Balancing NYC’s Budget | Seeking Alpha

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New York City Mayor Zohran Mamdani has pitched hiking property taxes by 9.5% as “a last resort” to help close an estimated $5.4B two-year revenue shortfall, if his proposal to tax the rich falls through. The deadline to finalize the city budget is June 30, following which it would go into effect in July.

Dig deeper: Mamdani initially proposed raising personal income taxes on New Yorkers earning more than $1M annually and hiking taxes on the most profitable corporations. He said this is “the most sustainable and fairest” path to bridge the city’s budget gap, “ending the drain by fixing the imbalance between what the City provides the State and what we receive in return.” But this would require the approval of the governor and state legislature, and New York Governor Kathy Hochul has already opposed this proposal.

Because of this, Mamdani floated the property tax hike and drawing $1.2B from the city’s reserves to plug the budget gap. He said this would be a “more harmful” path that would burden working and middle-class New Yorkers. “We do not want to have to turn to such drastic measures to balance our budget,” the mayor said while announcing his $127B preliminary budget. “But, faced with no other choice, we will be forced to.” If the city’s property taxes were raised, it would be the first such hike in more than two decades. And this would likely lead to higher rents, as landlords pass through the costs to tenants, and may push businesses away from the city.

The pushback: Mamdani’s proposal came a day after Hochul announced that the state will allocate an additional $1.5B over two years to help address New York City’s fiscal challenges. Hochul, who is up for re-election this year, said she is not supportive of a property tax increase, but noted that the decision is up to the City Council and Mamdani. “That’s their prerogative to look at that as an option,” she added. The property tax hike would require approval from the city council, but two of its members rejected the proposal as it would “worsen the affordability crisis.” Mark Levine, the city’s comptroller, said the tax hike would be regressive, and drawing down reserves would leave New York City vulnerable to economic turbulence. (5 comments)

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Companies reporting today include Occidental Petroleum (OXY) and Analog Devices (ADI).

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