A second credit rating agency has raised serious concerns over the Big Apple’s massive budget plan under Mayor Zohran Mamdani that calls for draining the city’s savings accounts.
S&P Global Rating — one of the “Big Three” firms in the credit rating sector — warned Monday that it may downgrade the city’s financial health if Mamdani balances his $127 billion proposed budget by pulling from the city’s reserves meant for dire circumstances.
“We believe the city has previously demonstrated resilience to weather fiscal challenges without deterioration of its credit quality,” the agency wrote in its report, first reported by Politico on Friday.
“That said, downside risk to our rating on New York City (GO debt: AA/Stable) could materialize if we believe two conditions persist: the city relies on nonrecurring budget solutions that fail to reduce the structural mismatch between recurring revenue and expenditures; and the city’s reserves erode to a point where its capacity to absorb an economic downturn or a federal funding shock is materially diminished.”
A second credit rating agency has raised serious concerns over the Big Apple’s massive budget plan under Mayor Zohran Mamdani that calls for draining the city’s savings accounts.
The news comes after another credit rating agency, Moody’s, warned on Wednesday that it was eyeing downgrading the city’s credit rating to negative from stable.
A downgraded bond rating would send borrowing costs spiking, creating a serious financial issue for the city.
S&P, which, like Moody’s, still maintained the city’s AA rating, also said it may not be smart for the city to rely on Albany for a bailout, which Mamdani has repeatedly said is something that’s in the works.
The state has its own future budgetary issues as federal funding cuts loom, according to the agency.
“Therefore, a potential constraint for the city is the state’s fiscal capacity and appetite to provide additional one-time or long-term resource commitments approving new revenue measures that replace federal dollars.”
At odds is Mamdani’s proposal to draw $2.6 billion from savings and trusts, leaving the city vulnerable to any sort of economic slowing or downturn.
The young socialist mayor proposed his massive $127 billion budget last month, with no savings or cost-cutting spelled out, while calling for property taxes to be hiked by nearly 10%.
New York City Mayor Zohran Mamdani speaks to city workers during a Ramadan iftar meal at the Museum of the City of New York on March 12, 2026. APHe’s used the budget to put pressure on Gov. Kathy Hochul to increase taxes on the highest earners and corporations. The governor has repeatedly refused to raise taxes as she seeks re-election in November.
She reiterated that position Friday during an unrelated press conference — and said the warnings from credit rating agencies should spur Mamdani and the City Council to find savings in order to balance the city’s books.
“I’m sure that the specter of a downgrade certainly focuses the minds of the City Council members on what they need to do to look at the spending overall,” Hochul told reporters.
New York Governor Kathy Hochul announces her transit savings projections under the auto insurance reform proposal from inside an upper Manhattan MTA bus depot on March 13, 2026. Matthew McDermott for NY PostThe Democratic governor has said Albany will pick up the tab for around $1.5 billion in city spending for two years — on top of billions of dollars in new childcare funding — as part of state budget negotiations, which should wrap well before the council has to finalize its own spending plan.
“They have time. They have months to prepare the next budget. We have already provided substantial assistance to the city. $1.5 billion right off the bat,” Hochul said.
State budget talks, Mamdani’s most likely avenue to get the approvals he needs for large-scale taxes or other cash from Albany, are set to begin in earnest between Hochul and Democrats in the Legislature next week.
— Additional reporting by Ella Morrison and Vaughn Golden
