Mamdani Gambled In Albany And Won. Can He Hit The Jackpot Twice?

NEW YORK — Mayor Zohran Mamdani emerged from Albany with billions of dollars in cash to help close a historic budget gap and partially fulfill a key campaign pledge. Pulling off a repeat next year will likely be more difficult.

The state-sanctioned windfall gives Mamdani breathing room as he prepares to finalize his first budget this month — and he largely has Gov. Kathy Hochul to thank. But with cash in hand, the young democratic socialist has embraced a short-term strategy that sets him up for another challenging cycle in just six months, when the respective grinds of the city and state budgets begin anew.

Mamdani will undoubtedly make the case for Albany to increase income taxes on the wealthiest New York City residents and large corporations as part of a “tax the rich” rallying cry, which would give him enough money to fill looming budget shortfalls and then some. And a coalition supporting him is already making plans for an aggressive push they believe will be successful. Yet there are early signs Mamdani will find the keepers of the state purse less receptive to New York City’s fiscal woes a second time around.

“He inherited a financial shortfall that could hurt the bond rating of the city and result in a loss of confidence of investors as well as the business community, and I couldn’t let that happen — that was my motivation this year,” Hochul said in an interview with POLITICO this month. “Now they have their own team in place. They control the budget. They need to look hard at spending.”

Hochul, who has become a key Mamdani ally, hails from a more centrist wing of the Democratic Party.

She has previously pushed Mamdani to curtail city expenditures rather than plugging budget gaps with new revenue from the state. And she’s expressed consistent opposition to hiking income taxes on high earners that would make the prospect of convincing her difficult in any year — let alone one where the economy could still be a concern and she’ll no longer be facing a reelection bid heavily dependent on New York City turnout.

Should she win in November, as polling currently indicates, she’ll also continue to control the fate of Mamdani’s key campaign pledge of universal childcare, which caused the mayor to temper his push for a tax hike this year.

If anyone is going to defy the longstanding rules of Albany politics, however, it would be the 34-year-old city executive.

Mamdani is still very popular. Even statewide, he has a better net favorability rating than Hochul — and raising taxes on the wealthy is even more popular. The mayor is working to keep his army of volunteers engaged and invested in his success (in part through the taxpayer-fundedOffice of Mass Engagement). He maintains a deep and abiding alliance to outside groups like the New York City chapter of the Democratic Socialists of America who are planning to pressure state officials on higher taxes. And he has endorsed several left-leaning candidates for state office that could change the dynamics in Albany.

Mamdani also retains a uniquely bright star power that Democratic strategist Trip Yang said will make the mayor a formidable force in negotiations next year, provided he can hold onto New Yorkers’ good will.

“All mayors have a honeymoon period,” Yang said. “His might be more intense and last longer.”

Once Hochul signed the severely late state budget on May 28, Mamdani emerged as one of the biggest winners. He secured approximately $500 million in recurring annual revenue from a pied-à-terre tax. The state permitted him to amortize a multibillion dollar contribution to the pension funds for retired city workers. It picked up a larger portion of the bill for jointly-funded programs and paid for a childcare expansion — a down payment on Mamdani’s marquee campaign promise. With state income taxes juiced by Wall Street profits, Hochul slipped the mayor another $1.5 billion, a third of that recurring revenue. And as a bonus, the budget dispensed with a bizarre and hostile city commission that threatened the mayor politically.

In the brief legislative session that followed, state lawmakers gave Mamdani two years of mayoral control of city schools and delayed a class-size mandate, providing him with more time to hire teachers and gird for the accompanying cash outlay.

All told, the state ended up wiping away most of the funding shortfall left by Mamdani’s predecessor and, in the process, delivered the mayor a tremendously successful run in the state capital where he served for five years as a legislator.

Budget watchdogs were not thrilled with how he spent the money.

Instead of bringing expenditures in line with revenue projections, Mamdani filled immediate funding needs without addressing structural imbalances that will only be further strained by looming contract negotiations for the city’s unionized workforce. By city Comptroller Mark Levine’s estimation, the mayor is already facing a $8.8 billion budget gap for the following year’s budget, a projection larger than the administration’s — and one that doesn’t take into account additional money for Mamdani’s priorities like free buses, continued childcare expansion and increased affordable housing production.

“In plain English, this all means that we are kicking a very big can into next year,” Levine said during a budget hearing last week.

In response to concerns about looming shortfalls, Mamdani has pointed to ongoing efforts to make city government more efficient and asked for New Yorkers to give him more time after a difficult first budget cycle.

“We know that it is a long-term project to put our city back on firm financial footing, and we are proud of the fact that we closed a $12 billion fiscal deficit in our first year in office,” Mamdani said at a press briefing last week, using an inflated figure for the city’s budget gap. “We are also committed to taking the steps along the way to ensure that we build a healthier picture for the long term.”

Much of that picture will be colored by the mayor’s relationship with Albany.

Earlier this year, Mamdani endorsed Hochul’s reelection, essentially ending a primary challenge from her mutinous lieutenant governor, Antonio Delgado, who was running to her left. Next year, there will be no opportunity for similar leverage.

Hochul has also gone out of her way to oppose income tax increases in particular, even as she’s signaled openness to other types of levies. How closely she sticks to her longstanding position will depend on the state of the economy, with lots of uncertainty coming from the White House’s erratic war in the Middle East.

“It’s hard to predict what next year will bring because it will depend on needs,” said one state official, who was granted anonymity to speak candidly about the budget picture. “Unless something significant changes, I think her priorities have been pretty consistent since taking office: she doesn’t want to do anything that will drive people out of the state or erode the tax base, though she is open to finding other ways to help the city.”

Lawmakers elsewhere also took note of how well the five boroughs made out last month, which could prove troublesome for the mayor’s team next time around.

“They are going to run up against a lot of non-New York City members feeling anxious about continuing to bail out the city,” one Democratic legislator said.

Over time, all mayors’ popularity tends to dip. The tough decisions that confront City Hall on a daily basis almost always come with real-world opportunity costs for some slice of New Yorkers. And after a while, the slices add up.

Adams, the previous occupant of City Hall, saw his job performance rating tank within six months. Just three months into Bill de Blasio’s first term, he absorbed a hit to his job approval ratings that he never fully recovered from.

Mamdani scored mixed but overall positive approval ratings around 100 days into his term and has the type of fervent following that’s unprecedented in modern mayoral politics, making it difficult to predict his future popularity. He also endorsed five candidates for state office — and was careful not to go against any incumbents — which could grow the ranks of political bedfellows in Albany.

The mayor’s continued popularity and the fact that Albany tends to raise revenue in off-election years may ultimately give Hochul the space to pursue tax increases with lower electoral risk — something she would be loathe to admit until after Election Day. And it remains to be seen how strongly Mamdani will personally push his Albany ally on taxing the rich — a fight he did not take up in earnest this year even as his base held rallies around the issue in the state Capitol.

“If he goes into a second session with the same popularity without having to win mayoral control, it’s a setup for a different type of session,” said Democratic strategist Jon Paul Lupo.