The City’s Rainy Day Fund, formally known as the Revenue Stabilization Fund, is a financial reserve intended to help New York City maintain services and fiscal stability during economic downturns. This page covers CBC’s work on the fund’s target size, mandatory deposit requirements, withdrawal restrictions, legislative proposals for City Charter amendments, and the adequacy of current reserve levels.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
New Yorkers should vote No on Question 5, which would require the City to develop a Rainy Day Fund policy but not ensure that the policy would strengthen the fund so that it protects New Yorkers from harm during a recession or severe emergency.
The City should adopt stronger deposit and withdrawal rules for the Rainy Day Fund.
The City's Rainy Day Fund policy should require deposits when revenues are strong, grow the Rainy Day Fund to 16 percent of tax revenues, and restrict withdrawals to recessions and severe emergencies.
New Yorkers should vote NO on Ballot Question 5 that would amend the City Charter's Rainy Day Fund provision.
The City should develop a robust Rainy Day Fund policy without any Charter change.
The City should require deposits to the Rainy Day Fund when revenues are strong by defining a growth threshold above which specific deposits are mandated.
The City should restrict Rainy Day Fund withdrawals to a recession or severe, time-limited emergency, and define criteria for a recession and the unexpected temporary spending increases or revenue decreases that characterize a severe emergency.
The City should grow the Rainy Day Fund to 16 percent of tax revenues to cover two years of recessionary tax revenue losses.
Key Data
Writing in October 2026, the CBCNY reported that the City had made only one deposit into its Rainy Day Fund, leaving the balance at $2 billion when it should have nearly $14 billion to cover two years of a recession.
During the October 2026 charter debates, the CBCNY analyzed a proposed amendment that would set a Rainy Day Fund target of 12% of tax revenues, but warned it could essentially cap the fund at 6% by counting other non-Rainy Day Fund reserves toward that target.
In a July 2026 memorandum, the CBCNY explained that current State law withdrawal rules allow 50% of the Rainy Day Fund to be used for any reason, leaving the remaining balance vulnerable to being spent based on any mayor's definition of a compelling fiscal need.
An analysis from November 2025 pointed out that the City failed to make any deposits into the fund despite strong tax revenue growth of 6.2% in fiscal year 2022 and 8.3% in fiscal year 2025.
As of March 2025, the CBCNY reported that the City holds $5 billion in the Retiree Health Benefits Trust that has been used as a de facto reserve in the past, which risks sapping funds meant for future retiree health benefits.
New York City's Rainy Day Fund currently holds only $2 billion, far short of the $14 billion needed to weather a two-year recession, because current rules do not mandate deposits even during periods of strong revenue growth. Voters are urged to reject Ballot Question 5, which would codify the weak status quo, and instead support policies that require deposits during strong economic times, grow the fund to 16 percent of tax revenues, and restrict withdrawals to actual emergencies.
Recommendations related to City Rainy Day Fund
New Yorkers should vote No on Question 5, which would require the City to develop a Rainy Day Fund policy but not ensure that the policy would strengthen the fund so that it protects New Yorkers from harm during a recession or severe emergency.
The City should adopt stronger deposit and withdrawal rules for the Rainy Day Fund.
The City's Rainy Day Fund policy should require deposits when revenues are strong, grow the Rainy Day Fund to 16 percent of tax revenues, and restrict withdrawals to recessions and severe emergencies.
Key Data
$2 Billion
— The current balance of the City's Rainy Day Fund, representing only one deposit made despite years of strong revenue growth.
$14 Billion
— The estimated amount the City's Rainy Day Fund should hold to cover two years of a recession.
12%
— The target percentage of tax revenues that Ballot Question 5 would establish for the Rainy Day Fund.
6%
— The level at which Ballot Question 5 could essentially cap the Rainy Day Fund by counting non-Rainy Day Fund reserves toward the target.
16%
— The percentage of tax revenues to which the Rainy Day Fund should be grown to ensure adequate protection.
New York City's Rainy Day Fund currently holds only $2 billion instead of the $14 billion needed to weather a two-year recession, yet the proposed Ballot Question 5 would enshrine this inadequate status quo by failing to mandate deposits and potentially capping the fund at just 6% of tax revenues. To truly protect public services, the City must reject this amendment and instead establish a robust policy that mandates deposits during strong economic times, restricts withdrawals to actual recessions, and grows the fund to 16% of tax revenues.
Recommendations related to City Rainy Day Fund
New Yorkers should vote NO on Ballot Question 5 that would amend the City Charter's Rainy Day Fund provision.
The City should develop a robust Rainy Day Fund policy without any Charter change.
The City should require deposits to the Rainy Day Fund when revenues are strong by defining a growth threshold above which specific deposits are mandated.
The City should restrict Rainy Day Fund withdrawals to a recession or severe, time-limited emergency, and define criteria for a recession and the unexpected temporary spending increases or revenue decreases that characterize a severe emergency.
The City should grow the Rainy Day Fund to 16 percent of tax revenues to cover two years of recessionary tax revenue losses.
Key Data
$2 Billion
— The current Rainy Day Fund balance after the City made only one deposit.
$14 Billion
— The estimated amount the Rainy Day Fund should have to cover two years of a recession.
6%
— The percentage of tax revenues at which the proposed Charter change could essentially cap the Rainy Day Fund.
16%
— The recommended target size of the Rainy Day Fund relative to tax revenues to cover two years of recessionary tax revenue losses.
