A budget gap, a governor facing re-election and the limits of a city that cannot set its own taxes
The $12 Billion Hole: Who Decides How New York Pays for Itself?
A budget gap, a governor facing re-election and the limits of a city that cannot set its own taxes
NEW YORK – The headline number in the Mamdani administration’s first months was a hole. According to amNY’s report of February 19, 2026, the city faced an initial budget gap of $12 billion. After savings measures and positive projections for Wall Street bonuses, it fell to $7 billion. A $1.5 billion boost in state aid brought it down further, to about $5.4 billion in the paper’s reporting, though the figures are rounded and the article’s arithmetic implies $5.5 billion.
The preliminary budget stood at $127 billion, $9 billion more than the budget it replaced. Roughly $1 billion of it came from savings initiatives, as Citizens Budget Commission president Andrew Rein noted.
Where the Gap Came From
The paper does not point to a single cause. It reports that recurring costs were under-budgeted in earlier financial plans over four years, including housing vouchers, police overtime and shelter services. Rein said the preliminary budget “basically fixed the under-budgeting that was rampant over the last four years,” and noted the growth in city spending over the past decade.
That framing matters. The gap is not the result of a new left-wing programme. It is the accumulated cost of services that the city had been providing without budgeting honestly for them. Shelter, police overtime and vouchers were real expenses; earlier plans simply declined to pay for them on paper.
The Two Paths
The administration’s preferred path required Albany to approve higher taxes on high earners and corporations. The fallback, if Albany refused, was a 9.5 percent property tax increase and use of reserves. Mayor Mamdani called the property tax hike a “last resort.” City Council Speaker Julie Menin considers new property taxes a nonstarter.
This is the structural problem of New York. The city, unlike almost every other major city in the country, cannot set its own income tax rates without a vote in the state capital. The most progressive revenue options are held by a legislature and a governor who answer to the entire state, and a governor facing an election. In February, the paper noted, Gov. Kathy Hochul had strongly opposed new taxes ahead of her re-election bid.
What Albany Did
The outcome, as Spectrum News reported in May, was a state budget of more than $268 billion that arrived more than eight weeks late, the latest in 16 years. Hochul resisted the most drastic tax increases on the wealthy. What came through was a pied-a-terre tax on luxury second homes, which we examine separately, along with the launch of a 2-K programme in New York City and an expansion of 3-K. The governor also agreed to about $1 billion in utility rebate checks to roughly 8.2 million New Yorkers.
So the city got something, but not the thing it asked for. The broad tax on the rich did not materialise; a narrower tax on one category of luxury property did. The property tax increase that the mayor called a last resort was avoided, at least for now.
The Class Question
For a socialist newspaper, the lesson is not that the mayor failed. It is that the budget is a map of power. Who can raise money, from whom, and with whose permission is the core of the matter. A city of 8 million people, whose economy generates a fortune for those at the top, must beg a state capital for the right to tax them modestly. A hedge fund founder’s tax bill on a $238 million apartment, as 6sqft notes, will roughly double and then rise to just under $4 million; the public services that his neighbours rely on are funded in large part by taxes on wages.
Rein urged the administration to exhaust efficiency measures before asking New Yorkers to “dig deeper into their pockets.” It is a fair concern, and it is the kind of argument that always arrives when working people are asked to pay and arrives more softly when the rich are. The question is who the pockets belong to. Taxing wealth is not asking New Yorkers to dig deeper; it is asking those with the deepest pockets to join in.
What Next
The next round begins when the legislature reconvenes. The Mamdani Post will track the proposals for corporate and high-earner taxes and the response in Albany. In the meantime, the city has found the money to keep services running, and the argument, once begun, will not go away.
The World Is Watching the Housing Question
The argument over whether a home is a right or an asset is not confined to New York. The comic press has been working the same seam from three angles: Manila News on the slump in condominium sales in Cebu, the London Prat on British pensioners being asked for referees and a letter from the vicar before they can buy (the piece is at https://prat.uk/cebu-estate-agents-demand-character-references/) and Bohiney on an Ohio realtor whose beachfront showings now last two hours. The jokes land because the underlying logic is recognisable: when housing is priced and traded like a share, the mood of the market matters more than the people who need to live somewhere. Readers can find more of this coverage at prat.uk and bohiney.com.
For readers who like their housing politics with a laugh, the British comic press is always open: The Daily Mash.
SOURCE: https://bohiney.com/cebu-realtor-cant-sell-beachfront-listings/