In the face of new fiscal challenges, Yonkers Mayor Mike Spano is not panicking. At least not yet. But he has already ordered a hiring freeze and directed his departments to cut spending. He also believes that if the City is to avoid layoffs and large property tax increases like those just proposed by Westchester County Executive Ken Jenkins, he will need to convince Governor Hochul and the State legislature to send additional funding to Yonkers.
I spoke with the Mayor today about the City budget in light of the County’s announced problems. He said he sees “red flags all over the place,” but believes the City can still avoid deep cuts and large tax increases.
The County’s Financial Problem
On November 7th, just three days after he was riding high from his landslide re-election, Westchester County Executive Ken Jenkins released a sobering proposed 2026 County operating budget of $2.5 billion. The highlights (or more accurately “lowlights”) include an 8% across-the-board cut to all County departments and a tax increase of 5.27%. The County is facing a nearly $200 million projected budget deficit, and the proposed cuts eliminate 180 positions or approximately 5% of the County’s force.
The recommended $5.27 tax increase and deep departmental cuts are shocking, especially when you consider that there have been no County tax increases for six consecutive years, and no layoffs.
Jenkins, who lives in Yonkers, explained:
“This has been an extraordinarily difficult year, and the budget process reflected that. We are operating in a moment of unprecedented uncertainty driven by the Trump Administration’s decisions beyond our control. Federal cuts, shifting aid formulas and tariffs have created instability in local planning in a way we have not seen in recent memory. There’s no way to sugarcoat it, this is simply the reality of this moment — and we are committed to leading through it with transparency, partnership and integrity.” (November 7, 2026 budget message, https://www.westchestergov.com/home/all-press-releases/10675-jenkins-releases-2026-budget-proposal-in-face-of-historic-fiscal-pressure-from-federal-government?
In part, Jenkins attributed the looming deficit to:
“…the loss of MGM and its bid to build a full-gaming casino in Yonkers. That decision alone represents an estimated $17 million in lost annual revenue for the County, not including the ripple effects across Westchester’s economy in the form of lost sales tax growth that would have followed.”
Mayor Spano’s Take on the Budget Problem
Mayor Spano named inflation and rising borrowing costs, the loss of federal Covid stimulus monies, MGM’s withdrawn casino license application, and the unrealistic wage demands of Yonkers labor unions as all putting pressure on his next proposed budget, which is due on April 15, 2026.
He believes the city can still avoid devastating layoffs, as long as the economy doesn’t go into recession. He said he will order additional cost saving measures beyond the current hiring freeze and belt tightening if and when it is required
The Unpleasant MGM Surprise; Will the new Library Go Forward?
During the recent run up to Election Day, we learned that Yonkers City officials were caught flatfooted by MGM’s withdrawal. At first, Mayor Spano speculated that the abrupt and unexpected withdrawal may have been precipitated by the Trump Organization pressuring MGM because of Trump’s financial interest in a competing New York casino project. The Mayor called on Governor Hochul to launch an investigation, which she dismissed out of hand.
The Mayor told me that he had been expecting $56 million in recurring revenue from MGM if the casino had been awarded a full gaming license. However, he said he did not include additional casino money in planning for next year’s budget, other than $10 million dollars separately negotiated as part of a community benefits agreement. Since the City will not receive this money, the financing had to be changed for the new library branch that is to be opened in the old Lincoln Park Jewish Center.
The City bought the building this year for $6.8 million and borrowed $10 million to cover closing costs and initial operating and reconstruction expenses, which were to be paid back when the City received the $10 million from MGM. Now, however, these costs will be absorbed into the capital budget. This will result in an additional $1.8 million in annual expenses the City will have cover for the borrowing and operating costs.
The Mayor said that he initially considered cancelling the new library project but acceded to the City Council’s wishes to move forward. He said he is currently working with both the Governor and MGM to assure that MGM continues to make investments in the existing casino, which will ensure that the casino revenue that the city currently receives (approximately $19 million annually) remains constant. He would like to see MGM expand to become a more diversified entertainment destination, and not merely a slot-machine racino.
Union Labor Contracts are Expiring
According to the Mayor, expiring municipal labor contracts are another concern that puts pressure on next year’s budget. The unions have been anticipating healthy pay raises based on the perception that the Hollywood on the Hudson development projects on the Westside coupled with the casino expansion would have the City’s coffers overflowing. The Mayor believes that the unions have unrealistic expectations.
The Mayor sees our uniformed employees as highly paid and receiving great benefit packages. He is proud of the City’s workforce and he thinks they earn and deserve their salaries. However, in negotiating new labor contracts he feels he must strike a balance between what the taxpayers can afford and what is fair for the City’s employees. He does not expect to meet the Union’s demands for large pay increases.
Rising Borrowing Costs, Inflation and Loss of Federal Covid Monies
The Mayor cited three other factors that are putting pressure on next year’s budget. First, with interest rates rising, the city borrowing costs are rising. This year the City has budgeted over $103 million to pay for past borrowing. Second, inflation has increased because of tariffs and other economic factors. This has adversely impacted ongoing construction costs the City must shoulder for new schools buildings and other infrastructure projects. Finally, during Covid and the post-Covid recovery period, the Federal government injected billions of dollars into the economy, in part, to keep municipalities solvent. Yonkers benefited greatly from this money, but this funding stream has now ended.
The State Comptroller’s Warnings
Finally, the way the City has balanced its budget in the past has made the City’s situation more precarious. Over the past decade, the City has plugged holes in the budget by using “its rainy-day fund” (also known as a non-recurring, fund balance) to pay for recurring obligations.
The New York State Comptroller, who must certify the City’s budget, has criticized for more than ten years the City’s practice of using rainy day funds to pay for recurring obligations. On July 2, 2025, the Comptroller warned that the non-recurring fund balance “may not be available in future years. Therefore, a potentially significant funding gap could occur in the 2026-27 fiscal year that the City must address by finding an alternate source of revenue or by reducing appropriations.”
In other words, according to the State Comptroller, this year the City may not accumulate sufficient reserve funds to balance the budget next year, and instead will have to resort to significant budget cuts and tax increases.
The Mayor recognized that the City has consistently used rainy-day funds to balance the budget but was not ready to concede that the City wouldn’t have sufficient fund balance to fill gaps in next year’s budget.
Next Steps
It would appear that there are many pending problems beyond the Mayor’s control that will need to break the City’s way if the City is to avoid implementing an austerity budget next year that includes layoffs and a large property tax increase. Inflation must be tamed, borrowing costs must decrease, municipal unions must accept small or no wage increases, and the nation cannot slip into recession.
It is probably wishful thinking that the City will emerge unscathed from these economic challenges. As we saw this week, Westchester County, which has traditionally been one of the most financially sound municipal governments with a coveted AAA bond rating, could not overcome the macroeconomic problems that Yonkers and all other municipalities face.
The Mayor, however, is not ready to throw in the towel. Each January, he goes to Albany and plays what he calls the “tin cup game.” During his mayoralty he has played this game exceptionally well, and has been able to secure the additional funds needed to avoid layoffs and large tax increases.
With more than seven months remaining in the current fiscal year, the City’s Finance Commissioner John Liszewski believes it’s too early to tell whether the City is running a deficit, and that we will know more in January after the Governor releases the State’s budget.
At this point the taxpayers of Yonkers can only hope that our optimistic Mayor comes through.
The Yonkers Ledger will be following the budget process and will keep you updated on all important developments.
