NYC Council Committee on Finance Fiscal Year 2027 Executive Budget Hearing – June 9, 2026

The New York City Council Committee on Finance, chaired by Councilmember Linda Lee, held an oversight hearing on the Fiscal Year 2027 Executive Budget on Tuesday, June 9, 2026, in Council Chambers at City Hall. The hearing featured testimony from the Department of Finance (DOF) and the Independent Budget Office (IBO). Councilmembers questioned DOF Commissioner Richard Lee and IBO Director Louisa Chaffee on a wide range of fiscal issues, including property tax reform, debt collection, new revenue proposals, housing policy, and budget uncertainties.

Consent Calendar

• No consent calendar items were considered during this hearing.

Public Comments & Testimony

• No public testimony was taken. The hearing focused on agency budget presentations and Council Q&A.

Discussion Items

• Property Tax Reform (DOF): Commissioner Lee stated that a comprehensive property tax reform proposal is being developed, building on the advisory commission’s recommendations, and will require state legislative action. He noted that the administration has not yet submitted a formal plan to Albany, citing the need to close a historic $12 billion budget gap.
• ECB Debt Collection (DOF): DOF identified $573 million in potentially collectible outstanding debt and $744 million deemed uncollectible. The agency collected $70.1 million in FY27 (12%) and aims to improve first-year outreach. A recent case recovered $9 million from Amazon for idling violations. DOF also plans an ECB amnesty program in FY27, pending Council authorization.
• Section 1127 Returns Error (DOF): DOF discovered a 10-year miscalculation where city employees living outside NYC improperly received a STAR credit on city tax returns. The error averaged $10–12 million per year in lost revenue. DOF corrected the calculation for tax year 2025 only and will not seek back payments. Approximately 40,000 employees are affected.
• Block-by-Block Housing Plan (DOF): Commissioner Lee explained that the 2019 rent stabilization law changes were reflected in FY27 assessments by increasing capitalization rates by 50 basis points, reducing market value of rent-regulated properties by 3.3% on average and taxes by 1.3%. Further relief will phase in over five years.
• Office-to-Residential Conversions (DOF): Of 30 office buildings converted to residential, only three were Class A. The 4% decline in Class A office parcels resulted in a 1.5% decrease in taxable assessed value, but DOF believes the impact on overall class shares will be minimal.
• Racial Equity Plan (DOF): DOF’s plan aims for 100% of services to be accessible by end of 2026. The agency is working with the new Mayor’s Office of Deed Theft Protection and improving information equity. Deputy Speaker Williams questioned progress on outreach and digital barriers. Commissioner Lee cited ongoing efforts, including language access and a new notification program for deed recordings.
• Lien Sale Cancellation (DOF): The administration paused the 2026 lien sale for a six-month review, ending this summer. DOF is evaluating equitable enforcement tools and preparing nominees for the new land bank board (deadline July 28, 2026). The current tax lien trust is unaffected.
• Pied-à-Terre Surcharge (DOF): DOF is implementing a new surcharge on second homes valued over $5 million, expecting to raise $500 million annually from about 8,000 properties. The surcharge will appear on property tax bills. DOF will develop enforcement rules, including for LLC- and trust-held properties. Concerns were raised about seniors with fixed incomes; DOF offers payment plans.
• Co-op/Condo Abatement Compliance (DOF): DOF mailed notices to owners potentially ineligible for the abatement, projecting $13 million in annual savings from those who cannot prove primary residency.
• Deed Theft Prevention Office (DOF): Only one of five budgeted positions (director Peter White) has been filled. Three more (ombudsperson, deputy director, community coordinator) are in process. The office coordinates with agencies like HPD, DIFTA, and district attorneys. Commissioner Lee noted statutory limits on preventing fraudulent deed recordings and urged sign-ups for the notification program.
• IBO Fiscal Overview (IBO): Director Chaffee summarized the FY27 executive budget ($124.7 billion), projecting a $1.1 billion gap. Key uncertainties include $149 million in untested due process savings, $21 million for class size bonuses under a newly extended state law, and a child care voucher funding cliff (from $1.8B in FY26 to $818M starting FY28). IBO calls this shortfall “nearly $1 billion annually.”
• Fair Fares Expansion (IBO): IBO released a report estimating costs for five expansion scenarios, ranging from increasing the discount to raising eligibility to 400% of the federal poverty line. Take-up rates were estimated at 19–32%, with transit utilization up to 63%. IBO noted that Fair Fares already has a relatively large marketing budget but suggested automated enrollment using Department of Finance tax data could reduce barriers.
• Class Size Compliance (IBO): IBO aligns with the administration’s $122 million FY27 plan to reach 70% compliance, but has not updated its estimate for 100% compliance by 2030.
• Homeless Services Budget (IBO): IBO attributed persistently high shelter costs to elevated daily rates and a growing population of single adults and adult families, even as asylum-seeker arrivals slow.
• Federal Health Cuts (IBO): Up to 450,000 New Yorkers may lose health insurance due to federal changes to the Essential Plan. Neither the state nor city budgets allocated additional funds. IBO warned of potential impacts on NYC Health + Hospitals.

Key Outcomes

• No formal votes were taken during the hearing; it was an oversight session.
• The Committee filed the oversight on T2026-1912 (as noted in the minutes).
• DOF committed to providing follow-up data on property tax reform timeline, ECB collection targets, the exact number of Queens homeowners receiving trash bin reimbursements, and details on the 1127 return correction notices.
• IBO will brief the Council on the Fair Fares report and host a public webinar on June 16, 2026.
• Next Steps: The Committee will hold public testimony on June 10, 2026, before finalizing budget recommendations for the FY27 executive budget.