On the surface, Zohran Mamdani has little in common with Robert F. Wagner Jr., New York City’s mayor from the early 1950s to the mid-1960s. Kathy Hochul bears even less resemblance to her equally distant gubernatorial forerunner, Nelson A. Rockefeller. Yet both Mamdani and Hochul could learn from a fateful fiscal bargain that Wagner and Rockefeller struck six decades ago.
By early 1965, three years into his third and final mayoral term, Wagner had increased city spending by 30 percent. His fiscal year 1966 budget proposed another 15 percent hike—twice the growth projected in tax revenues. He refused to cut. “I do not propose to permit our fiscal problems to set the limits of our commitments to meet the essential needs of the people of this city,” Wagner declared.
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Instead, he asked Albany for permission to close the gap with $256 million in bonds—about 10 percent of the city’s total tax receipts at the time, equivalent to at least $8 billion today. What Wagner brazenly called a “borrow now, repay later” strategy won legislative approval and was signed into law by Rockefeller, who—like Hochul in 2026—faced reelection the following year.
Despite two waves of big Albany-approved tax hikes under Wagner’s successor, John Lindsay, Gotham fell into an annual cycle of budgetary expansion, financed partly by IOUs. After one last bubble of economic growth in the late 1960s, the fiscal house of cards collapsed, bringing the city to virtual bankruptcy in 1975 under Lindsay’s hapless successor, Abraham Beame.
Knowing all this, consider Mayor Mamdani, whose agenda might be described as Wagnerian New Deal liberalism on twenty-first-century socialist steroids. “The only expectation I seek to reset is that of small expectations,” Mamdani proclaimed in his inaugural address. “Beginning today, we will govern expansively and audaciously.” Like Wagner 61 years ago, he shows little interest in setting limits.
This is where Hochul comes in. As governor, she wields considerable leverage over state lawmaking in general and the state budget in particular. She also chairs—and effectively controls a majority of votes on—the seven-member state Financial Control Board (FCB), created during the fiscal crisis to supervise New York City’s recovery. The board’s mandate was to impose discipline, chiefly by pressing Mayor Beame and his successor, Ed Koch, to curb spending and hold a tight line on municipal union contracts, a bad-cop role that Koch, at least, quietly welcomed.
The FCB relinquished full control of the city’s finances back in 1986. More recently, the board has been reduced to standby status, meeting annually to certify that the city has not run a deficit bigger than $100 million, allowing for debt-service-timing gimmicks. Still, the FCB is positioned to serve as an important check on fiscal recklessness in City Hall—that is, if the governor is willing to use it.
Unfortunately, there’s also a precedent for FCB inaction. Days after the 9/11 attacks, a shocked state legislature authorized $2.5 billion in emergency borrowing to finance World Trade Center cleanup costs. But the federal government soon agreed to pay for the entire cleanup (and more). Nonetheless, the control board under then-Governor George Pataki looked the other way as Mayor Michael Bloomberg used $2 billion of emergency bond money to cover a deficit baked into Rudolph Giuliani’s final pre-9/11 budget.
A near-recurrence of the old borrow-now, pay-later approach came in 2020, when Mayor Bill de Blasio sought state legislative permission to borrow billions for an anticipated budget hole following the Covid-19 outbreak. Then-Governor Andrew Cuomo disapproved, the FCB expressed concern, and the city’s pandemic-driven fiscal problem soon disappeared under a wave of federal pandemic aid and capital-gains taxes generated by a stock market boom.
Looking ahead, Mamdani’s planned spending surge—financed by further increases in New York’s already sky-high taxes on corporations and high earners—will do nothing to improve the city’s prospects for sustained growth or fiscal balance.
When (not if) a downturn on the near horizon pushes the city deeper into the red, the mayor’s first response will likely be to “tax the rich” yet again. After exhausting reserves, he will almost certainly prefer deficit borrowing to any restraint on his “expansive and audacious” agenda. The question is whether Hochul—or her successor, if she is not reelected—will stand aside and let him do it.
Without even spending an extra dollar on his expansive agenda, Mamdani may already be confronting a budget deficit of at least $2 billion in the current city fiscal year, according to city and state comptrollers’ offices estimates. Beyond that, these fiscal monitors say budget gaps could total more than $37 billion by FY 2029—more than double the shortfalls projected in Eric Adams’s final budget modification in November.
As Mamdani is about to learn, it’s easy to be audacious in speeches. Governing demands dollars—and sense.
Photo by Andres Kudacki/Getty Images