New York Mayor Zohran Mamdani has pledged to make New York an affordable city to live in. However, the city budget he unveiled is, in a word, "unsustainable in scale." Since New York City has long been fiscally mismanaged, the $127 billion figure released to the media isn't particularly shocking. Yet this amount is equivalent to the annual expenses of running countries like Greece or Thailand. New York City's budget has expanded dramatically in recent years. The budget adopted by former Mayor Mike Bloomberg for fiscal year 2014 was roughly $70 billion. In just over a decade, it has nearly doubled, growing faster than both inflation and New York City's economic growth rate.
This phenomenon has occurred simultaneously with population outflow, which critically affects funding for the mega-city. New York City's population plummeted during the COVID-19 pandemic. Compared to April 2020, the population decreased by 5.3% by July 2022. Arithmetically speaking, this means fewer taxpayers must share greater expenses. The imbalance becomes starkly apparent when comparing per-capita spending. Based on Lincoln Institute's fiscally standardized figures, New York City's 2023 general expenditure was more than 30% higher than Los Angeles and more than double that of Houston.
What do New York City residents get in return for such high spending? Consider the education system of New York City, the nation's largest school district. While New York City's education budget has increased, student enrollment has declined. The education budget, which was roughly $34 billion in 2019, has exceeded $40 billion, and per-pupil spending for fiscal year 2026 is expected to reach $35,000, the highest level in the nation. But the results are unimpressive. Graduation rates, test scores, and reading proficiency are middling at best, similar to other regions that spend far less on education than New York City.
Now let's examine the tax issue. In fact, the endpoint of every political debate in New York City ultimately converges on "who bears the costs." New York City already sits at one extreme of the American tax spectrum. For high earners, the combined state and city income tax rate reaches 14.7%. Add federal taxes, and the marginal rate exceeds 50%, with some investment income tax rates soaring to approximately 55%. The average tax rate for New Yorkers is comparable to European countries that provide universal healthcare, free college education, and excellent infrastructure.
Corporate taxation is also excessive. According to the Citizens Budget Commission, conducting business in New York City requires bearing the highest corporate tax rate in the nation. The combined corporate tax rate, aggregating various state and city taxes on businesses, reaches 17.4%. Nevertheless, Mamdani says he will either further raise income and corporate tax rates or increase property taxes by nearly 10%. As of 2022, property taxes already account for more than 27% of homeownership costs in New York City, higher than the national average.
What is "good government theory"? If "continuous program additions" is the answer to this question, the city will continue to cause unaffordable price increases. This is because unaffordable prices are a phenomenon that occurs when government becomes a machine growing faster than the society it governs. Mayor Mamdani's basic instinct is correct. The focus should be on easing cost burdens, particularly centered on housing issues. However, providing government subsidies for this purpose is not the appropriate approach. Subsidies inevitably lead to rent increases.
New York City's rental assistance soared from $263 million in fiscal year 2020 to $1.34 billion in the most recent fiscal year. In just a few years, rental assistance increased fivefold, yet housing prices actually surged. Matt Yglesias argues that city government should make building market-rate housing regularly and abundantly an easy and routine procedure. This would expand the tax base through greater population influx, fill school seats, and lead to rising local GDP. As a result, budget burdens would also decrease.
Democrats leading New York City's governance must make the right choice. Instead of announcing new welfare policies as if they were goals, they should make government work. They must focus on safer streets, properly functioning schools, predictable sanitation, and above all, supplying enough housing so the middle class can find places to live. New York City doesn't need any more grandiose rhetoric. What it really needs is more housing.