Although COGE prioritized the rainy day fund, the Commission missed a critical opportunity to establish a strong framework protecting New Yorkers from service cuts and layoffs during recessions. The administration can still adopt a robust rainy day fund policy that requires deposits during prosperous times and restricts withdrawals to severe emergencies.
Recommendations related to City Rainy Day Fund
The administration should adopt a strong rainy day fund policy that requires adequate deposits during good economic times and permits withdrawals only during a recession or severe emergency.
To ensure New York City's Revenue Stabilization Fund is an effective tool during downturns, the target size should be increased to 16% of tax revenues to cover two years of recessionary losses. Additionally, rules must be strengthened to mandate deposits during strong revenue years and strictly limit withdrawals to recessions or severe emergencies.
Recommendations related to City Rainy Day Fund
In order to be a true rainy day fund that provides resources when New Yorkers need them, the law or policy should limit withdrawals to a recession or severe emergency.
The City should apply the target size only to the Revenue Stabilization Fund.
Since a well-designed rainy day fund smooths out revenues over the economic cycle to protect New Yorkers when times are bad, deposit rules should be based on revenues alone.
The target size of the Revenue Stabilization Fund should be 16 percent—the amount needed to cover two years’ worth of recessionary tax revenue losses.
The City should require the City Comptroller to publish an opinion as to the reasonableness and appropriateness of the Revenue Stabilization Fund implementation policy.
Setting the City’s rainy day fund rules by local law is preferable because it would provide a more deliberative process that is less subject to executive prerogative which may change over time across administrations.
Key Data
16%
— The recommended target size for the Revenue Stabilization Fund to cover two years' worth of recessionary tax revenue losses.
12%
— The proposed target size of tax revenue in the preceding year, which is considered too small based on history.
50%
— The portion of the fund that the proposed amendment would allow to be used for any reason.
1%
— The threshold of city funds for revenue losses or increased expenditures to define a severe emergency for withdrawals.
3%
— The tax revenue growth rate suggested as a deposit trigger to improve the likelihood of fund growth.
$100-billion-plus
— The City's liability for retiree health insurance, which the Retiree Health Benefits Trust is intended to offset.
New York City needs stronger, rules-based guardrails for its Rainy Day Fund to ensure resources are consistently saved during prosperous times and protected for actual emergencies rather than ongoing budget gaps. To achieve this, the city should mandate deposits when tax revenue growth exceeds 3% or inflation, limit annual withdrawals to two-thirds of the fund, and establish a target size of 16% of tax revenues.
Recommendations related to City Rainy Day Fund
The City Charter should include only the basic guardrails—the framework requiring deposits, governing withdrawals, and setting a target size for the Rainy Day Fund.
The City Charter should require the detailed formulas and definitions for the Rainy Day Fund be established in local law, subject to the City Comptroller’s review.
The City Charter should require mandatory formula-driven deposits into the Rainy Day Fund when tax revenue growth exceeds the greater of 3 percent or inflation, leaving the precise formula to law.
Withdrawals from the Rainy Day Fund should be permitted only during a recession, based on economic indicators established in law, or during a temporary emergency that leads to a revenue decrease or expenditure increase exceeding two percent of City funds.
Annual withdrawals should be limited to two-thirds of the Rainy Day Fund, preserving some reserves for the future while providing immediate relief and time for other actions or aid.
The City Charter should establish a Rainy Day Fund target size of 16 percent of tax revenues.
Key Data
3%
— The tax revenue growth threshold above which the City Charter should require mandatory formula-driven deposits.
2%
— The minimum percentage of City funds that a revenue decrease or expenditure increase must exceed during a temporary emergency to permit withdrawals.
two-thirds
— The maximum limit for annual withdrawals from the Rainy Day Fund to preserve reserves for the future.
16%
— The recommended target size of the Rainy Day Fund as a percentage of tax revenues.
one
— The number of voluntary Rainy Day Fund deposits made by the City despite several years of exceptionally strong revenues.
New York City's fiscal plan for 2027 is criticized for being unprepared for a potential economic slowdown or recession, as the Rainy Day Fund is considered far too small. While the General Reserve is being increased by $350 million to provide a buffer, the overall budget relies on one-time savings and cost shifts that leave the city vulnerable to future fiscal stress.
Key Data
$350 million
— The amount by which next year’s General Reserve is being increased to provide a cushion if spending increases or revenues soften.
New York City's current laws governing the Rainy Day Fund are inadequate because they lack clear mandates for deposits, restrictions on withdrawals, and defined target sizes to protect long-term finances. To ensure wise stewardship, the City Charter should be amended to require the Mayor and City Council to enact a local law establishing specific policies for the fund's management.
Recommendations related to City Rainy Day Fund
The Charter should require the Mayor and City Council to enact a local law that details the City’s RDF deposit, withdrawal, and target size policy.
Withdrawals from the Rainy Day Fund should be prohibited until such a law is in effect.
New York City's Revenue Stabilization Fund, or "Rainy Day Fund," currently holds only $2.0 billion, leaving the city dangerously unprepared for the estimated $14.0 billion needed to weather a typical two-year recession. To address this, the city should enact legislation to mandate deposits during economic growth, restrict withdrawals to emergencies, and establish a target fund size of 17.2 percent of tax revenues.
Recommendations related to City Rainy Day Fund
The administration should work with the City Council to pass a Local Law to strengthen the Revenue Stabilization Fund by requiring deposits during economic expansions, restricting withdrawals to a recession or severe emergency, and setting the fund’s target size.
