Mamdani’s Magical Thinking

Mayor Zohran Mamdani is claiming that he’s balanced the city’s budget, but it’s not clear that Hizzoner’s math quite adds up. The mayor came into office warning of a budget deficit of some $5.4 billion that could be filled only via a raft of new taxes on high-earning New Yorkers. Governor Kathy Hochul is holding the line on most of those taxes. Yet far from moving to cut spending, Mr. Mamdani is instead turning to gimmicks and short-term fixes.Feature the appraisal by the city’s nonpartisan fiscal watchdog, the Citizens Budget Commission. Mr. Mamdani’s proposed budget, the commission cautions, relies on “short-term strategies, rather than a full-scale effort to shrink spending that doesn’t deliver for New Yorkers.” The commission laments that “a pension gimmick and temporary plugs exacerbate fiscal problems rather than solve them.”Worse, in the commission’s assessment, is that Mr. Mamdani’s tax increases threaten to hurt the city’s economy. “Raising already nation-leading taxes risks competitiveness, rather than reinforcing attractiveness,” the commission warns in a statement. One silver lining in Mr. Mamdani’s budgetary plans is that he has apparently dropped his threat to raise property taxes on city homeowners if Albany lawmakers didn’t raise other levies on high earners.For the demise of Mr. Mamdani’s ill-advised push to boost property taxes, one can in part thank the city council’s Black Caucus. The local lawmakers had come out against the hike over its “disproportionate harm” to “Black homeowners and working class families.” The protest, a warning to the Marxist mayor, was “a reminder that hostility to higher taxes transcends the typical divisions between right and left,” these columns have reported. Kudos to the Black Caucus members for their role in torpedoing the mayor’s push to raise property taxes. Yet it hardly bodes well for the city’s fiscal health that Mr. Mamdani, instead of opting for budget trims, is resorting to a kind of creative accounting to balance the books. Some $2.3 billion of the budget gap is meant to be covered by delaying payments to city pension funds, per the Times, a move which will require approval by Albany and city unions. That proposal could tee up another round of pushback on the mayor’s agenda from, in the labor unions, what could have been considered a reliable base of support. Fiscal realities, though, have a way of intruding into the best-laid plans of socialist lawmakers. This is particularly true for jurisdictions like New York City, which are required to balance their budgets and must to some degree rely on the appraisals of credit ratings agencies to float their public debt.These agencies have already threatened to downgrade the city’s bonds, an echo of the bad old days of the 1970s when the city flirted with bankruptcy. In another budgetary setback for Mr. Mamdani, the revenue expectations for his so-called pied-a-terre tax are being called into doubt by the city’s comptroller. The hopes that this tax will yield some $500 million in extractions from the wealthy might be, per the Times, “overly optimistic.”The budget commission laments that Mr. Mamdani envisions a 28 percent surge in city spending, leading to an anticipated $10 billion deficit by 2030. Instead of a “holistic transformation” pointing to “excellence in government,” the commission says, “we get the types of maneuvers we’ve seen in the past.” The upshot of these fiscal sleights of hand, they caution, is that Mr. Mamdani “balances this budget on the backs of future New Yorkers.”

Mamdani’s Magical Thinking

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