New York City Mayor Zohran Mamdani released his Fiscal Year 2027 Preliminary Budget, which includes $14 billion in new spending, while warning that he might have to “balance the budget on the backs of working and middle-class New Yorkers.”
Unlike the federal government, which can print money to cover budget deficits, states and cities do not have that luxury. Essentially, all municipalities, counties, towns, cities, and even states must pass a balanced budget, or they go “bankrupt.”
Not that long ago, New York City did go “bankrupt.”
“In 1975, New York City ran out of money. For a decade, it had managed to pay for its hundreds of thousands of city employees and robust social services by taking on billions of dollars in debt. But eventually, investors were no longer willing to lend the city any more money. New York teetered on the edge of bankruptcy — the city shuttered more than a dozen firehouses, teachers went on strike, and garbage piled up in the streets,” NPR writes.
A little more than five decades later, NYC is on the brink of bankruptcy again.
According to NYC Comptroller Mark Levine, “the City faces a $2.2 billion budget shortfall for FY2026 and a projected $10.4 billion gap for FY2027.”
“This is the first time since the Great Recession that the City faces a budget shortfall of this magnitude,” he cautioned.
Make no mistake, NYC has a monster budget. In FY 2026, NYC will spend $118.2 billion. From FY 2022 to FY 2025, NYC’s total budget has grown by an average annual rate of 4.2 percent. However, during that period, the total NYC population barely increased.
To put the NYC budget into perspective, consider Florida’s FY 2026 budget totals $117.4 billion. Florida’s population is more than 21.5 million, whereas NYC’s population is about 8.4 million.
Of course, the current crisis state of NYC’s budget is not Mamdani’s fault. He did inherit a mess from former Mayor Eric Adams. However, Mamdani refuses to even consider spending cuts while demanding $14 billion in new spending.
In the meantime, Mamdani is calling for budget gimmicks to balance the budget in the short term. He wants to take “$980 million from the city’s Rainy Day Reserve Fund in FY 2026 and $229 million from the Retiree Health Benefit Trust in FY 2027 in order to balance the budget as legally required.”
Mamdani also received a gift from Albany when Democrat Gov. Kathy Hochul agreed to “allocate an additional $1.5 billion in operating expenses over two years to help address New York City’s fiscal challenges.”
But raiding rainy day funds and betting on bailouts from Albany is not going to resolve the long-term budget crisis NYC currently faces. It would also totally inhibit Mamdani’s ability to enact his democratic socialist agenda.
Like it or not, Mamdani is going to do everything he can to increase NYC spending on his pet projects. So far, he proposes $11.9 million for “new Street Health Outreach & Wellness (SHOW) mobile units,” $43.3 million “to advance affordability efforts,” “more than tripling baseline funding for HRA’s Community Food Connection program with an addition of $54 million,” and $662 million “to modernize and preserve more than 3,200 affordable housing units.”
But that is just the tip of his socialist spending iceberg.
Mamdani also wants “free buses,” “free childcare,” government-subsidized grocery stores, and all sorts of other freebies and subsidies. He even wants to spend $3.27 billion installing solar panels at 500 NYC public schools.
So, how in the world could Mamdani pay for all of this? The answer is simple: He will increase taxes on the middle class.
In a classic socialist bait-and-switch, Mamdani has turned his back on the middle class because the middle class always bears the ultimate burden when socialism wreaks havoc.
The mega-wealthy can flee NYC for the Hamptons. Ordinary, hard-working residents of NYC cannot.
It is ironic that Mamdani’s campaign centered on the affordability crisis in the Big Apple and now he threatens to soak hardworking NYC residents with a big tax hike.
“Property taxes would be raised by 9.5 percent. This would effectively be a tax on working- and middle-class New Yorkers who have a median income of $122,000,” Mamdani flatly stated.
For now, Mamdani’s plan to raise NYC property taxes, which are already among the highest in the country, seems dead on arrival if it reaches the New York City Council.
“At a time when New Yorkers are already grappling with an affordability crisis, dipping into rainy day reserves and proposing significant property tax increases should not be on the table whatsoever,” said New York City Council Speaker Julie Menin (D).
“To rely on a property tax increase and a significant draw-down of reserves to close our gap would have dire consequences. Our property tax system is profoundly unfair and inconsistent, and an across-the-board increase in this tax would be regressive,” said Comptroller Levine.
While it is reassuring to see initial pushback to Mamdani’s middle-class-crushing tax hike scheme, it bears repeating that NYC’s long-term budget trajectory is quite concerning. At some point, revenue will need to be raised to pay for escalating pension benefits and other items.
If more revenue is not squeezed from the middle- and lower classes, essential services will be cut, and NYC will become a basket case again.
Alas, New York City is officially on the road to socialism.
Chris Talgo ([email protected]) is editorial director at The Heartland Institute.
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