Mamdani's (Possible) 9.5% Property Tax Hike While Red States Are Abolishing Property Tax Entirely
On snow shoveling, fiscal architecture, and what red states are getting wrong about the property tax
On January 25, 2026, three and a half weeks into his mayoralty, Zohran Mamdani got his first snowstorm. Winter Storm Fern dropped about a foot of snow on New York City. The streets were plowed fast. But the plows pushed snow into bus stops, because bus stops are the nearest open space, and nobody had a system for tracking which stops had been cleared. Extended sub-freezing cold turned the banks to ice. Bus riders posted photos of three-foot walls of frozen snow where their stops used to be. Crosswalks vanished. At least 20 people died from cold exposure in the weeks that followed, some of them inside their own apartments. City Council Speaker Julie Menin said the deaths “were not inevitable.”
Four weeks later, the city’s first blizzard since 2016 buried all five boroughs under nearly two feet of snow. A worse storm by every measure. And a markedly better response. Between the two storms, the administration had geotagged every unsheltered bus stop and crosswalk in the city so that DSNY could track each location and when it was last cleared. Emergency shovelers expanded from 550 to 1,300. Their pay went from $19 to $30 an hour. Warming centers more than doubled. A travel ban kept private cars off the roads overnight. By Monday morning, 2,200 bus stops were clear. No one died on the streets.
That sequence matters for everything that follows. The first storm exposed a system with no feedback loop, no way to know its own state. The fix was not bigger budgets or more press conferences. It was engineering: geotagging gave DSNY real-time visibility into its own operations, turning an opaque process into one that could be measured and corrected. The question hanging over the rest of Mamdani’s mayoralty is whether that instinct scales to a $114 billion budget.
Ketcham’s critique and what the budget actually is
In between the two storms, the Manhattan Institute’s John Ketcham published his verdict on Mamdani’s preliminary budget: “betrayal.” The Chief Savings Officers Mamdani had appointed to every city agency hadn’t yet filed their first reports. The deadline was still a month away; each department had 5 days to designate a CSO and 45 days to prepare a report, starting from January 29. The budget itself was, by design and long precedent, a negotiating document, an opening bid in the annual negotiation between City Hall, the City Council, and Albany. Every mayor in modern memory has used it this way.
I want to take that charge seriously, because Ketcham raises legitimate fiscal concerns. But consider what we’ve already seen. Mamdani’s first snowstorm exposed a system with no feedback loop. His second, a worse storm by every measure, produced a markedly better response, because the administration treated failure as an engineering problem rather than a communications one. In the limited time he’s been mayor, Mamdani is doing something most mayors almost everywhere fail at: adapting based on experience. That record deserves weight before we about budgets.
I also want to ask a question Ketcham’s critique never engages: is the fiscal framework Mamdani is operating within (property and income taxation as the structural backbone of municipal finance) sound, and is the alternative now being pursued across red-state America, wholesale abolition of the property tax, better? I think the answer to the first question is yes and the answer to the second is emphatically no.
What Mamdani actually did
On January 23, Mamdani signed Executive Order 12 requiring every city agency to designate a Chief Savings Officer. The mandate is specific: 1.5 percent savings in fiscal year 2026, 2.5 percent in fiscal year 2027. Public reports are due March 20, with updated assessments every six months. The CSOs are charged with finding recurring savings and sustainable efficiencies, consolidating redundancies and insourcing programs outsourced to what the executive order describes as “bloated consultant contracts.” Budget Director Sherif Soliman described the approach as going in “with a scalpel rather than a blunt instrument of across-the-board cuts.” Projected savings: $1.77 billion across two fiscal years.
Beyond the CSO program, the administration is hiring 50 new auditors at the Department of Finance (expected to generate $100 million per year in additional revenue). Auditors generate more revenue than they cost.
Organizations, public or private, focused on cutting costs almost always and automatically reduce quality, which increases costs in the long term. Organizations focused on improving the system find that costs fall as a consequence of better processes. The CSO program, while flawed, is at least trying to study agency operations before cutting or expanding them. Whether it delivers is Mamdani’s problem. The March 20 reports will tell us whether the method produced substance or theater.
