New Limits Proposed for NYC’s Rainy Day Fund

City Comptroller Mark Levin has put forward new regulations aimed at restricting contributions to New York City’s “Rainy Day” fund. This proposal may thwart Mayor Zoran Mamdani’s strategy to tap into this fund to address a substantial $5.4 billion budget deficit.

In a report released on Thursday, Levin suggested several new guidelines for the city’s revenue stabilization fund. Among the key recommendations is a requirement for the fund to maintain at least 10% of the city’s tax revenue. Additionally, the proposal includes mandatory deposits and forbids mayors from making withdrawals unless there’s a “compelling financial need.”

“New York City cannot take a stopgap approach in preparing for difficult times,” said Levin. “You need a well-structured rainy day fund with clear savings goals, consistent rules for deposits and withdrawals, and strong safeguards against political interference.”

Mamdani has indicated that he might use half of the rainy day fund and raise property taxes by nearly 10% to cover the anticipated budget gap, unless Governor Kathy Hochul and the Legislature agree to increase taxes on the wealthy. Despite Mamdani’s actions, Hochul appears determined to maintain her stance.

The fund in question, which was established in 2020, currently lacks formal guidelines for deposits and withdrawals, which is not the case for similar municipal funds elsewhere.

Former City Auditor Brad Lander, who has been active on the advisory panel regarding these guidelines, also called for standardized rules governing deposits and withdrawals.

The Citizens’ Budget Committee has expressed its support for formalizing these fund rules and praised Levin’s efforts. “We have long advocated for the essential elements identified by the Comptroller as necessary for a well-structured fund,” said Lane, welcoming the chance to collaborate with city officials to bolster the financial safety net for New Yorkers.

A source familiar with the situation indicated that the City Council is considering the proposal. Meanwhile, a spokesperson for Chairman Menin noted that there has been clear opposition to using the Rainy Day Fund for anything other than genuine emergencies. The council is said to be working on a strategy to identify responsible savings to potentially avoid any need to draw from the fund.

As of yet, the mayor’s office has not commented on these developments.