Boston Mayor Michelle Wu announced her $4.8 billion budget for fiscal year 2026 on Wednesday morning, one she said aims to provide stability while preparing for uncertainty in the future of federal funding.

Boston relies on $300 million in federal funding each fiscal year. Wu said the city has never made a mid-year budget cut to staffing positions, except when it’s had to adjust for cuts at the state level.

“So far, that has been relatively legally protected, but we know that right now the law is not seen as a boundary either,” Wu said of federal funding at the annual budget breakfast. “And so we need to be preparing for the worst in every case.”

Wu said given the new federal climate, city layoffs could have to be considered in the future.

The proposed budget marks a 4.4 percent increase from last year, adjusting for a one-time Housing Accelerator Program appropriation. It would eliminate nearly 500 city government positions that have been vacant for over a year; it does not call for any new positions and reduces spending on non-personnel items, such as equipment and supplies.

The City Council must still approve the budget, which would take effect July 1.

Wu also unveiled a five-year $4.5 billion capital plan to invest in essential services across the city, from roads and sidewalks to school renovations, parks and library buildings. The plan decreases slightly from the last one in size and number of projects; it includes 72 Boston Public Schools projects and aims to improve responsiveness to safety requests on the 311 line.

Property taxes remain the primary revenue source for all city services. The mayor said her administration continues to "push for relief for residents who've had to bear the increased tax burden," as the commercial tax burden has decreased.

In comments after the speech, Wu emphasized the risks to local funding under the Trump administration: "We know this will still be a period of uncertainty that will last probably the next 4 years at least," she said, noting she's hearing from residents across the city who "really are struggling right now."

Josh Kraft, who's running against Wu in the mayor's race, has criticized her handling of the budget.  He told WBUR in an interview this week, "Nothing is more core than fiscal responsibility, and a budget that's grown 20 percent in three years is something that I don't think shows a lot of fiscal discipline."

City officials say this year's budget was a more collaborative process between the mayor’s office and the City Council than in the past. City Councilor Brian Worrell said budget conversations began in November and have gone through working sessions and public hearings, which will continue until the council votes on the plan.

The council’s recommendations include prioritizing housing and food insecurity, protecting diversity and inclusion amidst the Trump administration’s crackdown, and funding quality-of-life issues, including clean streets and better pest control.

“The mayor’s proposed budget therefore reflects much of the Council’s advocacy, and much of what we’ve heard from community,” council President Ruthzee Louijeune said.

One beneficiary is a community center in Allston-Brighton. The center is slated to get revitalization funding, Louijeune said, after longtime calls from the community.

The city's chief financial officer, Ashley Groffenberger, also highlighted programs such as downtown office conversions to create more dorms and workforce housing, and a partnership with Eversource and National Grid to help residents manage utility bills.

“This year, we’re focusing on achieving that balance point: preparing for the worst case scenarios, given federal uncertainty and the larger economy," Wu said, "while not jumping ahead to slash city services that we know are more critical than ever for our residents and businesses."

This story— first published by WBUR— is part of a partnership between WBUR and the Boston University Department of Journalism. With additional reporting from WBUR's Mira Donaldson. The Reporter and WBUR share content through a media partnership.