‘Staggering Fiscal Mismanagement’: Mamdani Blames Predecessor for $12 Billion Budget Gap, Proposes New Taxes on Wealthy New Yorkers

The new mayor of New York City, Zohran Mamdani, has announced a push to raise taxes on the city’s wealthiest residents and corporations, citing a need to close a huge budget deficit he attributes to the “gross fiscal mismanagement” of the previous administration.Speaking at a town hall on Wednesday, the Democratic Socialist mayor laid out the grim financial reality facing the city: a projected shortfall of more than $12 billion across the next two fiscal years.“This is at a scale that’s actually greater than what we saw here in New York City during the Great Recession,” Mr. Mamdani said during a subsequent interview with CNBC.Mr. Mamdani, who took office on January 1, wasted no time assigning blame for the fiscal hole to his predecessor, Eric Adams. He accused the Adams administration of relying on one-shot financial measures and underbudgeting for predictable expenses like overtime and shelter costs.“This crisis has a name and a chief architect. In the words of the Jackson 5, it’s as easy as A-B-C. This is the Adams budget crisis,” Mr. Mamdani said.After Mr. Mamdani was elected but before he took office, Mr. Adams increased the budget for city government spending by some $2 billion to $118 billion. That left the incoming mayor with a projected $4.7 billion deficit that needs to be closed before the 2027 budget is adopted next summer. Federal aid cuts are also expected to lead to billions of dollars in losses to the city.Mr. Mamdani cited specific examples of wasteful spending, pointing to an artificial intelligence chatbot launched by the Adams administration that cost $600,000. Mr. Mamdani described the tool as “basically unusable.”“These budget gaps did not arrive by accident — they are the direct consequence of Eric Adams staggering fiscal mismanagement,” Mr. Mamdani said. “I have to show that the city government is not just serious about public goods, but also public excellence and public efficiency, and so we have to make sure every dollar that’s being spent is actually being spent in a worthwhile way,” he said.Mr. Adams fired back in a post on X, saying “facts have a way of getting in the way when slogans replace math and blame replaces leadership.”Noting that “bond raters gave my administration one of the strongest credit ratings in NYC history,” the former mayor said, “I didn’t leave a ‘budget hole.’ I left over $8 BILLION in reserves. Only someone who can’t read a balance sheet would call that a crisis.”He also took aim at Mr. Mamdani’s political bent, saying, “here’s the part socialists hate saying out loud: ‘Free’ is a lie. Every so-called free program comes with a price tag, and someone always pays for it.”To bridge the looming gap, Mr. Mamdani is proposing to raise the city’s corporate tax rate to 11.5 percent, matching New Jersey’s rate, and imposing a flat 2 percent tax on individuals earning more than $1 million per year.“The time has come to tax the richest New Yorkers and most profitable corporations,” Mr. Mamdani said. “We must raise taxes on the wealthiest few in New York City so that we can invest in the many. No longer can this city, the economic engine of our state, sustain this kind of an imbalance.”The mayor is also lobbying Albany for increased aid, noting that New York City generates $21 billion more in revenue for the state than it receives back.The proposal to raise taxes on the wealthy has sparked concern among the city’s business elite, some of whom warn that a redistributionist agenda could lead to an exodus of businesses and high-net-worth individuals. However, Mr. Mamdani dismissed these concerns, noting that the number of millionaires in the city actually increased following state tax hikes in 2021.“Capital flight is always spoken about whenever we talk about the potential of increasing taxes on the wealthy,” Mr. Mamdani said. He argued that residents are more likely to leave due to the deteriorating quality of city services than tax rates.The push for new taxes sets up a potential conflict with Governor Kathy Hochul, who is running for reelection and has resisted calls to raise levies. While Mr. Mamdani praised Ms. Hochul for recently committing state money to fund childcare, he insists that fiscal responsibility includes balancing the city’s books.“It’s important for all of us to be fiscally responsible in a moment such as this,” Mr. Mamdani said. “That fiscal responsibility also extends to ensuring that the city has a balanced budget for two fiscal years.”

‘Staggering Fiscal Mismanagement’: Mamdani Blames Predecessor for $12 Billion Budget Gap, Proposes New Taxes on Wealthy New Yorkers

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