New York City property owners are set to 'enjoy' thefirst property tax hike in more than two decadesas part of a proposed solution by Mayor Zohran Mamdani to fill a roughly $5 billion budget gap,Bloombergreports.

"He’s put a pretty extreme option on the table,which is a combination of raising property taxes and taking money from reservesand relying on some prettyaggressive revenue projectionsto boot," said NYC Comptroller Mark Levine.

The pitch, set to be unveiled Tuesday afternoon during Mamdani's preliminary budget proposal,comes one day after Governor Kathy Hochul vowed to kick in another $1.5 billionin additional aid to the city for the current fiscal year and next. Hochul has also committed $510 million for future years to help plug holes in the budget.

Mamdani says that the state should step up even more. Last week, he called on state lawmakers Wednesday to approve a 2 percent personal income tax increase on the city’s wealthiest residents as well as a hike in the corporate tax rate in a bid to close a multibillion-dollar budget gap. Of note, Hochul and the legislature must approve any tax changes.

While Mamdani is handcuffed in many ways when it comes to raising revenue,raising property taxes is something hecandoas part of the annual budget process.Homeowners, meanwhile,just had their assessed values jump 5.6%, which will bring the city an additional $325.8 billion - which is separate of Mamdani's plan.

Mamdani’s own rhetoric about the size and scope of the city’s budget situation has shifted.Earlier this month, just two weeks after describing the city’s $12.6 billion budget deficit as the city’s largest since the Great Recession,Mamdani revealedthe hole had actually shrunk by $5 billion, because of higher tax revenue, propelled by personal income tax growth and Wall Street bonuses.

Even threatening to raise property taxes could prove a political lightning rod for Mamdani,after campaigning to reform that system, which has been criticized for overburdening lower- and middle-income residents. The last time the city increased property tax rates was under former Mayor Michael Bloomberg in the early 2000s. -Bloomberg

Meanwhile last monthMamdanisaidNYC is facing a $12.6 billion deficit over the nexttwo years, which he blamed on his predecessor, Mayor Eric Adams, whose administration he says underbudgeted for various expenses such as cash assistance, rental assistance for homeless residents, special education and overtime costs. In FY 2025, NYC took in over $33 billion in property tax revenue.

Mamdani during his campaign promoted progressive reforms to fund proposals such as free public transit, rent stabilization andhousing programs, universal child care, and a $30 minimum wage, leading to hisupsetwin over more moderate Democrats.

He called for a 2 percent surcharge on high earners on the campaign trail.

Source: ZeroHedge News