BOSTON — As Boston confronts a deepening fiscal crunch, Mayor Michelle Wu has ordered all city departments to trim their budgets by 2% heading into the fiscal year 2027 cycle — a savings plan that mirrors the approach former mayoral candidate Josh Kraft put forward during the 2025 campaign.

The directive comes as projections show Boston could lose up to $2 billion in commercial tax revenue over the next five years. Downtown office vacancies remain stubbornly high, development has slowed, and homeowners are preparing to absorb an average 13% property tax increase — more than $700 for a typical household.

Those pressures are not new. Kraft said that during the campaign, he repeatedly warned that weakening commercial values and prolonged office vacancies would eventually shift the tax burden onto residents if City Hall failed to act early.

“Ten months ago, I raised grave concerns about the high commercial vacancy rate in Boston and what that loss of commercial tax revenue would mean for homeowners if not immediately addressed,” Kraft told Mass Daily News.

Kraft said his proposal was straightforward: a modest, across-the-board 2% reduction in departmental spending designed to impose discipline before the situation worsened. At a candidate forum earlier this year, Wu dismissed the idea, warning that such cuts would lead to layoffs and reductions in core city services and arguing that Boston’s budget was already lean.

But as the economic picture has darkened, City Hall is now adopting a version of the very framework that was brushed off during the race. Office values have continued to fall as remote and hybrid work reshape Boston’s commercial core, and the pipeline of major development projects — a key source of future tax revenue — has thinned.

“My concerns were downplayed, yet this is exactly where we find ourselves today,” Kraft said, as homeowners begin to feel the effects of those trends.

Wu has also renewed her push for state legislation that would allow the city to levy higher tax rates on under-occupied commercial buildings to stabilize revenue. Supporters of the mayor say the new budget directive reflects updated data and rapidly changing economic conditions.

Kraft, however, said his original proposal was intended to reduce the burden on residents before it reached its current level. He argued that earlier restraint could have softened this year’s tax increase.

“At the time, I proposed a 2% city-wide budget cut that would have lowered the exorbitant 13% tax increase homeowners are now facing,” Kraft said. “Homeowners are already overburdened by the high cost to live and raise a family in Boston.”

Rather than framing the moment as political, Kraft said the situation underscores the need for steady financial management.

“I thought it was a good idea then and I continue to think it is a good idea,” he said. “It’s about fiscal discipline.”

Analysts note that Boston’s financial outlook has tightened faster than anticipated. Whether the mayor’s directive proves sufficient will depend on how quickly commercial property values stabilize and how aggressively spending growth is restrained in the coming years.

Kraft suspended his bid for mayor of Boston earlier this year, days after the preliminary election. The city is now embracing a strategy once rejected — after years of spending growth left little room to maneuver.