New York City Mayor Zohran Mamdani warned that there could be a potential increase in property taxes for city residents on Feb. 17, declaring it would be a last resort to help fix the city’s budget crisis.
The mayor revealed a preliminary budget of $127 billion for the 2027 fiscal year, including a 9.5% property tax rate increase, generating $3.7 billion in revenue by the next fiscal year.
Mamdani said that this increase in taxes on businesses and homeowners would be implemented unless the state government agrees to his first proposal to raise taxes on the city’s wealthiest residents.
Mamdani’s preferred funding path would include a 2% personal income tax increase that would apply to New Yorkers earning more than $1 million a year, in addition to raising corporate taxes to 11.5%.
Alongside the property tax increase, Mamdani also proposed dipping into the city’s rainy day reserve funds, taking $980 million out of the current fiscal year and $229 million from the city’s Retiree Health Benefits Trust for the upcoming fiscal year, according to The New York Times.
The final budget and the property tax increase will take effect on July 1, once all parties have negotiated and obtained approval from the City Council.
This will mark the first time city taxes have been raised in over two decades, the last time being in 2003 when former Mayor Michael Bloomberg was in office.
Mamdani held a press conference on Jan. 28, where he announced a serious mishandling of the city’s budget, revealing a $12 billion gap that he attributed to former Mayor Eric Adams.
Mamdani’s proposal to increase property taxes is facing pushback from Gov. Kathy Hochul.
“I’m not supportive of property tax increases,” Hochul said at a press conference. “I don’t know that that’s necessary.” Hochul also does not support taxing the rich.
On Feb. 16, Hochul pledged an additional $1.5 billion in state funds in partnership with Mamdani, which would help recover the city’s budget over two years, as well as assist with expanding child care and the launch of the 2-Care program.
In addition to Hochul, City Council Speaker Julie Menin and Finance Chair Linda Lee consider higher property taxes to be impractical.
“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 joint statement.
The City Council has been actively conducting meetings to address the budget gap and to prevent a budget crisis from occurring in the future.
“I agree that this is not something that should be on the table,” Mamdani said in response to a question about a third option. “However, the city has very limited tools by which it can reach the legal requirement of a balanced budget in both this fiscal year and the next fiscal year.”
