NYC gets huge credit downgrade under Mamdani's poor mayoralty

What? No goofy smile?

New York City's Democratic Socialist Mayor Zohran Mamdani has proposed jacking up the city's budget in a big way.

Moody's downgraded New York City's financial outlook from "stable" to "negative" on Wednesday, pointing to a projected $5.4 billion budget deficit.

That gaping hole was laid out by Comrade Mamdani during a preliminary budget hearing back in February. The mayor wants to balloon the city's budget from $115 billion under his predecessor to $127 billion for the upcoming fiscal year, as millionaires flee the city.

A spokesperson for Mamdani pushed back, calling Moody's move premature. The rep pointed out that state lawmakers are eyeing roughly $5 billion in extra funding for the city.

Moody's statement did nod to the possibility that the proposed state aid "could have a stabilizing effect over time," but the ratings agency was quick to add that it would only count "if enacted."

If that Albany cash doesn't come through, Mamdani has floated hiking property taxes by 9.5 percent and dipping $980 million into the city's rainy-day fund. Moody's warned that pulling from reserves would "limit financial flexibility, especially if economic growth slows sharply or an outright downturn materializes."

New York City Comptroller Mark Levine described the potential tax increase and reserve raid as having "dire consequences." He called the Moody's outlook shift a major red flag.

"Moody's decision to review New York City's outlook to negative is a sobering wakeup call about the fiscal challenges ahead for us," Levine said.

This downgrade lands after a year of record Wall Street revenues and a solid local economy. Moody's kept the city's bond rating unchanged for now, even as it flipped the outlook. A full downgrade would almost certainly drive up New York's borrowing costs by flashing greater credit risks to investors.

The agency cautioned that a deeper rating cut could come if budget gaps swell to 10 percent of city revenue.

Mamdani has pinned the deficits on what he calls mismanagement during former Mayor Eric Adams's tenure, insisting prior budgets shortchanged cash assistance, rental support, and shelter services. In other words, he refuses to accept any responsibility, which doesn't bode well for future change in his socialist tactics.

The Adams years did, however, see the city take in more than 210,000 migrants, with housing and support costs estimated at roughly $4.3 billion. Those bills are still hammering the budget, but Mamdani's plans for dealing with the budget will only make things worse, as people with wealth wisely flee.

At the same time, Mamdani is pushing ahead with several expensive items from his campaign playbook, like expanded childcare and transit programs. Per estimates cited by the New York Post, his push to extend childcare to two-year-olds could jump from $73 million in year one to $425 million by 2027. 

The so called "free and fast buses" plan might run the city as much as $800 million.

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