Mamdani’s Nearly 10% Property Tax Hike Proposal Met With Opposition

Mayor Zohran Mamdani’s proposed 9.5 percent property tax hike as an emergency measure to close the city budget deficit wasn’t exactly welcome news, and it’s possibly his first major point of friction less than 90 days into his administration.

Mamdani stated that the tax increase would be a last resort if enough savings could not be identified and contributions from the state and a wealth tax could not be implemented. However, elected officials were more skeptical that working- and middle-class homeowners would shoulder the majority of the burden of higher property taxes.

Commercial real estate leaders were also on edge by the prospect of more expenses.

“Instead of encouraging homeownership and real estate investment, it signals that property owners will be expected to shoulder the cost of expanding his unpopular policies,” Compass Vice Chair Adelaide Polsinelli told Commercial Observer. “Commercial real estate markets are highly sensitive to policy signals. Uncertainty alone can heighten perceived risk for long-term capital allocations. Institutional investors and private owners rely on predictability. When there is ambiguity around future tax burdens, underwriting becomes more difficult, projected returns shrink, and investors will deploy capital elsewhere.”

A property tax increase would also have the unique effect of putting commercial real estate investors and everyday homeowners in the same boat.

“Under no circumstance should we consider balancing our budget on the backs of working-class New Yorkers, especially seniors on fixed incomes and public sector workers who keep our city running,” Queens Borough President Donovan Richards said in a statement. “In this new era, Queens homeowners desperately need our city to reform its already broken property tax system — one that sees Black and brown homeowners in middle-class communities paying more than brownstone owners in the city’s most affluent neighborhoods.”

Richards added that the tax hike would increase wealth inequality and exacerbate housing affordability — two issues that Mamdani campaigned on while running for mayor.

But the property tax increase appears to be the least desirable path for Mamdani in closing the city’s two-year budget gap, estimated to range from about $5.4 billion to $7 billion. He would prefer either a tax on the wealthy or to accept help from Albany, which has already contributed $1 billion to the city’s coffers this year.

Either option requires action from lawmakers at the state level.

“If we do not go down the first path, the city will be forced to go down a second, more harmful path of property taxes and raiding our reserves — weakening our long-term fiscal footing and placing the onus for resolving this crisis on the backs of working and middle-class New Yorkers,” Mamdani said in a statement. “We do not want to have to turn to such drastic measures to balance our budget. But, faced with no other choice, we will be forced to.”  

Both City Councilmember Phil Wong of Queens, who would be among local lawmakers voting to approve such a measure, and Staten Island Borough President Vito Fossella said they would first like to see the administration display fiscal responsibility before raising property taxes.

“In one of the highest taxed cities and states in the country, we cannot keep relying on property taxes and other new revenue instead of auditing programs that don’t serve New Yorkers, ending wasteful no-bid contracts, and taking a hard look at the endless tax burden tied to services connected to the migrant crisis,” Wong said in a statement. “I cannot go back to my constituents and ask them to pay more until City Hall proves it is living within its means and prioritizing essential services.”

Moreover, dipping into the city’s cash reserves would also only put the city in a state of budgetary uncertainty in the coming years if economic uncertainties persist in the long term, New York City Comptroller Mark Levine explained.

“We are left with no easy options,” Levine said in a statement. “But to avoid the harm of increasing property taxes and drawing down reserves, we need to find greater efficiencies and savings across New York City government and reconfigure programs that are growing at an unsustainable rate. We also undoubtedly need greater assistance from Albany, to further rectify the years-long funding imbalance between the city and the state.”

Mark Hallum can be reached at mhallum@commercialobserver.com.