Zohran Mamdani
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New York City Mayor Zohran Mamdani announced his historic $124.7 billion budget, which includes similar offerings from the prior New York City expenditures, plus a few enhanced social services. This budget is the largest ever in the city’s history and is larger than many budgets of other states in the U.S. While coming to a balanced budget marks a momentous occasion for the Mayor in the early months of his first term, it did not arrive without some challenges along the way. In particular, Mamdani has scaled back or delayed several campaign proposals and received significant backlash as he attempted to raise taxes on all New York City residents via his controversial 9.5% property tax increase. Despite this win, Mamdani still faces potential upheaval as many important figures, such as Ken Griffin (CEO of Citadel), have warned that higher taxes and anti-business policies could encourage firms to expand outside New York City, potentially diminishing future tax revenues.
Mamdani’s New York City Budget
Unlike the U.S. federal government, New York City is legally required to balance its budget annually because the city cannot run an annual deficit on its spending. Prior mayors like Bill de Blasio and Eric Adams faced recurring fiscal pressures and rising costs.
Mamdani came into the spotlight due, in part, to the imbalance that has been generated, particularly among the income inequality that continues to rise between the city’s elite and working class. Mamdani had many campaign promises geared less toward those wealthy residents and more toward the lower-income earners, such as free childcare, buses, and grocery stores. To pay for this, Mamdani pledged to focus his efforts on raising taxes on the city’s highest-earning taxpayers.
His win for the Democratic nomination in June of 2025 marked a turning point for his popularity among New York City residents, followed by his official victory as Mayor in the November 2025 election.
However, reality soon set in as he learned an important lesson that the New York City Mayor does not actually have this authority, and the New York State Governor was less aligned with Mamdani’s tax plan than he had hoped. This friction left Mamdani in a difficult spot, as many of his promises required more tax revenues that were not going to be arriving.
Following a 12-week cycle where Mamdani pitched his ideas and continued to come up with new possibilities for balancing the budget, New York City has a budget. This budget includes $124.7 billion in spending, which, according to The New York Times, is the largest annual spending in the city’s history. The budget will now go to the City Council for ratification in advance of the June 30 deadline.
3 Key Takeaways From Mamdani’s Budget
(1) Mamdani Found A Way To Work With Other Politicians
During his campaign, as Mamdani began promising significant tax increases to pay for his proposed enhanced services, he quickly came to the realization that he could not go it alone. In particular, the New York Governor, Kathy Hochul, immediately voiced her unwillingness to raise taxes on only the wealthiest New York City residents and corporations.
As Mamdani was not going to simply get a green light to execute any tax increases that he saw fit, he was left with the challenge to work together with the Governor to come up with a plan that would appease her. He did just that. In fact, before any assistance from the state, the city faced an estimated budget gap of approximately $5 billion. However, he was able to close this gap due to generous funding from the state of New York. This agreement signals his ability to find compromise among other politicians in an effort to meet important political goals.
(2) Mamdani Did Not Raise Taxes On Most Of The Wealthy Individuals And Corporations
A key campaign promise that fell flat for Mamdani was his goal to raise taxes on New York City’s wealthiest taxpayers and corporations. This goal did not happen. New York’s highest-earning and wealthiest individuals continue to maintain the same tax rate, along with corporations that operate in the city.
According to the New York Post, critics argued that Mamdani alienated many of New York City’s important business leaders as he took to social media to single out individual billionaires. For instance, Mamdani shot a social media post directly outside of Griffin’s luxury apartment in an effort to raise awareness for Mamdani’s proposed pied-à-terre tax. Ultimately, this post has backfired on the Mayor as Griffin has now publicly pledged to move many of his company’s high-paying jobs from New York City to Miami. If Citadel is the only company doing this, then the impacts on New York City’s financials may be negligible. However, if others follow, then the financial impact can be severe.
The tax that Mamdani did propose and intends to impose on the wealthy is a pied-à-terre tax, an incremental property tax on unoccupied second homes valued at over $5 million. According to his finalized budget, Mamdani expects to collect $500 million from this tax. However, concerns have already been raised about this tax and the tax collection estimates. In particular, the city’s own comptroller believes the actual amount that can be collected is much lower (between $340 and $380 million). Furthermore, Mamdani’s estimate does not account for wealthy taxpayers selling properties or using financial experts to work around this tax burden. Thus, it is unclear whether this proposed tax law change will have as significant of an impact on tax collections from the wealthy as Mamdani had hoped.
(3) Mamdani’s Budget Features A Unique Pension Accounting Change That Could Have Long-Run Negative Impacts
A key piece of bridging the funding gap was Mamdani receiving permission from New York State to reamortize the city’s pension obligations. This maneuver generates a benefit of over $2 billion on this year’s financials.
To summarize how this works, when pension obligations are larger than pension funding, the entity must make up for the shortfall over time. The amount that must be paid annually is subject to many assumptions, such as the number of years it will take to make up the difference and the rate at which it will pay those obligations.
Mamdani’s budget does not remove any pension obligations. According to The New York Times, the budget delays the funding. This maneuver often comes down to accounting for the pensions. However, it can have several significant implications. First, pushing out the payments raises the overall costs. This move is analogous to having a 30-year mortgage over a 15-year mortgage. Second, if the overall pension debt grows, then it can lead to a concept known as negative amortization, potentially causing unfunded pension liabilities to grow faster than the city can reduce them. Perhaps, most importantly, this accounting maneuver has the potential to significantly hurt New Yorkers by shifting the costs onto future residents and damaging the entity’s credit rating, leading to an increasingly diminishing financial situation for all those involved.
Mamdani’s first budget as Mayor of New York City marks a career accomplishment for the young politician, especially given its size and magnitude. However, it is not without caveats, and Mamdani and New York City residents should take note of some of the potential risks associated with the Mayor’s ambitious plans.