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Mayor Michelle Wu did not rule out potential hiring freezes and layoffs if President Trump’s policies lead to worsening financial crises.
When Boston Mayor Michelle Wu announced her $4.8 billion budget proposal for the 2026 fiscal year Wednesday, there was one overwhelming theme: preparation for continued financial turbulence under the second Trump administration.
As the White House pursues an aggressive new tariff policy, global markets are slumping and the odds of a recession are rising. Wu has been watching the chaos unfold.
“I’ve been checking the headlines, I’ve been monitoring the financial markets, and it’s not pretty. And it looks to be getting even worse,” she said at a “Budget Breakfast” on Wednesday morning.
The mayor also warned that Boston could find itself losing out on federal funding. Boston relies on about $300 million in federal funding every year to support a variety of city services. Wu has been a frequent target of Trump allies, and there is a possibility that the federal administration could try to cut funding.
“Right now the law is not seen as a boundary either, and so we need to be preparing for the worst in every case,” Wu said.
That worst-case scenario could cause the Wu administration to implement hiring freezes or lay off city workers. Wu did not rule out either possibility if the federal government plunges the country into deeper financial trouble.
“Should we be entering into a more serious economic crisis triggered by this federal administration, it may very well get to the point where we will need to be considering layoffs and hiring freezes,” she said. “I and this team are going to manage as hard as we possibly can to avoid that.”
The new budget proposal represents a 4.4% increase over the current fiscal year budget. This is in line with the rate of inflation, officials said.
Wu and Chief Financial Officer Ashley Groffenberger stressed that the city’s budget should remain more stable and resilient to short-term economic volatility than that of many other cities. More than 70% of the city’s revenue comes from property taxes, which continue to be stable, Groffenberger said. Excise revenue is more exposed to economic pressures, she added, but this represents just 6.4% of the city’s total revenue.
Being able to continue city services uninterrupted is the priority, Groffenberger said. This means investing in “nuts and bolts” like improvements to the 311 system or trash collection.
The city will not be adding new positions or investing in any major new programs, Groffenberger said. The administration is calling to cut non-personnel line items like equipment and supplies. It is also eliminating some long-term vacancies, those positions that have been vacant and without “activity” for more than a year.
Wu spent much of last year pushing for the ability to shift more of the city’s property tax burden onto commercial properties, only to be stymied on Beacon Hill. During this process she resisted calls to implement budget cuts and dip into the city’s financial reserves. Wu maintained that this was the right decision, that the current budget is solid and that the fiscal year is proceeding as planned. The city is better positioned to adapt to the economic uncertainties that will likely continue during fiscal year 2026 because of these actions, Wu said.
Wu expects calculations to change as the federal government continues to sow “chaos and disruption,” she said. The budgeting process will now involve a series of back-and-forths with the City Council before a June deadline. More than 40 departmental hearings are scheduled to take place before the end of May, Councilor Brian Worrell said.
Wu outlined the specifics of her budget recommendation in a letter Monday to the City Council. It can be found below.
Mayor Wu FY26 Transmittal Letter by Ross Cristantiello on Scribd
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