New York City is staring down a $7.25 billion budget gap this coming fiscal year — and the savings trumpeted by Mayor Zohran Mamdani, including $100 million over two years in school-contract savings he bragged about last week, are barely a drop in the bucket.

Artificial intelligence offers a once-in-a-generation chance to boost government productivity, lowering the city’s costs.

Yet an obscure but significant state law known as the LOADinG Act threatens that opportunity.

The statute began in 2023 as an AI-transparency bill for state agencies, with the stated purpose of establishing accountability and transparency for AI use in government decision-making — a reasonable and even worthwhile goal.

Three years and three rounds of amendments later, however, the LOADinG Act has evolved from a law to protect the public to one that protects government employees.

The accountability and transparency provisions were mostly removed.

In their place is a legislative ban on government agencies using AI to displace employees, cut their hours, reduce their pay or benefits, or transfer “duties and functions currently performed” by a worker to an automated system.

In simple terms, it guarantees that no civil servant will lose a job, or even a single task, to AI.

These protections extend to school districts, SUNY, CUNY, and counties, cities, towns and villages — that is, nearly every public employer in the state.

The law’s language covers “city” without qualification: no population threshold or NYC carve-out, unlike other state laws.

So its protections, which were extended to city employees in February 2026, could have big budget implications for Gotham.

While the law doesn’t outright ban city agencies from using AI, it effectively prohibits it where it could most effectively reorganize bureaucracy away from the staffers who are now doing it, making it impossible for managers to reassign and automate routine work like intake, triage, first-pass drafting and document review.

A legal regime that permits automation in theory but bans it in practice exists to protect incumbents, not to encourage adoption.

The law hands public-sector unions a statutory basis for a grievance or an improper-practice charge whenever an agency’s AI use touches a unionized job.

The city got a preview of its likely consequences in Nassau County last fall.

After the county district attorney’s office sought to introduce automated systems to handle case-input work, the Civil Service Employees Association filed a charge with the state’s Public Employment Relations Board.

The union disputed the new tech on the grounds that it cut into members’ overtime, resting its claim on the union’s contract and ordinary bargaining law rather than on the LOADinG Act (which at the time didn’t yet reach counties).

City agencies may now face similar disputes — but with a statutory floor behind them.

The law is a form of union job protection that applies automatically, doesn’t depend on what any contract says, and bars agencies from shifting tasks to AI even when nobody’s job or pay is at stake.

That’s because the statute doesn’t define its key terms: No court or agency has interpreted what “displacement” means in this context, or “duties and functions currently performed,” and the law doesn’t say which tools even count as a covered AI system.

And the burden of guessing wrong will fall on the agency, not on the union bringing the charge.

For city lawyers, the safe (and predictable) bet is the broadest possible reading: avoid automating anything that touches a union job, not just the uses that would actually cost someone a position, hours or pay.

That kind of caution will carry a huge opportunity cost.

City agencies can deploy AI for functions nobody currently performs — but risk-averse agency leaders will leave untouched the routine, high-volume work that wastes so much staff time.

They’ll confine automation to the margins, foreclosing the savings New York City needs most right now and weakening the case for investing in AI at all.

Agencies will bear the cost of software and training, but lack the freedom to reorganize the work that would pay for them.

Yet government exists to provide services — not to guarantee the jobs of the people who provide them.

A statute that began as a question about whether New Yorkers could trust their government’s use of AI has become one that asks whether, in practice, government can use AI at all without organized labor’s sign-off.

The LOADinG Act’s job protections expire in July 2028, unless Albany renews them.

Before it does, City Hall and the Legislature owe New Yorkers a closer look at what the law actually protects — and who pays for it.

Sean Speer is a technical writer at Manhattan Institute.