To close New York City’s $5.4 billion budget gap over the next two fiscal years, newly elected Mayor Zohran Mamdani has proposed raising property taxes and tapping into reserves.
Budget Plan Hinges On State Support
Mamdani presented two options to balance the city’s $127 billion 2027 preliminary budget during a Tuesday press conference. His preferred solution involves increasing taxes on the wealthy and corporations, a key element of his campaign. However, this requires cooperation from New York Gov. Kathy Hochul, who has shown little enthusiasm for the idea.
If the state does not agree to tax the rich, Mamdani may resort to raising property taxes by 9.5% for the city’s residents. This move could affect middle and working-class citizens as much as Wall Street. The Mayor described this option as “painful” and “a tool of very last resort,” hoping to work with Albany to prevent it.
He is proposing to tap $980 million from the city’s Rainy Day Reserve in FY 2026 and $229 million from the Retiree Health Benefit Trust in FY 2027 to meet the legally required balanced budget.
“This is something that we do not want to do,” Mamdani told the reporters.
Notably, the Mayor can hike the property tax without state approval.
Mamdani’s proposal comes after a history of disagreement with Gov. Hochul over tax hikes. As reported by Spectrum News, in January, Hochul continued to downplay Mamdani’s requests for tax increases. Even on Tuesday, in a separate event, Hochul told reporters, “I don’t think a property tax increase is necessary,” City Hall Bureau Chief of the NY Post, Craig McCarthy, wrote on X.
Mamdani Tax Plan Faces Backlash
Taxing the wealthy and implementing a rent freeze on all rent-stabilized apartments in NYC were two of the cornerstone proposals of Mamdani’s mayoral campaign. Multi-unit buildings, typically home to renters, generally face higher effective tax rates than one to three-family homes, and those higher taxes on landlords could eventually lead to higher rents.
NYC Comptroller Mark Levine stated that relying on a property tax increase and significant draw-down of reserves could have “dire consequences,” leaving the city vulnerable to economic turbulence. He emphasized the need for more assistance from Albany.
Furthermore, Mamdani’s policies have faced criticism in the past. In November, Treasury Secretary Scott Bessent expressed skepticism and stated that Mamdani’s proposals were “old ideas that have never worked.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
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