How GOP Budget Cuts Could Affect NYC: Your Questions Answered

In February, House Republicans passed a budget that President Donald Trump described as “ONE BIG BEAUTIFUL BILL.” It lays out Trump’s plan for federal money: tax cuts for the wealthy and increased military spending paid for by cuts to social services. 

Currently, the bill must pass the Senate before becoming law.

And even though Trump’s initial attempt to freeze all federal funding has been blocked by two federal judges, his administration is appealing the decisions and some agencies have reportedly continued to withhold funds.

So how do these potential cuts — and the uncertainty around them — affect New York City?

THE CITY received dozens of questions from readers asking about just that. New Yorkers are wondering: What will happen to Medicaid, Social Security, SCRIE, the Weatherization Assistance Program, transit projects and more?

We spoke to a group of budget experts to try and find out. But the picture is very complicated, and in many cases there are no easy answers.

“What will happen is so hard to discern, because what happens may not be directly related to the cut,” said Christian Henrichson, the director of City Studies at the Citizens Budget Commission, a city-based budget watchdog organization. “The risks aren’t only to the things that are federally funded.”

Did we answer your question about NYC’s budget? If not, write to our newsroom at ask@thecity.nyc.

How does the city budget work, and how much of it comes from the feds?

New York City receives federal funding in a number of different ways: from federally-funded state programs that flow to the city, and to city programs directly. The city’s latest budget for 2025 includes $9.6 billion of federal funds — around 8% of its total budget.

However, the percentage of federal money in the state budget is far higher: 39%.

“New York State is pretty heavily dependent on federal money,” said Ana Champeny, the vice president for research at the CBC. “Most of this is for Medicaid and something called the Essential Plan.” (More on those below.)

The state divides its revenue across several pots of funds, mostly according to the funding’s source. The pot that includes most federal grants that flow to the city stands at about $89 billion for the current fiscal year, which ends on March 31. The state receives another $3 million from the feds for capital projects. 

Outside of Medicaid, there are many state programs central to the wellbeing of city residents that receive some federal funding. The big city services and entities that receive funding that way are public housing (NYCHA), the MTA, higher education (CUNY), our public hospital system (NYC Health+Hospitals) and cash assistance like SNAP.

In the city budget, federal money makes up for “a much smaller slice than in the state budget — and you don’t have one giant thing like Medicaid,” explained Champeny. 

Within the city’s own budget, about 80% of federal funding goes to just five agencies: The Department of Education (DOE) receives the largest chunk, and then the Department of Social Services (DSS), the Administration for Children’s Services (ACS), the Department of Homeless Services (DHS), and the Housing Preservation Department (HPD).

Who will be most affected by big cuts to federal money flowing to NYC?

These cuts would disproportionately hurt low-income families and other vulnerable New Yorkers, experts said.

The agencies named above oversee a dizzying array of critical services, including subsidized apartments, enforcement of child welfare laws, grants for childcare and shelter for homeless families. As THE CITY previously reported, much of our local education department’s federal money funds Title I grants, which support schools that serve students in poverty, as well as money for school lunch and breakfast programs. 

And if they are erased from the federal budget, there is little chance the city could fill in the gap without making cuts somewhere else.

“You might say ‘Oh, it’s only $9 billion, it’s only 8% [of the city budget]’” Champeny said. “That is a lot of money. The city can’t be like ‘Oh, we’ll just fund all of this.’”

“There are going to have to be choices made about how to best utilize these resources,” she continued. 

Are there any programs we know will not be affected?

The short answer: no. 

If the federal government takes money away from a program like Medicaid or public housing, it’s up to the state or city to decide if and how they want to make up that shortfall. And they don’t have a ton of extra money lying around — so if they want to fund specific programs, it will most likely require that they de-fund something else. 

The Independent Budget Office, another city nonprofit that provides fiscal information to inform city policy, stresses that the impact of cuts could be more far-reaching than people realize. 

