New York City Mayor Zohran Mamdani, a Democratic socialist, stated in a recent speech that is now going viral on social media, that the city he has only been mayor of for four months is looking down the barrel of a budget crisis of “historic magnitude,” one that he says rivals the fallout from the Great Recession and cannot be solved by making cuts alone.
“We are extending the executive budget deadline from this coming Friday until May 12th because a crisis of this scale cannot be solved without state action,” Mamdani went on to say at a press conference on April 28, citing a deficit so so huge that it requires action to be taken far beyond the walls of City Hall. Comptroller Mark Levine says the NYC deficit is sitting at around $2.2 billion with a projected gap of $10.4 billion in 2027.
That means a predicted budget shortfall of $12.6 billion in a two-year period, which is half of Mamdani’s term in office. Levine then noted in a press release, “This wasn’t caused by a bad economy—it’s the result of budgeting decisions from the previous administration that we must now deal with.” In order to address the deficit, Mamdani stated that the city has gone to great lengths to save money.
“We put forward a proposal to save about $1.7 billion by finding inefficiencies, any examples of fraud or waste through our chief savings officers. And so the council and the administration share a commitment to finding those savings,” he said during his speech. “However, what we are also clear about is the fact that there’s no amount of savings we can find that would absolve Albany of the need to continue to partner with the city to deliver that balanced budget.”
“We cannot close this deficit with savings alone,” Mamdani said, according to Yahoo News. “We need new revenue and we need a structural reset.” The Big Apple’s government is required by law to pass a balanced budget every year. However, this year, officials are saying they can’t finalize one without clarity and support from the state.
In order to close the massive gap, the mayor is calling for a mixture of new revenue and state-level reports, which includes the scaling back of the pass-through entity tax break. For those unaware, the PTE as it’s called, is an optional tax that started on January 1, 2022. It was created to aid New York City residents bypass the federal $10,000 cap on State and Local Tax (SALT) deductions.
PTE also covers partnerships, S corporations, and limited liability companies, not just individual residents. Mamdani claims the current system benefits millionaires and multi-millionaires. “We are rather asking the state for a modest reduction from 100% to 75%,” Mamdani said to New Yorkers. “That change alone will generate nearly $1 billion in additional revenue.”
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“Revenue we can invest in the buses that carry New Yorkers to work, the public schools that educate our children, the public parks and beaches where we spend our summers,” he continued. “And Speaker Menon and I will work with our partners in Albany to address the imbalance that has long characterized the relationship between our city and our state. New York City generates more than 55% of state revenue but receives less than 42% in return.”
Featured Image: screenshot from embedded video