The City Council found a $6 billion alternative to raising property taxes and dipping into the city’s reserves. The mayor says the proposal is “unrealistic.”
The proposed savings, according to the City Council’s 60-page response to Mayor Zohran Mamdani’s $127 billion preliminary budget, avoid the mayor’s proposal to raise property taxes by 9.5 percent and to raid the city’s rainy day fund and Retiree Health Benefit Trust to fill a $5.4 billion, two-year budget gap.
The $6 billion figure springs from recalculations of various estimated revenues and costs, as well as “efficiencies” identified by the Council, such as requiring competitive bidding of all Department of Education contracts. The Council believes revenue estimates need to be adjusted in a number of areas, including for fees collected by the city’s housing and building agencies.
In February, the mayor pitched raising property taxes as a “last resort” if the state does not raise taxes on corporations and New York’s top earners. Lawmakers are still hashing out a state budget with Gov. Kathy Hochul, who has not supported raising taxes.
Mamdani swiftly responded to the Council’s plan, saying that “claims we can close this gap without significant new revenue is unrealistic.” The mayor said the Council’s plan “would result in slashing billions of dollars from agency budgets, which would force the city to cut services.”
He also said the proposal double-counts previously identified savings, overestimates revenues and exaggerates debt service savings.
The Council’s plan assumes that the preliminary budget overestimated growth in wages and salaries by $860 million. Speaker Julie Menin asserted Wednesday that the Council’s proposal would not result in cuts to services or staff.
The Council’s plan points to a few real estate-related items, though they aren’t the largest sources of proposed savings. For one, it estimates that unaccounted-for interest earnings tied to Related Companies’ 70 Hudson Yards could add $29 million to the city’s general fund in fiscal year 2026 and $20 million in 2027. The interest is tied to surplus payment in lieu of taxes from Hudson Yards that feed into the city’s general fund.
Last year, the City Council approved a plan to allow Related to use surplus PILOTs to pay for a platform over the Western Rail Yard, necessary for the next phase of Hudson Yards. That arrangement awaits further approval.
The Council’s plan estimates considerably higher property tax revenue for the fiscal years 2027 through 2030 than the mayor’s budget. Citing “stronger collection expectations,” the Council estimates bringing in $724 million more property tax revenue in 2027 than the $40.3 billion projected in the mayor’s budget. The Council’s estimates grow from there, projecting revenues higher than the mayor’s budget by $1 billion in 2028, $1.6 billion in 2029 and $2.2 billion in 2030.
The reason for these differences wasn’t immediately clear.
The Council believes that the city should also increase its revenue estimates stemming from Department of Buildings’ permitting and late fees by $80 million in fiscal year 2026, based on the collection of these fees so far. Similarly, the Council’s plan calls for adjusting the estimate for fines and fees collected by the Department of Housing Preservation and Development related to tax incentive submissions, including 485x. The Council believes the mayor’s budget left $33.8 million from these fees out of its fiscal year 2026 projections.
The plan additionally points to $11 million in annual revenue from payments in lieu of taxes received by the Department of Citywide Administrative Services. The mayor’s preliminary plan doesn’t include that revenue for fiscal years 2026 nor 2027, but should be included in each, according to the Council.
Wednesday’s release of the Council’s plan underscored mounting tension between the mayor and City Council speaker as the two find themselves at odds on issues, including the City Council’s fight to expand the city’s housing voucher program. Menin indicated during a press conference that the City Council is ready to settle with the administration on that issue and had urged the mayor against appealing a court decision that mandated the program’s expansion.
When asked by reporters if the state should raise taxes, Menin said she believes in progressive taxation but doesn’t “want a situation where we’re pitting states against each other, which is basically what that would do.”
Still, she said state lawmakers should consider all options as they work to pass their budget.
“Right now, we don’t know where they are going to land,” she said. “All options should and need to be on the table.”
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