After some delay, New York City has reached a consensus for the $124.7 billion executive budget without a nerve-inducing property tax hike on homeowners.
“For too long, working New Yorkers have been told that austerity was the answer to adversity,” said Mayor Zohran Kwame Mamdani at the City Hall press conference on Tuesday, May 12.
First, Mamdani said his team worked hard to partner with Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, Assembly Speaker Carl Heastie, and City Council Speaker Julie Menin to close the looming city $5.4 billion budget gap without implementing a 9.5% increase on property taxes.
The racial implications of raising property taxes in a housing market that has changed substantially over the past 50 years, and now has higher property values in many predominantly Black and Brown neighborhoods, could have been dire.
To address the gap on the city level, Mamdani and Menin are working to reduce the unincorporated business tax (UBT) credit that is estimated to raise about $68 million.
“We had a productive meeting with Mayor Mamdani on the Executive Budget, and we appreciate that the administration has moved toward an approach championed by the Council that identifies savings and avoids raising property taxes or raiding reserves,” said Menin in a joint statement with Councilmember Linda Lee, chair of the committee on finance.
The city budget highlighted critical investments like baselining funding for libraries, fair fares, parks, CUNY, and cultural institutions; childcare providers and early childhood education support; and capital funding for housing and comprehensive renovations to New York City Housing Authority (NYCHA) developments.
But one group that is still dissatisfied with the city budget are advocates committed to expanding the City Fighting Homelessness and Eviction Prevention Supplement (CityFHEPS) housing voucher program.
Mamdami said that his team identified an additional $1.2 billion in savings by addressing systemic inefficiencies in critical programs, but intend to “strengthen” CityFHEPS in the coming years.
“The Mayor’s Executive Budget underscores a critical disconnect between his campaign promises and the commitments he intends to keep to benefit everyday New Yorkers. The erasure of CityFHEPS expansion funds is a betrayal that stands to leave thousands of families unnecessarily stuck in the shelter system,” said Christine C. Quinn, president & CEO of WIN, and former City Council speaker. “This is a budget balanced on the backs of homeless New Yorkers.”
To help on the state level, the city was delegated $4 billion in support, which includes $352 million more in direct aid; $3.2 billion in state authorizations, like pension liability restructuring and class size flexibility; and $500 million in revenue from the proposed pied-à-terre tax on second homes valued above $5 million.
According to a short analysis from New York State Comptroller Thomas DiNapoli, the updated city budget lays a viable path forward but still relies on certain things coming through in the exceedingly late state budget that hasn’t been approved yet.
“Importantly, the city is no longer relying on a 9.5% property tax hike, which would have broadly added cost pressures for households and businesses,” said DiNapoli in a statement.
“The city also removed rainy day funds and retiree health benefits trust as one-time revenue to close the budget gaps, which had concerned my office as imprudent,” he continued. “These judicious changes were made possible by actions anticipated at the state level and other one-time choices that will help the city to balance its budget through FY 2027, but they also underline the cost pressures that remain in the later years of the financial plan.”
The next steps in the budgeting process will be for the city council to review the Mayor’s executive budget and hold a series of oversight hearings to reach a final plan. In the meantime, the city waits with bated breaths on the final state budget from the governor and state legislature.
