New York mayor: Zohran Mamdani’s promises for the city are on a collision course with fiscal reality

During his campaign, New York City Mayor-elect Zohran Mamdani promised free childcare and buses, 200,000 new units of affordable housing and city-owned grocery stores, funded by raising taxes on corporations and the wealthy or borrowing.

Those pledges, which powered him to a decisive win over former New York Governor Andrew Cuomo, now meet fiscal and political reality.

While Mr Mamdani proclaimed his victory “a mandate for a city we can afford” in a speech late Tuesday, local time, after securing a majority of the vote amid the highest turnout since 1969, any new taxes to fund his agenda need the backing of the state, and Governor Kathy Hochul has said she’s against such hikes.

Political observers say Ms Hochul could placate Mr Mamdani by funding lower-cost priorities such as free buses - estimated to cost nearly $US1 billion ($1.5b) - while making a down payment on his signature proposal: free childcare.

Ms Hochul has said she supports the goal but warned of its price tag.

“If you do it in its entirety in one year for New York City alone, it’s a $US7 billion price tag,” Ms Hochul said at a press conference in September. “I have to double that for the rest of the state. So we had conversations along the line of how you get to that place someday, but you manage the rollout over time.”

Ms Hochul said in a congratulatory post on X late Tuesday that she had spoken to Mr Mamdani and told him she was “looking forward to working together to make our city more affordable and liveable.”

Mr Mamdani, a Democrat, received 50.4 per cent of the votes, while Mr Cuomo, running on an independent line after his loss to Mr Mamdani in the primary, garnered 41.6 per cent with more than 90 per cent of the vote counted. Republican Curtis Sliwa got 7.1 per cent.

“The benchmark of winning a majority was set for him by many observers and even if you just barely clear that, clearing it matters,” said Evan Roth Smith, a Democratic pollster with Slingshot Strategies, a political consulting firm. “That will help when he goes to Albany, when he goes to the federal government, as he works with City Council. He can say ‘I have a majority of New Yorkers on my side and supportive of my vision’.”

But Ms Hochul won’t view the “mandate of the city as a mandate for Buffalo, for Long Island, for Oneida,” said Lupe Todd-Medina, a Democratic strategist, who warned that Mr Mamdani’s win won’t guarantee him a political honeymoon period.

Massive Deficit

Mr Mamdani and his supporters want more government services; Albany, which controls the city’s taxing and borrowing power, will focus instead on sustaining existing ones.

Ms Hochul is contending with a $US4.2 billion deficit, almost four times last year’s gap. Federal cuts to health care and food stamps will fall hardest on New York City, where Mr Mamdani faces a $US5 billion hole in next year’s budget.

Mr Mamdani, a 34-year-old democratic socialist from Queens, built a coalition around tenants, riders and young families. The son of Indian parents who immigrated from Uganda, he campaigned on the idea that the government should shoulder more of the everyday costs that keep working- and middle-class New Yorkers on the brink.

“He’s going to have to modulate his messaging and figure out the priorities he has for the legislative session,” said Shontell Smith, partner and head of the New York practice at political firm Tusk Strategies. “Nothing against him, it’s just the financial realities of New York State.”

Ms Hochul, a centrist who resists broad tax hikes, likely faces a tough 2026 re-election against Republican US Congresswoman Elise Stefanik, who’s expected to announce her bid for governor imminently. Ms Stefanik has already signalled she will link Ms Hochul, who endorsed Mr Mamdani, to his policies. On Fox News’ Fox and Friends in September, Ms Stefanik said the governor “owns” Mr Mamdani’s positions like raising taxes and cutting spending on police.

Still, with the fiscal pressures facing the state and city, Ms Hochul may have to abide some tax increases, according to interviews with Democratic lawmakers and political strategists. The Democratic-controlled legislature routinely pitches tax hikes in its proposed budget, which serves as a launching point for a final fiscal plan ultimately approved by Ms Hochul.

“There are going to be tax increases, whether anybody likes it or not, at the very minimum, to recoup reductions in federal tax bills,” State Senator John Liu said in an interview, referring to the extension of President Donald Trump’s tax cuts. “The governor would not like to have new taxes in a re-election year, but she doesn’t want to have millions of people in New York not have insurance, not have health coverage.”

Mr Mamdani wants to raise New York City’s income tax on earnings above $US1 million a year by 2 percentage points - quadruple what former Mayor Bill de Blasio proposed for earnings above $US500,000 - to pay for universal pre-kindergarten (Mr de Blasio did not get the tax increase). Mr Mamdani also backs lifting the state corporate tax to 11.5 per cent, matching New Jersey and tied for highest in the US, from 7.25 per cent.

The tax hikes - which would raise $US9 billion, according to Mr Mamdani’s campaign - risk driving top earners and businesses to lower-tax states.

New York already ranks 50th on the Tax Foundation’s State Tax Competitive Index. Republicans will likely wield any tax increase as a cudgel in next year’s congressional elections, especially in Long Island, where Democrats have faced tough campaigns.

All told, Ms Hochul still has incentives to work with Mr Mamdani.

She faces a primary challenge from Lieutenant Governor Antonio Delgado, who is advocating for free childcare and building affordable housing similar to Mr Mamdani’s platform and will be angling for his endorsement. If she defeats Mr Delgado, Ms Hochul will need Mr Mamdani’s backing to shore up her left flank and avoid a third-party challenger in the general election.

“The governor’s going to want to give the incoming mayor a win,” Ms Smith of Tusk Strategies said. “New York City is such a strong base for Democrats.”

Jack O’Donnell, an Albany lobbyist, said Mr Mamdani will want early proof that he can deliver on his promises, while Ms Hochul will welcome policies that improve affordability for middle- and low-income residents.

“Finding ways to help middle class and working-class New Yorkers really aligns between both Mamdani and Hochul,” Mr O’Donnell said. “You see that most brightly in something that she’s been talking about her whole career, which is childcare. And I would expect that we’re going to see a real, concrete proposal in the state budget.”

State estimates put the price of universal childcare at roughly $US14 billion annually, according to Ms Hochul. She’s said she’ll look for “creative” ways to fund it.

When Mr de Blasio took office in 2014, he proposed taxing the wealthy to fund pre-kindergarten. Then-Governor Cuomo resisted the increase, but he and the legislature agreed to fund the program without raising taxes - a compromise that could offer a model for Ms Hochul and Mr Mamdani.

“The Democratic base has become more progressive, and I think it wants to see bigger ideas from their leaders,” said Basil Smikle, former head of the New York Democratic Party. “Mamdani might find a much more receptive state legislature than de Blasio did, and he may find a more receptive governor.”

With assistance from Laura Nahmias and Danielle Moran.

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