Facing a potential $12 billion budget gap and needing to make good on promises to fulfill an ambitious, but pricey, affordability agenda, Mayor Mamdani indicated Wednesday he may push the governor in budget negotiations to include tax hikes on millionaires and corporations.
That effort could set up a conflict between the newly-elected mayor and the governor. Hochul’s record $260 billion budget proposal, unveiled Tuesday, did not include major tax hikes, despite Mamdani’s calls to do so.
“Our administration is preparing to make the case that it is the time for New York’s most profitable corporations and wealthiest residents to pay their fair share,” Mamdani said Wednesday at an unrelated press conference. While the city accounts for 54.5% of the state’s tax revenue, it receives back 40.5% of the state’s services, he noted.
The governor, who is facing re-election later this year, has stood staunchly opposed to raising taxes on the city’s most well-off, though she signaled after Mamdani’s election that the door was slightly open to corporate tax increases.
The mayor has pledged to fund pricey agenda items, including universal preschool, free buses and more affordable housing production, with a 2% tax hike on the city’s wealthiest residents and an increase in state’s top corporate tax rate.
He argued Wednesday that part of the reluctance to adopt his plan is a “lack of understanding.”
“This has to be one part of proving to New Yorkers that every dollar they give to the city is a dollar they’re going to see back in services,” Mamdani said.
The mayor is currently looking down the barrel at a potential $12.6 billion budget gap for this fiscal year and the next, according to estimates from the city’s comptroller, Mark Levine.
Levine blamed the shortfall largely on is almost entirely to blame on the Adams administration, citing under-budgeting of expenses the city knew it was going to incur, like overtime costs and CityFHEPS, the city’s housing voucher program. The potential gap doesn’t account for funding threats from the Trump administration.
While Mamdani and Hochul have different views on the tax question, the two have touted a friendly relationship in the early days of his administration. The mayor praised the governor earlier this month as they announced free preschool for two-year-olds to be funded for the first two years by the state with existing revenue.
Hochul did include a small tax hike on nicotine pouches, like Zyn, in her budget proposal, as well as an extension of the state’s top corporate tax rate of 7.25% for another three years. It is currently set to expire at the end of the fiscal year.
“I know he’s calling for a tax increase. I’ve heard that,” Hochul said of Mamdani on Tuesday. “I’m sensitive to the impacts.”
The state budget is due April 1, the start of the new fiscal year.
