NYC Mayor Mamdani Calls for Tax Hikes on Rich to Fix $12B Deficit

New York City Mayor Zohran Mamdani called on Tuesday for raising taxes on the city's wealthiest residents and big corporations to close a $12 billion budget deficit. He blames the shortfall on poor money management by the previous mayor, Eric Adams, and former Governor Andrew Cuomo. The news comes as city comptroller Mark Levine warned of a $2.2 billion gap this fiscal year and $10.4 billion next year.

Background

New York City started the year with balanced books, but trouble brewed fast. Comptroller Mark Levine, who took office on January 1, released numbers showing the city faces its biggest shortfall since the 2008 recession. For fiscal year 2026, which ends in June, the gap sits at $2.2 billion. Looking to 2027, it jumps to $10.4 billion. Levine points to spending choices made under the Adams administration. They set spending too high compared to what taxes bring in. The city also skipped budgeting for costs that keep coming back, like help for renters, overtime pay for workers, and money for homeless shelters.

These problems build on warnings from state comptroller Thomas DiNapoli. His office said the city's out-year gaps could hit $13.6 billion by 2029 if growth slows and costs rise. The city bumped its 2026 budget to $118.2 billion, up $2.3 billion from plans last year. But that skips $3.8 billion in expenses pushed from last year. Business taxes fell short by $378 million from what was expected. Jobs might have dipped too, which hits tax collections and ups demand for city services.

Mayor Mamdani took office after winning on promises to make life cheaper for regular folks. He wants free buses and childcare for kids up to age five. But state leaders, like Governor Kathy Hochul, turned down his push for tax hikes on the rich in her budget last week. She did boost childcare money to $4.5 billion, covering the first two years of a bigger plan. Still, Mamdani's team now stares down these deficits with few easy fixes.

Key Details

Comptroller Levine laid out the math in a report this week. The $2.2 billion hole for 2026 comes from unbudgeted items totaling $3.8 billion. That includes rental aid, overtime, shelter costs, public help, school legal fights, and subway support. Next year's $10.4 billion gap grows even larger because those costs keep climbing. Levine says the economy is not the main culprit. Tourism, shows on Broadway, office rents, and stock market gains keep city money flowing strong. U.S. growth holds up too, with no big recession in sight.

Past Budget Choices

Levine pins most blame on the Adams era. They spent more than taxes covered and ignored repeating bills. DiNapoli agrees, noting the city used extra cash in recent years to patch holes. That luck may end soon. Federal grants make up over $28 billion of 2026 revenues, mostly for schools and social aid. Changes in Washington could cut those. The city holds some backup cash, like $1.45 billion a year in reserves, but that's not enough for the full gaps.

Mamdani's top budget aide, First Deputy Mayor Dean Fuleihan, spoke at a budget group event in December. He said the team would only chase new taxes if the state went along. Now, with Hochul out, Mamdani renewed his call. His administration starts a full budget check soon. Levine plans to help by talking to state leaders in Albany next month. He calls himself an activist comptroller, ready to audit city housing efforts and push for tight spending.

“It is time to ask NYC’s wealthiest and large corporations to pay their fair share, while also working toward a fiscal relationship with the state that better reflects NYC’s status as the economic engine of the state.” — Mayor Zohran Mamdani

What This Means

The deficits force hard picks for Mayor Mamdani's team. They must deliver a balanced preliminary budget in February. Options include cutting services, dipping into savings, or finding new cash. Tax hikes on high earners and firms sit at the top of Mamdani's list. He ties it to his goals for free transit and childcare. But without state buy-in, that path gets rocky. Hochul's budget skips those increases, leaving the city to fend alone.

Labor market soft spots add risk. If jobs drop more, taxes fall and aid needs rise. Social service costs, like help for the needy and renters, trend up. School and transit bills do too. The city skipped big reserve builds, betting on steady revenues. A mild downturn could blow that apart. Federal shifts loom large, with grants at stake.

Levine commits to teaming with Mamdani and Albany to balance the books. His office tracks monthly economic updates. DiNapoli urges efficiencies and cost controls. The center on New York City budgets flags federal tax changes already costing $520 million in city revenue. State losses hit $2.9 billion. These hits make the gaps wider.

City leaders face a crunch like none since 2008. Mamdani's review will shape cuts or revenue hunts. Residents watch for impacts on schools, housing, transit, and safety. The push for fairer taxes from the top tests ties with state powers. Albany talks next month could shift the path. For now, the $12 billion cloud hangs over budget talks.