Law360: NYC’s Mamdani Pitches Property Tax Hike As Backup Plan

New York City would hike property taxes by $3.7 billion to help close a $5.4 billion budget gap if state lawmakers don’t permit the city to raise income taxes under a preliminary budget plan that Mayor Zohran Mamdani unveiled Tuesday.

Mamdani’s proposal would raise the average property tax rate to 13.45% from 12.283% in 2027, according to the mayor’s financial plan. The tax rate was last raised in fiscal year 2009.

Bloomberg Law: Mamdani Threatens NYC Property Tax Hike to Fill Budget Hole

New York City Mayor Zohran Mamdani is proposing raising New York City’s property taxes for the first time in more than two decades and is looking to raid the city’s reserve funds to fill a roughly $5 billion budget gap.

“He’s put a pretty extreme option on the table, which is a combination of raising property taxes and taking money from reserves and relying on some pretty aggressive revenue projections to boot,” said New York City Comptroller Mark Levine.

The proposed 9.5% property-tax hike, which Mamdani called an option of “last resort” would take effect in the fiscal year that begins July 1 and would include all of the city’s property classes, affecting more than 3 million residential and more than 100,000 commercial units. If implemented, it would raise $3.7 billion in the next fiscal year, according to the mayor’s office.

Relatedly, Mayor Mamdani also proposes to end the historically problematic tax lien sale program in New York City.

Bloomberg Law: Mamdani Wants to End Tax Lien Sales, Hire Auditors in NYC Budget

Mamdani’s preliminary budget for the fiscal year that begins July 1 assumes an $80 million revenue loss from the suspension of the tax lien sale as officials work on replacing the program, which has been cited in the past for causing disproportionate harm to Black and Hispanic neighborhoods.

The New York City Council passed legislation last year that would instead establish a land bank to ensure the collection of unpaid taxes while preventing the displacement of tenants. Budget officials said they’re still hammering out the details of the new debt collection system.

The city traditionally sells outstanding property tax and water debt to a private trust for roughly 70 cents on the dollar. The trust then contracts with private collection companies, some of which charge as much as 18% interest, plus additional fees. The debt can quickly become unsustainable, increasing the odds of foreclosure.