Mamdani will present the budget on May 12 in New York.Image: keystone
Mayor Zohran Mamdani presented the new budget for the city of New York at the beginning of the week. The planned savings are intended to close a billion dollar deficit without making major cuts. Critics speak of a temporary solution. At the same time, the budget shows that Mamdani is forced to compromise in office.
May 15, 2026, 5:56 p.mMay 15, 2026, 5:56 p.m
Last Tuesday, New York Mayor Zohran Mamdani presented the city’s draft budget for the current and next year. Coming into office with the promise of improving the city’s finances through, among other things, consistent taxation of New York’s wealthy elite, Mamdani’s concrete plans were eagerly awaited.
When he took office, the new mayor inherited a deficit of $12 billion from his predecessor, the business-friendly Democrat Eric Adams. Now Mamdani presented a balanced budget of $124.7 billion, one of the highest in the history of the US metropolis.
Balanced budget without social cuts
Unlike New York State, the city is required to present a balanced budget. However, the fact that Mamdani managed to do this without increasing property taxes, dipping into reserves or cutting social benefits, refers to the New York news portal “The City”, which specializes in local journalism as a “true financial miracle”.
In a statement from the city, Mamdani wrote: “For far too long, working New Yorkers have been led to believe that austerity measures are the solution to all problems. This budget rejects this failed policy. We are restoring financial stability without cutting the services people rely on.”
The fact that this was achieved in the budgeting phase is mainly due to the cooperation between the New York mayor and the governor of the state of the same name. As the New York Times writesMamdani sought to establish a positive relationship with Governor Kathy Hochul early on. This now seems to be paying off. The state contributes around four billion dollars to the city budget with measures and support packages.
Critics say that financial problems are not being solved but rather postponed
A central component of the savings is that the city spreads out the payments into the pension funds of city employees. Instead of completely compensating for the existing financing gap by 2032, the payments are now to be distributed until 2037, which will relieve the budget in the short term without changing the pension rights of employees, as these will continue to be legally guaranteed.
The renowned US political magazine “The Nation” calls this approach a type of “unobtrusive, creative accounting” that politicians like to denounce to their opponents, only to resort to it once in office. The adjustment of the repayment period will lead to a temporary relief of over two billion dollars on the city’s finances.
The independent financial supervisory authority Citizens Budget Commission criticizes in a statement that this does not solve the problems but shifts them into the future: “This pension trick balances the budget at the expense of future New Yorkers – residents in the mid-2030s will have to pay to close the budget gap in the 2027 fiscal year.”
New tax on luxury second homes
One point that democratic socialist Mamdani prefers to talk about is a newly imposed tax on second homes in New York with a property value of over five million dollars. According to Mamdani and Governor Hochul, the additional taxation of such luxury apartments should generate around $500 million in additional tax revenue.
The new regulation is Mamdani’s first success in an effort to make New York’s rich upper class pay with higher taxes. The increase in income tax for rich New Yorkers demanded by the now incumbent mayor during the election campaign sometimes failed due to the required approval from the state. That led Mamdani to threaten a 9.5 percent property tax increase earlier this year if the state did not agree to a higher income tax.
After a lot of criticism, including from the community of black home and real estate owners in New York City, Mamdani backed away from the plans. Other aspects of the new budget plan show that the 34-year-old New Yorker, as incumbent mayor, will have to put some of his campaign promises on the back burner in an effort to present a balanced financial budget.
Mamdani has to make concessions
For example, Mamdani’s aim to reduce the size of school classes in New York in favor of a better teaching climate will be postponed for cost reasons, but will not be canceled, as he emphasizes. Other projects, such as a support program for tenants in financial difficulties, are also being postponed as a result of the austerity measures.
According to the city, additional money will be freed up through administrative reforms and stricter spending controls among city authorities. The budget is now up to the city council, which can make changes to it until June 30th.