The General Reserve is a budgetary cushion maintained by New York City and the Metropolitan Transportation Authority to provide liquidity for unexpected expenses and economic volatility. This page covers CBC’s work on reserve funding levels, the use of reserves to cover underbudgeted programs, the role of rainy day funds, and strategies for strengthening the City’s fiscal stability against potential federal aid cuts and recessions.
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..
The administration should increase the general reserve by $1 billion a year, from $1.25 billion to $2.25 billion, to strengthen the city's ability to absorb the initial impact of unexpected cuts or delays in federal aid.
To protect New Yorkers from additional federal cuts, the administration should preserve resources and flexibility by increasing the general reserve by $1 billion per year.
The City should add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
The City should 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.
The City should 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.
The City should not fund any new or expanded programs in the Executive Budget or during adoption.
Key Data
In the FY 2027 budget agreement, the City increased the General Reserve by $350 million to provide a cushion against potential revenue softening or spending increases.
As of June 2026, the City's Rainy Day Fund balance is just $2 billion, while a typical recession could cause a revenue shortfall of $15 billion over two years.
As of November 2025, the City would require $14.0 billion over two years to cover tax revenue losses during a recession, yet the Rainy Day Fund holds only $2.0 billion.
In June 2025, it was noted that a typical recession would sap $11 billion of revenue over two years, an amount that would overwhelm the City's existing reserves.
The fiscal year 2027 budget agreement includes a $350 million increase to the General Reserve, a move that provides a necessary financial cushion against potential spending spikes or revenue shortfalls. However, the budget remains vulnerable to economic downturns because the Rainy Day Fund is insufficient and the overall budget cushion is limited.
Recommendations related to General Reserve
The City should continue to prioritize the General Reserve to provide a necessary cushion if spending increases more than planned or revenues soften.
The City must address the fact that the Rainy Day Fund is currently too small to adequately prepare the budget for a potential economic slowdown or recession.
Key Data
$350 million
— The amount by which the General Reserve is being increased in the fiscal year 2027 budget.
The Fiscal Year 2027 Executive Budget relies heavily on one-time resources and gimmicks, leaving the city with minimal financial cushion. To improve fiscal stability, the city should increase its General Reserve to $500 million to better withstand economic volatility and unexpected spending shocks.
Recommendations related to General Reserve
The City should increase the fiscal year 2027 General Reserve to $500 million to protect against economic volatility and unexpected spending shocks.
Key Data
$100 million
— The current General Reserve is at the statutory minimum, which is less than 1/10th of a percent of the budget.
$1.35 billion
— The budget includes one-shot actions derived from reducing the fiscal year 2027 budgetary reserves to the statutory minimum.
$500 million
— The recommended increase for the fiscal year 2027 General Reserve to protect against economic volatility and unexpected spending shocks.
To better prepare for potential federal funding cuts and economic instability, the city should increase its general reserve by $1 billion annually, raising it from $1.25 billion to $2.25 billion. This strategic increase would strengthen the city's capacity to absorb unexpected fiscal shocks and ensure that essential services remain protected during periods of financial turbulence.
Recommendations related to General Reserve
The administration should increase the general reserve by $1 billion a year, from $1.25 billion to $2.25 billion, to strengthen the city's ability to absorb the initial impact of unexpected cuts or delays in federal aid.
To protect New Yorkers from additional federal cuts, the administration should preserve resources and flexibility by increasing the general reserve by $1 billion per year.
Key Data
$1,450 million
— Current amount listed for General and Capital Stabilization Reserves in the fiscal year 2027 budget.
$1.25 billion
— Current level of the General Reserve.
$2.25 billion
— Proposed level of the General Reserve.
$1 billion
— Amount by which the General Reserve should be increased annually.
The New York City fiscal year 2026 budget agreement is criticized for being unaffordable and unprepared for potential federal cuts or economic downturns. It fails to adequately bolster reserves, as the General Reserve is already earmarked to cover underbudgeted programs rather than serving as a safety net.
Recommendations related to General Reserve
The City should put aside $3 billion to soften the first blows of federal cuts and protect against a future recession.
The City must increase efficiency and shrink low impact programs to stabilize the budget and secure the future.
The City should prioritize critical services, manage them to deliver results, and protect its fiscal foundation to become more affordable, safe, and stable.
Key Data
$3 billion
— Amount that should be put aside to soften the first blows of federal cuts and protect against a future recession.
$9 billion
— Future budget gaps projected after accounting for underbudgeted expenses.
$11 billion
— Amount of revenue a typical recession would sap over two years, which would swamp the City’s reserves.
New York City's budget is currently precarious due to unaffordable spending growth and a lack of preparation for potential federal aid cuts. To improve fiscal stability, the city should increase its general reserve funding and implement stricter budget management practices.
Recommendations related to General Reserve
The City should add at least $1.0 billion in funding to the fiscal year 2026 General Reserve to help respond to potential federal cuts.
