Mamdani Heads to Albany Seeking Billions as City Budget Gaps and Tax Hurdles Mount

New York’s new mayor seeks to plug a yawning budget gap by pleading for Albany’s help and higher taxes—testing the limits of city-state relations and progressive ambition.

Zohran Mamdani, New York City’s recently inaugurated mayor, faces a deficit so large that “tin cup” now seems an understatement for City Hall’s annual pilgrimage to Albany. This year, the mayor arrives hat in hand before state lawmakers, seeking relief for a projected $12 billion gap over the next two fiscal years—the sort of red ink that gives accountants migraines and adversaries ammunition. The opening weeks of Mamdani’s tenure are shaping up to be less “honeymoon” than “receivership.”

At his pre-Albany press conference last month—flanked by First Deputy Mayor Dean Fuleihan and budget director Sherif Soliman—the mayor spelled out the city’s dire fiscal position. Gone are the days of pandemic windfalls and buoyant property tax receipts. Instead, Mamdani blamed much of the city’s predicament on budgetary inertia inherited from Eric Adams and chronic underfunding by the state. With city comptroller Mark Levine forecasting a $2 billion hole by June and nearly $10 billion more looming next year, the prediction is as clear as subway graffiti: the numbers refuse to cooperate.

This fiscal squeeze has forced the mayor’s hand, and he is doing what every big-city executive eventually must—trekking north to New York’s marbled statehouse, armed with spreadsheets and optimism. Among Mamdani’s asks: greater support for his signature campaign pledges, including a rent freeze for stabilized tenants, a network of free and more frequent buses, and, most costly, a full sweep of universal child care programs for all children under five. While these are ballast for any ambitious progressive agenda, even the initial pilots are straining the city’s purse; the first 2,000 children in the child care programme, for example, will cost $75 million this year, underwritten only temporarily by the state.

Details of the mayor’s wish list portend heated debate. Central to his pitch is a tax hike targeting the city’s wealthiest residents and corporations—a move that echoes the campaign rhetoric but clashes with Albany’s prevailing winds. Governor Kathy Hochul, quick to remind everyone who holds the veto pen, has repeatedly signalled her reluctance to raise taxes. Albany skeptics, many from upstate corridors unaccustomed to municipal profligacy, will probe what Mamdani intends to do to “put his own fiscal house in order,” as the Citizens Budget Commission’s Andrew Rein dryly observed.

For New Yorkers, the stakes are not theoretical. City services—schools, transit, sanitation—buckle under the weight of chronic shortfalls. Promises to deliver sweeping new programs sound less buoyant when the city is left counting coins to patch roads and keep precincts staffed. Every dollar wrung from Albany comes attached to new conditions, reducing city hall’s autonomy further.

The city’s options, meanwhile, range from tepid to puny. Raising property taxes is a perennial non-starter, especially as mortgages float higher and outer-borough homeowners grumble. Deep program cuts risk undermining both public confidence and Mamdani’s own political brand. As for borrowing, the mayor would run afoul of legal limits and, likely, the bond market’s tolerance.

Ripples from this imbroglio extend far beyond the five boroughs. New York is a net donor to the state budget but is increasingly a supplicant, thanks to rising infrastructure costs, a hefty Medicaid bill, and new social initiatives. Should New York’s pleas fall on deaf ears, the city’s predicament will chart a cautionary tale for other American metropolises deferring their fiscal reckoning. Here, as in Chicago or San Francisco, swelling commitments collide with slowing economic growth, a fragile commercial property market, and a workforce still adjusting to hybrid routines.

Testing the social contract between city and state

Compared to other global cities, New York’s predicament is unusually acute. London, for all its deficits and grumbles, at least controls property taxation and transit policy with a freer hand. Paris has benefited from a more predictable national backstop. In contrast, New York’s relationship with its own state government remains fraught and archaic: both city and mayor are legally subordinate to Albany’s whims, a legacy of pre-home-rule days that has become costlier with each new crisis.

The larger question is whether Mamdani’s municipal progressivism can survive under such constraints. Policy aspiration is cheap; pay-fors are not. Raising taxes on the rich is politically alluring in Manhattan, at least in theory, but New Jersey beckons across the river, and the experience of prior surcharges has shown no guarantee of a revenue windfall. Nor can the city easily attract the next generation of businesses if its ledger is pockmarked with red ink and its subways eerily underpopulated.

We reckon the coming negotiation will reveal much about the health of New York’s vaunted social contract. Mark Levine, the comptroller, is right: these gaps will not “magically go away”—wishful thinking is not a substitute for structural reform. Tin Cup Day may be an annual ritual, but the city would do well to avoid making fiscal desperation a way of life. A city of eight million, with ambitions to remain the world’s capital of aspiration, deserves a budget as resilient as its people.

For now, the outcome hinges on the same ancient trade-off: how much can a local government promise, and how will the costs be shared, now that every dollar is spoken for? If New York cannot persuade Albany to pony up or change course on taxes, the consequences will reverberate not just through municipal unions and budget hearings, but through schools, families, and a city still on edge after years of pandemic tumult. The mayor’s tin cup, in short, must do more than simply rattle; it must persuade—and quickly.

Unless city and state can reach consensus—or at least détente—the five boroughs risk a return to the gloomy cycles of austerity that many believed were ancient history. Leadership and candor are in order. We await both. ■