New York City Mayor Zohran Mamdani Raiding Retirement and Health Funds
Mayor Zohran Mamdani is already short of funds for his socialist dream for New York City. Like a true communist, his plan is to increase taxes on homeowners while raiding retirement and healthcare funds. Ironically, communists are supposed to support the working man, but in reality, they support the non-working man who needs more money from the working man to keep from having to work.
On February 17, 2026, Mayor Mamdani presented his first preliminary budget and framed the city’s finances as a choice between two paths. He delivered an ultimatum to Governor Kathy Hochul and the state legislature: approve higher taxes on the wealthy or he would use the limited tools under his direct control to close a projected $5.4 billion shortfall.
His preferred path calls on Albany to raise personal income taxes by 2 percent on New Yorkers earning over $1 million and to increase corporate taxes on the most profitable companies. If the state refuses, he says he will pursue what he describes as a last resort: a 9.5 percent property tax hike, the first major increase in more than 20 years, affecting roughly 3 million residential units, along with drawing down approximately $1.2 billion from the city’s reserves, including the Rainy Day Fund and retiree health benefit trusts.
The proposal to tap retirement-related funds has generated the strongest backlash. Mamdani’s plan includes taking $229 million from the Retiree Health Benefits Trust, which pays health insurance premiums for retired city workers such as teachers, police officers, and sanitation workers.
Using money set aside for future medical costs to cover today’s operating deficit shifts long-term obligations into the current budget cycle. Budget watchdogs, including the Citizens Budget Commission, warn this would leave the city less prepared to meet healthcare costs for an aging workforce.
Mamdani insists he does not want to touch these funds and describes this as a harmful path he hopes to avoid. He is using the threat to pressure Governor Hochul into approving higher taxes on the wealthy.
Mamdani has also pushed to shift city pension investments away from what he calls harmful industries, including certain fossil fuel companies and firms tied to the conflict in Gaza. Pension trustees and union leaders argue this amounts to political intrusion into retirement assets and conflicts with their fiduciary duty to maximize returns for retirees.
By law, trustees must focus solely on financial performance. Critics contend that divesting from high-performing sectors for ideological reasons narrows the investment pool and can reduce long-term returns. Analysts noted that the Tel Aviv Stock Exchange significantly outperformed the S&P 500 in 2025.
Avoiding such assets means forfeiting gains that help keep pension funds solvent. Even a one or two percent underperformance compounded over time could create substantial funding gaps.
The dispute has escalated into a showdown with New York City Comptroller Mark Levine, the legal custodian of the pension funds. Levine recently announced plans to resume investing in Israel Bonds, calling them a long-term, secure investment that has never missed a payment in 80 years. Mamdani opposes the move, arguing the city should not support a foreign government involved in the Gaza conflict.
However, the mayor does not control the pension boards outright. The comptroller and union representatives hold significant seats, limiting Mamdani’s ability to force divestment. Critics say he is attempting to pressure the boards into adopting his position.
Governor Hochul has called the property tax hike unnecessary and continues to oppose raising state-level taxes on high earners. City Council Speaker Julie Menin labeled the proposal a non-starter, arguing the city should not balance its budget on the backs of working-class homeowners already struggling with affordability.
Labor unions are also raising alarms. Leaders from groups such as TWU Local 106 warn that if the city begins drawing from retiree healthcare funds to support current spending, it sets a dangerous precedent. Their argument is simple: if officials dip into healthcare trusts today, what prevents them from targeting pension checks tomorrow?
Critics further argue that New York already has the highest combined state and local income tax rate in the country and warn that additional increases could accelerate the migration of businesses and high earners to states such as Florida and Texas. Recent data show significant outflows of residents, income, and employers.
Opponents contend the core problem is rising spending, including pension and benefit obligations, not a lack of tax revenue.
This shortfall and heated debate do not even begin to address the long list of freebies Mamdani promised during his campaign. Funding proposals such as state-owned grocery stores and free buses would require even higher taxes. Raising taxes further, critics argue, is never the best way to help the working man.
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