New York City Mayor Zohran Mamdani just announced that he plans to push Governor Kathy Hochul hard during budget negotiations to enact serious tax hikes on millionaires and corporations to close a massive budget shortfall, as per Yahoo News. This announcement came as the city is looking down the barrel of a potential $12.6 billion budget gap for this fiscal year and the next.
His argument is straightforward: the city needs its wealthiest residents and most profitable corporations to pay their “fair share,” as he put it. Mamdani absolutely needs this cash injection to make good on his ambitious, and admittedly pricey, affordability agenda. He’s promised universal preschool, free public buses, and a significant increase in affordable housing production. To fund all that, he’s targeting a 2% tax hike on the city’s richest residents alongside an increase in the state’s top corporate tax rate.
This entire situation stems from some serious financial headaches. City Comptroller Mark Levine estimates the budget gap at $12.6 billion. Levine pointed the finger largely at the previous administration, citing known expenses that were seriously underbudgeted, like overtime costs and funding for CityFHEPS, the city’s housing voucher program. If that wasn’t enough stress, the comptroller notes that this massive potential gap doesn’t even factor in potential funding threats from the Trump administration.
Mamdani has just a few short weeks to convince the governor that the time for major tax reform is now
Mamdani noted that while the city generates a whopping 54.5% of the state’s tax revenue, it only receives 40.5% of the state’s services in return. He stated, “This has to be one part of proving to New Yorkers that every dollar they give to the city is a dollar they’re going to see back in services.”
However, Mamdani’s push immediately sets up a major conflict with Governor Hochul. The governor just unveiled her record $260 billion budget proposal, and it didn’t include the major tax increases the mayor has been calling for. Hochul is facing reelection later this year, and she has historically stood staunchly opposed to raising taxes on the city’s most well-off residents.
She did acknowledge the pressure, though. “I know he’s calling for a tax increase. I’ve heard that,” Hochul said earlier this week, adding, “I’m sensitive to the impacts.” While the governor didn’t go for the major overhaul Mamdani wanted, she did include a few smaller measures. She proposed a minor tax hike on nicotine pouches, like Zyn, and she’s looking to extend the state’s current top corporate tax rate of 7.25% for another three years.
That rate is currently scheduled to expire at the end of the fiscal year, so keeping it in place is certainly better than nothing, but it’s definitely not the tax increase Mamdani was demanding. Despite this brewing budget battle, the two leaders seem to be keeping things relatively friendly. They’ve touted a good working relationship, and earlier this month, the mayor even praised the governor when they announced free preschool for two-year-olds.
The clock is ticking, though. The state budget absolutely has to be finalized by April 1, which marks the start of the new fiscal year.
Published: Jan 22, 2026 01:30 pm