Zohran Mamdani floats 9.5 percent hike in NYC property taxes to pressure millionaires to pay up

NEW YORK CITY, NEW YORK: Mayor Zohran Mamdani is floating a move New York City hasn’t seen in more than two decades. In his first preliminary budget rollout on Tuesday, February 17, the mayor laid out what he described as a worst-case scenario to plug a $7 billion hole.

He proposed a potential 9.5% hike in property taxes, along with dipping into city reserves, if Albany doesn’t step up with higher taxes on wealthy individuals or corporations. 

 Zohran Mamdani's 'last resort'

Mamdani said the possible property tax increase would be a fallback if Gov Kathy Hochul and state lawmakers don’t deliver additional revenue.

"If we do not go down the first path, the city will be forced down a second, more harmful path," Mamdani said. "Faced with no other choice, the city would have to exercise the only revenue lever fully within our own control. We would have to raise property taxes."

That potential 9.5% increase would touch a lot of New Yorkers, more than three million residential units, and over 100,000 commercial buildings. Alongside that, Mamdani said the city would pull nearly $1.2 billion from reserve funds. $980 million would be extracted from the Rainy Day Fund and another $229 million from the Retiree Health Benefits Fund.

Still, he insisted this is not the direction he wants to go. "What we are announcing is a path of last resort, one that we do not want to pursue," Mamdani said, adding that those were "options that we will only employ if there is no other means of arriving at a balanced budget."

Despite the fiscal strain, the mayor promised there would be no cuts to city services. In fact, he outlined increased spending for snow removal, homeless outreach, and services for the mentally ill.

Mamdani has pegged the current shortfall at $7 billion, which is down from the $12 billion figure he cited last month. He has repeatedly said he inherited the mess from his predecessor, referring to it as "Mayor Adams' budget crisis."

Kathy Hochul responds

Gov Kathy Hochul didn’t waste time responding.

At an unrelated event on Tuesday, she made it clear she’s not sold on the property tax idea.

"I am not supportive of a property tax increase, I don't know that that's necessary," Hochul said.

She pointed out that the new budget year doesn’t even begin until July, suggesting there’s still room to negotiate.

But today, "he is required to put options on the table, but that does not mean that's the final resolution.... there is no way to know today that is the outcome of what this process will look like after many months of negotiation with the City Council," Hochul said. "But let's find out what is really necessary for him to close that gap."

Her comments came just one day after she announced a $1.5 billion investment into the city over the next two years. This funding includes $510 million aimed at costs that had shifted from the state to the city under prior administrations.

That package includes $300 million for youth programs, $60 million for public health, and the restoration of $150 million in sales tax receipts that would have otherwise stayed with the state. 

Council skeptical while progressives hold the line

If Mamdani does pursue a tax hike, he’s likely to face resistance from the City Council. The city hasn’t raised property taxes in 23 years, dating back to the Bloomberg administration.

Council Speaker Julie Menin broke it down in a statement.

"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," Menin 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, which could worsen the affordability crisis."

Meanwhile, progressive councilmembers like Lincoln Restler are counting on the governor and state lawmakers to come through with additional funding.

"And if we are unable to get it, we'll cross that bridge when we get there," Restler said.

Meanwhile, the Democratic Socialists of America released a statement saying not to raise taxes would be a "declaration of war" on Mamdani's affordability agenda.