Mamdani World Readies for Next Year’s Tax-the-Rich Push

Mayor Zohran Mamdani claimed victory after this year’s state budget sent New York City billions of dollars in aid and a new tax on luxury second homes. But the good vibes between the city and Albany may be short-lived.

Mamdani and his allies have already begun to discuss another big push for aid and new taxes. The reason is twofold: Mamdani would need more money from Albany to implement big-ticket campaign promises like universal child care. More urgently, the city faces big budget gaps in the coming years that will need to be closed — and could get larger after the city negotiates new labor contracts.

Albany’s bailout for the city is nothing to sneeze at, totaling $2.4 billion — not including the $500 million-a-year pied-à-terre tax. But two-thirds of that aid is set to end after next year, according to an analysis by the Citizens Budget Commission — meaning the city will need to either cut spending or bring in more revenue.

“Even though we passed the pied-à-terre tax, we have lots of work left to do,” said Gustavo Gordillo, co-chair of the Democratic Socialists of America’s New York City chapter. “We’re looking to next session to pass a tax on the rich and corporations that actually meets the needs of New Yorkers.”

Mamdani has spoken to progressive groups about what next year’s campaign might look like, a person familiar with the discussions said. Although the strategizing is still in its infancy, there’s likely to be one clear difference: The campaign could ramp up as soon as this fall, rather than waiting until the legislative session starts in January.

“I’m certainly committed to starting earlier, and strategizing with the mayor’s administration to maximize state policy that’s good for the city — including new taxes on the rich,” said State Senator Julia Salazar, one of nine DSA-endorsed lawmakers in Albany.

Favorable terrain?

Conventional wisdom at the start of this year was that 2026 would be a golden opportunity for progressives to pass corporate and income tax hikes in Albany. Mamdani had unspent political capital, and Hochul, seeking re-election, needed New York City voters for both her Democratic primary and the November general election. That was before Mamdani endorsed Hochul in February, leading Lieutenant Governor Antonio Delgado to drop his primary challenge.

Another Mamdani victory was also a paradoxical setback for the broader movement. Hochul’s January pledge to fund free child care for the city’s two-year-olds and expand free pre-K statewide undercut the DSA, which had planned to center its tax-the-rich campaign on child care.

Some of those involved in the tax-the-rich campaign expect 2027 to be different.

“We hear that next session the terrain will be more hospitable to raising taxes on the rich, because it’s not an election year,” Gordillo said.

Hochul was this year’s main obstacle, given her steadfast opposition to raising income or corporate taxes — even as the state Senate and Assembly reiterated their longstanding support for both. By next year, presumably, she will have been freshly re-elected — she currently holds a wide polling lead over Republican Bruce Blakeman — lessening any fear that tax hikes could spur an electoral backlash. (Polling has consistently shown strong support for raising taxes on wealthy people in New York.)

Jon Paul Lupo, a Democratic political consultant who led intergovernmental affairs for former Mayor Bill de Blasio, agreed that 2027 could be more opportune.

“A whole host of Albany actors were limited in what they were willing to do this year, because it’s an election year,” said Lupo. “There’s a much better chance that you see movement on taxes in Albany than there was this year.”

Recent history supports that view. All major tax hikes in New York in recent decades have happened in odd-numbered years without state elections, including in 2003, when lawmakers hiked city and state taxes in the wake of 9/11 and an economic recession; and in 2009, when the state raised income taxes during the Great Recession. The state’s last big income and corporate tax hike happened in 2021, amid the pandemic and shortly before Hochul took office.

Others in Albany see little reason to expect Hochul will soften her stance. State Senator Andrew Gounardes, who represents parts of Brooklyn and chairs the Budget and Revenue committee, said this year’s city bailout will make it hard to justify another one next year, especially as upstate municipalities face their own fiscal challenges.

“I’m not under the illusion that next year it becomes easier,” he said. “It might become more difficult.”

Looming gaps

Mamdani himself has said little about next year’s plans, and his office declined to comment on whether he’ll take an active role in the campaign. This year, he stayed largely on the sidelines while his allies rallied for taxes — a strategy that may have helped preserve his relationship with Hochul, but appeared to sap some energy from the movement.

Jen Goodman, a spokesperson for Hochul, said she could not speak to hypothetical questions about next year’s budget, but pointed to the support for the city in this year’s plan. She also referred to Hochul’s comments to Politico last week, in which the governor called on Mamdani to “look hard at spending” after this year’s infusion from the state.

Next year’s tax push could center on child care; Hochul has only committed to funding the city’s “2-Care” program for two years, leaving future funding in question. But the city may also need more state help just to backstop its own budget — a potential replay of this year, when Mamdani’s forward-looking agenda took a backseat as he rushed to close an unexpectedly large gap.

The city projects budget gaps totaling $7.1 billion, $9.1 billion and $9.8 billion for fiscal years 2028 through 2030, according to Mamdani’s May budget proposal, which accounted for the influx of state aid. As a share of the city’s total spending, those are bigger than nearly all of the out-year gaps the city has faced in the last decade, according to an analysis provided by the Citizens Budget Commission.

Those gaps will likely shrink on their own if the city’s tax revenues remain strong, said Andrew Perry, director of fiscal research at the Fiscal Policy Institute. But the bigger-than-usual gaps mean that next year’s budget will, at a minimum, be “tight,” he said.

Just $780 million of the city’s $2.4 billion rescue package will recur after 2027, the Citizens Budget Commission found. Watchdogs including City Comptroller Mark Levine and credit-rating agencies have said the city needs more recurring revenue to stabilize its finances. Moody’s, which downgraded the city’s outlook in March, wrote that “state-level proposals to enhance revenue” — such as new taxes — “could have a stabilizing effect” on the city.

A few additional wild cards could strain both the city and state’s budgets next year. An economic downturn, projected by some economists, could depress tax revenues. And federal cuts to food stamps and Medicaid, included in last year’s “One Big Beautiful Bill Act,” will hit harder next year.

By November, the city must also negotiate a new contract with the large labor union DC37, which represents municipal workers. Any pay raises in that deal will likely be applied to other unions under the system known as pattern bargaining, which could worsen the city’s budget holes and make state aid all the more valuable.

“There’s every reason to believe it’ll be a significant push next year, because he’s going to have a significant budget problem and has not really embarked on major restructuring and savings programs,” said Andrew Rein, president of the Citizens Budget Commission. “Will [state leaders] have the stomach to do this again in a second year? That’s both a political question as well as a state fiscal question.”

Mamdani and his allies will have a menu of options to choose from if they make another big push. Besides income and corporate tax hikes, the city’s official Albany wishlist for 2026 included taxes on all-cash real estate sales and shrinking a tax credit used by high-income business owners, both of which could resurface next year.

City Hall has made some efforts to cut costs. At Hochul’s urging, Mamdani’s administration announced plans last month to curb billions of dollars in spending on rental aid and special education, which have been among the city’s fastest-growing expenses. And the “chief savings officers” Mamdani appointed within city agencies have found $1.8 billion in savings through next year — a relatively modest total compared to some past mayors’ gap-closing programs.

Budget officials told the City Council this month that the savings officers are looking for additional cuts.