Frank Rondel
New York City Mayor Zohran Mamdani unveiled a preliminary budget proposal on Tuesday that includes a potential 9.5 percent increase in property taxes, a measure he described as a “last resort” if Governor Kathy Hochul does not approve higher income taxes on the wealthiest residents, reports customreceipt.com with reference to the Times.
The proposed hike would affect over 3 million single-family homes, co-ops, and condominiums, along with more than 100,000 commercial properties. Mamdani emphasized that while the measure targets the wealthiest New Yorkers, it would inevitably impact working- and middle-class homeowners, underscoring that this was not his preferred approach. The mayor cited the city’s limited authority to raise taxes independently and noted that combining a property tax increase with withdrawals from reserve funds might be the only solution to address a projected $5.4 billion budget shortfall over two years.
“If we cannot pursue the first option of raising income taxes on the wealthy,” Mamdani stated, “we will be forced onto a more damaging path — one where property taxes and reserve fund usage are the only tools available.” He added that his administration continues to collaborate with Albany to avoid this scenario.
Governor Hochul downplayed the likelihood of a property tax increase, suggesting that cost-saving measures and updated accounting practices might mitigate the need for higher rates. “He’s required to put options on the table; that does not mean that’s the final resolution,” she said.
Mamdani’s initial $127 billion budget, a $5 billion increase from the current plan, would take effect on July 1 following adjustments and negotiations with the City Council. Analysts noted that the proposal appears designed to pressure the governor to support a wealth tax for residents earning $1 million or more annually.
Despite ideological differences, Mamdani has maintained a cooperative stance with Governor Hochul, endorsing her re-election bid and refraining from participating in upcoming “Tax the Rich” rallies. The mayor also praised recent cash advances from the governor, including a $1.5 billion allocation for city services.
However, the property tax proposal drew criticism from key city officials. City Comptroller Mark D. Levine and Council Speaker Julie Menin expressed concerns, with Menin highlighting the financial strain on small property owners and neighborhood businesses. Queens Borough President Donovan Richards called the measure “a nonstarter,” citing inequities in the city’s existing tax system.
The Citizens Budget Commission estimated that the proposed increase would raise property taxes by approximately $700 annually for a typical one- to three-family home. Mamdani projects that the combined income from the property tax and reserve fund adjustments could generate $14.8 billion over four years. The plan also includes $980 million from the rainy day fund and $229 million from the Retiree Health Benefits Trust.
Mamdani’s campaign previously focused on a wealth tax to fund universal childcare. The current plan shifts the justification toward addressing the budget gap, which the mayor attributes to inaccuracies in prior fiscal projections under former Mayor Eric Adams. The administration has identified an additional $1.7 billion in savings, though details remain unspecified.
Local advocacy groups and progressive allies urged the governor to prioritize a wealth tax rather than burden property owners. Conversely, landlord organizations and Republican leaders criticized the proposed increase, highlighting the strain on immigrant property owners and suburban taxpayers.
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