The City should restrict Rainy Day Fund use to a recession and not to temporarily backfill recurring federal cuts.
The administration should set a target size of 17.2 percent of tax revenues for the fund, based on revenue losses following the 2001 and 2008 recessions.
The administration should make mandatory deposits equal to 75 percent of any tax revenue growth above 3 percent.
The administration should grow the fund when revenues are strong, before a downturn makes it too late.
The City should not use the Rainy Day Fund to mitigate federal actions, which would leave New Yorkers, especially those in need, vulnerable to an economic downturn.
The administration should restrict withdrawals to an economic contraction, with the definition and economic metrics defined in law, or a severe emergency with a significant, unanticipated revenue loss or expenditure needs.
Key Data
$2.0 billion
— Current balance of the Revenue Stabilization Fund, leaving the city ill-prepared for the next downturn.
$14.0 billion
— Estimated amount needed over two years to cover tax revenue losses and modest 2 percent annual spending growth.
17.2 percent
— Recommended target size for the Rainy Day Fund based on revenue losses following the 2001 and 2008 recessions.
75 percent
— Mandatory deposit rate of any tax revenue growth above 3 percent.
3 percent
— Threshold of tax revenue growth above which mandatory deposits are required.
$15 billion to $20 billion
— Estimated revenue erased over three years during a typical recession.
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New York City's fiscal year 2026 budget failed to allocate any funds to the Rainy Day Fund, despite the availability of strong tax revenues. Depositing at least $2 billion into this reserve is necessary to ensure service preservation and fiscal stability during future economic downturns.
Recommendations related to City Rainy Day Fund
The City should deposit at least $2 billion into the Rainy Day Fund to help preserve services and stability during the next recession.
Key Data
$0
— The amount added to the Rainy Day Fund in the fiscal year 2026 budget.
$2 billion
— The amount recommended to be deposited into the Rainy Day Fund to help preserve services and stability during the next recession.
The New York City fiscal year 2026 budget agreement fails to adequately prepare for potential economic downturns by neglecting to deposit $3 billion into the Rainy Day Fund to mitigate federal cuts and recession risks. A typical recession could reduce city revenue by $11 billion over two years, a figure that would overwhelm current reserves and leave the city vulnerable.
Recommendations related to City Rainy Day Fund
The City should put aside $3 billion to soften the first blows of federal cuts and protect against a future recession.
Key Data
$3 billion
— The amount the City should put aside to soften the first blows of federal cuts and protect against a future recession.
$11 billion
— The amount of revenue a typical recession would sap over two years, which would swamp the City’s reserves.
$9 billion
— The amount of future budget gaps left by the budget agreement after accounting for underbudgeted expenses.
The 2025 New York City mayoral candidate questionnaire asks contenders to outline their positions on critical fiscal and operational issues, including the management of the city's budget, tax policies, and the implementation of a Rainy Day Fund. Candidates provide their perspectives on how to address city finances, improve government efficiency, and prioritize capital investments.
To ensure long-term fiscal stability, the city must prioritize building up the Rainy Day Fund by establishing mandatory deposits during periods of economic growth. This measure is part of a broader strategy to address bloated spending and ensure the city's financial health remains resilient against future instability.
Recommendations related to City Rainy Day Fund
The next mayor should build up the Rainy Day Fund with mandatory deposits in good times.
New York City's current laws governing the Revenue Stabilization Fund are inadequate because they lack clear mandates for deposits, restrictions on withdrawals, and a defined target size to protect long-term finances. To ensure the fund can effectively cushion the city during economic downturns, the Charter should be revised to require a local law establishing specific rules for target sizes, mandatory deposits, and emergency withdrawal limits.
Recommendations related to City Rainy Day Fund
The Mayor and City Council should enact a local law that details the City’s RSF deposit, withdrawal, and target size policy, with withdrawals from the fund prohibited until such a law is in effect.
The local law should identify a minimum target size for the Rainy Day Fund that is 16 percent or more of tax revenue.
The City should require deposits when tax revenue growth is at least 3 percent, year-over-year, on a common rate and base, and define the formula to be used to calculate the minimum deposit.
The City should limit withdrawals from the Rainy Day Fund to a recession or severe emergency.
The City should limit the first withdrawal following the occurrence of a recession or severe emergency to two-thirds of the balance of the fund.
Key Data
16%
— The minimum target size for the Rainy Day Fund should be at least 16% of tax revenue.
3%
— Mandatory deposits into the Rainy Day Fund should be required when tax revenue growth is at least 3% year-over-year.
2%
— A severe emergency is defined as a temporary event causing an increase in expenditures or decrease in revenues equal to or greater than 2% of total City funds.
two-thirds
— The first withdrawal from the Rainy Day Fund following a recession or severe emergency should be limited to two-thirds of the fund's balance.
New York City faces significant uncertainty regarding federal funding, which comprises $7.4 billion of the fiscal year 2026 preliminary budget. To prepare for potential cuts and economic instability, the City should bolster its financial reserves, including depositing $500 million into the Rainy Day Fund, while restraining spending growth and ending budget gimmickry.
Recommendations related to City Rainy Day Fund
The City should strengthen the Rainy Day Fund by depositing $500 million and reserve the Fund for a short-term emergency like a recession, not for temporary mitigation of recurring federal cuts.
Key Data
$500 million
— The amount the City should deposit to strengthen the Rainy Day Fund to prepare for short-term emergencies like a recession.
