Mayor issues ultimatum to Hochul on revenue options
Clear Ultimatum Delivered to Governor
At his budget presentation on Tuesday, Mayor Zohran Mamdani delivered a forceful ultimatum to Governor Kathy Hochul: either the state raises taxes on the wealthiest New Yorkers and corporations, or New York City will be forced to impose the first property tax rate increase in over two decades while simultaneously raiding its budget reserves.
The mayor’s framing painted a picture of stark fiscal consequences stemming from the prior administration’s mismanagement. He articulated two distinct paths forward, with the first involving progressive revenue generation and the second involving what he explicitly labeled a painful fallback option. Nothing about this situation was typical, Mamdani emphasized, and therefore solutions would not follow conventional approaches.
The Revenue Numbers and Gap Reduction
The city began with a $12 billion budget gap identified in the mayor’s January budget address. Through updated tax revenue projections, savings initiatives, and $1.5 billion in additional state support announced by Hochul on Monday, the remaining two-year gap was reduced to $5.4 billion. The Mamdani administration applied revenue adjustments driven by a $7.3 billion upward revision in tax revenue and state funding including $1.5 billion from Governor Hochul.
After applying savings from agency efficiency initiatives and state support, the city still faced remaining gaps that Mamdani said could be addressed through his preferred approach of establishing new revenue streams from high-income earners and profitable corporations. These would be permanent revenue sources rather than temporary reserve draws.
Hochul’s Immediate Resistance
Governor Hochul responded to Mamdani’s proposal by stating she was not supportive of property tax increases and questioned whether such increases were necessary. She noted that the budget year would not begin until July 1, allowing months for negotiation between the mayor and state lawmakers. However, she has maintained her opposition to raising income taxes on high earners or increasing corporate tax burdens.
Hochul’s position puts her in direct conflict with the mayor’s primary preference. The governor has previously expressed concerns about tax competitiveness and the ability to retain wealthy residents and corporations in the state. Despite providing additional funding to address pressing city needs, Hochul has drawn a firm line against the tax increases Mamdani championed during his mayoral campaign.
Impact on Three Million Households
The property tax proposal under Mamdani’s fallback plan would affect approximately three million residential units and over 100,000 commercial buildings throughout New York City. A 9.5 percent property tax rate increase would generate $3.7 billion in fiscal year 2027 alone. For the first time in over 23 years, since the Bloomberg administration, such a broad-based property tax increase would hit every property owner from wealthy investors to working families.
The city would additionally draw down $980 million from the Rainy Day Fund in fiscal year 2026 and $229 million from the Retiree Health Benefits Trust in fiscal year 2027. These reserve draws have concerned fiscal watchdogs who argue that reserves should be preserved for recession periods rather than used for structural budget gaps.
Strategic Positioning and Negotiations Ahead
Mamdani’s public presentation of these two competing options appears designed to pressure state lawmakers to act on his revenue proposals. By publicly highlighting the consequences of inaction, he is creating political pressure on Hochul and the state legislature to authorize new revenue streams. This approach puts lawmakers in the position of either approving new taxes on wealthy individuals and corporations or accepting responsibility for property tax increases.
The preliminary budget submission marks the official beginning of the budget negotiation cycle. The mayor submitted his opening position knowing that substantial conversations with the City Council, fiscal watchdogs, and advocacy groups would follow. For detailed analysis, see Empire Center for Public Policy, Citizens Budget Commission, and Fiscal Policy Institute.
