Mamdani Dangles Property Tax Hike Unless Albany Lets City Tax the Wealthy First

With New York City’s future fiscal health in tension, a showdown over who should shoulder the burden—its richest residents or its broader property-owning class—offers a case study in urban governance under financial duress.

New Yorkers prize their annual rites, from the first Mets game to the last snowplow after a Valentine’s storm. Less beloved is the city’s recurring budget drama, which this year has acquired new urgency. Mayor Zohran Mamdani’s threat to raise property taxes by a hefty 9.5% unless Governor Kathy Hochul allows him to squeeze more from the wealthy and corporations marks the city’s fiscal sparring as unusually stark.

On January 28th, Mamdani unveiled his $127 billion preliminary budget for fiscal year 2027, bluntly charting two possible routes out of a $5.4 billion gap. Either Albany grants the city the authority to tax high earners and large firms, or City Hall must dip once again into reserves and, more painfully, ask property owners—with their condo common charges and Queens bungalows—to pony up. The administration calls these “paths”; critics see them as a rhetorical pincer.

Behind the mayor’s brinkmanship lies both familiar mathematics and novel politics. Adjusting the property tax rate, last attempted in the Bloomberg era, is one of the few tools that remain in a city whose fiscal levers are mostly held in Albany. Absent new powers, City Hall’s 9.5% hike would fill a projected $3.7 billion hole. The rest would be patched with $980 million from the Rainy Day Fund and $229 million from the Retiree Health Benefit Trust, exhaust valves better left untouched in a city notorious for its cyclical fortunes.

Notably, the bulk of new spending would not fund mayoral vanity projects but plug gaps in rental assistance, shelters, and special education—lifelines during a period of slow economic rebound. A further $576 million would be allocated to more pedestrian needs: snow removal, food aid, and lawyers to clear mounting backlogs.

If Mamdani’s gambit bodes well for transparency, it portends discomfort for nearly everyone else. Property owners—already beset by high insurance and underwhelming city services—face the rare prospect of a double-digit rate bump. Renters may think themselves immune, but landlords’ costs tend to trickle down with grim predictability. For New Yorkers living paycheck to paycheck, the threat is hardly abstract.

Queens Borough President Donovan Richards, usually cautious in public rebuff, called the measure a “nonstarter.” Prominent housing advocates, including Christie Peale of the Center for NYC Neighborhoods, warn that swelling property taxes risk pushing vulnerable families to the brink. Such concerns recall the brutal lessons of the city’s 1970s fiscal crisis, when tax hikes and service cuts sapped both economic dynamism and public trust.

Fiscal arithmetic, however, brooks little sentimentality. The previous administration’s budgetary optimism overstated tax receipts even as federal pandemic aid tapered off. While Mamdani’s team claims credit for $1.77 billion in efficiency savings and improved revenue projections, the city remains tethered to the state: it sends over $18 billion more annually to Albany than it receives in return. Without new revenue streams, hard choices are inevitable.

Property taxes, though a familiar scapegoat, pun intended, are already contentious in a system where valuations lurch unpredictably and the burden falls sharply on small homeowners and multifamily dwellers. By contrast, Mamdani’s preferred target—high earners and corporations—has its own hazards. The city’s top 1% account for a paltry 43% of personal income tax receipts, and the fear of capital flight is not wholly fanciful. Entrepreneurs and hedge-fund managers need not stay when Miami or Dallas beckons.

Dueling fiscal philosophies

Other cities—and indeed, nations—face parallel debates. London’s Sadiq Khan, too, struggles to tax the city’s global elite, constrained by Whitehall’s say-so. In Paris and Toronto, urban mayors bristle at the imbalance of tax flows vis-à-vis central governments. New York’s conundrum thus fits a broader pattern: municipalities host the neediest while their taxing authority remains asymmetrical and their wealthy increasingly mobile.

What, then, should the city do? In the abstract, the mayor’s logic holds: a metropolis with fierce inequality should tilt its burdens northwards. Yet the pursuit of the “fairest” course risks unintended consequences, including the perennial spectre of footloose capital. Meanwhile, property-tax hikes, for all their political toxicity, deliver revenue with certainty and few loopholes.

We reckon that New York must chart a prudent middle path: lean more aggressively on Albany for reform—such as ending “mandate unfundedness,” whereby the city delivers state services without commensurate subsidy—while keeping property tax increases modest and tightly targeted. Longer term, lawmakers might ponder reclassifying property to ensure coop owners do not subsidize Fifth Avenue towers.

Mamdani’s willingness to dish out bad news, so rare lately in American politics, portends a more honest fiscal debate. The city cannot spend its way out of structural imbalances, nor can it indefinitely postpone hard choices. Still, if New Yorkers appear weary, they have reason: in the six decades since the fiscal crisis, budget fixes have grown more brittle while the engine of opportunity sputters.

Fiscal realism, not class warfare, must prevail. For all its bravado, this gambit reminds us that cities are where abstract debates about equity yield to the dryness of accounting ledgers and the heat of snowbound boroughs demanding ploughed streets. In New York, as in other great cities, the real test is not who pays more, but whether the city can deliver more with less.

As the mayor and governor joust across their marble corridors, it falls to the city’s administrators to make do with what they have—adopting reforms, curbing excess, and ensuring that any new burdens are borne with transparency and care. In a metropolis as unequal and influential as this, the true stakes are not who blinks first, but whether anyone delivers. ■