New York City's current fiscal strategy relies on depleting surplus funds to cover recurring expenses, leaving the city unprepared for potential federal aid cuts or economic downturns. With only $2.0 billion in the Revenue Stabilization Fund—an amount insufficient to weather an average recession—the city must prioritize fiscal discipline and bolster its reserves to ensure long-term stability.
Recommendations related to City Rainy Day Fund
End the budget gimmickry and present accurate, reasonable estimates of expenses and revenue, as required by the City Charter, in the Fiscal Year 2026 Executive Budget to improve fiscal transparency and stability.
Implement a Program to Eliminate the Gap (PEG) to reduce spending growth by streamlining administrative operations, increasing program efficiency, and scaling back or eliminating programs that deliver the least value to residents to preserve critical services.
Not fund any new or expanded programs in the Executive Budget or during adoption to avoid further straining the city's finances.
Add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts and bolster the city's rainy day reserves.
Key Data
$2.0 billion
— The amount currently held in the Revenue Stabilization Fund, also referred to as the Rainy Day Fund.
$11.0 billion
— The estimated revenue loss over two years during an average recession, highlighting the insufficiency of current reserves.
$5.0 billion
— The amount held in the Retiree Health Benefits Trust, which has been used as a de facto reserve in the past.
$1.5 billion
— The amount in budgetary reserves per year beginning in fiscal year 2026, which is below projected budget gaps.
4.6 percent
— The rate of tax revenue growth since the last deposit to the Revenue Stabilization Fund in fiscal year 2022.
The City Charter should be amended to mandate deposits into the Rainy Day Fund during periods of economic growth and restrict withdrawals to recessions or severe emergencies. These rules would ensure the fund is preserved to protect New Yorkers from dramatic service cuts during economic downturns.
Recommendations related to City Rainy Day Fund
The Charter should require the City to deposit money into its Rainy Day Fund (RDF) when the economy is growing and preserve the fund for its intended purpose—to protect New Yorkers from dramatic cuts during a recession or short-term emergency.
At minimum, the local law should: require mandatory formula-determined deposits; limit withdrawals to a recession or severe emergency; and set a target size.
New York City should establish a formal local law to govern its Rainy Day Fund, mandating specific deposit requirements when tax revenue grows by at least 3% and setting a minimum fund target size of 16% of tax revenue. This legislation would also restrict withdrawals to periods of recession or severe emergencies, defined as events impacting at least 2% of total city funds, to ensure the city's long-term financial stability.
Recommendations related to City Rainy Day Fund
The City should require the Mayor and City Council to enact a local law that details the City’s Rainy Day Fund deposit, withdrawal, and target size policy, with withdrawals prohibited until such a law is in effect.
The local law should identify the minimum target size for the fund as 16% or more of tax revenue.
The City should require deposits when tax revenue growth is at least 3%, year-over-year, on a common rate and base, and define the formula to be used to calculate the minimum deposit.
The City should limit withdrawals to a recession or severe emergency.
The City should define a severe emergency as one that is temporary and causes an increase in expenditures or decrease in revenues equal to or greater than 2% of total City funds.
The City should limit the first withdrawal following the occurrence of a recession or severe emergency to two-thirds of the balance of the fund.
The City should require the City Comptroller to issue an opinion, prior to a vote, on the proposed law regarding the reasonableness and appropriateness of the target size, mandatory deposit, permitted withdrawal, and definitions of a recession and a severe emergency.
Key Data
16%
— The minimum target size for the Rainy Day Fund should be at least 16% of tax revenue.
3%
— Deposits to the fund should be mandatory when tax revenue growth is at least 3% year-over-year.
2%
— A severe emergency is defined as a temporary event causing an increase in expenditures or decrease in revenues equal to or greater than 2% of total City funds.
two-thirds
— The first withdrawal following a recession or severe emergency should be limited to two-thirds of the fund's balance.
New York City should amend its Charter to mandate specific rules for the growth, deposit, and withdrawal of the Rainy Day Fund to ensure it is used effectively to protect residents during economic downturns. Establishing these legal requirements would provide necessary stewardship and prevent the fund from being diverted for other purposes.
Recommendations related to City Rainy Day Fund
The Charter should require a local law that ensures the City’s Rainy Day Fund is grown and used for its intended purpose—to protect New Yorkers from dramatic cuts during a recession or short-term emergency.
The Charter should require a local law that sets mandatory deposit and appropriate withdrawal rules to help ensure wise Rainy Day Fund stewardship.
The city's current budget fails to allocate funds to the rainy day reserve, leaving the existing $2.0 billion balance insufficient to protect against potential economic downturns. To improve fiscal stability, the city should prioritize depositing at least $1 billion into this fund over the next two years.
Recommendations related to City Rainy Day Fund
The city should deposit at least $1 billion into the Rainy Day Fund over this and next year.
Key Data
$2.0 billion
— The current balance of the Rainy Day Fund, which is described as wholly insufficient to protect New Yorkers from massive cuts during a recession.
$1 Billion
— The minimum amount the city is recommended to deposit into the Rainy Day Fund over this and next year.
New York City's Rainy Day Fund currently holds less than $2 billion, which is insufficient to cover the estimated $11 billion revenue loss that would occur during an average two-year recession. To better protect residents against future economic downturns or emergencies, the City should prioritize depositing at least $1 billion into these reserves over the current and upcoming fiscal years.