Two cities offer evidence that this approach works across ideological lines.
Carmel, Indiana, under Republican Mayor Jim Brainard (1996–2024), transformed from a bedroom community of 25,000 into an internationally recognized city of over 100,000. The taxable property base grew sixfold. Parks expanded from 41 acres to over 1,000. Brainard built more than 155 roundabouts (reducing intersection injury crashes roughly 80 percent), a walkable downtown, and a greenway connecting Carmel to Indianapolis. He kept public ownership of water utilities rather than privatizing them. Through all of this, Carmel’s tax rates remained among the lowest in Indiana, because the investment itself generated the revenue base that sustained it. The Manhattan Institute’s own City Journal published a glowing profile under the headline “Carmeltopia”. S&P downgraded Carmel’s bond rating in 2017 over $300 million in new debt, so the model carried fiscal risks. But the overall record of a city that quadrupled in population and maintained low taxes through strategic public spending is hard to argue with.
Greater Manchester, under Labour Mayor Andy Burnham (2017–present), tells a parallel story from the other side of the Atlantic. Since signing its devolution deal, Greater Manchester has been the UK’s fastest-growing city-region economy, with average annual growth of 3.1 percent and the highest productivity growth in the country. Burnham, who calls his approach “business-friendly socialism,” brought the bus network into public ownership, pioneered a place-first governance model integrating transport, housing, education, and health, and built a combined authority that operates with the coherence of a single government rather than a collection of silos.
One a Republican in Indiana. The other New Labour in Manchester. Both invested in public goods rather than strip-mining them. Both maintained or expanded public ownership of key assets. Both produced revenue growth that exceeded the cost of investment. A recommendation that Ketcham may or may not agree with: the CSO program should seek heterodox expertise from organizations like the Foundation for American Innovation’s Governance Program, which is designed around improving government efficiency through stronger execution and institutional design, not simply budget cuts or headcount reduction.
Where the critics are right
New York City spends $42 billion on an education system that has lost 118,000 students since 2019. Municipal health benefit costs are among the highest in the country. Mamdani reversed the Adams administration’s shelter caps, adding roughly $1 billion in costs. Bloomberg hiked property taxes 18.5 percent after September 11; Mamdani is threatening 9.5 percent during a period when Wall Street bonuses are at their highest levels since 1987.
These are real numbers. Ketcham and the Citizens Budget Commission are right to press them. But the standard austerity response treats each number as evidence that spending is too high and must be cut: cap the shelter costs, freeze education spending, make employees pay for health insurance. That sounds disciplined. But it skips the essential prior question: what system produces these costs, and what are the causes?
The education budget didn’t grow to $42 billion because someone chose an extravagant number. It grew through mandates (from local, state, or national politics in all sort of ways) layered on mandates and administrative structures sized for an enrollment that no longer exists. The answer might involve consolidation, redeployment, or something no one has considered yet, but it has to come from people who understand the system, not from a column prescribing cuts from the outside. After all, how many McKinsey style cost cutting end in complete failure? I would like to think that Ketcham is more cautious than that. The same applies to health benefits: the question isn’t simply “should employees contribute?” (which is cost-shifting, not cost reduction) but what plan designs, procurement structures, and delivery models produce the total cost, and whether the system can be redesigned to produce better outcomes at lower expense.
But notice the structural point that Ketcham’s critique takes for granted: every one of these spending-side debates is possible precisely because the fiscal architecture exists to argue about. A stable revenue base allows for adjustment, negotiation, and course correction. That stability is not a theory. It is an empirical fact about the property tax.
During the Great Recession, state income tax revenue fell 17 percent. Sales tax revenue fell 7 percent. Property tax revenue grew approximately 5 percent. James Alm documented this in a 2013 paper titled “A Convenient Truth: Property Taxes and Revenue Stability.” Federal Reserve researchers attributed the resilience to assessment lags, statutory smoothing mechanisms, and local policymakers’ ability to adjust millage rates: built-in institutional shock absorbers that sales and income taxes simply lack.
