New York Mayor Zohran Mamdani is ordering city agencies to identify 2.5 percent in “savings” over the next two fiscal years and beyond. To facilitate these reductions in spending growth, he launched a voluntary “Workforce Savings and Efficiency Survey” last week inviting city employees to “identify opportunities to reduce waste, improve efficiency and make government work better.”
The mayor deserves praise for seeking to control spending. But asking agency officials and rank-and-file workers to find savings in their own budgets—even such modest ones—is a naïve approach. The responsibility for balancing the budget ultimately rests with the mayor. To do so, he should impose a hiring freeze of non-uniformed officers, require agencies to make cuts that force better prioritization of resources, and eliminate unnecessary positions through innovation and modernization.
Mamdani is calling for these savings—despite declaring just three months ago that the city is “on firm financial ground”—because he knows that problems lie ahead. The Office of Management and Budget predicts a $6.4 billion shortfall for fiscal year 2028. Comptroller Mark Levine puts the gap at $8.8 billion. Mamdani won’t be able to delay hard decisions through one-time measures and other maneuvers, a luxury he enjoyed with the most recent budget.
Past mayors have imposed budget cuts, called Programs to Eliminate the Gap (PEGs), in response to anticipated budget shortfalls, often because of external shocks like a recession, 9/11, or the 2008 financial meltdown. Wary of the baggage attached to the austerity label, Mamdani has branded his exercise as a “savings” plan.
The problem with politely asking agencies to identify areas for reduced spending is that it encourages them to cry wolf. Agency leaders have strong incentives to resist cuts by offering illusory savings and portraying any reduction as catastrophic service disruptions.
Commissioners will often threaten to slash their most essential, high-value functions to scare the mayor into backing off. Former Mayor Eric Adams’s proposed PEGs—many of which were eventually canceled—were accompanied by threats of ending Sunday library hours and providing fewer litter baskets.
PEGs are therefore not foolproof. They succeed only when the mayor is genuinely committed to cutting spending. According to a 2024 Citizens Budget Commission analysis, only 16.7 percent of Adams’s 5 percent PEG savings in 2023 were attributable to efficiency, while roughly 42.3 percent came from re-estimating program costs downward and eliminating vacant positions that stood little chance of being filled.
Asking employees to identify savings is also counterproductive because about 95 percent of the workforce is unionized. Employees will recommend what the unions want, including less outsourcing. The dramatic expansion of the municipal workforce under former Mayor Bill de Blasio’s administration demonstrates that a larger government does not necessarily improve quality of life for residents.
Mamdani may have an ulterior motive behind his saving exercise: justifying tax increases. If agencies can show that they enacted cuts, the mayor can make the case to Governor Kathy Hochul and the state legislature that he has done everything possible to reduce expenditures—even if that’s not really true. Starting early adds credibility to the story.
Mamdani’s current fiscal year 2027 budget showed many supposed savings to be speculative. For example, he presumes that ineligible dependents can be identified and removed from city health plans. Some savings will come from purported reductions in overtime, despite not knowing the circumstances that may make it necessary, such as heightened public-safety threats requiring more police shifts.
A non-uniformed hiring freeze, by contrast, is a surer way to reduce expenditure, as there’s little ambiguity over whether someone is on the payroll or not. Exiting employees would not be replaced, forcing Mamdani and his commissioners to preserve service levels with gradually fewer staff by improving productivity.
The city’s history shows that aggressive PEGs and hiring freezes push agencies to discover productivity improvements and efficiencies that they would otherwise have little reason to pursue. In the face of the 2008 financial crisis and Great Recession, Mayor Michael Bloomberg cut the public workforce from 311,018 in 2008 to 293,550 in 2012, largely through attrition. At the same time, he digitalized city processes and service provision to reduce costs.
In the long run, Mamdani likewise needs to innovate, which invariably involves eliminating low-value city programs. He does appear interested in making government work better, at least as far as his Charter Revision Commission reform proposals suggest. The reforms include five charter amendments now bound for the November ballot to simplify and speed up permitting, procurement, and approvals to use public space.
Ultimately, Mamdani must wrestle with the reality that “sewer socialism” rests uncomfortably alongside public-sector unionization. City employment remains far too unproductive and driven by seniority, and union work rules make it extraordinarily difficult for any mayor to manage the workforce. Mamdani will need the political will and political capital to eliminate roles and press the unions for work-rule flexibility to boost productivity.
The mayor’s forthcoming labor negotiations are therefore important not only for their fiscal impact on future budgets, but also because they will reveal whether he will fight to wrest enough control from the unions to transform the city as he desires. The largest labor contract, with DC 37, expires in November, and the labor reserve has enough funding only for raises of 1.25 percent.
When Mamdani kicked off his first budget with dire predictions in January, he said that his savings plan sought “not only to protect and deliver public goods, but also public excellence, public efficiency.” Now he has to fight for them.
Here is how to cut the Department of Education, the largest agency that accounts for 1/3 of the city's budget https://www.city-journal.org/article/mamdani-new-york-education-budget