Mamdani Unveils $127 Billion Queens Budget, Leans on Property Taxes While Hoping for Albany

New York City faces tough trade-offs on how to close a daunting budget gap—with policies that could reverberate across its social fabric and economic prospects.

At $127 billion, New York City’s newly unveiled preliminary budget for fiscal year 2027 is the stuff of both ambition and anxiety—a ledger whose sums lay bare not just the world’s most complicated municipal finances, but also stark societal choices. The numbers, and the rhetoric surrounding them, hint at a city at fiscal crossroads: will the wealthy chip in more, or will ordinary New Yorkers shoulder the load through increased property taxes and depleted reserves?

Mayor Zohran Kwame Mamdani, still fresh to office, presented the Fiscal Year 2027 plan against a bruising backdrop. City bean-counters discovered that essential services—rental aid, shelter operations, special education—had habitually been given puny allocations. As a result, the anticipated gap ballooned, reaching a combined $12 billion shortfall over FY 2026 and FY 2027 (as per the November 2025 Financial Plan Update).

The mayor’s options, as he bluntly outlined: either extract more from those at the top and prod Albany into rebalancing what the city gives versus what it receives—or, failing this, turn to the blunter tools of property tax hikes and one-off withdrawals from Gotham’s rainy-day caches. Each avenue courts its own winners and losers. The first promises to hit millionaires and the biggest corporations; the latter will squeeze landowners, landlords and, ultimately, tenants, while risking the city’s long-term solvency and creditworthiness.

The budget’s arithmetic is sobering. Even after deploying reserve funds—$980 million from the Rainy Day account in FY 2026 and another $229 million from a retiree health trust in FY 2027—and securing a combined $1.6 billion in new state support (including the governor’s Foundation Aid), the hole stands at $5.4 billion over two years. An Executive Order now pushes every city agency to designate a Chief Savings Officer charged with finding recurring efficiencies; these are projected to deliver $1.77 billion in savings. But such economies are, as ever, easier to order than to achieve.

Bereft of broader tax authority, the Mamdani administration resorts to what it can control. The budget presumes a hefty 9.5% property tax increase, worth $3.7 billion for FY 2027—a rise liable to pinch not just millionaires in Park Slope but also brownstone owners in up-and-coming Queens. For a metropolis increasingly preoccupied with affordability, such a move, though perhaps inevitable, bodes uneasily.

The administration’s priorities, at least, resist easy caricature. Of $14 billion in new or changed agency expenses over the next two fiscal years, nearly all is targeted at bridging service shortfalls, with only 4% (or $576 million) marked for “targeted investments”—snow removal, mobile outreach vans, shelter expansions for the homeless, and measures for senior nutrition.

Still, these incremental investments feel modest relative to the scale of unmet need. Housing insecurity and street homelessness, perennial New York maladies, risk growing if city finances cramp; so too do backlogs in special education and city-provided child care. A dent in the rainy day fund may seem tolerable within a single fiscal cycle, but portends troubling precedent if, as some sour New York State Comptroller audits warn, the national economy lurches south.

For New Yorkers, the reverberations will be immediate and uneven. Owners and landlords can often defray higher taxes through higher rents. Businesses, already nursing grievances about regulatory burdens, may bridle at even the prospect of new levies. Middle- and working-class residents, meanwhile, may find the path forward much stonier. Even small shifts in the city’s fiscal regime echo quickly through job markets, housing prices, and municipal services—from subway reliability to classroom headcounts.

Attempts at reform, fraught with politics, are a perennial New York tale

The mayor’s appeal to Albany is both unsurprising and ironical. For decades, New York City has transferred far more in tax revenues to the Empire State’s coffers than it receives in earmarked support. Each new mayor promises to reverse the “staggering imbalance,” and each encounters a state legislature better at polite obfuscation than material redress. This year’s $1.6 billion, while not puny, barely dents the flow.

Elsewhere, American cities are navigating similar shoals, though seldom at this monstrous scale. Chicago, too, raises (and raises) property taxes to paper over its deficits, while Los Angeles leans increasingly on volatile sales taxes. The difference, perhaps, is that New York’s woes—a consequence of both its sprawling responsibilities and its chronic underfunding—matter more. The city’s fiscal health shapes the entire regional economy and, arguably, signals the state of urban America itself.

There are lessons, as ever, from abroad. London, for instance, lacks the power to tax income locally, relying on modest property taxes and a narrow business-rate regime; Paris, by contrast, benefits from generous state transfers. Neither arrangement has spared those cities from fraught debates about growth, fiscal prudence and social obligation. But both offer cautionary tales: chronic underinvestment rarely yields political gratitude.

Our verdict is circumspect. The Mamdani administration’s budget is at once prudent—seeking savings, shunning systemic cuts to essential services—and structurally fragile, overly reliant on tax moves that are politically precarious and, over time, possibly untenable. Raising taxes on high earners and large enterprises is neither novel nor certainly foolproof: capital and talent can, and sometimes do, decamp. Yet to lean solely on property owners and reserves, as fallback, risks eroding the city’s social contract.

The wider implication is that New York’s budget woes are not simply accounting matters but, rather, emblematic of a city-state still grappling with its identity: a place both expensive and indispensable, envied and envying, forever dodging the fiscal reckoning that its own vibrancy makes impossible to evade indefinitely.

However one slices it, New York remains, as ever, a city too vital to fail—yet uncomfortably near to doing so without urgent fiscal creativity and political courage. ■