Property Tax Hike Could Shock Con Ed Bills Citywide, With $600 Hits by 2028

With property taxes poised to climb, New Yorkers may find their energy bills rising in tandem—highlighting a perennial fiscal dilemma for America’s largest city.

New York’s tax hunters rarely let up. This year, a proposed 9.5% hike in the city’s property tax rate could cost homeowners and landlords dear, but it is tenants and ratepayers who may ultimately foot the bill. For the city’s 8.5m residents—already seasoned in the art of wallet-clutching when the mail arrives—such news portends more than just an administrative adjustment. It may mean that the price of keeping the lights on, and the radiator humming through another Northeast winter, is set to march higher.

The budgetary gambit in question, championed by Zohran Mamdani in his preliminary $127bn plan, would lift the general property-tax rate from 12.83% to 13.45%. Although Mamdani claims the increase is a stopgap, designed to patch a formidable fiscal hole, experts warn that this cure may prove more bitter than intended. The reason: utilities such as Con Edison and National Grid, themselves major property owners, are allowed—and indeed expected—to pass tax increases directly onto consumers.

John Howard, former president of the New York State Public Service Commission (PSC), did not mince words when pressed by reporters: “No le están cobrando impuestos a Con Edison. Le están cobrando impuestos a los clientes.” The city, he argued, has long treated utility property as a particularly fattened outlet for exaction. The regulatory logic of the PSC, which recently approved hikes in both electric (10.4%) and gas (15.8%) rates over the next three years, effectively enshrines the practice of passing on municipal levies.

The numbers are far from trivial. Taxes and fees now account for close to 30% of the delivery charges on Con Edison bills—some $3bn a year, according to the utility’s own figures. For National Grid, the burden is lighter but still notable, at roughly a quarter of a typical bill. These contributions to city coffers are, for all practical purposes, an indirect tax on everyone who indulges in heat or refrigeration.

For the average New Yorker, the arithmetic bodes ill: by 2028, says the PSC, the median customer will pay at least $600 more per annum even without factoring in the latest property-tax proposal. The cumulative effect may further strain household budgets already gnawed by rent, food, and other essentials—costs that show little sign of abating. Small businesses, too, face a double-whammy: higher property taxes on commercial space and steeper energy bills.

As ever, the second-order consequences ripple out. Landlords, from Park Avenue moguls to immigrant proprietors of modest walk-ups, are apt to recoup increased tax obligations through rent hikes or tighter maintenance budgets. Tenants respond by crowding a hotly competitive housing market or decamping for cheaper climes; shops and restaurants, by trimming staff or hours. Even the property-tax windfall may prove less buoyant than hoped if rising bills dampen demand for city living.

The mayor’s plan is not universally beloved. Kathy Hochul, the state’s governor, has made clear her distaste for any “paltry” increase in taxes this year, while Julie Menin, speaker of the City Council, pronounced the property-tax ploy “unviable.” Mamdani retorts that the only alternatives—hiking income taxes on the wealthy and raising the corporate rate—look equally forlorn. City finance has never been a stranger to thickets.

When heat and light get dearer, broader questions smolder

Consider, too, the outlier status of New York’s approach. The tax load on utility property in the five boroughs is, by the city’s admission, three to four times higher than the national average of 8%. This eccentricity is not, strictly speaking, new. But it saps New York’s competitiveness, a fact well understood by anyone who has tried to site a new manufacturing plant or data centre within reach of reliable power. The city’s robust tax regime may be less an instrument of equity and more an obstacle to sustained growth.

Across the country, other metropolises wrestle with parallel predicaments. Chicago, Boston, and Los Angeles all rely heavily on property taxes to fund municipal services, with each facing pressure to keep public budgets afloat as federal support grows tepid. New York, with its particularly puny federal aid versus its outsize ambitions, has cobbled together a hybrid: draconian for property owners, diffuse but ultimately inescapable for ordinary ratepayers.

National Grid points out that it has yet to see a formal proposal, while utilities and their regulators tiptoe around the debate. Little wonder. Any whiff of an impending increase is enough to summon the wrath of rate advocacy groups, which have long argued, not unreasonably, that New Yorkers pay some of the highest utility bills in America. The city’s penchant for progressive tax rhetoric rarely collides with the regressive results of surreptitious levies folded into electric bills.

A city of Gotham’s scale must, of course, pay its way. But repeated, unsystematic hikes in property taxation (and the consequences for energy costs) do little to bolster confidence among businesses or households. They also invite awkward questions about city hall’s unwillingness to rein in spending or to revisit the underlying allocation of fiscal pain.

Still, New York remains an engine of innovation as well as of tax policy. Its resilience lies in its capacity to attract talent and investment despite, not because of, its peculiar fiscal ecosystems. That stamina, though, is hardly guaranteed in an era when remote work and migration offer once-unimaginable exits.

In public finance, as in energy, the principle endures: what cannot go on forever won’t. If New York wishes to avoid pricing itself into stagnation, it would do well to break with its tradition of stealth taxes on necessities. Failing that, the city may find itself searching for still more creative ways to extract resources from its long-suffering denizens—before those denizens decide enough is enough. ■