New York City Mayor Zohran Mamdani on Tuesday unveiled a $124.7 billion budget that he said would close a projected $12 billion deficit over the next two years without drawing from the city’s rainy day reserves, raising property taxes, or making major cuts to social services. 

But the plan relies heavily on state aid and delayed pension payments, raising questions about whether the city has solved its fiscal problems or merely postponed them. TIME has reached out to Mamdani’s office for comment.

The Democratic Socialist mayor's first budget arrives as city spending continues to outpace revenue growth, testing his ability to reconcile his campaign promises with fiscal reality while maintaining support from both Albany and the progressive voters who elected him.

Much of the budget gap was closed with the help of Gov. Kathy Hochul, who provided $7.6 billion in state aid to the city. Mamdani also said the administration identified an additional savings, including by reducing unnecessary overtime costs projected to save an additional $1.77 billion. 

The executive budget caps months of negotiations between state and city officials over how to keep the city with the nation’s highest tax collections per capita fully funded without raising additional taxes. The proposal must still be reviewed by the City Council, which is expected to negotiate and approve a final budget by June 30.

Here are some of the key policies in Mamdani’s budget:

Pension payment delay 

A considerable amount of savings comes from a delay of payments into New York City’s municipal pension funds, a measure that Mamdani said could save $1.6 billion in the upcoming fiscal year, but would require support from four of the five city’s major public pension funds. Critics contend the move effectively pushes today’s budget obligations into future taxpayers by extending the pension repayment schedule.

Andrew Rein, President of the Citizens' Budget Commission, a nonpartisan think tank, explained that the city has been contributing to major public pension funds since 2012 after realizing the returns on pension investments fell short of projections. The city later agreed to spread the payment over 20 years. Under Mamdani’s proposal, the repayment schedule would be  extended by an additional five years, through 2037. 

“I think that's a gimmick, because what we're doing is asking by stretching out our pension repayment plan, we're basically asking taxpayers in the mid 2030s to help close the 2027 budget, which is not fair,” Rein told TIME. 

Emily Eisner, acting executive director and chief economist at the Fiscal Policy Institute, argued the proposal is not a cause for concern because it would not affect retirees’ pension payments.

“You could call that kicking the can down the road, or you could just call it smoothing the payments out a little bit differently from what the agreed upon plan was," Eisner said. "Either way, it's not a major change.”

Pied-à-terre tax

As part of Mamdani’s signature campaign pledge to raise taxes on New York City’s ultrawealthy residents, the mayor’s budget proposal projects $500 million in annual revenue from a tax on luxury homes and apartments that sit vacant, commonly known as a pied-à-terre tax. Under the proposal, owners of residences valued above $5 million would pay an additional annual tax ranging from 0.5% to 4% of the property’s market value, on top of the city’s existing property taxes, which sits between 10% to 20%.

Earlier this month, Mamdani singled out billionaire financier Ken Griffin’s penthouse in a viral video as an example of the “fundamentally unfair system” that allows the city’s richest to store their wealth in luxury properties. Griffin responded by saying he would expand his hedge fund Citadel’s office in Miami rather than New York City, and described the video as “creepy and weird.” 

Both Mamdani and Hochul have expressed support for the proposal, though key details—including how property values would be assessed and how the tax would be implemented—have yet to be finalized. In a report, New York City Comptroller Mark Levine estimated that the actual estimate of the revenue could be reduced to “between roughly $340 million and $380 million” when taking into account the behavioral changes following the imposition of the tax.

Rein also warned that charging pied-à-terre tax does come with risks, as some people rent out their second homes to New York residents, which is exempt from pied-à-terre tax under the bill introduced in the state legislature.

“It would also be a fairly radical change to how we value these apartments, and that change would invite challenges from these apartment owners,” Rein said.

The current New York City’s tax system requires luxury condos and co-ops to be assessed based on the hypothetical income they would generate if they were rental properties, far underestimating their actual sales value, but to change how the city government assess property values would also require state legislature’s approval. 

No new property taxes, for now

In February, the mayor floated the idea of raising property taxes by 9.5%, saying it would be the only way to balance the city budget.

The idea was met with fierce backlash from Black homeowners. The New York Times reported that local lawmakers across the political spectrum, from Mamdani’s progressive allies to more centrist Democrats, viewed raising property taxes as a nonstarter. The mayor then quietly walked back on this idea, and instead pushed for Gov. Hochul to raise income taxes for residents making more than $1 million a year. This is because New York City cannot raise taxes without approval from the state legislature. Hochul, who is up for re-election this year, has so far rejected the idea of raising broad-based income and corporate taxes. 

Eisner estimated that the proposal to raise income and corporate taxes will be faced with fewer hurdles next year, when the governor is no longer campaigning for reelection. She also argued that reductions in federal funding under President Trump’s “One Big Beautiful Bill” could increase pressure on state lawmakers to generate additional revenue.

“There will be many forces putting pressure on the governor and the state legislature to raise revenue,” Eisner said. 

Meanwhile, fiscal hawks are calling for Mamdani to cut inefficient spending to keep the budget balanced in the long term.

“We now have 200 schools with fewer than 200 students, and we still are funding most of them as if they have more students than that. That is inefficient and a waste of money,” Rein said. “If the mayor is as ambitious at running the government well and efficiently as he is at improving affordability, we can make it.”

Still, questions remain about the long-term durability of Mamdani’s budget plan. While the plan allows the mayor to avoid politically painful measures, much of the savings depend on a steady growth of tax revenue, which could take a turn for the worse during a recession.

The coming budget negotiations with the City Council—and the city’s financial outlook in the years ahead—are likely to determine whether Mamdani has fundamentally reshaped New York’s fiscal trajectory or simply bought City Hall more time.