This is quite a concerning development.
Mayor Zoran Mamdani’s proposal to increase property taxes by 9.5% could hit New Yorkers hard, especially as utility costs for electricity and gas might also go up.
This Democratic Socialist leader aims to raise property taxes for the first time in over twenty years to support his substantial budget of $127 billion. However, experts caution that Con Edison and National Grid will just transfer these extra costs onto residents who are already feeling the financial squeeze.
“We’re not taxing Con Edison; we’re taxing our customers,” expressed John Howard, former chair and commissioner of the State Civil Service Commission, the body that oversees energy companies.
“The property taxes for utilities here are exorbitant. Those costs are passed directly to customers without them even realizing it,” Howard, who often critiques utility taxation, remarked.
He further noted that the hike in property taxes for public utilities contradicts Mamdani’s commitment to tackling the affordability crisis.
“Essential goods shouldn’t be taxed like this, particularly when people are struggling financially. We don’t tax basics like groceries,” Howard pointed out.
Residents of the Big Apple already face challenges in managing their utility bills, with average customers projected to spend an extra $600 annually by 2028, irrespective of whether the proposed tax hikes occur.
Recently, the Public Service Commission (PSC) approved a three-year plan allowing Con Edison to increase electricity costs by 10.4% and gas prices by 15.8% within that period.
In response to Mamdani’s intentions to raise property taxes, a Con Edison representative stated, “Total taxes and fees already surpass $3 billion each year, around 30% of our shipping expenses.”
Taxes and fees account for 25% of what National Grid charges its customers.
When asked about Mamdani’s tax increase, a National Grid spokesperson mentioned, “We haven’t received any official proposals.”
A PSC report from last fall on the effects of the state’s climate change legislation indicated that property taxes assessed on Con Edison and National Grid are three to four times higher than the national average of 8%.
“Utilities in New York and their customers pay more in non-income taxes, including property taxes, compared to utilities elsewhere in the country,” the PSC noted.
A spokesperson from the PSC confirmed that it is indeed the customers who end up paying the property taxes imposed on these utilities.
The mayor’s preliminary budget plan indicates that a 9.5% tax increase would elevate the overall property tax rate from 12.83% to 13.45%.
The outlook doesn’t mention any relief for utilities from property tax increases.
Mamdani described property taxes as a “Plan B,” indicating they are a last resort while he continues to urge Gov. Kathy Hochul and the state Legislature to raise taxes on the wealthy to finance the city’s needs. He argues this extra funding is crucial for bridging a multibillion-dollar budget gap and for implementing various social policies, like free bus fares.
Hochul, also a Democrat seeking reelection, opposes Mamdani’s tax hike this year, though there are rumors that he might be more receptive to increased taxes after facing voters in November alongside other Democrats.
Several City Council members, including Speaker Julie Menin, have suggested that Mamdani’s proposed tax increase is risky from the outset.
Mamdani’s office hasn’t provided a comment as of now.
