Mayor Zohran Mamdani on Tuesday said New York City may have to raise property taxes to close a multibillion-dollar deficit if Albany does not impose new taxes on the rich or corporations as he unveiled a $127 billion budget.
The mayor’s threat signaled that the democratic socialist remains committed to raising taxes on the wealthy, even as he forges an alliance with Gov. Kathy Hochul on expanding child care, a popular initiative with voters.
The governor, a moderate Democrat who is seeking re-election, would have to sign off on any income tax increases. She has been steadfastly opposed to any kind of tax hikes.
The last time the city significantly raised property taxes was in 2003 under former Mayor Michael Bloomberg in response to the 9/11 attacks that led to a recession.
“We do not want to have to turn to such drastic measures to balance our budget,” Mamdani said during a press conference at City Hall. “But faced with no other choice, we will be forced to.”
Mamdani said he would also rely on money from the city’s reserves, which reached a record high last year of $8.5 billion.
The mayor framed the proposal as one driven by hard numbers, rather than politics. “This is not a conversation on the basis of ideology,” he said. “This is a conversation about a fiscal crisis.”
The mayor’s preliminary budget is the first step in a monthslong process. The City Council must approve the budget by June 30, before the start of the next fiscal year.
Before the mayor’s budget presentation on Tuesday, the governor told reporters she did not believe raising city property taxes was necessary. “So he’s required to put options on the table, but that does not mean that that’s the final resolution,” Hochul said.
City Council Speaker Julie Menin objected to Mamdani’s proposal, saying the Council would work to find additional savings and revenues “before increasing the burden on small property owners and neighborhood small businesses.”
“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 said in a statement.
City Comptroller Mark Levine said the city was “under the greatest fiscal strain since the Great Recession,” but he argued Mamdani should find more savings before raising property taxes. He pointed out that the city’s property tax system has long been considered unfair to single-home owners and those in the outer boroughs.
“To rely on a property tax increase and a significant draw-down of reserves to close our gap would have dire consequences,” Levine said. “Our property tax system is profoundly unfair and inconsistent, and an across-the-board increase in this tax would be regressive.”
The comptroller also warned against drawing from the reserves – a combination of different savings funds intended to cover year-to-year gaps or emergencies — because it would leave the city vulnerable to future fiscal crises.
But Mamdani is clearly intent on pressuring Albany, one day after he and the governor announced the state would give the city an additional $1.5 billion to help stabilize its finances.
Because the city is required to balance the budget by law, the mayor’s Tuesday budget bridges a $5.4 billion shortfall over the next two years by assuming a 9.5% property tax increase. The tax would affect over 3 million residential owners and over 100,000 commercial property owners, according to city officials.
The mayor’s “last resort” proposal would also draw nearly $1 billion from the city’s reserves and $229 million from a fund to pay for health benefits for municipal retirees.
In another move that some elected officials may criticize, Mamdani is canceling his predecessor Eric Adams’ phased hiring of 5,000 additional police officers. His budget proposes a $22 million decrease to the NYPD’s $6.4 billion budget next year.
The preliminary budget also did not include funding for a Department of Community Safety, the mayor’s signature public safety policy that would dispatch mental health teams to some 911 calls.
Mamdani said the new department would be reflected in his executive budget, which is due in late April following public hearings.
Asked why he did not extract more savings from the NYPD, which he criticized as a state assemblymember, Mamdani said that he has mandated cost savings from all agencies.
George Sweeting, a fiscal policy expert at the New School’s Center for New York City Affairs, questioned the logic of taxing the rich to help close a budget gap. The mayor could not use the revenue to fund other parts of his agenda that proved popular with voters, like free buses and city-owned grocery stores.
“You can’t use the money twice,” Sweeting said.
This story has been updated with new information.