The City should 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.
The City should 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.
The City should not fund any new or expanded programs in the Executive Budget or during adoption.
Key Data
$2.0 billion
— Amount currently held in the Revenue Stabilization Funds (RSF), also referred to as the Rainy Day Fund.
$1.5 billion
— Amount included in budgetary reserves per year beginning in fiscal year 2026.
$11.0 billion
— Estimated revenue loss over two years during an average recession.
$5.0 billion
— Amount in the Retiree Health Benefits Trust (RHBT) that has been used as a de facto reserve in the past.
The Metropolitan Transportation Authority maintains a General Reserve funded by approximately 1 percent of operating expenses from the Mortgage Recording Tax, which provides a buffer against potential budget gaps. However, this reserve, ranging from $185 million in 2023 to $210 million in 2027, is insufficient to cover the agency's identified financial risks and should be increased.
Recommendations related to General Reserve
The MTA should consider whether the General Reserve should be gradually increased because the current budgetary cushion is insufficient given the identified risks.
Key Data
$185 million
— Annual contribution to the General Reserve in 2023.
$210 million
— Annual contribution to the General Reserve in 2027.
1 percent
— Portion of operating expenses from the Mortgage Recording Tax set aside for the General Reserve.
411%
— General Reserve as a percentage of the restated budget gap in 2023.
23%
— General Reserve as a percentage of the restated budget gap in 2027.
New York City's fiscal year 2023 budget includes adjustments for the General and Capital Stabilization Reserves, which function as contingency funds that can be rolled over if unspent. These reserves, totaling $1,805 million in the adopted budget, are excluded from spending obligation calculations to provide a clearer picture of actual service-related expenditures.
Key Data
$1,805 million
— Funds in the General Reserve and Capital Stabilization Reserve in the fiscal year 2023 Adopted Budget.
$1,305 million
— Funds in the General Reserve and Capital Stabilization Reserve in the fiscal year 2023 Executive Budget.
$20 million
— Funds in the General Reserve and Capital Stabilization Reserve in fiscal year 2022.
New York City voters are encouraged to approve Ballot Question 4, which would amend the City Charter to establish a rainy day fund for use during economic downturns. This savings mechanism aims to prevent the need for service cuts and tax increases during recessions, which could otherwise result in revenue shortfalls of at least $15 billion.
Recommendations related to General Reserve
Voters should vote yes to approve the change to the City Charter that would allow the city to create a rainy day fund.
Voters should vote yes on Ballot Question 4 to create a rainy day fund to help protect New Yorkers from the most harmful service cuts or counterproductive tax increases.
Key Data
$15 billion
— The potential multi-year revenue shortfall that could result from a recession.
The Fiscal Year 2020 Adopted Budget increases spending, savings, and reserves, but new spending commitments exceed the deposits made to the City's reserves. While the budget adds $150 million to the general reserve and $100 million to the Retiree Health Benefits Trust, more of the new resources should have been set aside to bolster fiscal standing for future economic downturns.
Recommendations related to General Reserve
The most prudent course of action would have been to place the vast majority of these new resources in reserve.
The Mayor and Council Speaker should have gone further to bolster the City’s fiscal standing while the economy continues to thrive in order to protect New Yorkers when the rainy day arrives.
Key Data
$329 million
— New savings included in the budget agreement.
$45 million
— Creditworthy savings from headcount and Thrive NYC reductions.
$150 million
— Increase to the City's general reserve.
$100 million
— Increase to the Retiree Health Benefits Trust.
$89.16 billion is the size of the Adopted Budget for FY 2019. After adjusting for prepayments in prior years and other reserves and spending, the total value of spending is $92 billion. This episode features a panel of fiscal experts hosted by the Association for a Better New York. Listen…
The Metropolitan Transportation Authority's 2018 budget relies on the depletion of reserves, including the 2017 General Reserve, to address financial gaps. This reliance on short-term resources to cover long-term liabilities creates significant fiscal risks, especially as budget deficits are projected to grow.
Recommendations related to General Reserve
The board should avoid draining reserve funds and eschewing PAYGO capital for more debt, as these actions substitute short-term resources for long-term liabilities.
The board should reject the 2018 budget as proposed without any new funding, as continued implementation of the Subway Action Plan will result in a deficit.
The board should not advance a budget without either funding sources identified to support the Subway Action Plan or commensurate reductions in other areas to maintain a cash balance.
Key Data
$135 million
— The amount of the 2017 General Reserve the MTA announced it would use in July 2017.
$20 million
— The amount of the remaining 2017 General Reserve included in the November financial plan drawdown.
$450 million
— The total amount provided to the MTA over the life of the financial plan by using the 2017 General Reserve and stopping planned contributions to other funds.
$679 million
— The combined amount held in the Bridges and Tunnels Necessary Reconstruction Fund and the MTA Retiree Welfare Benefits Trust.
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