“I’m just going to use the example of $100 for police cars,” Louisa Chafee, the IBO’s director explained. “If that money is cut, some people might think ‘Well then, that’s $100 less for police cars.’”

“But the reality is that the state may make the decision that the program that the federal government has chosen not to fund is so critical, that the state will use its own money,” she continued. In the example, the state pays for the police cars — but the money has to come from somewhere.

“The state might need to cut money from some other places that have nothing to do with the federal change so as to fill the critical service,” Chafee said.

The primary source of funds on the state and city level are taxes. But there’s only so much tax revenue to go around — and New York already has some of the highest taxes in the country, making raising taxes a politically risky option.

Is there a way to anticipate which programs could be cut?

According to Champeny, which programs face cuts is largely dependent on the priorities of the current city administration: the mayor and the City Council. 

“Different mayors have had different approaches to how they have done this in the past,” she said. 

For example, when then-Mayor Michael Bloomberg was in charge during and after the 2008 recession, he made cuts to the DOE, the Sanitation Department, ACS and even threatened to shutter firehouses.

“There are things that are politically very unpopular, like closing fire companies, that rarely come on the table, but did under Mayor Bloomberg,” Champeny said. 

Budget cuts often face significant pushback — Bloomberg’s attempt to close firehouses ultimately failed after protests swept the city. When Mayor Eric Adams tried to make cuts to libraries and cultural centers last year — which Champeny describes as “small-dollar cuts” in comparison to the budget as a whole — there was a coordinated effort to protect those institutions, which resulted in the mayor restoring the funding.

Another way of saving money is to stop hiring, which can be implemented across multiple city agencies. But city employment levels are down from before Covid, and there isn’t that much room to cut back.

“I don’t know how much more you could squeeze out of that in terms of savings,” Champeny said.

Biggest risks: Medicaid, the Essential Plan and NYCHA

As we mentioned earlier, some of the city’s programs that receive the most federal funding are Medicaid, the Essential Plan and NYCHA.

Medicaid is a federal healthcare coverage program that supports low-income people. The federal government, states and localities (i.e. cities like NYC) share the responsibility of paying for the program. But the feds shoulder most of the burden.

The state anticipates that federal dollars will make up about 60% of the program’s total funding this fiscal year. 

New York City, for its part, provided $6.7 billion toward the program this fiscal year, making up about 6% of the city’s total adopted budget for this year. 

Even though money for something like Medicaid is distributed to the state, cuts to these programs would be deeply felt on a city level. More than 5 million people in New York City — over half of the city’s population — are covered by New York State health insurance plans including Medicaid, the Essential Plan, Child Health Plus, or the Qualified Health Plan.

Trump has said he won’t mess with Medicaid. But a budget resolution passed by the House calls for the House’s Committee on Energy and Commerce with jurisdiction over Medicaid to slash its budget by $880 billion over the next ten years. It would be “mathematically impossible for them to do that without touching Medicaid,” said the Empire Center’s senior fellow for health Policy Bill Hammond.

The Essential Plan, which covers New Yorkers who earn slightly more than what’s allowed to be eligible for Medicaid, costs almost $10 billion overall, and is almost entirely funded by the federal government: the feds fully fund the actual program, while the state pays for most administrative costs.  

A Medicaid waiver that the state applied for last year expanded the Essential Plan to cover even more people above the federal poverty line. But the program is only financially attached to Medicaid — legally, any changes to the Essential Plan would require a change to the Affordable Care Act, Hammond said.

“There’s no way to turn off the formula — it’s written into federal law,” he said.

Another program that could face cuts is NYCHA, the New York City Public Housing Authority. NYCHA provides low- and moderate-income housing to hundreds of thousands of people, by some estimates a bigger population than Miami, Atlanta or New Orleans. And according to Champeny, it’s “heavily dependent on federal funding.”

Seventy percent of NYCHA’s 2025 operating budget comes from federal funding, as does around 40% of its budget for capital funding, which includes infrastructure improvements. 

