Comptroller warns of Trump risks to New York City federal funding

New York City could lose billions of federal funding when President-elect Donald Trump takes office, according to the city comptroller’s office.

Two reports from Comptroller Brad Lander compared the incoming president’s proposals with the federal funding benefitting the city. The details are specific to New York, but many of the threats affect cities and states nationwide. 

Federal non-emergency revenue accounts for $8 billion of New York City’s fiscal year 2025 budget, one report said — around 7% of the budget. 

The reports did not analyze the likelihood of different funding cuts. Lander said he wanted to avoid “political guesses” and focus on “the magnitude of the risk.”

“Even if we were to just lose 10% of that,” Lander said in an interview with The Bond Buyer, “that’s still $700 million to a billion dollars, which is significant resources to have to come up with.”

When broadening the scope to include state and federal programs that directly support the city, the report found more than $100 billion of federal funds that flow to New York City each year.

The report covered everything from Social Security payments to New Yorkers to Federal Emergency Management Agency funding.

Lander’s office compiled “threats” to programs from Trump’s campaign priorities, actions in his first term, proposals from congressional Republicans, and the Heritage Foundation’s Project 2025.

The report also noted Trump’s history of targeting Democratic Party-supporting states and cities. 

New York, as the nation’s largest city, receives more federal funding than others for transportation, hospitals and housing, but the rest of the nation’s cities face similar funding threats, Lander said. 

“The vast majority of cities and states around the country rely substantially on federal resources for education, for housing, for social services, for health,” Lander said. 

The scale of the threat, Lander said, is similar to the hits to state governments in the Great Recession or the beginning of the COVID-19 pandemic. In most situations that put such a drastic strain on state governments, Lander said, the federal government steps in to assist states; here, it could be causing the problem. 

Federal funding breakdown

Within the city’s municipal budget, Landers’ reports say, the biggest recipient of federal funds is the Department of Education, which gets $1.965 billion annually. The Department of Social Services gets $1.88 billion, and the Administration for Children’s Services receives $1.578 billion of federal funds — roughly half of its budget. 

The federal government also supports New York’s capital budget. The city’s five-year Capital Commitment Plan includes $2.56 billion in federal funding, the reports say. 

Federal subsidies make up more than a quarter of the New York City Housing Authority’s 2024 operating budget, and NYCHA is set to receive $4.5 billion in federal capital funding through 2028 — that’s more than half of its total capital budget, according to the reports. Those subsidies are provided through congressional appropriations, the reports said.

“The head of HUD in Trump’s first term, Ben Carson, proposed eliminating HUD’s Public Housing Capital Fund for infrastructure upgrades and reducing its Operating Funds for apartment-level repairs and day-to-day maintenance by 37%,” the report said. 

NYCHA’s Section 8 program receives a federal subsidy of nearly $2 billion. 

“The first Trump administration proposed rule changes for vouchers limiting eligibility as well as a $5 billion (or 26%) reduction to the Section 8 budget, which would have resulted in a reduction of over 9,000 housing vouchers for New York City,” the report said. “Project 2025 would impose term limits on receipt of housing vouchers and increase work requirements.”

Infrastructure spending, a key priority of the Biden Administration, could well look drastically different under Trump.

New York Mayor Eric Adams set up a federal infrastructure funding task force, which secured more than $2.4 billion since 2020. Trump could deprioritize New York’s applications to those grant programs or eliminate the programs altogether. 

State agencies serving the city, like the MTA and the Port Authority of New York and New Jersey, rely on billions of dollars from the federal government each year. The MTA’s 2025-2029 capital plan expects $14 billion of federal funding. 

Huge infrastructure projects in the city are in need of federal approval and funding, according to the report, such as an overhaul of the Brooklyn Queens Expressway and the MTA’s Interborough Express. 

In Trump’s first term, he stalled New York infrastructure projects like the Gateway program and congestion pricing. 

Many policies Trump touted on the campaign trail could increase the cost of construction, which would effectively shrink the capital budgets of agencies like the MTA and NYCHA.

Undocumented immigrants, who Trump has promised to deport en masse, are a major source of labor for the construction industry.

His proposed tariffs would target building materials like steel. 

Bloomberg News

Lander also specifically highlighted the threat to disaster relief funding. 

The president declares an emergency and determines whether federal funds are necessary. In Trump’s first term, he suggested withholding FEMA funding from Democratic states and cities that were hit by natural disasters. New York is still benefiting from disaster mitigation funds it received after Hurricane Sandy, the report noted. 

Another perhaps surprising wild card: Trump pledged in the campaign to eliminate or reduce the cap on the federal income tax deduction for state and local taxes.

The cap was created in Trump’s first term as part of the .

Eliminating the SALT cap would save $19 billion for taxpayers in New York state, Lander said, and improve the city’s competitiveness against other jurisdictions. Raising or ending the cap would hurt demand for New York tax-exempt bonds, one report said.

What can New York do?

New York has already taken steps to protect its finances from Trump’s policies, Lander said. After Trump suggested he would prevent congestion pricing tolls from taking effect, Gov. Kathy Hochul approved the program so it would begin before inauguration day. 

There are some other areas where the city or state could work around federal pressure. If the Trump administration withholds aid for public hospitals that provide abortion care, Lander said, the New York City Health and Hospitals would lose $1 billion of funding. 

“One thing that would be worth exploring is to say, should we consider creating a city-financed affiliate to the Health and Hospitals Corporation that would provide abortion care on city funding, and might that preserve the billion dollars,” Lander said. 

Many of the threats outlined in Lander’s report are unlikely to pass; some require congressional approval and some would be challenged in court.

The fate of other policies will be tied up in the debate over the 2017 tax provisions, which expire this year if Congress doesn’t act, and the federal farm bill, which is also up for renewal, one report said.

As it stands now without any changes in federal funding, the comptroller’s office projects municipal budget gaps of around $6 billion in the coming years. Those gaps won’t be difficult to close, Lander said, but they don’t leave room to fill gaps left by federal funding. 

Meanwhile, agencies like NYCHA and the MTA might have to adjust their borrowing habits. A sudden loss of revenue could change how the market views their credit, and they’ll already be saddled with their current debt service costs, Lander said. 

“There’s no doubt that if significant federal funding cuts are implemented, that could jeopardize or lead people to rethink how much additional debt they can afford,” Lander said. 

If the SALT cap is lifted, the city might raise taxes to capture some of the income New Yorkers would save, Lander said. But for situations like natural disasters, the city has very little recourse. 

“Unfortunately, there’s no way to prepare for the totality of what is at risk here,” Lander said.