New York City Mayor Zohran K. Mamdani has a grand ambition: show that democratic socialism can work and win favor in America by coupling what he calls “public excellence” in government services for everyone with vastly higher taxes on the rich, so that voters around the country can see what a more expansive government can deliver. The mayor’s inaugural $125.8 billion budget, which he will negotiate to finality with the city council by late June, demonstrates the limits of this idea. Whether from the perspective of the Left or the Right, the problem is that Mamdani has created a business-as-usual New York City budget. Like all mayors, he can't figure a way out of the constraints imposed on him by public-sector unions and existing welfare programs.
In releasing the latest draft of his budget last week, Mamdani tried to declare victory. “We are making government work for the people of this city,” he said, “securing support from Albany and taxing the rich so that we can invest in housing, safety, child care, parks, libraries, and the public goods that make New York the greatest city in the world.” He has a knack for delivering rhetoric, perhaps, but the budget numbers, put into historical context, aren’t transformative.
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Strip out federal loans and grants, and the portion of the city budget funded by the local and state tax base will rise by about 1 percent, well below the inflation rate, to $118.4 billion. That’s down from a 6.2 percent increase from the current fiscal year, inherited from former Mayor Eric L. Adams.
On his promises of new spending, the biggest political win Mamdani gets from this budget is on child care: he has wrung $1.2 billion from Albany for pre-K and daycare, including a pilot program for two-year-olds. On his taxing promises, he has won a new surcharge on second homes worth $5 million or more, projected to bring in $500 million.
So the mayor can say that he has taxed the rich and boosted spending—but if you didn’t already know that he had won a campaign on sweeping socialist promises, you wouldn’t know it from this budget.
Last year, candidate Mamdani proposed $9 billion in annual taxes on wealthier earners—households earning about $1 million as well as large businesses—to pay for childcare for infants six weeks old and up, free buses, some funding for a new department of community safety, and city-run grocery stores. What’s striking isn’t how little of this blueprint won approval from the governor, Kathy Hochul, who, along with the legislature, controls any new income-based revenues. Rather, it’s how little of it Mamdani even asked for: he did not reserve any money in his proposed budget to pay for free buses, for example.
Indeed, Mamdani’s first budget, seen in the context of New York fiscal history, is more of a continuation than a disruption. Just like Mayor Bill de Blasio, who achieved state funding for pre-K for four-year-olds in 2014, Mamdani has gained new state funding for an incremental expansion of early education and childcare. The Mamdani-era new tax on second homes isn’t all that different from the $400 million high-end property tax approved by then-Governor Andrew M. Cuomo in 2020—and it may fall far short of its projected revenues, anyway, as it will be difficult to administer.
As for broader taxes on wealthy earners, requiring state legislation? Hochul hasn’t allowed any such taxes this year partly for political reasons: she is up for reelection, and her credible challenger four years ago, Republican Lee Zeldin, campaigned from the right. And Hochul has no need to authorize new taxes—the state has nearly $15 billion in official cash reserves. The cash has piled up in part because of a previous tax increase: in 2021, Cuomo and lawmakers increased the tax rate by nearly a percentage point on households earning more than $2 million, and created two new brackets above $5 million, with a new top rate of 10.9 percent.
Turns out the self-described socialist came late to the tax-the-rich party.
With the economy still growing, and the city’s tax revenues thus still rising, Mamdani might find room for some of his program’s more ambitious elements—such as $1 billion annually for free buses—were he to scrutinize the rest of the budget. But two factors constrain him.
The first is ceaselessly rising social-services spending on homeless shelters and cash welfare. The city will spend $1.5 billion of its own tax funds on welfare this upcoming year, up from less than $900 million that Adams budgeted in his first year. Back then, city taxpayers spent less than $1.7 billion on homeless services; next year, that figure will reach $3.6 billion.
When, in January, Mamdani blamed Adams for the budget deficit he inherited, he wasn’t wrong. It’s just that, like mayors before him, Mamdani hasn’t tried to change the spending trajectory, presumably wanting to preserve his limited first-year political capital on a potentially unwinnable fight with advocacy communities. With one exception: Mamdani did slow growth in one program: city-funded housing vouchers. (The self-proclaimed socialist is New York’s only mayor in the last three to try to slow the growth of something.)
The second factor constraining the mayor is the growing cost of the city workforce. Mamdani hasn’t shown interest in getting a handle on this—for example, by saying that in future contract negotiations, he’ll ask city workers to pay for a portion of their own health-care premiums, or pledging to obtain improvements in productivity in return for future raises. Instead, he has supported union efforts to undo the pension savings that Cuomo achieved for the city workforce as governor in 2012, among them raising the retirement age to 63, from a range of between 55 and 62. (The state controls local pension benefits.)
In other words, Mamdani has proven politically pragmatic, preferring modest victories, relative to his campaign promises, to protracted fights with the ageless institutions, from unions to anti-poverty advocates, that make up New York City’s permanent government.
Pragmatism, though, may not avert a future fiscal crisis. Even without funding his promises, Mamdani, with Hochul’s assent, has reached into New York’s dusty grab bag of fiscal gimmicks to balance this budget. Most egregiously, the city is pushing $7 billion worth of future pension costs over the next five years further off into the future. He’s doing what he accused Adams of doing—leaving a mess for the next mayor—and he got the idea to do so from the supposedly more moderate city council. His proposal to tax rich earners and businesses more heavily may only be delayed.
New York loves big personalities, from Mamdani today to Mayor Rudolph W. Giuliani three decades ago. But no matter who is in charge, with some mayors worse than others, spending inexorably rises. Consider: the city- and state-funded New York City budget in 2002 was $34.4 billion—in today’s dollars, that’s $63.7 billion, or slightly more than half what we’ll spend this year.
It says a lot about New York City that in order to afford socialism, we’d have to cut spending first.