Recommendations related to City Rainy Day Fund
The City should include a deposit of at least $1 billion into the Rainy Day Fund over this and next year to protect New Yorkers during a recession or a severe one-time emergency.
The City should deposit at least $500 million in the Rainy Day Fund in fiscal year 2024.
The City should budget to deposit at least $553 million in fiscal year 2025.
The City should deposit more into the Rainy Day Fund if revenues are higher than projected in the Executive Budget.
Key Data
$11 billion
— Estimated revenue loss that would be sapped by an average recession over two years.
$2 billion
— Current amount held in the Rainy Day Fund.
$1 billion
— Minimum amount that should be deposited into the Rainy Day Fund over the current and next fiscal year.
$500 million
— Recommended deposit amount for the Rainy Day Fund in fiscal year 2024.
$553 million
— Recommended deposit amount for the Rainy Day Fund in fiscal year 2025.
New York City's Revenue Stabilization Fund currently lacks adequate rules for target size, mandatory deposits, and withdrawal constraints, leaving it vulnerable to misuse. The Charter should be revised to include clearly defined, mandatory deposit and withdrawal rules to ensure the fund effectively serves as a rainy day reserve.
Recommendations related to City Rainy Day Fund
The Charter should include clearly defined rules governing the RDF.
At minimum, the Charter should require mandatory deposits, withdrawals be limited to a recession or severe emergency, and a target size.
Key Data
17.2 percent
— Target size equal to 17.2 percent of pre-recession tax revenue.
75 percent
— Mandatory deposits of 75 percent of tax revenue growth that exceeds 3 percent annually.
3 percent
— Mandatory deposits of 75 percent of tax revenue growth that exceeds 3 percent annually.
50 percent
— Current withdrawal limits of 50 percent of the balance in one year.
16 percent
— City Comptroller recommended target size of 16 percent of City tax revenues.
The City has not made a voluntary deposit to its Rainy Day Fund since fiscal year 2022, leaving the current $2 billion reserve woefully insufficient to withstand a future economic contraction. This lack of adequate savings, coupled with chronic underbudgeting, leaves the City's fiscal foundation in a precarious position.
Key Data
$2 billion
— The amount currently set aside in the City's Rainy Day Fund, which has not received a voluntary deposit since fiscal year 2022.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
The fiscal year 2024 budget agreement relies on one-year funding strategies that increase future budget gaps and fiscal cliffs, failing to address long-term fiscal stability. Additionally, the agreement neglects the opportunity to bolster the city's financial reserves by failing to deposit funds into the Rainy Day Fund.
To stabilize the city's precarious fiscal outlook, the budget should prioritize depositing at least half of any additional fiscal year 2023 resources into the Rainy Day Fund. This measure is intended to protect New Yorkers from a potential revenue-sapping recession while avoiding the shortsighted use of one-time funds for recurring expenses.
Recommendations related to City Rainy Day Fund
The City should deposit at least half of any additional fiscal year 2023 resources into the Rainy Day Fund.
At least half of the additional resources not included in the Executive Budget should be deposited into the Rainy Day Fund to protect New Yorkers from a revenue sapping recession.
New York City should deposit at least $2.5 billion into its rainy day fund this year to protect essential programs against future economic downturns. Establishing a consistent, formula-based annual deposit structure would further ensure long-term fiscal stability by mandating reserves during periods of economic growth.
Recommendations related to City Rainy Day Fund
The city should add at least $2.5 billion to the rainy day fund this year.
The city should adopt a steady formula for future deposits to set aside a portion of revenue growth toward long-term reserves in years when the economy is growing.
The city should set a target size, mandate deposits, and specify criteria for when these funds can be withdrawn.
Key Data
$2.5 billion
— The amount proposed to be added to the city's rainy day fund this year.
$3.3 billion
— The amount of additional tax revenue available in fiscal year 2022.
$1.5 billion
— The amount of additional tax revenue projected to be available next year.
New York City faces potential revenue shortfalls of $13 billion to $19 billion during the next recession, necessitating a stronger financial cushion. To improve budget stability, the city should increase its Rainy Day Fund balance by depositing $2.3 billion of newly identified revenue and establishing formal legal rules for the fund's management.
Recommendations related to City Rainy Day Fund
Deposit half of the newly identified resources, $2.3 billion, into the Rainy Day Fund.
Shift between $250 million and $500 million annually from the general and capital stabilization reserves to the Rainy Day Fund.
Commit to setting rules to govern the RDF in Local Law to ensure the fund has resources available during a recession or severe emergency.
Key Data
$13 billion to $19 billion
— Potential revenue shortfall the City could face over three years in the next recession.
$4.5 billion
— Additional revenues available in fiscal years 2022 and 2023 than was projected in the Executive Budget.
$2.3 billion
— Amount of newly identified resources recommended for deposit into the Rainy Day Fund.
$3.5 billion
— Resulting balance of the Rainy Day Fund if the recommended $2.3 billion deposit is made alongside the $700 million already planned.
$12 billion
— Recommended total balance for the Rainy Day Fund.
$250 million to $500 million
— Amount to be shifted annually from general and capital stabilization reserves to the Rainy Day Fund.
New York City should prioritize fiscal stability by depositing additional tax revenue into the Rainy Day Fund to prepare for future economic downturns and emergencies. Establishing a schedule for $500 million in annual deposits to this reserve is essential to avoid future service cuts or tax increases when the city faces inevitable revenue shortfalls.
