New York City's new mayor is in a bit of a bind. Zohran Mamdani needs to close a $5.4 billion hole in the city's budget over the next two fiscal years, and he's essentially laid out two paths: one he wants, and one he really doesn't.

The Preferred Plan Needs Albany's Blessing

During a Tuesday press conference outlining his $127 billion preliminary budget for fiscal year 2027, Mamdani made his preference crystal clear. He wants to raise taxes on the wealthy and corporations, which was a centerpiece of his campaign. There's just one problem: he needs Governor Kathy Hochul and the state legislature to sign off on it, and Hochul hasn't exactly been enthusiastic about the idea.

If Albany doesn't play ball, Mamdani has a Plan B that he openly admits is painful. He's floating a 9.5% property tax increase on city residents, something he called "a tool of very last resort." Unlike the wealth tax proposal, this is something the mayor can actually do without state approval, which probably makes it feel more real to everyone involved.

To make the numbers work for the legally required balanced budget, Mamdani is also proposing to pull $980 million from the city's Rainy Day Reserve in fiscal 2026 and another $229 million from the Retiree Health Benefit Trust in fiscal 2027.

"This is something that we do not want to do," Mamdani told reporters.

Governor Hochul Isn't Convinced

The tension between City Hall and Albany isn't new. Hochul has consistently downplayed Mamdani's push for tax increases since January. Even on the same day as Mamdani's budget presentation, the governor was at a separate event telling reporters she doesn't think a property tax increase is necessary, according to NY Post City Hall Bureau Chief Craig McCarthy.

This creates an awkward situation where the mayor's preferred solution depends entirely on someone who seems unlikely to provide it.

The Property Tax Problem

Here's where things get complicated. Mamdani campaigned on taxing the wealthy and implementing rent freezes on rent-stabilized apartments. But property tax increases don't work quite so neatly. Multi-unit buildings already face higher effective tax rates than one to three-family homes, and if landlords see their taxes jump, those costs have a way of flowing through to tenants eventually.

NYC Comptroller Mark Levine warned that relying on property tax increases and draining reserves could have "dire consequences," leaving the city vulnerable if economic conditions deteriorate. He emphasized that more help from Albany is essential.

The criticism extends beyond budget mechanics. Treasury Secretary Scott Bessent weighed in last November with some pointed skepticism, calling Mamdani's proposals "old ideas that have never worked."

So the mayor is stuck waiting to see if Albany will give him what he wants, or if he'll have to pull a lever that even he admits nobody wants pulled.