New Rochelle proposes $256 million 2026 budget, council presses for detail on cuts and capital reduction

The City of New Rochelle—s administration presented a proposed 2026 budget that holds the tax levy increase to the state cap formula (a 2.64% levy increase) and limits use of the city—s unassigned fund balance as it seeks to restore fiscal stability after 2024 audit findings. City finance staff said the all‑funds proposal totals $256,000,000, a roughly $20.5 million reduction from the prior year driven largely by trimming capital projects.

City Manager and finance staff said the city expects to finish the year with an improved unassigned general fund balance (they projected ending the year around $17 million and estimated a 17.49% unassigned‑balance percentage for 2026) and to remain below a 25% debt limit used by rating agencies; "we stayed within the debt limit — we're at 24.5%, under 25%," Ed, finance staff, told the council.

The package relies on ongoing strong sales tax and pilot revenues to offset other pressures; staff reported steady sales tax performance and noted that pilot payments reduce property tax pressure for homeowners by shifting some revenue streams into a developer PILOT arrangement.

Council members asked for greater detail about several items in the presentation. Council member Tarantino questioned the rationale and savings from a $5 million retirement prepayment that staff said reduced future liabilities; Tarantino said he calculated the city might have foregone investment yield by prepaying the obligation. "If we have $5,000,000 at 4%, that's $200,000," he said, arguing the city may have lost net investment income by prepaying. Finance staff responded that the prepayment was made in response to an auditor comment about a prior year practice and that the city realized net savings in that accounting treatment.

Members also pressed staff for an itemized list of the department‑by‑department cuts that produced the budget—s assumed 5% operating reductions, and for a full accounting of the capital cut that reduces planned capital spending from about $49.9 million to roughly $22.2 million proposed for 2026. "What that's gonna do is on capital budget improvements, it's gonna set us back a number of years to make that up," Tarantino said.

City staff said some capital reductions reflect one‑time sources that are no longer available — such as ARPA and other grants used in prior years — and that the administration prioritized stormwater mitigation and critical maintenance while limiting what the city will attempt to deliver in a single year to what it can reliably manage and fund. The DPW and capital planning teams said they will present a more detailed capital budget at an upcoming meeting.

What happens next: council moved several budget amendments and hearings to the consent agenda and adopted a resolution directing a public hearing on the city manager—s 2026 budget on Dec. 2. Staff told the council they will return with more detailed departmental backup (including the requested list of cuts) and a capital presentation next week.

Votes and next steps The council moved multiple budget amendment items to the consent agenda by voice vote (ayes). A public hearing on the proposed 2026 budget was scheduled for Dec. 2; staff said any additional clarifying materials would be posted and presented ahead of that hearing.

Quotes "We are proposing a budget of $256,000,000," Ed (finance staff) said during the presentation. "We're at 24.5%, under 25%" on the debt limit, he added.

"We executed the lease [for a downtown small business hub]," the city manager said of an economic development initiative that staff intend to bring online in 2026, "the build out and the operating service agreement is scheduled for 2026. I gotta tell you, it's definitely gonna happen in 2026."