Recommendations related to City Rainy Day Fund
The mayor and council must resist the temptation to use additional tax revenue to expand services, and instead deposit this money into the Rainy Day Fund (RDF) for the next recession and to help refill the city’s labor reserve.
The city should schedule $500 million annual deposits to the RDF, which could come from the budgeted General and Capital Stabilization Reserves.
Key Data
$500 million
— The amount of annual deposits the city should schedule to the Rainy Day Fund.
$2 billion to $3 billion
— The range of annual budget gaps beginning in fiscal year 2024 that create the need for a robust Rainy Day Fund.
New York City's recently created Rainy Day Fund has a balance of $1 billion, including a planned $500 million deposit for the current year, but no deposits are scheduled for future years. To ensure long-term fiscal stability, the City should commit to annual deposits of at least $500 million and enact legislation to establish stronger rules for mandatory deposits and withdrawals.
Recommendations related to City Rainy Day Fund
The Executive Budget should include annual deposits to the Rainy Day Fund.
The Executive Budget should include planned deposits of at least $500 million annually to the Rainy Day Fund in each year of the financial plan.
The Mayor and City Council should also advance legislation to mandate deposits and establish stricter controls for use of the Rainy Day Fund.
Key Data
$1 Billion
— The current balance of the City's Rainy Day Fund, which includes a planned $500 million deposit this year.
$500 Million
— The planned deposit to the Rainy Day Fund for the current fiscal year.
$500 Million
— The recommended minimum annual deposit to the Rainy Day Fund in each year of the financial plan.
$11 to $12 Billion
— The recommended level of total reserves for the City, which the current reserves remain well below.
$6.1 Billion
— The total reserves currently counted by the City, representing 8.3% of City-funded expenditures.
8.3%
— The share of City-funded expenditures represented by the City's current reserves of $6.1 billion.
New York City's fiscal year 2022 expenditures were adjusted downward by $1,450 million to account for a deposit into the Rainy Day Fund, which functions as a savings account rather than operational spending. This adjustment is part of a broader effort to clarify actual spending obligations by distinguishing between service costs and transfers to reserves.
Key Data
$1,450 million
— The amount by which fiscal year 2022 expenditures were decreased to reflect the deposit to the Rainy Day Fund.
Although New York City currently maintains record reserves, the fiscal year 2023 preliminary budget fails to allocate additional funds to the City's Rainy Day Fund. To better prepare for future economic downturns or emergencies, the city should commit to making annual deposits of at least $500 million into this reserve.
Recommendations related to City Rainy Day Fund
The financial plan should include annual deposits of at least $500 million to the City's Rainy Day Fund to help the City weather the inevitable future recession or severe emergency.
Key Data
$500 million
— The minimum annual deposit amount recommended for the City's Rainy Day Fund to help weather future recessions or emergencies.
New York City should prioritize building financial reserves to prepare for future economic downturns, as the city has historically faced a recession on average every six years since the 1970s. Although a $500 million deposit was committed to the Rainy Day Fund, the city lacks a schedule for continued annual deposits in fiscal year 2023 and beyond.
Recommendations related to City Rainy Day Fund
The City should be building reserves to be prepared for the next economic downturn, given that New York has experienced a recession on average every six years since the 1970s.
The City should schedule annual deposits into the Rainy Day Fund for fiscal year 2023 and beyond, rather than only committing to a one-time deposit.
Key Data
$500 million
— Amount committed by Mayor de Blasio to be deposited into the Rainy Day Fund this year.
six years
— Average frequency with which New York has experienced a recession since the 1970s.
New York City has established a Rainy-Day Fund, which currently holds $498 million after incorporating recent surpluses and a $500 million deposit in the fiscal year 2022 budget. To ensure long-term fiscal stability, the City should enact laws to limit withdrawals to emergencies and mandate regular deposits, including 75 percent of tax revenue growth exceeding three percent annually.
Recommendations related to City Rainy Day Fund
The incoming Administration should deposit funds regularly into the RDF and improve its legal framework.
The City should enact a local law to limit withdrawals to a recession or severe emergency, both of which should be legally defined.
To bolster the fund over time, the new City law should mandate deposits when the economy is expanding.
The City should deposit 75 percent of the tax revenue growth in excess of three percent per year.
Resources also should be deposited when available due to other circumstances, such as the current massive influx of federal aid.
Planned deposits should be reflected in the City’s four-year financial plan.
Key Data
$488 million
— The amount of the City's fund balance that was unlocked by the creation of the Rainy-Day Fund.
$5 million
— The annual surplus added to the Rainy-Day Fund balance in fiscal years 2020 and 2021.
$498 million
— The total balance of the Rainy-Day Fund after adding the fiscal year 2020 and 2021 surpluses.
$500 million
— The additional deposit included in the Fiscal Year 2022 Adopted Budget.
75 percent
— The portion of tax revenue growth in excess of three percent per year that the City should deposit into the fund.
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New York City's executive budget for fiscal year 2022 fails to utilize available federal aid and tax revenue to address long-term fiscal gaps, which remain at roughly $5 billion annually. To ensure future stability, the city must implement a regular program to eliminate budget gaps and commit to consistent contributions to its newly established rainy day fund.
Recommendations related to City Rainy Day Fund
The City should be budgeting regular deposits into its newly established Rainy Day Fund.
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The proposed legislation to establish a Rainy Day Fund for New York City lacks necessary safeguards, as it currently allows withdrawals at the discretion of city officials rather than restricting them to defined economic emergencies. To ensure the fund functions as intended, the state should require that withdrawals be limited to periods of economic recession or severe fiscal distress, defined by specific indicators like revenue losses or expenditure increases of at least one percent.
