Governor Kathy Hochul and Mayor Eric Adams are planning their budgets as if the 2024 election didn’t bring major changes. However, Donald Trump’s victory and the likelihood of Republicans controlling Congress could cause big challenges, especially for New Yorkers who rely on government programs like education, healthcare, and housing inspections.
Right now, both leaders are making the most of better-than-expected tax revenues. Hochul announced the state’s deficit for 2025 is down to $1 billion, while Adams raised the city’s budget to $115 billion, adding funds for more police officers, rental assistance, and cash-assistance programs.
While these moves address immediate needs, federal funding cuts promised by Trump and Republicans could cause serious problems later. The city’s budget depends on $8 billion in federal aid, supporting critical programs like schools, housing inspections, and childcare. The state relies even more on federal money — $85 billion annually — mainly for Medicaid and education.
If federal cuts happen, both the state and city could face tough choices. For example, the state might ask the city to pay more for Medicaid, adding billions to its costs. Other areas like the City University of New York (CUNY), the Metropolitan Transportation Authority (MTA), and public housing also depend heavily on federal dollars.
Some officials hope Republicans won’t follow through on big cuts, as happened during Trump’s first term. However, local leaders like Rep. Ritchie Torres admit that reducing federal funds to New York seems likely.
State Sen. Liz Krueger is calling for bold action, such as raising taxes on the wealthy and large corporations, to fill funding gaps and support critical needs like affordable housing and public transit.
One potential relief could come from lifting the $10,000 cap on federal deductions for state and local taxes, saving New Yorkers billions annually. However, this change might not fully solve the problem, as it primarily helps upper-middle-income taxpayers and not the wealthiest residents or the city budget overall.
City Comptroller Brad Lander warns that neither the city nor state has enough resources to fully cover federal funding cuts. Without federal support, New York may face tough economic decisions in the coming years.