NYC Faces Credit Downgrades Amid Budget Woes

Moody's, Fitch, and Kroll issue negative outlooks for the city's finances under Mayor Mamdani's spending plans.

Mar. 23, 2026 at 12:35am

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Major credit rating agencies have recently taken steps indicating concerns over the financial health of New York City, including Moody's changing its outlook from 'neutral' to 'negative'. This comes as the city faces a projected $5.4 billion revenue shortfall, the largest since the Great Recession, despite strong economic indicators. Mayor Mamdani's proposed $127 billion spending plan and reliance on the city's reserves have drawn criticism from Comptroller Levine, who has warned of structural budget imbalances.

Why it matters

Credit downgrades can make it more expensive for the city to borrow money and fund critical infrastructure and services. This comes at a time when Mayor Mamdani is pushing for increased social spending, raising concerns about the city's long-term fiscal sustainability.

The details

Moody's, Fitch Ratings, and Kroll Bond Rating Agency have all issued negative outlooks for New York City's financial standing, citing the city's heavy reliance on its 'rainy day fund' and other reserves to cover a growing budget gap. While the agencies have not issued immediate downgrades, they warn that the city's plan to pull $2.6 billion from reserves, up from an original $1.2 billion, is unsustainable.

  • Moody's recently changed its outlook from 'neutral' to 'negative'.
  • Fitch Ratings and Kroll Bond Rating Agency also issued negative guidance for the city's financial outlook.

The players

Zohran Mamdani

The current mayor of New York City, who has proposed a $127 billion spending plan that has drawn criticism for its potential to further stress the city's finances.

Mark D. Levine

The New York City Comptroller, who has spoken against the progressive orthodoxy, noting the city is spending more than it brings in and creating structural budget imbalances.

Kathy Hochul

The Governor of New York, whom Mayor Mamdani has called on to raise income taxes on corporations and wealthy New Yorkers.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.