Recommendations related to City Rainy Day Fund
Any withdrawal should be limited only to times of economic recession or severe emergency, which should be defined in law.
Define a recession as two successive quarters of economic contraction as indicated by declines in real gross city product or employment.
Specify that a severe emergency should be accompanied by revenue losses or increased expenditures of at least one percent of city-funded spending.
Negotiate a chapter amendment with the bill sponsors and legislative leaders to require that any withdrawal be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
Key Data
50 percent
— The proposed bill allows withdrawals of up to 50 percent of the Rainy Day Fund balance to be made to balance the budget.
one percent
— A severe emergency justifying a withdrawal should be accompanied by revenue losses or increased expenditures of at least one percent of city-funded spending.
Legislation intended to establish a Rainy Day Fund for New York City currently lacks necessary safeguards to prevent the misuse of funds as a slush fund. To ensure the fund serves its intended purpose of mitigating service cuts during emergencies, the bill must be amended to restrict withdrawals to periods of economic recession or severe crisis.
Recommendations related to City Rainy Day Fund
The proposed legislation should be amended to place essential restrictions on the use of the Rainy Day Fund.
Any withdrawal from the fund should be limited only to times of economic recession or severe emergency, as defined in law based on economic and fiscal indicators.
Without an amendment to include these restrictions, the bill should be held.
New York City's fiscal year 2021 budget relies on diverting $2.6 billion from the Retiree Health Benefits Trust and $1.4 billion from other reserves to address the fiscal crisis, highlighting the city's lack of true rainy day funds. This short-term strategy creates a $5.0 billion gap for fiscal year 2022, necessitating more substantial and recurring savings to ensure long-term stability.
Recommendations related to City Rainy Day Fund
The City should work with labor partners to identify non-core services and subsidies to reduce or suspend, while seeking additional efficiencies in agency operations, employee benefits, contracts, leased space, and fleet operations.
The City's savings plan should be larger with more recurring value to address the fiscal crisis.
Spending reductions should be focused on paring down to efficiently providing core needed services to strengthen the City’s ability to weather the economic downturn.
Key Data
$2.6 billion
— amount diverted from the Retiree Health Benefits Trust (RHBT) to balance the budget.
$1.4 billion
— amount diverted from other reserves to balance the budget.
$2.7 billion
— total value of the two-year savings program.
$5.0 billion
— looming budget gap projected for fiscal year 2022.
7.4 percent
— projected tax revenue growth for fiscal year 2022.
New York City lacks sufficient budgetary reserves to manage economic downturns, with only $1.25 billion set aside for the upcoming year compared to a potential $20 billion three-year shortfall in a recession. Establishing a well-designed Rainy Day Fund with mandatory deposit rules and strict withdrawal limits is essential to protect municipal services and ensure fiscal stability during future emergencies.
Recommendations related to City Rainy Day Fund
The State should amend the Financial Emergency Act to allow an exception for the creation and use of a Rainy Day Fund.
State law should define a recession as two successive quarters of economic decline to restrict use of an RDF to periods of economic contraction or severe emergency.
The City should limit withdrawals from the RDF to no more than two-thirds of the fund balance in any year to ensure funds are available for the second year of a recession or emergency.
The City should implement mandatory deposits equal to 75 percent of the tax revenue growth above 3 percent to ensure sufficient funds are accumulated.
The City should adopt a target size of 17.2 percent of tax revenue for the Rainy Day Fund to ensure it can offset drastic service cuts or revenue increases.
Key Data
$1.25 billion
— Amount set aside in reserves for the upcoming year.
$6 billion
— Estimated near-term revenue loss by the Office of the New York City Comptroller.
$20 billion
— Estimated three-year shortfall if a recession similar to those in the recent past occurs.
$9 billion
— Amount that would have been netted in reserves if the recommended strategy had been followed over the last 10 years.
17.2 percent
— Recommended target size of the Rainy Day Fund as a percentage of tax revenue.
71 percent
— Percentage of voters who approved the amendment to the City Charter to create a Rainy Day Fund.
New York City voters approved Ballot Question 4, amending the City Charter to establish a Rainy Day Fund that allows the city to save money during economic growth to mitigate service cuts and tax hikes during downturns. This legislative change provides a necessary mechanism for responsible financial management and service stability during future economic emergencies.
Spectrum News NY1 CBC President Andrew Rein explains the importance of voting "yes" on ballot question #4, which would allow for the creation of a “rainy day fund” and let the city save money during prosperous times.
New York City voters have the opportunity to amend the City Charter to establish a rainy day fund, which would allow the city to save money during prosperous times to avoid service cuts or tax increases during economic downturns. Establishing this fund is critical, as a future recession could lead to multi-year revenue shortfalls of at least $15 billion.
Recommendations related to City Rainy Day Fund
Voters should vote yes to approve the creation of a rainy day fund.
Voters should vote yes on Ballot Question 4 to strengthen the city’s budgeting processes and protect New Yorkers.
Key Data
$15 billion
— The potential multi-year revenue shortfall that could result from a recession.
New York City voters are encouraged to support Ballot Question 4, which would amend the City Charter to establish a Rainy Day Fund that allows the city to save revenue during economic growth for use during downturns or emergencies. This amendment is essential for improving the city's financial management by providing a mechanism to mitigate the impact of severe economic crises.
