DAYS THE BUDGET IS LATE: 42
ZO, THAT’S IT? Mayor Zohran Mamdani has been advocating for Albany to increase income and corporate taxes to address New York City’s $5.4 billion budget shortfall.
However, in presenting an executive budget today that balances the deficit without these state-level tax hikes, Mamdani has made a notable concession, demonstrating that he could manage the budget without needing Albany’s tax increases.
When asked by Playbook if this means he is abandoning his pursuit of income and corporate tax hikes, Mamdani indicated satisfaction with the commitments he has already achieved.
“I’ve been transparent about my vision, whether it involves fast and free buses or higher taxes on the wealthiest New Yorkers and big corporations — this budget embodies that vision through its tax on the rich,” Mamdani stated.
Mamdani referred to the pied-à-terre tax, which Governor Kathy Hochul and Albany legislators have pledged to implement as part of this year’s overdue state budget. This tax targets owners of secondary homes in the city valued over $5 million and is projected to raise $500 million annually for the city’s budget.
This amount is significantly less than the $9 billion in new revenue that Mamdani’s proposed income and corporate tax hikes were expected to generate annually, as he outlined during his mayoral campaign last year.
Nevertheless, Mamdani expressed gratitude to Hochul when questioned about her lack of support for these tax increases. “I view this as a victory,” he remarked at City Hall. “I want to thank Governor Hochul for her collaboration. This partnership represents a dedication to the city’s long-term health and vitality.”
A supporter of Mamdani’s echoed this sentiment but added a note of caution.
“The mayor’s statements today suggest that the city and governor have finalized their objectives for this year,” Jasmine Gripper, director of the New York Working Families Party, told Playbook. “But the struggle continues.”
Gripper’s comments hint at 2027, when Mamdani might have a better chance of persuading Hochul to endorse his preferred tax hikes.
Hochul, facing reelection against Republican Bruce Blakeman, has been hesitant about tax increases this year. Should she secure another term in November, she might be more open to tax hikes in 2027, when reelection pressures are absent.
A spokesperson for Hochul declined to discuss 2027 strategies. Likewise, Mamdani’s spokesperson did not comment on his tax priorities for Albany in 2027.
This year’s executive budget from Mamdani suggests a critical need for additional revenue from Albany next year.
The city’s projected budget gap for fiscal year 2028 exceeds $7 billion, as per documents released today. The gap for fiscal year 2029 is even larger, surpassing $9 billion, according to new estimates.
Without further state intervention next year, addressing these substantial future gaps could be challenging for Mamdani, unless he opts to cut spending further.
Gustavo Gordillo, co-chair of the New York City chapter of the Democratic Socialists of America, emphasized that his group will continue to press Hochul for higher taxes on the wealthy to prevent cuts to municipal services.
“Overcoming the deficit was tough. We achieved it. That’s a substantive victory proving socialists can lead,” Gordillo said. “But to fulfill the comprehensive affordability agenda, we need a governor who supports working New Yorkers rather than billionaire donors, ensuring the rich pay their fair share.” — Chris Sommerfeldt and Joe Anuta
From the Capitol
BLAKEMAN WINS CASE ON MATCHING FUNDS: A judge in Albany County has halted an effort by Democrats to prevent GOP gubernatorial candidate Bruce Blakeman from accessing $3.5 million in campaign matching funds.
Blakeman was excluded from the program in March after the Democratic majority on the Public Campaign Finance Board ruled that he failed to submit a non-existent form identifying his running mate. Justice Denise Hartman ruled today that this decision was “arbitrary and capricious.”
“Blakeman registered his campaign, confirmed compliance with the Program, attended necessary training, publicly declared their joint ticket, and submitted certified amended filings 11 days before the filing deadline,” Hartman wrote. “Yet, he was not notified of any deficiencies by the PCFB until after the deadline had passed.”
The board’s Democrats indicated that “an appeal is likely.”
Read more from POLITICO Pro’s Bill Mahoney.
UNIONS BACK PRISON REFORM: A dozen unions are set to announce support for two penal reform bills that advocates hope will be addressed in this year’s short post-budget session.
Organizations such as 1199SEIU, District Council 37, and the New York State Nurses Association are endorsing the Earned Time Act, which increases early release credits for job training program participation, and the Second Look Act, allowing inmates to petition for early release after ten years.
“New York faces a labor shortage that hinders economic growth and strains state industries,” the unions wrote in a letter to state leaders. “Thousands of jobs remain unfilled, while many New Yorkers are excluded from the workforce due to long sentences and limited program access for earning release.”
Lawmakers may have just two weeks to tackle post-budget issues before the summer adjournment. However, Katie Schaffer from the Center for Community Alternatives is hopeful about the measures’ momentum, noting that state Sen. Jeremy Zellner’s recent cosponsorship of the Second Look Act now has majority support in his chamber. — Bill Mahoney
STRIKING A DEAL — The Metropolitan Transportation Authority’s Long Island Rail Road and five unions that have threatened to strike are only at odds regarding the fourth year of a three-year contract.
