New York City Mayor Zohran Mamdani on Tuesday framed a potential 9.5% property tax increase as an “option of last resort,” warning that without state approval to raise taxes on the city’s wealthiest residents, his office will be “forced to exercise the only revenue lever fully within our own control.”
The move would set the stage for the first major property tax hike in the city since 2003.
In his budget presentation, Mamdani laid out the deficit he says his administration inherited in January and the steps it has taken to shrink the two-year gap from roughly $12 billion to $7 billion. To fill the remaining gap, Mamdani outlined two paths:
“The first is the most sustainable and the fairest path,” he said, and means “ending the drain on our city and raising taxes on the richest New Yorkers and the most profitable corporations.”
But if that path fails, he warned, “the city will be forced down a second more harmful path,” raising property taxes and raiding the city’s reserves.
Throughout his presentation, Mamdani repeatedly emphasized that he does not want to raise property taxes.
“I have said time and time again that it is a broken system, one that we are sincerely looking to reform,” he said. “What I am showcasing to New Yorkers is that there is one tax the city can raise. It is a broken property tax system. We do not want to do so, which is why we have said time and again that we want to work with Albany to ensure that we resolve the crisis by addressing the structural roots of it.”
That structural fix would include higher corporate taxes as well as a 2% income tax increase on city residents making $1 million or more—both of which require state approval. But Gov. Kathy Hochul, who is up for reelection in November, has balked at both ideas.
The billion-dollar budget gap driving the mayor’s revenue push
City budget officials initially projected the deficit at nearly $12 billion across the next two fiscal years. Since then, that estimate has narrowed by roughly $5 billion, fueled by a stronger-than-expected revenue picture tied to Wall Street bonuses, internal efficiency measures, and withdrawals from the city’s reserves.
But the revised math still leaves a gap that the administration must close by raising new revenue. In his proposal, Mamdani put the number he’s looking to raise at roughly $5.4 billion.
Comptroller Mark Levine warned that the mayor is stacking several high-risk tools at once, pairing a property tax increase with reserve draws and optimistic projections about future revenues.
“We do have a big gap to fill, and he’s put a pretty extreme option on the table, which is a combination of raising property taxes and taking money from reserves and relying on some pretty aggressive revenue projections to boot,” Levine said Tuesday morning, The City reports.
In his speech, the mayor also warned against this path, saying that raising property taxes is “the option of last resort, options that we will only employ if there is no other means of arriving at a balanced budget.”
“There is no third option of failing to balance the budget,” he continued. “Ever since the fiscal crisis of the 1970s which placed the city on the brink of bankruptcy, New York City has been legally required to balance its budget.”
That means if Albany won’t back his plans to raise income taxes, the mayor will be forced to raise property taxes.
The first major property tax hike since 2003 would hit a wide range of owners
Mamdani’s proposal would land on top of a property tax system that already spreads costs unevenly across New York’s different types of buildings, and one that he promised to reform in his inauguration speech.
Currently, the city sets property tax rates by class, with commercial and industrial parcels taxed at just under 11%, and one- to three-family homes facing rates closer to 20%. Any across-the-board increase would ripple through every category of owner, raising immediate questions about who would get hit hardest and whether the city will try to cushion certain groups through exemptions or abatements.
Small property owners have already been critical of Mamdani’s platform to freeze rents, and immediately hit back on his proposal to raise property taxes as the latest in a long line of budget fixes that lean on landlords and homeowners first.
“Owners of small rental properties are sick and tired of being treated like ATM machines every time the city needs to balance the budget,” Ann Korchak, board president of the Small Property Owners of New York (SPONY), said via statement. She argued that higher tax bills would collide with other cost pressures and leave owners with few ways to absorb the increase.
“Raising property taxes, while at the same time freezing rents (which the mayor is intending to do), would be crushing to small owners, driving us into foreclosure and bankruptcy,” Korchak continued.
Korchak also cast the move as a direct threat to immigrant and multigenerational owners who rely on a handful of units as both a livelihood and a family asset, warning that the city is treating these owners as a backstop for fiscal problems they didn’t create.
A partnership, with hard limits
Even as the property-tax fight sharpens the contrast between Hochul and Mamdani, both sides are still trying to project a workable governing relationship.
Hochul has been publicly cool to the idea of raising property taxes. “I’m not supportive of a property tax increase,” she told reporters this week. “I don’t know that that’s necessary, but let’s find out what is really necessary to close that gap.”
At the same time, the governor has offered fiscal support that City Hall is already counting on. On Monday, Hochul announced an additional $1.5 billion in state money aimed at narrowing the city’s deficit, including more than $500 million in recurring funding.
“A strong New York City means a stronger New York State. This investment protects services and puts the city on stable financial footing,” Hochul said in a statement. “New Yorkers expect the state and the city to work together, and I’m proud to partner with the mayor to deliver for working families.”
Mamdani, for his part, leaned into that partnership while making clear he sees Albany as the decisive actor in whether the city avoids a broad property tax increase.
“I am encouraged and heartened by the relationship that we have built with Governor Hochul and the state legislature,” he said, adding he is “hopeful that we can arrive at a fair solution at the end of this budget process.”
But he warned the alternative is a fallback that “should not be placed on the backs of working- and middle-class New Yorkers,” arguing that if the city can’t secure structural changes from the state, it will be left with “the only revenue lever fully within our own control.”
Pressed by reporters about what that lever would look like, Mamdani put a number on the threat while insisting he still wants Albany to make it unnecessary.
“The property tax increase, if the city was forced to do so, would be at a 9.5% increase,” he said. “This is something that we do not want to do, and this is something that we are going to utilize every single option to ensure does not come to pass.”