Recommendations related to City Rainy Day Fund
New York City voters should support Ballot Question 4 to amend the New York City Charter to allow the City to create and use a Rainy Day Fund (RDF).
Legislators must limit use of the RDF to times of economic recession and severe emergency to ensure the fund is not used during periods of economic growth.
New York City should establish a Rainy Day Fund to save resources during economic growth, which can then be used to mitigate spending cuts and tax increases during downturns. This proposal includes specific charter amendments to ensure the fund's operations comply with existing balanced budget requirements and state financial laws.
Recommendations related to City Rainy Day Fund
The City should establish a Rainy Day Fund to accumulate resources during periods of economic expansion and revenue growth.
The City should codify rules regarding deposits and withdrawals to the Rainy Day Fund in City law.
The City should permit use of the Rainy Day Fund without violating the City Charter and the State Financial Emergency Act for the City of New York balanced budget requirements.
The Charter Revision Commission should have the proposed language reviewed and modified by those with deep expertise in drafting legislation.
At a fireside chat with CBC President Andrew Rein, NYC Comptroller Scott Stringer discussed City fiscal policy, the need for rainy day reserves, and how to promote New York City’s competitiveness, among other topics.
New York City's current budget structure prevents the creation of a formal Rainy Day Fund, forcing the city to rely on problematic workarounds like using retiree health benefit assets to cover current expenses. Establishing a dedicated savings fund with a target size of 17 percent of tax revenues would allow the city to better manage economic downturns without resorting to drastic service cuts or tax increases.
Recommendations related to City Rainy Day Fund
The charter commission should approve and advance to voters the creation of a Rainy Day Fund to allow the city to save revenues during economic growth for use during downturns.
The charter commission should leave the charter’s budgeting and financial management framework intact while amending it to allow for a well-structured Rainy Day Fund.
The city should set the target size of the Rainy Day Fund at 17 percent of tax revenues to effectively mitigate the most damaging impacts of a recession or emergency.
The city should require annual deposits of 75 percent of all tax revenues in excess of 3 percent growth during periods of economic expansion.
The city should limit withdrawals from the Rainy Day Fund to periods of recession or emergency, with economic triggers defined in law.
Key Data
$1.25 billion
— The amount currently set aside annually for reserves in the city's financial plan.
$15 billion to $20 billion
— The projected three-year revenue shortfall for the city in the event of a recession comparable to the past two.
17 percent
— The recommended target size for a Rainy Day Fund based on past revenue trends to mitigate recessionary impacts.
75 percent
— The recommended portion of tax revenues in excess of 3 percent growth that should be deposited into the fund annually.
$9 billion
— The amount the city would have accumulated in a Rainy Day Fund if the recommended deposit policy had been in place during the recent record-long recovery.
New York City faces potential cumulative tax revenue shortfalls of $15 billion to $20 billion over three years during a recession, necessitating the establishment of a Rainy Day Fund to avoid service cuts or tax increases. Implementing a fund with a target size of $10.8 billion, based on 17.2 percent of pre-recession tax revenue, would provide necessary fiscal stability during economic downturns.
Recommendations related to City Rainy Day Fund
The City and State should authorize the City to use a Rainy Day Fund by codifying its parameters and amending State law and the City Charter to permit it.
Legislation to establish the Rainy Day Fund should specify the target size, required deposits, and permitted withdrawals.
The target size of the Rainy Day Fund should be set at 17.2 percent of the pre-recession year tax revenue.
Minimum required deposits should capture more revenue in years with faster growth, while also allowing sufficient revenue to fund City services.
Withdrawals from the Rainy Day Fund should be permitted during an economic contraction or a severe emergency.
Key Data
$15 billion to $20 billion
— Cumulative tax revenue shortfalls over three years in the event of a recession.
17.2 percent
— Target size of the Rainy Day Fund relative to pre-recession year tax revenue.
$10.8 billion
— Recommended Rainy Day Fund target size in fiscal year 2020.
75 percent
— Minimum deposit requirement of annual tax revenue growth in excess of 3 percent.
$8.5 billion
— Projected Rainy Day Fund balance if the deposit requirement had been in place during the current nine-year expansion.
New York City's current balanced budget requirement prevents the establishment of a rainy day fund, which is necessary to accumulate reserves during economic growth to mitigate the impact of potential recessions. Amending the Charter to allow for such a fund, alongside mandatory deposit and withdrawal guidelines, would help the city avoid harmful service cuts and tax increases during economic downturns.
Recommendations related to City Rainy Day Fund
The Charter should be amended to make an exception to the balanced budget requirement to permit use of an RDF.
To ensure the City appropriately funds and expends the RDF, the Charter ultimately should require mandatory deposits and provide guidelines for withdrawals.
The Charter should be amended to preclude the use of the Retiree Health Benefits Trust as an RDF by mandating the fund and limiting disbursements to the PAYGO cost.
Key Data
$15 billion and $20 billion
— Estimated tax revenue shortfall over three years in the event of a recession.
$3.2 billion
— Balance of the Retiree Health Benefits Trust (RHBT) in fiscal year 2008.
$1.4 billion
— Balance of the Retiree Health Benefits Trust (RHBT) in fiscal year 2013.
$4.5 billion
— Current balance of the Retiree Health Benefits Trust (RHBT).
4.4 percent
— The RHBT balance as a percentage of the total $103.3 billion liability at the end of fiscal year 2018.
$103.3 billion
— Total OPEB liability at the end of fiscal year 2018.
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