New York City Mayor Zohran Mamdani has ditched his plan to raise New Yorkers’ property taxes — an unpopular measure he threatened to use to help close a two-year deficit.
The decision to drop the tax hike came as Mamdani unveiled a $124.7 billion executive budget on Tuesday — the latest version of the mayor’s spending plan for the fiscal year that begins July 1.
“We have balanced the budget, and we have done so without placing the burden on the backs of working New Yorkers,” Mamdani said at a news conference at City Hall on Tuesday. “This budget does not raise property taxes and it refuses to slash services.”
Mamdani’s new budget proposal includes roughly $4 billion in additional aid from Albany that the mayor and Governor Kathy Hochul announced Tuesday, including $500 million from a surcharge on expensive second homes in New York City. The so-called pied-à-terre tax is being considered as part of state budget negotiations, and details of how it could be implemented are still unclear.
The budget announcement is a milestone for Mamdani, who had faced skepticism that he could come up with a plan to close the deficit without cutting services or imposing substantial tax increases. But it’s far from a done deal, with the plan requiring approvals by state lawmakers and the City Council — and with political pushback to the pied-à-terre tax from wealthy businesspeople like Citadel founder Ken Griffin.
Among the largest components of the new state aid is $2.3 billion saved over two years from a proposal to amortize city pension payments. That change would require state approval, as well as signoff from five affected pension funds. The mayor is also planning to receive $68 million from a reduction in the city’s unincorporated business tax credit.
Mamdani called the pied-à-terre tax and the change in the unincorporated business tax credit, which would mostly affect affluent taxpayers, “common-sense measures.” He said the city is working with Albany on plans to administer the second-home levy.
More than $500 million in savings will come from delaying the state’s imposition of a limit on school class sizes. The city also anticipates saving more than $600 million from reining in costs for programs that provide rental subsidies to people at risk of homelessness and reimburse families for private tuition payments for students with learning disabilities.
The additional state funding announced Tuesday is part of the state’s yet-to-be-finalized budget, and is contingent on approval from the Legislature.
“I have been committed to ensuring New York City succeeds, because a strong and stable City means an even stronger New York State,” Hochul said in a statement.
Earlier this year, as part of his preliminary budget, Mamdani threatened to raise property taxes by nearly 10% as a way to lobby Hochul for more funding. He had little support for an across-the-board increase, with City Council members including Speaker Julie Menin opposing the plan. Any increase would have needed to be passed by that chamber.
Menin and Council Member Linda Lee, who chairs the finance committee, said they had a “productive” meeting with Mamdani and will hold hearings on the spending plan over the coming weeks.
The initial budget proposal from the mayor’s office alarmed credit rating companies, who changed their outlook on the city to negative, citing the city’s long-term structural deficits. Mamdani also had proposed sweeping nearly $1 billion from the city’s savings, which are supposed to be used in times of fiscal calamity, to help close the gap.
For months, Mamdani has warned about the city’s financial situation, calling it “a generational fiscal crisis” that rivals the Great Recession. He has repeatedly called for higher taxes on the wealthy and corporations to help right New York City’s budget, though those asks have been met with resistance by Hochul.
Raising property taxes was one of the few actions to address New York City’s financial challenges that wouldn’t have required state approval. Other changes, including altering the income or corporate levies, would require signoff from Albany.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Laura Nahmias