Multiple independent studies confirm the finding. A 40-year panel of Texas municipalities found that cities with stronger property tax authority had a significantly reduced probability of revenue decline. Hou and Seligman’s Georgia study demonstrated that displacing property taxes with sales taxes increased long-run revenue volatility. The American Institute for Economic Research, a free-market think tank, confirmed that property tax receipts remained “nearly constant” through the Great Recession. The IMF (in one of the very few times I agree with them) ranks recurrent property taxes as the least distortive tax instrument for long-run GDP growth, ahead of consumption, income, and corporate taxes.
The Economic Policy Institute found that if state and local spending after the Great Recession had grown at pre-recession rates, unemployment would have reached pre-recession levels by 2013 instead of 2017. Four years of needless suffering, attributable to sub-national austerity enabled by revenue collapse. The property tax is what prevents that collapse at the municipal level.
This is the architecture Mamdani is working within, and it is exactly what several states are now trying to destroy. Florida’s proposed constitutional amendment would eliminate property taxes and replace the lost revenue with a sales tax. The required rate, assuming no behavioral change, would be 15.34 percent. In Georgia, more than 300 local governments opted out of prior property tax relief measures, and some localities raised taxes by as much as 158 percent in a single year. These states are not reforming the property tax. They are replacing the most stable revenue instrument in municipal finance with the most volatile one.
And who actually benefits? Research by Abdoulaye Ndiaye models the property tax as a “forced mortgage” that, while painful, constrains housing prices and facilitates intergenerational access to homeownership. His simulations suggest that raising California’s property taxes to Texas levels would increase homeownership among 25-to-44-year-olds by 7.4 percentage points. The implication runs in reverse: eliminating property taxes produces an immediate capitalization windfall of 7 to 9 percent in home values, representing $200 to $250 billion in unearned equity for existing Florida homeowners alone. Reduce the carrying cost of an asset, and its price rises to absorb the savings. The beneficiaries are those who already own. The losers are those trying to buy.
The effects compound. When holding costs approach zero, empty nesters and investors face negligible incentive to sell or downsize. Housing supply that would otherwise enter the market stays locked up. Renters fare worst: rents remain sticky (landlords do not pass through property tax savings), sales taxes pile on every purchase, and circuit-breaker programs that might offer relief are riddled with gaps. Only 21 of 30 states with circuit breakers extend them to renters; 17 restrict eligibility to seniors. Eliminating property taxes altogether doesn’t just set back generational wealth. It abolishes the mechanism by which the next generation builds any.
A constitutional amendment abolishing property taxes has no feedback loop. It cannot be geotagged and revisited after the first storm. The Mamdani administration has proposed no such thing. It has threatened a 9.5 percent property tax increase it explicitly does not want, as leverage for its preferred alternative: raising income taxes on the 33,000 New Yorkers earning more than $1 million annually and recalibrating the city-state fiscal relationship. One can disagree with that strategy. One can call it heavy-handed or politically naive. But it operates within the architecture of stable, progressive taxation. It can be adjusted, negotiated, and reversed by future mayors and councils.
NYC’s property tax is sound in theory and broken in practice
We should be honest about something the red-state abolitionists get right, even if they draw the wrong conclusion: New York City’s property tax system, as actually administered, is one of the most regressive in the country. The problem is not the instrument. The problem is a 1981 assessment framework that has calcified into a machine for undertaxing the wealthy and overtaxing everyone else.
State law caps the growth of assessed values for small homes at 6 percent per year and 20 percent over five years. In neighborhoods where values are rising quickly, assessed values fall further and further behind market reality. The Citizens Budget Commission found that Manhattan’s median assessment ratio for Class 1 homes is 2.1 percent (taxing properties on roughly a thirtieth of their market value), while Staten Island’s is 5.2 percent and the Bronx’s is 5.0 percent. The boroughs with the least expensive housing bear the highest effective rates; the boroughs with the most expensive housing enjoy the lowest.
