While unveiling a preliminary fiscal budget Tuesday, New York City Mayor Zohran Mamdani presented what he called a last-resort plan to city and state lawmakers: raise corporate taxes and income taxes on wealthy New Yorkers, or risk nearly a 10% property tax hike for the middle class.
Mamdani unveiled a preliminary $122 billion budget for fiscal year 2026 and $127 billion by 2027, and emphasized that that the city is now facing a $5.4 billion budget gap. City officials and the City Council will now start negotiations to pass a balanced budget by June 30.
The mayor said there are two paths for a balanced budget, which is required by law: increase personal income taxes on New Yorkers earning more than $1 million and corporate taxes on the most profitable corporations, as well as the state providing more funds to the city; or raise property taxes and draw down on city reserves, including the Rainy Day fund and the Retiree Health Benefits Trust Fund.
“If we do not go down the first path, the city will be forced to go down a second, more harmful path of property taxes and raiding our reserves — weakening our long-term fiscal footing and placing the onus for resolving this crisis on the backs of working and middle-class New Yorkers," Mamdani said. "We do not want to have to turn to such drastic measures to balance our budget. But, faced with no other choice, we will be forced to.”
Governor Kathy Hochul on Monday allocated an additional $1.5 billion in operating expenses over two years to help address New York City’s fiscal challenges. That said, the mayor has also been pushing state legislators to increase allocation to the city.
Mamdani repeated that he did not want to raise property taxes and implied that it was a starting point for negotiations. If property taxes were raised by 9.5%, the city would generate $3.7 billion in fiscal year 2027, he said.
City Comptroller Mark Levine called the preliminary budget an honest accounting, but warned against raising property taxes.
"To rely on a property tax increase and a significant draw-down of reserves to close our gap would have dire consequences," he said in a statement. "Our property tax system is profoundly unfair and inconsistent, and an across-the-board increase in this tax would be regressive. Drawing down reserves during a period of economic growth would leave us vulnerable to economic turbulence next year."
Levine called for the administration to find greater efficiencies and savings across all agencies and reconfigure programs that are growing at an unsustainable rate.
City Council Speaker Julie Menin and Council Finance Chair Linda Lee said a property tax hike should not be on the table.
“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," the two said in a statement. "The Council believes there are additional areas of savings and revenue that deserve careful scrutiny before increasing the burden on small property owners and neighborhood small businesses, which could worsen the affordability crisis."