The previous contract expired three years ago. The unions and the MTA have reached an agreement on the retroactive pay for those years but are still apart on the fourth year, starting this summer, according to sources familiar with the delicate negotiations.
The unions’ most recent public offer was a 5 percent pay raise, whereas the MTA proposed about a 3 percent increase.
The MTA initially sought changes to work rules, which union critics claim are outdated and overly generous. Now, the MTA is considering one-time lump sum payments instead of salary increases for the fourth year. While one-time payments don’t recur, the unions prefer a built-in pay raise, citing ongoing inflation.
The unions stated they are preparing for a strike and that no “contract talks” were scheduled today, although a formal bargaining session is set for tomorrow.
“We are having discussions today,” MTA spokesperson John McCarthy told POLITICO today. — Ry Rivard
SEEKING A ZYN WIN: A tax on nicotine pouch products like Zyn is expected to be included in the final state budget deal.
A coalition of private sector groups — including The Business Council of New York State — is attempting to influence the details.
The business groups are urging state lawmakers and Hochul to implement a 67-cent flat, unit-based tax instead of the original proposal for a 75 percent wholesale tax. In a letter to the governor and top state legislators, the groups argued that their proposal would still restrict access for those under 21 and mitigate an illegal market.
“It is a proven tax structure that keeps adult consumers purchasing through legal, taxed, and regulated channels, minimizes illicit trade, and preserves enforcement safeguards,” they wrote. “Importantly, it also provides stable and reliable revenue without importing the community and youth harms that accompany illegal markets.” — Nick Reisman
GRAND JURY SUBPOENA: NYU Langone received a grand jury subpoena last week requesting six years of information on patients under 18 who received gender-affirming care and the medical staff involved, according to an online disclosure.
Several other unnamed institutions received the subpoena, NYU Langone said in the notice. Under New York’s shield laws, local health care organizations must report subpoenas or requests for information regarding legally protected health activities to the state attorney general’s office.
“We understand that these developments may be concerning to our patients, providers, and others,” the health system wrote in the notice. “Please know that NYU Langone takes the privacy of your protected health information very seriously and we are evaluating our response to the subpoena.”
The subpoena by the U.S. Attorney’s Office in the Northern District of Texas, which was first reported in the newsletter Erin in the Morning, indicates federal prosecutors empaneled a grand jury to weigh potential criminal charges. Federal agencies reportedly subpoenaed NYU Langone and Mount Sinai last year demanding information on care for transgender minors.
NYU Langone shuttered its program for transgender youth earlier this year, citing the current regulatory environment. — Maya Kaufman
FROM CITY HALL
THINKING ABOUT THE UNTHINKABLE — New York City Police Commissioner Jessica Tisch addressed civic leaders, highlighting that New York City remains a terrorist target, especially this summer, with multiple major international events, large public gatherings, and historic commemorations, including the World Cup and America’s 250th birthday.
“New York City is not only a global hub, it is a global target,” she said at a breakfast organized by the Association for a Better New York.
Tisch noted that “what begins overseas often finds its way here,” referring to the war with Iran, the October 7, 2023 attacks in Israel, and new warfare tactics involving drones. She also mentioned domestic threats and lone actors.
She did not elaborate on how a terrorist attack could alter the political landscape in New York City and affect perceptions of her boss.
“An attack will always be exploited by the Mamdani derangement crowd, but I think a lot of it would depend on where it comes from,” said Richard Flanagan, a professor at the College of Staten Island, who has written about the challenges facing mayors.
Maki Haberfeld, a professor at the John Jay College of Criminal Justice, commented that if an attack originates from a Muslim group or individual inspired by ISIS, “It will be a huge liability for him because of who he is, being the first Muslim mayor of New York City.”
Basil Smikle, a Democratic strategist and political analyst, noted that Mamdani would face similar criticism as during his campaign, being young and progressive. Unlike Rudy Giuliani, who was praised after the 9/11 attacks, Mamdani has not spent years building a public reputation around law and order. The information and political climate is also different now.
“That is a big difference from 2001 to now. You didn’t have the access to alternative viewpoints in the way you do now,” he said.
Currently, Flanagan sees Mamdani as balancing the law-and-order coalition and his base, which seeks police reforms, partly because he retained Tisch as NYPD head. “It’s a fine line and he’s walking it,” he said. — Ry Rivard
IN OTHER NEWS
— DYNAMIC DUO: President Donald Trump defended Mamdani on a conservative talk radio show Tuesday, describing him as a ‘nice guy,’ but criticized his proposed second-home tax, warning it could drive the wealthy out of the city. (POLITICO)
— NOT-SO-NICE SUNSET: The presence of federal immigration enforcement agents in New York City is affecting immigrant-majority neighborhoods like Sunset Park, where nearly 80% of businesses reported a decline in sales and foot traffic. (Gothamist)
— FEES ON NOTICE: The New York senate is aiming to pass consumer protection bills targeting deceptive business practices, including surveillance pricing and junk fees. (Spectrum News)