The co-op and condo valuation method compounds the distortion. Luxury co-ops and condos are assessed not at market value but as if they were comparable rental buildings, often rent-stabilized buildings whose rents bear no relationship to unit sale prices. Bloomberg’s investigation found a $2 million luxury Brooklyn condo carrying an annual property tax bill of $157. Meanwhile, a retired homeowner in Southeast Queens or Canarsie pays an effective rate two or three times higher on a property worth a fraction as much.
The State Comptroller, the Citizens Budget Commission, and the TENNY coalition (spanning civil rights organizations, tenant advocates, and real estate developers) have all documented these disparities. Comptroller Mark Levine called the proposed 9.5 percent blanket property tax increase “regressive,” because layering a flat increase onto a regressive base makes the regressivity worse.
The roadmap to fix it exists. The 2021 Advisory Commission on Property Tax Reform produced a comprehensive framework: combine the fractional assessment classes, value all residential properties at sales-based market value, apply a single transparent rate (estimated at 0.814 percent for revenue neutrality), provide a homestead exemption for primary residents, institute circuit breakers for low-income homeowners, and phase the changes over five years. Economist James Parrott, who served on the commission, has said most outer-borough homeowners would likely come out ahead. The losers would be owners of rapidly appreciated Manhattan and brownstone Brooklyn properties whose assessed values have been artificially suppressed for decades. The legal pathway is opening: in 2024, the Court of Appeals ruled 4-3 that TENNY’s claims could proceed, finding the city has authority to adjust its assessment practices. Budget Director Soliman said in mid-February that the city plans to introduce property tax reform legislation “in a matter of weeks.”
The tension is real. Assessment reform that shifts the burden from overtaxed outer-borough homeowners to undertaxed Manhattan co-ops is revenue-neutral by design. It does not close a $5.4 billion budget gap. The blanket 9.5 percent increase generates revenue but worsens the regressivity that reform is meant to cure. Whether the administration can reconcile these objectives is a question only the coming months can answer. But the distinction that matters is clear: assessment dysfunction is an argument for fixing the property tax, not abolishing it.
The market already voted
Before we turn to the austerity experiments, a word about the panic that wasn’t.
In the weeks surrounding Mamdani’s November 2025 election, Fox Business ran headlines about $100 million in signed contracts from New York buyers flooding South Florida. The wealthy would flee, capital would dry up, Manhattan real estate would crater.
Then came the data. Signed contracts for Manhattan homes priced above $4 million rose 25 percent from October to November 2025, more than twice the rate of the overall market. Olshan Realty tracked 41 high-end contracts in the five days following Mamdani’s victory, beating its ten-year Thanksgiving week average. Jonathan Miller of Miller Samuel was blunt: “Throughout 2025 on a year-over-year basis, overall sales have risen, prices have risen, sales have risen faster than inventory.” The idea of a millionaire migration, he said, was “a classic misinformation scenario, where no one’s looking at actual data.”
One month of luxury sales data does not settle the question; capital flight, if it occurs at all, plays out over years, not news cycles. And increasing demand for NYC real estate means upward pressure on asset prices, which means worsening affordability, the central problem Mamdani was elected to solve. But the real estate surge contains a fiscal lesson: every new luxury purchase expands the city’s property tax base. If Albany blocks Mamdani’s preferred revenue path (income tax increases on millionaires), the growing property tax base provides an alternative instrument to capture the wealth flowing into the city. The revealed preference of capital is that New York City remains valuable. The governance challenge is ensuring that value translates into a functional city for the people who live there full-time, not just those who collect addresses.
Three experiments in “cut first”
The austerity playbook, and even the more modest cuts proposed by its defenders, has a seductive logic: government is bloated, waste is rampant, and a sufficiently determined executive can slash spending to produce dramatic savings. Three case studies test this premise against reality.
