Kathy Hochul Has Become Zohran Mamdani’s Most Important Ally

ALBANY, New York — Gov. Kathy Hochul’s proposed tax on pricey New York City real estate is offering yet another desperately needed financial boost to rookie Mayor Zohran Mamdani.

Hochul is backing an annual surcharge on non-primary Big Apple residences that are worth $5 million and higher, with the proceeds going toward paying down Mamdani’s $5.4 billion city budget gap.

In proposing the tax, the moderate Democratic governor is again going to bat for the freshman democratic socialist mayor, risking political attacks from the right and alienating the business community by reversing her opposition to raising taxes this year.

But the surprise move stands to also help Hochul bolster her support in vote-rich New York City, where the Buffalo-born governor will need to run up the score as she seeks reelection this year. At the same time, the tax proposal further deepens an increasingly symbiotic relationship between Hochul and Mamdani.

“It is one of the most politically efficient decisions she can make,” Democratic strategist Trip Yang said. “She can maximize a broad spectrum of allies and minimize criticism. It is a politically optimal decision and it’s a sound policy decision.”

Hochul’s closely watched alliance with Mamdani has been a national test case for how two vastly different wings of the Democratic Party can govern alongside each other. And in the four and a half months since he took office following a surprising victory last year, they have each become the others’ most important political and governing ally — an arrangement that has intertwined their electoral fates.

Mamdani and Hochul disagree on key issues like policing and Israel. Yet both the centrist governor and far-left mayor have insisted they can work together in the interest of supporting New York City, the engine of the state and national economies. And that relationship has been mutually beneficial.

The governor has repeatedly moved this year to boost the new mayor’s standing. She handed him his first governmental victory by backing an expansion of no-cost child care. Weeks later, she agreed to send $1.5 billion in state aid to New York City to reduce the budget gap. Her real estate tax plan, which is expected to generate some $500 million in annual revenue, is the latest effort to help Mamdani’s financial footing.

The mayor’s political support for Hochul, meanwhile, has been crucial. He endorsed her reelection bid in February — a nod that was a knockout punch to the governor’s sole primary challenger, Lt. Gov. Antonio Delgado. The mayor has also refrained from directly confronting the governor over her opposition to raising taxes on rich people and large corporations — a signature issue for his successful campaign.

Hochul on Wednesday called her proposal “a common sense surcharge” by targeting ultra wealthy people who do not live full-time in the city. She also continued to insist broader proposals like an income tax rate hike or corporate levy increase would not be on the table.

And while her office has cautioned that the efforts do not amount to a state-approved Gotham bailout, Hochul acknowledged she is trying to improve the city’s financial health.

“We’re trying to help the city whittle it down,” she said of the $5.4 billion budget hole. “I’m a partner to this mayor. I have found a path. We’re not looking to do this elsewhere in the state because the whole objective is to close the city’s budget gap.”

Mamdani praised the announcement as a significant development as he also tries to enact a costly agenda.

“Thanks to the support of Governor Hochul, we are one step closer to balancing our budget by taxing the ultra-wealthy and global elites with a pied-à-terre tax — the first of its kind in our state,” the mayor said in a statement.

Hochul’s alliance with Mamdani began last summer after his upset Democratic mayoral primary win against her predecessor, former Gov. Andrew Cuomo, with conversations that culminated with the governor’s endorsement. Their relationship deepened through the fall and solidified during a post-election Democratic retreat in Puerto Rico.

Hochul earlier this year handed Mamdani two significant victories. She agreed to spend $1.7 billion to expand free child care — satisfying a shared and paramount policy goal for both Democrats. When the mayor warned the city faced a financial crisis more dire than the 2008 recession, Hochul agreed to a $1.5 billion infusion of state cash following a weekend meeting.

Yet that additional aid and announced cost savings did not fully close the gap — or satisfy left-flank calls for raising taxes on New York’s wealthiest residents.

Democratic state lawmakers pressured Hochul further to raise taxes, proposing budget plans that hiked rates on people who earn $5 million and more. But the mayor — a national figure who holds sway over an ardent political base — did not publicly lean on the governor. He chose not to attend a tax-the-rich rally in Albany and the event itself was sparsely attended. Mamdani also did not appear at a March rally with his mentor, Vermont Sen. Bernie Sanders.

During this time, Mamdani’s team privately circulated a menu of tax increase options. Those proposals included a “city mansion tax” on properties worth more than $5 million — a provision that appeared to be a beta version of Hochul’s pied-à-terre plan unveiled this week.

And even as Hochul was publicly resistant to raising taxes in the state budget talks, her team was privately assessing its options. The surcharge proposal was internally discussed among Hochul’s staff in recent weeks, according to two people familiar with the conversations. The mayor was told of the idea earlier this week, those people said.

Hochul also broached the idea Tuesday evening with the Real Estate Board of New York, a powerful business consortium, according to three people with first-hand knowledge of those discussions.

The tax proposal must still be approved in the state budget, which is now more than two weeks past its due date. Top legislative Democrats in Albany said Wednesday they would review the proposal, but it’s likely to be approved in some form: The Democratic-controlled Legislature has proposed various pied-à-terre measures in recent years.

New York’s business elite, however, were less receptive. Many private-sector boosters have considered Hochul a bulwark against Mamdani’s policies and fear businesses will now be further motivated to leave the city if the tax climate worsens. That includes the real estate community, whose leaders warned the tax would have a wide effect.

“Its impact will reach far beyond a small group of owners,” said Real Estate Board of New York President James Whelan. “It will not raise the amount of revenue expected, will lower property values and raise costs.”

Other business leaders worry the tax will lead to an accelerated wealth flight.

“I’ve told this to the mayor, I’ve told this to the governor: We don’t want anymore people leaving New York. We want New York to be the attraction,” said John Catsimatidis, a billionaire supermarket and energy mogul.

New York’s taxes, he added, are onerous — especially on real estate.

“At a certain point you reach a — what do you call it — the ‘fuck you’ level,” Catsimatidis said.

Joe Anuta and Chris Sommerfeldt contributed to this report.