Zohran Mamdani ran on a promise to make New York City affordable. This week, he unveiled a budget that is, in a word, unaffordable.
New York has been fiscally profligate for so long that the headline number — $127 billion — produces little shock. But for perspective, these are similar to the annual expenditures of a midsize nation (with all the expenses a country requires) — like Greece or Thailand — devoted to governing one city.
New York City’s budget has ballooned in recent years. Mike Bloomberg’s last budget, adopted for fiscal 2014, totaled about $70 billion. In little more than a decade, the budget has nearly doubled, growing faster than inflation and faster than the city’s economic growth.
And much of it has happened as the city has been losing the one thing that makes big government easier to finance: people. New York City’s population fell sharply amid the pandemic, with a 5.3 percent decline from April 2020 to July 2022. More recent reports show a rebound, but the city remained below its 2020 baseline as of 2024. The arithmetic is brutal: A larger bill is divided among fewer payers.
Per person, the imbalance is stark. Using the Lincoln Institute’s fiscally standardized numbers, New York’s general spending in 2023 was more than 30 percent higher per capita than Los Angeles’s — and more than double Houston’s.
And what do New Yorkers get for this? Look at New York City schools, the largest district in the country. The city’s education budget has climbed while enrollment has shrunk. It has risen from roughly $34 billion in 2019 to more than $40 billion, with per-student spending projected to reach nearly $35,000 in fiscal 2026 — among the highest in the nation. The outputs — graduation numbers, test scores and reading levels — are at best middling, often comparable to places that spend a fraction of what New York does.
Now come the taxes — because every political argument in New York eventually ends up at the same curbside: Who will pay?
New York City already sits at the extreme end of the American tax spectrum. For high earners, the combined state and city income tax rate reaches 14.776 percent. Add federal taxes, and the combined marginal rate can exceed 50 percent, reaching roughly 55 percent on certain investment income. New Yorkers pay tax rates comparable to those in European countries that provide, in return, universal health care, free college education and amazing infrastructure. New Yorkers get some 300 miles of sidewalk sheds and construction fences.
On business taxation, the city is also off the charts. The Citizens Budget Commission reports that New York City business activity faces the country’s highest combined marginal corporate tax rate — 17.44 percent once state, city and regional layers are stacked. Mamdani wants to hike income and corporate rates even further, or else he says he will raise property taxes by almost 10 percent. Property taxes already made up more than 27 percent of the costs of homeownership in the city as of 2022, above the national average.
New York is really the prime example of a problem Democrats seem unwilling to confront. Blue cities are out of control, promising more, spending more, delivering less and pushing off the fiscal problems to some future day.
Take Los Angeles — another one-party metropolis wrestling with affordability and disorder. The city’s homelessness budget for fiscal 2025-2026 totals about $950 million. The Los Angeles Homeless Services Authority reported that in 2023 homelessness was up 9 percent countywide and 10 percent in the city, and a 2024 Associated Press account noted that homelessness has surged 70 percent countywide since 2015 (and 80 percent in the city) amid public frustration “despite billions spent.” An audit reviewed $2.4 billion in city homelessness funding and found that officials could not reliably track where it went or what it achieved. Or take Chicago, with a mayor whose approval rating is deep underwater and where the pension promises are so large that they will surely bankrupt the city at some point.
What is the theory of good government here? If the answer is “keep adding programs,” the city will keep producing unaffordability — because unaffordability is what happens when government becomes a machine that grows faster than the society it governs.
Mamdani’s basic instinct is right. Focus on affordability, especially housing. But not by providing government subsidies — these only seem to have driven up the cost of rent, as subsidies naturally do. (The city’s rental-assistance spending rose from $263 million in fiscal 2020 to $1.34 billion in the most recent reported fiscal year. That is a fivefold increase in a handful of years — and housing costs only got worse.) Matt Yglesias persuasively argues that the city should make it easy — and routine — to build abundant market-rate housing. That will bring in more people, expand the tax base, fill the schools and increase local GDP. And that will make the budget affordable.
Democrats in city halls can make the right choice: stop governing as if the goal is to announce new entitlements, and instead make government work — safer streets, functioning schools, predictable sanitation and, above all, enough housing that the middle class can find places to live.
New York does not need more soaring rhetoric. It needs more homes.
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