New York City Mayor-Elect Zohran Mamdani, a democratic socialist, and a business-backed budget watchdog agree: The government should deliver high-quality services. Where they differ is whether to raise taxes on the rich and businesses to do it.
"He needs to focus on the priority programs that deliver, including his new programs, and be willing to shrink the ones that don't deliver value to New Yorkers no matter how popular they are," Andrew Rein, president of the Citizens Budget Commission, said in an interview. "We have to be very careful about the cost of government and the cost of taxes."
The CBC laid out recommendations Wednesday for the incoming Mamdani administration to improve government services, cut spending and prepare for billions of dollars in federal budget cuts. One month after the 34-year-old is sworn in as mayor on Jan. 1, he'll have to propose a budget that closes a deficit that could range from $5 billion to $8 billion.
Mamdani should create a city-wide performance management system modeled on the New York Police Department's Compstat, allowing city officials to identify programs that work and fix or eliminate those that don't, the CBC said. The incoming mayor should also leverage labor negotiations to boost both workers' wages and productivity and boost the city's reserves by $1 billion a year to protect vulnerable New Yorkers from federal cuts, it said.
Risk of raising taxes
Raising taxes on New York City's wealthy, who already pay the highest income tax rate in the U.S., and on corporations will only hamper the city's ability to attract and retain wealthy residents and businesses, the CBC said. Millionaires, who comprise less than 1% of New York City filers, generate 40% of city income tax revenue, it said.
Between 2010 and 2022 New York City's share of U.S. millionaires fell to 4.2% from 6.5%,
Mamdani rode to office by promising to tackle New York City's affordability crisis, proposing a $9 billion tax increase to fund free childcare and buses and city owned-grocery stores. Yet alongside frustration about the city's high cost of living is a belief that government isn't working for ordinary New Yorkers.
A survey by the CBC in April found that less than three in 10 people say government is doing a good or excellent job, and about one in 10 say their tax dollars are being spent wisely. City spending on education has increased to $42,000 per student even as enrollment has declined and student test scores have shown
"We are spending $120 billion a year and not getting the value of those dollars," Rein said.
Spending overshoot
New York has spent $2.3 billion more than it took in over the last three fiscal years, a rate that isn't sustainable, especially since a recession is inevitable even if its timing is uncertain, according to the CBC. The city's rainy day fund has only $2 billion, leaving the city ill-prepared for the next downturn.
Mamdani has said that his administration plans to crack down on tax evasion and government efficiency. The city could save $300 million per year by reforming the procurement process, Mamdani said in his platform.
But the city has to do more to streamline operations, the CBC said. City managers and labor unions should work together to identify work rules that constrain operations. For example, fixed shift lengths for sanitation workers and inflexible routes hamper the city Department of Sanitation's ability to increase productivity and cut the cost of trash collection.
"Mayor-elect Mamdani has big, bold plans," Rein said. "But he will have to come into office and close a $6- to $8-billion budget gap, prepare for federal cuts and recession, and improve the quality of city services, which New Yorkers right now are saying are woefully inadequate."
