Disputes over budgets can make enemies out of friends, but they can also have the opposite effect.<\/p>\n
New York City\u2019s mayor, Zohran Mamdani, and its City Council speaker, Julie Menin, put aside their growing list of differences to join together on Tuesday to announce that they would extend the deadline for the mayor to introduce an executive budget and call on Gov. Kathy Hochul to send more money to help the city\u2019s fiscal woes.<\/p>\n
At the heart of their pitch was a proposed change to a tax credit called the Pass Through Entity Tax used by some business owners. If implemented, they asserted that the measure could raise up to $1 billion a year in tax revenue.<\/p>\n
Mr. Mamdani insisted it was crucial that the state step up. \u201cA crisis of this scale cannot be handled without state action,\u201d he told reporters.<\/p>\n
But in a sign of the inertia weighing down both city and state budget negotiations, Ms. Hochul immediately threw cold water on the request, noting the billions of state dollars earmarked for child care, cash assistance and a new tax on second homes in New York City.<\/p>\n
\u201cI think it\u2019s crystal clear,\u201d she said. \u201cWe have helped them.\u201d<\/p>\n
The state budget is already nearly a month overdue, and the fiscal uncertainty has now begun to affect the rest of the state<\/a>. At their news conference on Tuesday, the mayor and Ms. Menin said they would push back the executive budget release to May 12, in the hopes that they could convince the state to be more generous.<\/p>\n Here\u2019s where things stand.<\/p>\n What do Mamdani and Menin want?<\/p>\n Any proposal to raise New Yorkers\u2019 taxes \u2014 especially in a year where the governor is running for re-election \u2014 is going to be a hard sell, even with New York City facing a projected $5.4 billion deficit through the next fiscal year.<\/p>\n In seeming recognition of that, Mr. Mamdani and Ms. Menin chose to target the Pass Through Entity Tax, an optional tax that certain businesses can pay in order to get a credit on their state income tax returns.<\/p>\n The New York City leaders asked the governor to consider cutting the P.T.E.T. credit to 75 percent from 100 percent, suggesting that the change would generate as much as $1 billion each year by essentially targeting the wealthy.<\/p>\n \u201cAny way you slice it, it\u2019s basically a tax increase on these people,\u201d said Andrew Rein, the president of the Citizens Budget Commission. Mr. Rein urged the mayor to first delineate how his administration planned to achieve a promised $1.7 billion in savings before clamoring for more tax hikes.<\/p>\n When asked about the proposal on Tuesday, Ms. Hochul did not mince words.<\/p>\n \u201cIt\u2019s not happening,\u201d she said.<\/p>\n What type of tax would Hochul prefer?<\/p>\n Despite her resistance to raising income taxes, Ms. Hochul has come to support a measure that would tax second homes<\/a>, sometimes called pieds-\u00e0-terre, in New York City worth upward of $5 million.<\/p>\n The measure has received a warm welcome in the Legislature, even in the absence of details of how the tax might work.<\/p>\n The governor has claimed that the measure will raise at least $500 million a year for the city. But it remains unclear what tax rates would need to be imposed to raise that figure.<\/p>\n There are also serious questions around how the city would determine which properties ought to be taxed: Assessed values would perhaps be the most straightforward metric, but these values are notoriously low, leading many multimillion dollar homes to appear as if they are worth far less.<\/p>\n Real estate and business groups, including the Partnership for New York City, are opposed to the proposal and have requested a carve out for people who can prove they already contribute substantially to the city\u2019s economy.<\/p>\n Kara Cumoletti, a spokeswoman for the Hochul administration, said the governor had discussed the plan with a wide range of \u201cimpacted stakeholders\u201d and remained committed to the plan. \u201cIf the business community has additional ways they would like to generate revenue for the city, they are welcome to propose them,\u201d she said.<\/p>\n Is New York City being slighted by the state?<\/p>\n At the heart of the city\u2019s request is an unbalanced equation: New York City continuously sends more money to Albany than it receives in return, by the billions of dollars.<\/p>\n In recent years, New York City has contributed nearly $69 billion in state tax revenue, according to a report by the CUNY Institute for State and Local Governance<\/a>, roughly 55 percent of all state tax receipts.<\/p>\n Of that haul, around 40 percent is returned to New York City from the state operating fund \u2014 roughly $47.6 billion, the study found.<\/p>\n Mr. Mamdani has blamed this imbalance for the city\u2019s dire financial straits. \u201cThat gap is not sustainable, and if we fail to close it, crises like these will become a routine occurrence,\u201d he urged on Tuesday.<\/p>\n Mr. Mamdani\u2019s critics argue, however, that as the wealthiest municipality in the state, New York City has a responsibility to redistribute some of its revenue to poorer areas, much as Mr. Mamdani argues wealthy individuals should be taxed to benefit poorer individuals.<\/p>\n Where does the mayor\u2019s property tax proposal stand?<\/p>\n Mr. Mamdani first raised the notion of a property tax hike as a threat: If Ms. Hochul was unwilling to raise taxes on the wealthy, the city would have no choice but to raise revenue through a tax it controls.<\/p>\n The mayor was instantly barraged by concerns from members of his own coalition \u2014 most notably by representatives of Black homeowners in Brooklyn \u2014 who protested the tax<\/a> as regressive. Since then, Mr. Mamdani has mostly backtracked on the proposal, telling city and state lawmakers that he was unlikely to pursue such an increase in a series of closed-door meetings.<\/p>\n \u201cWe are continuing to work every day to ensure that it\u2019s off the table,\u201d Mr. Mamdani said in an interview<\/a> with The New York Times.<\/p>\n What happens if no new taxes are implemented?<\/p>\n The most likely scenario is that the city will have to make cuts to its programs and services, as Mr. Mamdani\u2019s predecessor, Eric Adams, repeatedly did and undid<\/a> amid a torrent of criticism. It\u2019s an outcome that Mr. Mamdani, who has sought to use his term as proof that the government can deliver meaningfully for people, would like to avoid.<\/p>\n