Mamdani: Fiscal Crisis as Bad as Great Recession in NYC

The man who believes that government is capable of being benevolent and of being everything to everybody is crying poverty because his city is unexpectedly broke, and he hasn’t even started draining its resources. 

BREAKING🚨: NYC Mayor Zohran Mamdani declares the city is facing a “fiscal crisis at the scale of the Great Recession” — a massive budget hole blamed on past mismanagement.

His fix?: “Look inward for savings and efficiencies… and raise taxes on the wealthiest New Yorkers and… pic.twitter.com/Womv6FMd3d

— Officer Lew (@officer_Lew) January 28, 2026

You can’t make this up. Mamdani has billions upon billions of dollars he wants to allocate to new giveaways, but it turns out the city doesn’t even have enough to do what it is doing now. 

Fear not, though, he can raise taxes, right?

Mamdani’s been mayor of New York City for less than a month and he’s already run out of other people’s money https://t.co/27gLhKffJN pic.twitter.com/hu4LvLLVLT

— Enguerrand VII de Coucy (@ingelramdecoucy) January 28, 2026

New York City has been spending billions of dollars putting up illegal aliens in 4 star hotels and feeding them meals that often get thrown out, and it turns out that even in an economy that is starting to boom, the city cannot afford to do the things it is already doing, no less take over housing, transportation, grocery stores, and all the other fine things Mamdani has promised. 

Mayor Zohran Mamdani says New York City is facing an unexpected $10 billion projected budget deficit in the coming year and plans to push state lawmakers to increase taxes on high-income New Yorkers and corporations to close the hole.

“We must raise taxes on the wealthiest few in New York City so that we can invest in the many,” the newly elected Democratic socialist mayor of the country’s largest city said in an interview Tuesday.

During the campaign, Mamdani pledged to raise taxes on millionaires and corporations to help fund his ambitious affordability agenda. But the plan drew swift rebuke from the city’s elite, who said a tax hike would drive the wealthiest out of New York. New York Gov. Kathy Hochul, who would have to sign off on the increases, has said she opposes income-tax hikes but has previously been more open to a potential corporate-tax increase. “I don’t believe in raising taxes for the sake of raising taxes,” she said earlier this month.

Mamdani said in the interview the tax increases were now urgently needed to meet the moment. “New York City has not seen a gap of this scale since the Great Recession,” he said, referring to the 2008-09 financial crisis. He added that his administration has already begun conversations with state officials.

Mamdani also wants Albany lawmakers to increase the amount of state funding the city receives. Hochul has boosted state funding to the city since she took office, according to a spokeswoman for the governor.

Governor Kathy Hochul, who is struggling to work with Mamdani to satisfy her progressive base, has already increased funding for the city, but Mamdani wants more from the state and the right to increase taxes on top of that. 

Mamdani has little power to do so directly himself, complicating matters for him and also complicating matters for Hochul as well. 

Hochul, you see, has ambitions, and those ambitions require money from the big New York donors and enthusiasm from the ever-more-powerful progressive base that is currently in love with Mamdani. And if there is one thing you can be sure of, it’s that Mamdani is not looking for efficiencies and change in every couch cushion, although he may be interested in using the fiscal crisis to weed out any potential political opponents he might otherwise be unable to fire. 

Despite the yawning hole, Mamdani said he plans to present a balanced preliminary budget by pursuing savings and looking for inefficiencies without cutting any programs that benefit the working class. He didn’t directly address whether his proposed budget would still allow him to pursue signature proposals, such as free bus service and government-subsidized grocery stores.

“That budget is going to ensure that the working-class New Yorkers who did not create this crisis are not then made the victims of it,” he said. The governor and the mayor said earlier this month the state would fund a rollout of free child care for 2-year-olds in the city—another major policy proposal of Mamdani’s campaign.

State and city coffers often swell when Wall Street has a good year. Several of the largest banks have forecast strong gains in 2026, and Hochul has said she expects a windfall in tax revenue from Wall Street bonuses this year. However, Mamdani said he didn’t want to rely solely on bonuses to cover the crisis. “We don’t want to attach ourselves to easy answers for difficult questions,” he said.

Earlier this month, City Comptroller Mark Levine warned of deficits, including a $2.2 billion shortfall in the $115.9 billion budget for the city’s current fiscal year ending June 30. His office projected a $10.4 billion gap for the next fiscal year.

You can be certain that a plan to cut out any politically inconvenient rivals and programs is on the table already. I wouldn’t be surprised to see a mass culling of inconvenient New York City employees and the breaking of political deals from earlier administrations in the name of efficiency, with resources transferred to Mamdani’s priorities. 

It’s hard to say how much of this crisis is real and how much he is using it to pressure Hochul, who has significant power over Mamdani’s plans. 

Nathan Gusdorf, executive director of the Fiscal Policy Institute, a think tank that analyzes the city’s finances, said his group was critical of the Adams administration’s budgeting practices, including inaccurate forecasts that at times led to confusing and adversarial negotiations with the city council. Some of the city’s projected deficits were because of policy commitments passed by the council that weren’t adequately funded, Gusdorf said.

Gusdorf said there might be political will in Albany to increase income taxes or corporate taxes given the deficit and support for Mamdani’s affordability agenda.

“The reality is there is probably no way around a city tax increase to balance the city’s budget,” he said.

Don’t expect Hochul to just roll over. Democrats and Wall Street are deeply intertwined these days, and that is especially true for Hochul. Newsom has his financial base to draw from, and Hochul’s is Wall Street and associated businesses. She’s already seeing a slow trend of Wall Street folks trying to extricate themselves from New York—a very difficult task, and unpleasant for them, given how deeply connected the industry is to the city. That trend may accelerate in much the same way that California’s push for a wealth tax is driving billionaires away from California, which, if anything, is a more pleasant place to live than New York. 

I am skeptical that New York City could not solve this budget crisis on its own—when you are talking about “out-year” deficits, the basis for forecasting them is anticipated growth in expenditures and receipts, which are easily manipulated. Even slowing the rate of growth in programs can yield massive savings, not that people in government like to do that. 

My guess? This is more a power move on Mamdani’s part, both to get more money and to clean out inconvenient people and programs. And given Mamdani’s evident political skill, I would spend more time watching Hochul’s reaction to see how adroit she is. 

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