Trump’s last administration attempted to slash public housing funds, and Elon Musk’s Department of Government Efficiency is creating chaos in the federal agency that oversees public housing.

People hang out outside of the NYCHA Housing complex at 344 E. 28th St on Thursday morning, August 19, 2021. Credit: Hiram Alejandro Durán/ THE CITY

Unlike something like Medicaid that is widely used across the country, including red states like Louisiana, Kentucky and West Virginia, public housing is concentrated in just a few very blue places like New York City. And the five boroughs have the highest number of public housing units and federal housing vouchers in the country. 

That means that if Republicans were looking for somewhere to cut funding that would be more politically advantageous, they could look to NYCHA. 

“This is an area where cuts could disproportionately hurt NYC,” said Champeny. “Public housing would then turn to the city for support.” 

Your budget questions, answered

Our readers had specific questions for our newsroom about the Trump budget cuts, which we answered below. Have more questions for our reporters? We’re all ears, and do the best we can to find answers. Write to us at ask@thecity.nyc.

Benefits for Seniors 

Reader Owen W. asked: I will be 71 in a couple of months, and I’ve been receiving Social Security payments for the last several years … I would like to know if the spending bill will eliminate those benefits, as well as Medicare benefits.

The Trump administration has pledged not to touch Social Security or Medicare. And unlike his statements on Medicaid, the promise seems slightly more legitimate.

“Social security and Medicare are entitlements, funded by payroll taxes, and they are not subject to federal appropriation,” said Champeny. That means that every American who qualifies is able to receive assistance — and the programs are not part of the usual year-to-year budgeting process. 

This doesn’t mean they’re totally off the table — but Champeny says it doesn’t seem like we’ll see big cuts. 

However, the administration could still impose restrictions or regulatory changes that make them harder to obtain: for example, DOGE just tried to cut costs by eliminating phone services for social security, which are predictably important for seniors who may struggle to navigate the system via a computer. 

Reader Arthur K. asked: Will SCRIE be affected?

SCRIE, or the Senior Citizen Rent Increase Exemption, is a tax abatement: for buildings that freeze rent for seniors, the landlords pay less in taxes. That doesn’t mean it’s completely separate from this process, but tax expenditures are usually offered for multiple years — “they are more on auto-pilot,” Champeny explained. Budget expenditures are more likely to be affected. 

Hypothetically, SCRIE could be cut as a way to increase tax revenue for the city, but Champeny doesn’t think that SCRIE would be at the top of the list. 

“The city would have to make the choice to cut this program instead of something else,” she said. 

Reader Gail N. asked: What would large cuts in federal funds to NYC mean for the Dept. of Aging and senior centers?

The Department for the Aging does receive some federal money: in the latest fiscal year, the department received around $76 million in federal funds of their $426 million budget — around 18%.

Some of the programs receive more federal money than others: homecare, for instance, receives $0 in federal funds, whereas Senior Employment and Benefits, a department which provides workforce training for un- and under-employed seniors, has a budget of only $9 million, and $7 million of that is federal money — or 80% from the feds.

If money were to be cut from the agency, the city would have to make the decision whether to level out the effects or eliminate a specific program. 

Seniors eat lunch at the Chinese-American Planning Council’s Open Door Senior Center, in Manhattan’s Chinatown, March 11, 2020. Credit: Gabriel Sandoval/THE CITY

Transit’s Future

Reader David S. asked: Is the Gateway tunnel project in jeopardy in any way?

Federal funds are a crucial part of the MTA’s capital plan: the big, multi-year budget that MTA officials say is needed to keep things from “falling apart.”

The last capital plan, from 2020-2024, saw an estimated $13 billion in federal dollars. Their next plan — which calls for a total of over $68 billion of funding in total — will likely need around the same level of federal funds.

In addition, if Trump does manage to nix congestion pricing, the MTA would lose the projected $15 billion they’re relying on in tolling revenue.

For concerns about the Gateway Program — a massive transit project that will create a tunnel under the Hudson connecting New York and New Jersey, we checked in with our dogged transit reporter Jose Martinez, who’s been reporting on it. 

