Unable to win the backing of the powerful state governor to increase income taxes, Mamdani, 34, has been forced to look elsewhere to fund his flagship policies that include free buses and mental health emergency responders.
Unveiling his budget for the year ahead of US$127 billion – bigger than the economy of Ethiopia – Mamdani announced he was US$5.4 billion short, blaming his predecessor Eric Adams.
In an effort to plug the fiscal black hole, Mamdani has asked centrist governor Kathy Hochul to raise income taxes on annual earnings of US$1 million plus, and to hike levies on the most profitable businesses.
He called that the most “sustainable and fairest” approach, warning the alternative – raising more regressive property taxes – risked “placing the onus for resolving this crisis on the backs of working and middle-class New Yorkers.”
That alternative would likely be hugely unpopular in a city where about 30% of people are homeowners and already pay an average of US$6,300 a year in property taxes.
‘Doesn’t seem right’
A hike would hit both residents of Manhattan’s ultra-wealthy neighbourhoods, as well as owners of single-family homes in Queens or Staten Island, upper middle class Americans the Democratic Party is keen not to alienate.
“Many of those people voted for Mamdani because he claimed he was going to make the city more affordable,” Ruth Colp-Haber, president of the real estate consulting firm Wharton Property Advisors, wrote on LinkedIn.
“That doesn’t seem right to me.”
Instead of raising taxes, “the best choice is to eliminate spending that does not improve New Yorkers’ lives and make government more efficient,” argued Andrew Rein, president of the Citizens Budget Commission, an independent public finance watchdog.
Political scientist Lincoln Mitchell of Columbia University told AFP that by threatening to hike property taxes if the governor refused to play ball, “what he’s done strategically is smart.”
“What that does is it pits the top 30% of wealthy people against the top two percent.”
The risk for Mamdani is that there is no guarantee that Hochul will agree to tax millionaires and large corporations – particularly as she faces a perilous re-election fight, said Costas Panagopoulos, a political scientist at Northeastern University in Boston.
Mamdani has already endorsed her, robbing himself of a valuable bargaining chip.
Backroom talks are ongoing in Albany to finalise the budget which must be concluded in the spring.
“It’s clear that the mayor is now coming out of his honeymoon phase,” said Panagopoulos.
“The realities of governing are setting in.”