Mamdani Proposes 9.5% Property Tax Hike as “Last Resort” to Close $5.4
Billion Budget Gap
Mayor Zohran Mamdani said his proposal to
raise New York City property taxes was a “last resort” to close a budget gap.
1.
Proposal Overview
·
Zohran Mamdani proposed a 9.5% property tax rate
increase.
·
Would raise the citywide rate from 12.28% to
13.45%.
·
Affects 3+ million residential properties
and 100,000+ commercial buildings.
·
Described as a “last resort” if Albany
rejects higher income taxes on millionaires.
2. Budget
Context
·
Preliminary budget totals $127 billion (a $5
billion increase).
·
Facing a projected $5.4 billion deficit over two
years.
·
By law, NYC budgets must be balanced.
·
Estimated to generate $14.8 billion over four
years.
3.
Alternative Plan: Tax the Wealthy
·
Mamdani seeks higher income taxes on earners
making $1 million+ annually.
·
Requires approval from Gov. Kathy Hochul and the
state Legislature.
·
Framed property tax hike as fallback if Albany does
not act.
·
Hochul downplayed likelihood of property tax
increase, citing possible savings.
4. Use of
Reserve Funds
·
Proposed withdrawal of:
o
$980 million from the rainy
day fund (current fiscal year).
o
$229 million from the Retiree Health Benefits
Trust.
·
Claims prior administration left inaccurate
projections; former Mayor Eric Adams disputes this.
5.
Political Reactions
·
City Council Speaker Julie Menin opposed property
tax hike; urged savings review.
·
City Comptroller Mark D. Levine criticized
proposal.
·
Queens Borough President Donovan Richards called it
a “nonstarter,” citing inequities in tax system.
·
Citizens Budget Commission estimated a typical
homeowner would pay ~$700 more annually.
·
Landlord groups warned of burden on small property
owners.
·
Republican gubernatorial nominee Bruce Blakeman
criticized state support for NYC.
6.
Political Strategy & Dynamics
·
Mamdani appears to be pressuring Albany while
maintaining cordial ties with Hochul.
·
Recently endorsed Hochul’s re-election bid.
·
Supporters, including the Democratic Socialists of
America, framed proposal as leverage to “Tax the Rich.”
·
Final budget must be approved by the 51-member City
Council before June 30 deadline.
7.
Broader Implications
·
First proposed NYC property tax hike since the
tenure of Michael R. Bloomberg.
·
Raises debate over affordability, tax equity, and
fiscal sustainability.
·
Sets up tense negotiations between City Hall,
Albany, and the City Council.
Conclusion
Mayor Zohran Mamdani’s property tax proposal is
positioned as a fiscal fallback amid a looming deficit, but it has sparked
political pushback and renewed debate over tax fairness in New York City. The
final outcome hinges on negotiations with Gov. Hochul and the City Council in
the lead-up to the June 30 budget deadline.
Mayor
Zohran Mamdani on Tuesday (17.02.2026) proposed to raise property tax rates in New
York City by nearly 10 percent, a measure he is preparing as a “last resort” to
be deployed if he cannot persuade Gov. Kathy Hochul to raise income taxes on the
wealthy.
The
suggested 9.5 percent increase would affect more than 3 million single-family homes,
co-ops and condos and over 100,000 commercial buildings, Mr. Mamdani said as he
delivered his preliminary spending plan.
The
mayor acknowledged that his proposal would not merely force the wealthy to pay more
taxes, but would also be a “tax on working- and middle-class New Yorkers,” and stressed
that this was not his first choice.
But
he noted that New York City mayors had little authority to raise taxes without the
governor’s and Legislature’s acquiescence, and said that a city property tax increase
— combined with raiding the city’s reserve funds — was the only way to address a
looming budget deficit projected to reach $5.4 billion over two years.
“If we cannot follow this first path,” he said,
referring to his proposed income tax hike on wealthier New Yorkers, “we will be
forced onto a much more damaging path of last resort — one where we have to use
the only tools at the city’s disposal: raising property taxes and raiding our reserves.”
“The
second path is painful,” he added. “We will continue to work with Albany to avoid
it.”
If
other options surface, Mr. Mamdani may yet water down or abandon the proposed tax
increase as the June 30 city budget deadline draws closer — a possibility that Ms.
Hochul alluded to on Tuesday, as she played down the likelihood of city property
taxes rising.
“That’s
their prerogative to look at that as an option,” she said, suggesting that cost-cutting
measures and updated accounting might make such an increase unnecessary. “He’s required
to put options on the table; that does not mean that’s the final resolution.”
The
budget plan, Mr. Mamdani’s first since becoming mayor, totals $127 billion — a $5
billion increase from the current budget — and would take effect July 1, following
revisions and negotiations with the City Council.
