PTET tax – Mayor Zohran Mamdani and Council Speaker Julie Menin unite to urge cutting a millionaires’ tax credit, but Gov. Kathy Hochul says the change won’t happen—leaving the city budget gap unresolved.
New York City’s budget fight just turned into something rarer than usual: a temporary alliance between Mayor Zohran Mamdani and Council Speaker Julie Menin.
The two top Democratic figures—who have spent much of the year trading barbs over how to close the city’s multibillion-dollar budget gap—came together to demand changes to a state tax credit that largely benefits millionaires.. Their pitch was straightforward and politically pointed: scale back the credit. generate about $1 billion in revenue for the city. and use that windfall to bring spending plans back into balance.
Mamdani has argued for a revenue-first approach. saying the deficit can only be solved by raising taxes on millionaires and large corporations.. Menin has pushed back with a different emphasis. arguing for trimming what she calls municipal bloat—an idea Mamdani previously dismissed as unrealistic.. Tuesday’s joint press conference was an attempt to bridge those competing instincts without fully surrendering either leader’s core philosophy.
The change they asked Albany to consider centers on the Pass-Through Entity Tax credit—known by lawmakers and policy watchers by the acronym PTET.. Mamdani framed the proposal in numbers that quickly landed as a political message: reducing the credit by a quarter. Menin said. would translate into nearly $1 billion in additional city revenue.. Standing beside the council speaker, Mamdani signaled that this was the practical step their prior disagreements had been missing.
Then Gov. Kathy Hochul moved to close the door.
In Albany later Tuesday. Hochul dismissed the effort bluntly. telling reporters “It’s not happening” and explicitly rejecting changes to the PTET.. That response matters beyond the substance.. It transforms what had been a negotiating opening into a new ceiling the city leaders now have to plan around—at precisely the moment when the city budget is supposed to be headed toward final choices.
For Hochul, the political calculus is complex.. She is preparing for reelection and. like most governors who rely heavily on New York City support. needs the state’s biggest Democratic constituency to stay aligned.. But Mamdani’s base is not subtle; he draws strength from a more progressive wing that often pushes the governor from the left.. Being at odds with the mayor on a major revenue proposal risks turning a friendly city into a more difficult one at the exact time Hochul can least afford it.
The timing is also pressure-packed on the government calendar itself.. Mamdani and Menin agreed to delay the release of the mayor’s executive budget proposal until May 12.. Technically. that proposal was due this Friday—but with the state budget now nearly a month late. the city leaders say they can’t responsibly finalize spending without clarity about how much revenue will flow from Albany.
That’s where the Hochul rejection creates a second problem: not only is the city short of ideas. it’s also being asked to make choices without the benefit of confirmed state numbers.. If lawmakers don’t resolve state fiscal mechanics soon. city negotiations can slide from “hard but manageable” into “holes in the plan that are hard to reconcile. ” as Mamdani and Menin both implied.
Behind the procedural chess is a larger question for voters: who pays when budgets get squeezed. and which level of government gets to set the terms.. Mamdani and Menin were effectively arguing that Albany should shoulder more of the burden by moderating a tax break.. Hochul’s position suggests the governor believes that tax credit route would either be too disruptive to the state’s fiscal strategy or politically untenable for her to defend.
With the governor refusing the most immediate path. the alliance could either collapse back into familiar rivalry—or evolve into a tougher. more inventive negotiating posture.. One likely outcome is that the city will have to lean more heavily on budget levers it can control. even if that contradicts parts of either leader’s preferred approach.. Another is that the PTET fight becomes a bargaining chip inside broader state budget negotiations. where lawmakers look for compromises that can be sold as both responsible and responsive.
The political stakes don’t stop at City Hall.. The state budget dynamics are still in motion. and every day of delay raises the odds of rushed decisions that can fuel public dissatisfaction—whether that shows up in service cuts. slower program rollouts. or new fights over what “municipal bloat” actually means in practice.. For residents watching closely. that could translate into a simpler question: will the budget finally get fixed. or will the stress only get shifted to the next legislative deadline?
As the city waits for state numbers, one tragedy underscored the human cost of disruption inside the broader policy environment.. Mamdani’s plan to close the long-decaying Bellevue intake center has already triggered painful consequences as shelters and intake operations were relocated. including a death by suicide after one person was moved to a hotel-turned-shelter.. Advocates had warned about coordination and health risks during transitions—reminders that budget decisions can become real life very quickly.
While the tax-credit fight has played out in press conferences and statehouse language. the lesson for policymakers is the same: when timelines slip and funding is uncertain. the burden lands on systems that serve some of the most vulnerable New Yorkers first.. That reality raises the temperature of the current budget negotiations—because it’s not just about balancing books. it’s about whether government can deliver stability while it’s still building the plan.
The day’s deescalation between Mamdani and Menin may be rare, but it looks fragile. Hochul’s refusal means the city’s budget gap is still there—and the alliance, for now, is facing the kind of hard constraint that politics alone can’t solve.