Zohran Mamdani at a news conference in January.
Photo: Michael Nagle/Bloomberg/Getty Images
On Tuesday, Mayor Zohran Mamdani warned that the city could be forced to raise property taxes unless Albany implements a tax increase on the state’s wealthiest earners, issuing a clear ultimatum for Governor Kathy Hochul, who is running for reelection and has been publicly opposed to a tax hike on the wealthy.
In the first preliminary budget proposal of his term, Mamdani laid out this potential future in his proposed $127 billion budget, which factors in a 9.5 percent increase in property taxes and would see the city withdrawing $980 million from the city’s Rainy Day Fund this year as well as drawing down $229 million from the Retiree Health Benefits Trust in the next fiscal year. The final budget, once negotiated over and approved by City Council, will take effect July 1.
During his briefing, the mayor described a city at a crossroads, facing two potential paths to balance the budget under a looming $5.4 billion budget gap Mamdani described as “historic.” Mamdani said his administration’s preferred funding path would be to generate revenue by a 2 percent increase in personal-income taxes on New Yorkers earning more than $1 million a year as well as raising corporate taxes on the state’s most profitable corporations, calling it the most “sustainable and the fairest” option.
But in lieu of statewide support for his longstanding campaign promise, the mayor said the city would instead be forced to make a more difficult choice: raising property taxes and taking money from the city’s reserves, a move Mamdani described as a “last resort.”
“We remain firmly within a budget crisis. It is a crisis that we can and will overcome. But we cannot do so without either significant structural changes in Albany or painful decisions of last resort here at home,” Mamdani said. “I am encouraged and heartened by the relationship that we have built with Governor Hochul and the state legislature and hopeful that we can arrive at a fair solution at the end of this budget process.”
While Mamdani touted his growing relationship with Hochul, his proposal highlighted a well-established policy difference between the democratic-socialist mayor and the more moderate governor. While the pair have found several points of collaboration on issues like child care, Hochul has been blunt about her opposition to a wealth tax. At an unrelated press conference Tuesday, the governor signaled that her position hasn’t changed. “I’m not supportive of a property tax increase,” Hochul said, per Politico. “I don’t know that that’s necessary, but let’s find out what is really necessary to close that gap.”
City Council Speaker Julie Menin and Councilmember Linda Lee, the Finance Committee chairman, issued a joint statement voicing their disapproval of any potential property tax increase. “At a time when New Yorkers are already grappling with an affordability crisis, dipping into rainy day reserves and proposing significant property tax increases should not be on the table whatsoever,” Menin and Lee wrote.
Their statement continued, “The Council will release its own projections ahead of preliminary budget hearings and will conduct a thorough review of the Administration’s financial projections. Our goal is to deliver a balanced budget that protects essential services, addresses the affordability crisis, and reflects shared fiscal responsibility.”
Last month, Mamdani set the stage for this week’s proposal with a grim announcement, revealing that the city was facing a $12 billion budget gap that he attributed to underbudgeting during Eric Adams’s tenure. Last week, the mayor adjusted the outlook to $7 billion, citing his administration’s use of in-year reserves and “recognizing higher-than-expected revenues.” On Monday, the forecast improved even more as Mamdani and Hochul announced that the state would be allocating an additional $1.5 billion over the next two years.
