Mamdani seeks to 'end the drain' on New York City by the state

He wants a 'reorienting' of the city's fiscal relationship with the state.

Good afternoon — It’s Wednesday and Latte Day.

In today’s CapCon:

• New York City Mayor Zohran Mamdani called for a fiscal reset between the city and state, saying the imbalance has caused systemic harm.

• Mamdani also found $5 billion in the last two weeks to bring the city’s budget gap down from the original $12 billion estimate.

• Here’s what to expect during tomorrow’s state budget hearing on courts, crime and corrections, including an update on state prisons.

• Grocery stores have started to experiment with pricing based on personal data. These two lawmakers want to ban that.

• Republicans rounded out their full statewide slate of candidates at their nominating convention on Long Island Wednesday.

• A new bill seeks to require stronger care for incarcerated people who experience a mental health crisis in response to India Cummings’ death in 2016.

Names in today’s CapCon: Zohran Mamdani, Eric Adams, Dean Fuleihan, Kathy Hochul, Sherif Soliman, Edward P. Ra, Bruce Blakeman, Todd Hood, Donald J. Trump, Saritha Komatireddy, Letitia James, Joseph Hernandez, Michaelle Solages, Michael Gianaris, Joseph Zayas, Rowan Wilson, Daniel F. Martuscello III, Rossana Rosado

---

New York City Mayor Zohran Mamdani (Lori Van Buren/Times Union)

🗣️ Mamdani finds $5 billion to cut budget gap but says city still needs state’s help

New York City Mayor Zohran Mamdani said last month that his administration was facing a $12 billion budget gap and needed state assistance to fill it.

He’s attributed that gap to under budgeting by former Mayor Eric Adams, referring to the deficit as ABC — the Adams Budget Crisis. But without the invention of a time machine, there’s nothing Mamdani can do about that.

Two weeks later, the city’s budget gap has changed by quite a bit. Mamdani said it’s now $5 billion smaller, leaving the city’s two-year deficit at $7 billion (he will release updated figures on Feb. 17).

About $3 billion of that $5 billion is due to higher income tax receipts than the city expected. Another $1 billion came from “an aggressive savings plan,” and the remainder is being taken from the city’s reserves.

First Deputy Mayor Dean Fuleihan said that picture could continue to improve in the coming months if income tax receipts remain higher than expected. That doesn’t mean the city is out of the woods, Mamdani said.

“However, New York City is still placed on a ledge,” Mamdani said. “The most responsible way off is with dedicated recurring revenue that can provide the services New Yorkers deserve.”

It’s not news that Mamdani is seeking a 2% increase in the New York City personal income tax rate to generate that revenue. He’s also asking for an increase in the corporate tax rate.

Both options would require permission from the state Legislature, which has supported tax hikes on high-income earners in recent years, and Gov. Kathy Hochul, who’s opposed those tax hikes but hasn’t ruled out a corporate tax increase.

But Mamdani isn’t asking solely for the state Legislature to allow those tax increases. He’s also seeking an overall reset between New York City and the state government.

Wednesday’s state budget hearing (Lori Van Buren/Times Union)