The federal experiment. The Department of Government Efficiency promised $2 trillion in federal savings. The Cato Institute found that DOGE produced “no noticeable effect on the trajectory of spending.” As of mid-2025, it claimed roughly $214 billion (a figure disputed by independent analysts), while total federal spending rose approximately 6 percent. Elon Musk himself acknowledged the effort was only “a little bit successful” and said he would not do it again.
The damage to institutional capacity was real. The federal workforce shrank by roughly 9 percent, some 317,000 positions, through buyouts, firings, and attrition. At the Social Security Administration, disability claim backlogs were projected to double from one million to two million cases. Retirement claim backlogs hit 600,000 by May 2025. The website crashed ten times in three weeks. Field offices closed in some of the nation’s poorest states, and research cited by the EPI documents a 13 percent drop in disability benefit receipt in affected areas. Meanwhile, 2,000 headquarters staff were reassigned to process claims after a six-week training program, performing work that ordinarily requires two years to learn.
The local experiment. In England, Reform UK took control of Kent County Council and created the Department of Local Government Efficiency. They spent nine months searching for the waste their national leadership had insisted was everywhere. Paul Chamberlain, the cabinet member responsible, told the Financial Times: “We made some assumptions that we would come in here and find some of the craziness that Doge found in America and that was wrong, we didn’t find any of that.” No frontline service cuts were made. Council tax rose 3.99 percent.
The historical record. Chicago cycled through three consecutive mayors, each elected as the negation of the last one’s failures, each reproducing a new variety of failure. Rahm Emanuel (2011–2019) pursued austerity and privatization, closed 50 Chicago Public Schools overwhelmingly in Black and Brown neighborhoods, doubled the property tax levy to shore up the pension crisis, and fought the courts to cut pensions. He did everything the fiscal hawks prescribed and still gutted neighborhood institutions so the spreadsheets could balance. The backlash produced Lori Lightfoot, who won in 2019 on a landslide reform mandate, then squandered it through managerial dysfunction and became the first sitting Chicago mayor in forty years to lose reelection. Then came Brandon Johnson, a former CTU organizer who got his start protesting Emanuel’s closings, elected in 2023 on an explicitly anti-austerity platform, now facing a $1.2 billion budget gap. Negation is not a governing philosophy, and the cycle produced nothing but wreckage.
New York City just lived its own compressed version. Andrew Cuomo systematically drained city funding during his decade as governor, redirecting revenue upward while New York City’s contribution to state coffers (54.5 percent) far exceeded what it received back (40.5 percent). Then came Eric Adams: the centrist, the former cop, the pragmatic deal-maker. Adams talked fiscal discipline while presiding over what Mamdani’s administration now calls “staggering mismanagement.” He chronically underbudgeted essential services ($860 million for cash assistance programs projected to cost $1.7 billion) while maintaining the appearance of balance through aggressive reserve drawdowns and staffing vacancies. He was indicted on federal bribery and campaign finance charges. If Mamdani governs only as the negation of Adams, he is simply the latest turn of the same wheel.
The system, not the mayor
The instinct in electoral politics is to treat failure as a communications problem: hold a press conference, fire someone, promise to do better. The instinct Mamdani showed between the two snowstorms was to treat failure as an engineering problem. That is what state capacity actually means: not bigger budgets or more workers (though both may help), but institutions that can see what they are doing and adjust.
The CSO reports land March 20. The executive budget follows in April. The City Council negotiation runs through June. These documents will reveal whether the administration understands the difference between cutting costs and eliminating the causes of costs, or whether it merely borrowed the vocabulary. Adams also promised transparency. He also had institutional tools. He used them to maintain appearances while the structural problems compounded. If Mamdani’s CSO program produces cosmetic savings while the real questions go unasked, the comparison to Adams will stop being a cautionary tale and start being a prediction.
The states dismantling their property tax architecture have no such tools and no capacity to learn from their own mistakes. A constitutional amendment is not a system. It cannot be studied, adjusted, or corrected when the next recession arrives and the sales tax revenue collapses. New York’s property tax base provides something those states are about to lose: a stable foundation to govern from, and the institutional room to get better at it.