannot unilaterally "eliminate" a deficit outside this process. Typically, inherited projected gaps are closed through a combination of spending cuts, revenue measures, and sometimes the use of reserves, but the legal standard focuses on the adopted budget being balanced on paper for each fiscal year rather than on a multi‑year "deficit" in the way that term is used for federal budgets.