By
law, city budgets must be balanced. But the mayor’s initial proposal for how to
do so seemed less like a last resort and more like an opening foray in a pressure
campaign to get Ms. Hochul to back his call to raise taxes on those making $1 million
or more a year.
In
recent weeks, Mr. Mamdani has seemed to go out of his way not to antagonize the
governor, a pro-business Democrat who is up for re-election this year and with whom
the new democratic socialist mayor has forged a warm alliance despite their ideological
differences.
The
mayor recently endorsed Ms. Hochul for re-election and told allies he would most
likely skip a “Tax the Rich” rally planned for next week in Albany. And on Tuesday,
even as he warned of raising property taxes, Mr. Mamdani praised the governor for
her ongoing cash advances to New York City, including $1.5 billion announced on
Monday for a host of city services.
Still,
the prospect of a property tax rate increase — which New Yorkers have not seen since
Michael R. Bloomberg was mayor — did antagonize others, including the city comptroller,
Mark D. Levine, and the Council speaker, Julie Menin, who also holds sway in the
final city budget.
Ms.
Menin, a Democrat, said in a statement that she opposed the property tax proposal,
but did not recommend a wealth tax increase.
“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,” she said. “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.”
The
Queens borough president, Donovan Richards, another Democrat, called raising property
taxes “a nonstarter.”
“In
this new era, Queens homeowners desperately need our city to reform its already
broken property tax system — one that sees Black and brown homeowners in middle-class
communities paying more than brownstone owners in the city’s most affluent neighborhoods,” Mr. Richards added.
New
York City’s property tax system is both byzantine and opaque, making it difficult
to assess the impact of Mr. Mamdani’s proposed increase.
The
mayor is proposing raising the citywide rate across the four property tax classes
— which range from Class 1, small homes, to Class 4, including offices and hotels
— to 13.45 percent, from the current 12.28 percent.
The
Citizens Budget Commission, a nonpartisan think tank, said the suggested rate increase
would amount to a property tax increase of about $700 a year for a typical owner
of a one-, two- or three-family home.
Andrew
Rein, president of that commission, said Mr. Mamdani is presenting a “false choice”
between income and property tax hikes, and should look for more cuts and savings
in the budget.
Mr.
Mamdani is estimating the tax move would raise an additional $14.8 billion over
four years, according to budget documents.
The
mayor also proposed raiding the city’s reserves, taking $980 million out of the
so-called rainy day fund in the current fiscal year, and
drawing $229 million down from the city’s Retiree Health Benefits Trust for the
upcoming fiscal year.
In
his campaign for mayor, Mr. Mamdani repeatedly called for a wealth tax to help pay
for a universal child care system. But in January, the governor and the mayor agreed
on a plan to expand child care without raising taxes.
Now
the mayor has shifted the rationale for raising taxes on those earning $1 million
or more, saying that it was needed to address the budget gap — which he has blamed
on inaccurate number crunching by his predecessor, former Mayor Eric Adams. (Mr.
Adams has said he left Mr. Mamdani with over $8 billion in reserves.)
The
mayor said his administration has identified another $1.7 billion in savings to
reduce the budget gap, though he was not specific about what those measures would
entail.
The
City Council must approve city budgets, giving Ms. Menin and the 51-member legislative
body significant sway over what is likely to be a thorny negotiation process.
Mr.
Mamdani’s most loyal backers echoed the mayor’s messaging that the governor should
push for a wealth tax.
In
a statement, Divya Sundaram, the deputy director of Our Time, a nonprofit dedicated
to enacting Mr. Mamdani’s agenda, did not address the notion of a property tax hike,
instead demanding Albany raise taxes on the wealthy. “The money is there,” she said.
“Governor Hochul only needs to prioritize the lives of working-class New Yorkers
over the windfall profits of the billionaire class.”
The
New York City chapter of the Democratic Socialists of America also framed the mayor’s
budget proposal as evidence that the governor “must #TaxTheRich.”
Landlord
groups had a different perspective.
“The
mayor has declared war on thousands of immigrant property owners, most of them multigenerational
families, who have their entire life’s savings invested in their small buildings,”
said Ann Korchak, board president of Small Property Owners of New York, who said
that such an increase, combined with a rent freeze, would crush small owners.
And
they were not alone.
Bruce
Blakeman, the Nassau County executive who last week clinched the Republican nomination
for governor, said that Democrats should be focused on tax relief, rather than increases.
He
criticized the $1.7 billion investment announced this week as yet another example
of Democrats in general — and Ms. Hochul in particular — prioritizing New York City
ahead of the rest of the state.
“Kathy
Hochul is happily handing billions to New York City while suburban and upstate taxpayers
struggle to pay their bills,” he said in a statement. “Why should someone on Long
Island, the Hudson Valley, or western New York be asked to pay for policies and
programs that don’t benefit their communities?”