“The Gateway project is not in jeopardy — yet,” Martinez said. Ground has been broken at various points of construction, and a majority of the project’s contracts have already been awarded for future work. 

However, the project could still be slowed under Trump, who in his previous administration was accused of delaying federal funding for Gateway for political reasons.

More broadly, the Trump administration has made several threats to funding for the MTA and congestion pricing, which brings in lots of revenue for the transit system.

Housing

Reader Gloria P. asked: Could rent stabilization be impacted?

Rent stabilization and rent control aren’t part of city budgeting. They’re underpinned by state laws that date back to 1969, and were updated most recently in 2019 with the Housing Stability and Tenant Protection Act.

The right to a rent-regulated lease is baked into tax policy and the development of new housing, not something that is paid for by money changing hands between the federal government and New York.

Does that mean it’s completely off the table? We can’t say for sure, but it would take far more effort than simply balancing the budget — and it’s not like deregulating rent would send money directly back into the city’s coffers, unlike other options.

“I would say it’s like three steps from the immediate bulls-eye,” said Chafee of the IBO.

However, if funding is cut broadly for public housing, that will mean the city will have less ability to develop affordable housing in the future, much of which is rent stabilized.

Courts and Public Defense

Reader Sarah C. asked: How could funding for legal services and public defense be affected by any federal funding cuts?

The salaries of public defenders in the city aren’t paid for by federal money — it’s mostly a combination of state and city funds through large contracts to the public defender organizations. However, as we mentioned earlier, the state could hypothetically reallocate funds from legal defense services if we face other cuts. Gov. Kathy Hochul faced backlash last year for attempts to cut public defense spending.

Climate Plans

Reader Avi K. asked: What’s happening with the Fed’s Weatherization Assistance Program (WAP) and the state’s NYSERDA programs?

In Trump’s Office and Budget Management memo that declared a funding freeze, he sought to pause all funding related to the Green New Deal. Though the Green New Deal famously never passed and does not exist, Trump has been open about walking back Biden’s climate commitments, including stopping payments that were part of the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. 

The federal funding freeze has since been stopped — but it’s clear that any climate-related program faces an uncertain future. 

New York agencies and authorities have been awarded over $1.3 billion in grants for conservation, clean air and energy programs through the IRA, according to the office of State Comptroller Tom DiNapoli. (New York’s municipalities, businesses and nonprofits had been awarded another $646 million.)

NYSERDA, the New York State Energy Research and Development Authority, runs programs that aim to reduce greenhouse gas emissions and promote sustainability. Its programs related to clean electricity, energy-efficient buildings, clean transportation, and general planning all are funded at least partially by federal grants, including nearly $585 million in funds awarded through the IRA.

NYSERDA won $249.8 million to help fund a solar program to lower utility bills for low-income customers and hasn’t spent any of that money yet. Of the $159 million for rebates for home energy retrofits, NYSERDA spent about $547,500, and of the $158.4 million for rebates for high-efficiency appliances, NYSERDA spent $5.8 million. Other programs NYSERDA wont funding for include assistance for building codes and contractor training. 

The Weatherization Assistance Program is a program that helps low-income New Yorkers make their homes more energy efficient, paid for in part by other programs like the Home Energy Assistance Program (HEAP), Sustainable Energy Resource for Consumers (SERC) and Weatherization Readiness Funds (WRF). Parts of the Bipartisan Infrastructure Law meant to help people with high energy costs also fund the program. 

HEAP, in particular, is fully funded by the federal government. When the fund runs out, the state simply closes off residents’ access to applying for the program. This happened late last year – irrespective of any threats of federal funding cuts. 

A representative from the WAP had no comment. 

As for post-disaster aid (from after Hurricanes Sandy and Ida), City Hall spokesperson Liz Garcia said that “we have not been informed that HUD or FEMA disaster-relief funding is at risk.”

Additional reporting by Jose Martinez and Samantha Maldonado.

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