Moody's Lowers NYC's Credit Outlook To Negative Due To Budget Gaps

The credit outlook doesn't change the city's actual rating but comes after the first day of City Council budget hearings.

Published on Mar. 11, 2026

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Moody's Ratings has lowered its credit outlook for New York City to negative due to 'sizable and persistent' budget gaps. The credit outlook doesn't change the city's actual rating but comes after the first day of City Council budget hearings. New York City Comptroller Mark Levine called the credit outlook update a "sobering wake-up call." Mayor Zohran Mamdani has warned of an estimated $5.8 billion deficit and is weighing tax increases to close the gap.

Why it matters

A negative credit outlook from Moody's could make it more expensive for New York City to borrow money and fund essential services and infrastructure. This comes as the city is already facing significant budget challenges due to the economic impacts of the COVID-19 pandemic.

The details

Moody's cited the 'sizable and persistent projected budget gaps that signal underlying structural imbalance and reduced financial flexibility' in New York City, despite the city's still favorable economic conditions. Comptroller Mark Levine said the city is spending more than it is bringing in, and the preliminary budget only achieves balance by drawing down reserves. Mayor Mamdani is considering raising income taxes on high-earners or increasing the city's property tax rate to address the estimated $5.8 billion deficit.

  • On March 11, 2026, Moody's Ratings lowered New York City's credit outlook to negative.
  • The credit outlook update came after the first day of New York City Council budget hearings.

The players

Moody's Ratings

A credit rating agency that lowered New York City's credit outlook to negative.

Mark Levine

The New York City Comptroller who called the credit outlook update a "sobering wake-up call."

Zohran Mamdani

The Mayor of New York City who has warned of an estimated $5.8 billion deficit and is weighing tax increases to close the gap.

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What they’re saying

“The negative outlook reflects the emergence of sizable and persistent projected budget gaps that signal underlying structural imbalance and reduced financial flexibility, despite New York City's still favorable economic conditions.”

— Moody's Ratings (Bloomberg.com)

“Moody's negative outlook should sharpen our focus on the task ahead: building a budget based on realistic revenue projections, ensuring that spending growth remains sustainable, securing fair funding from Albany, and strengthening City reserves ahead of potential economic risks next year.”

— Mark Levine, New York City Comptroller (Patch.com)

What’s next

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The takeaway

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