New York City’s proposed Fiscal Year (FY) 2026 operating budget relies on $7.4 billion in federal government funding, accounting for 6.4% of total spending, according to a series of briefs released today by New York State Comptroller Thomas P. DiNapoli. DiNapoli’s office estimates that recent federal government actions to cut grant programs could jeopardize at least $535 million of federal aid in FY 2025 and FY 2026, but notes that nearly all federal operating aid that flows to the city could be subject to cuts or elimination. 

“New York City has already been notified of hundreds of millions of dollars in cuts or pauses to federal funding for this year and next, but the full impact of recent actions by Washington is not yet known,” DiNapoli said. “To better inform taxpayers and policymakers, my office has examined the largest federal grants the city receives and the potential risks that cuts to those grants pose to the city’s operating budget and New Yorkers.” 

In January, the administration announced a temporary pause on obligations and disbursements of federal assistance that is in effect until the administration completes a review of each grant program to identify inconsistencies with the President’s executive orders. Based on DiNapoli’s analysis, nearly all federal operating receipts anticipated by the city would be subject to the review. 

Through April 8, the city received notifications of paused and partially or fully terminated federal awards which DiNapoli’s office estimates could have a negative operating budget impact up to nearly $400 million in FY 2025 and $135 million in FY 2026. However, this only considers budgeted amounts as of the FY 2026 Preliminary Budget and does not include changes that may be made to programs as part of the Federal Fiscal Year 2026 budget. 

DiNapoli’s report notes that federal funds cover a higher share of essential services that the city provides to its most vulnerable residents, notably education, social services, and housing. Federal funds also provide direct support to semi-autonomous organizations such as the Metropolitan Transportation Authority, the New York City Housing Authority, the City University of New York, and New York City Health + Hospitals, and to other health care providers and non-profit organizations that serve New Yorkers. 

The city’s FY 2025 operating budget includes nearly $9.7 billion of federal funds, comprising 8.3% of total spending. This includes $1.1 billion of pandemic funds, which the city uses in part to fund recurring programs. In FY 2026 federal funding drops to $7.4 billion, due largely to the winddown of pandemic funds, which total just $65.2 million in FY 2026, and conservative assumptions by the city for federal grants and whether they are recurring. 

DiNapoli’s analysis found:

• The city’s 10 largest federal awards comprise more than three-quarters of the city’s anticipated federal awards in FY 2026, excluding COVID funds.
• The Department of Education (DOE) receives more federal funding than any single city agency. DOE’s federal grants are expected to total $2.1 billion in FY 2026, 7% of the agency’s total planned FY 2026 spending excluding fringe benefits and centralized costs.
• As a share of spending, federal spending is more highly concentrated in the city’s housing and social services agencies. In FY 2026, federal funds are assumed to comprise more than half of the planned spending at the Department of Housing Preservation and Development, and nearly 40% of the spending at the Administration for Children’s Services.
• The city’s largest federal award is Temporary Assistance for Needy Families, which funds public assistance grants and other social services, and comprises nearly a quarter of the city’s non-pandemic federal funding in both FY 2025 and FY 2026. That money supported an average of 146,189 family assistance recipients in FY 2024, and nearly 44% of the planned costs for family shelter operations at the Department of Homeless Services in FY 2025.

Briefs
Federal Funds To New York City: A Review of Categorical Grants
Temporary Assistance for Needy Families
Child Care and Development Block Grant
Title I Grants to Local Educational Agencies
Section 8 Housing Choice Vouchers
National School Lunch, Breakfast Programs
Community Development Block Grant
Medicaid
Title IV-E Foster Care
Individuals with Disabilities Education Act
Homeland Security Grant Program
Social Services Block Grant

Related Report
Review of the Financial Plan of the City of New York (February 2025)