Mamdani Unveils $127 Billion Budget for 2027, Eyes Millionaire Tax or Higher Property Bills

New York’s fiscal crossroads test the city’s willingness to ask more from the wealthy in order to secure services for all.

In New York City, numbers often call the tune, and this winter they delivered a bracing refrain: a $12 billion gap yawning across the municipal books for the next two years. On February 26th, Mayor Zohran Kwame Mamdani unveiled the Fiscal Year 2027 Preliminary Budget, outlining a dilemma familiar to big-city treasurers everywhere: whittle, tax, or both.

The mayor did not mince words about the challenge. Without new revenue from taxes on the richest residents and the most profitable corporations, said Mr Mamdani, City Hall will reluctantly hike property taxes and raid rainy day reserves. “There are two paths,” he warned, leaving little ambiguity about his administration’s preference: make the well-off chip in more, or else the burdens will fall—less equitably—on middle- and working-class New Yorkers.

At $127 billion, the FY27 budget is hefty even by Gotham standards. Yet, the apparent largesse conceals structural vulnerabilities. According to city bean-counters, their predecessors had gradually underfunded everything from rental assistance to special education—a pattern that has now emerged with some vengeance, inflating gaps versus last autumn’s projections by billions.

To plug holes, the Mamdani administration adopted what bureaucrats like to call “aggressive savings mandates.” Through his Executive Order 12, the mayor has compelled every city agency to designate a Chief Savings Officer, tasked with rooting out inefficiencies. Such measures, plus a welcome $7.3 billion upward nudge in projected tax receipts and $1.6 billion in emergency top-ups from Albany (including $1.5 billion from Governor Kathy Hochul), have pared the remaining budgetary gap to about $5.4 billion over two years.

Still, another uncomfortable bit of arithmetic remains. The preferred remedy—raises to personal income tax for those earning more than $1 million, and higher levies on corporates—is stymied by the city’s lack of tax-raising authority without state blessing. Absent that, City Hall’s only recourse is to hike property taxes by 9.5% in 2027, drawing an extra $3.7 billion, while cannibalizing nearly $1.2 billion from reserve funds over the next two years.

The bulk of the new spending merely patches overdue bills, but there are glimmers of proactivity. Snow removal will see $100 million more; $5 million will modestly bolster warming centers for the unhoused; an expanded fleet of mobile health units is budgeted at $11.9 million. Small beer in absolute terms, but notable amid the belt-tightening elsewhere.

What does this portend for New Yorkers? The city’s prowess at delivering services such as shelter, health care and public education is, for now, preserved—albeit by stretching local taxpayers. Homeowners, particularly in the outer boroughs, may bridle at steeper tax bills. Aspirations for a more equitable city—one where the affluent pick up more of the tab—will likely remain at the mercy of suburban state legislators wary of antagonizing their own voting blocs.

The perils (and promise) of fiscal pragmatism

At the second-order, the city’s budget manoeuvring offers both reassurance and frustration. The administration touts Chief Savings Officers as the vanguard of a new culture of thrift. But the sums saved—$1.77 billion across two years—are modest relative to total outlays. If anything, they suggest the easy efficiencies have long since been wrung dry, leaving only hard political choices.

Economically, the city retains growth potential: revised tax forecasts stem from a resilient local economy, buoyed by high-income earners and enduring corporate profits. Yet, this very concentration of wealth fuels political discontent, notably as “tale of two cities” rhetoric persists. A property tax hike, however progressive in its rhetoric, can feel indifferent to underlying inequities—multifamily apartment dwellers pay differently from homeowners, the rich from the less so.

Politically, Mr Mamdani’s hand is weakened by dependence on Albany. Since the city cannot touch personal or corporate income tax rates on its own, it must either choose the far-from-neutral property tax, or slim essential services. This fiscal hostage-taking by the state capital is not new—over decades, the city has reliably sent more to Albany’s coffers than it receives in return. For ambitious city leaders, new revenue hinges on persuading state legislators, including upstate and suburban power blocs with little to gain from tax hikes on city-based millionaires.

Nationally, New York’s predicament is hardly unique. Major American cities from Chicago to San Francisco face similar fiscal juggling, their fortunes tethered to broader economic tides and to relations with higher-level governments. Yet, New York’s size and outsized revenues raise the stakes. The city’s perennial self-reliance—some call it resilience, others resignation—is a source of pride, but also a constraining dogma that leaves services at the mercy of capricious markets and distant lawmakers.

There are lessons, too, from cities abroad. London’s devolved government, though hemmed in by Whitehall, has gained broader taxation leeway over time, while Paris operates under a more unitary state. Singapore, often lauded for its budget surpluses, benefits from strong national-local fiscal coordination. American cities’ reliance on property taxes and patchwork reserve funds increasingly appears parochial by comparison.

For all the gnashing of teeth, New York’s current plan is neither bold nor reckless. Instead, it is a study in pragmatic improvisation and—perhaps—political calculation. The administration’s insistence on recurring revenue from wealthier cohorts is a sound, if perennially quixotic, position. Property tax increases, though politically and socially unattractive, at least ensure the city’s legal obligation for a balanced budget. Dipping into reserves is hardly a panacea, but a time-worn expedient. Transparency appears improved; the days of quietly underbudgeting special education or housing are, one hopes, numbered.

The great risk is that perennial budget crises, and the patch-ups they engender, become the new normal. Should tax authority ever be granted, the city might finally pursue a fairer, more sustainable settlement for all who call it home—wealthy and working-class alike. Until then, New Yorkers will remain locked in a familiar dance: thriving atop a fiscal tightrope, only wistfully eying the safety net below. ■