A bipartisan group of City Council members excoriated the Mamdani administration on Tuesday for ditching a gripe-filled hearing on the botched rollout of the mayor’s new pied-à-terre tax.

Meanwhile, the number of households the city now admits were wrongfully targeted for the hefty surcharge continued to rise from 1,906 a week ago to 2,318 as of Monday — a 21% spike.

And more property owners who received notices threatening them with the tax joined a lawsuit alleging the administration didn’t do its homework before hitting thousands of home, condo and co-op owners across the five boroughs with the ominous notices.

In May, Mayor Zohran Mamdani persuaded Gov. Kathy Hochul and the state Legislature to approve the new tax to help close a $5.4 billion city budget gap. The measure imposes a surcharge on expensive homes owned and kept largely vacant by out-of-towners, but thousands of real-life New Yorkers were threatened with the new tax if they could not quickly muster the paperwork to prove residency.

The city Department of Finance sent out notices to 17,000 households last month asserting they were subject to the tax, placing the burden on them to prove the targeted properties were not second homes — when the city already had access to some data that could show otherwise.

The department was immediately inundated with applications seeking exemptions from the charges, which could increase a property owner’s tax burden by tens of thousands of dollars. By last week, 4,290 owners had applied. As of Tuesday, that number had more than doubled to 9,884.

Flooded with complaints from constituents, the City Council tried to get more clarity from City Hall on how the administration determined who would get the dreaded notices.

Councilmember Gale Brewer (D-Manhattan), chair of the governmental operations committee, and Linda Lee (D-Queens), chair of the finance committee, asked City Hall to send a representative in person to explain the Finance Department’s protocols.

A Minor Mea Culpa

With Mamdani on vacation upstate, the Council expected to hear from Finance Commissioner Richard Lee. A day before the hearing, the mayor’s office informed Brewer no one from the administration would attend, citing the pending litigation. An hour before the hearing, they sent over a five-page written statement from Lee that provided few details on his department’s methods.

Brewer, who dubbed the event a “strange hearing,” was then forced to read Lee’s statement into the record to an empty witness table. The statement included a partial mea culpa from the finance commissioner: “I understand there are concerns regarding this surcharge. I also understand that there are individuals who received an initial determination letter who may not ultimately owe the surcharge.”

When Brewer finished, her colleagues — both Democrats and Republicans — blasted the mayor for the administration’s no-show performance.

“Regardless of what’s going on in this administration, they should show up,” said Councilmember Eric Dinowitz (D-Bronx).

“They are not here because they don’t want to answer questions,” said Councilmember Vickie Paladino (R-Queens).

“So much for transparency,” complained Councilmember Phil Wong (D-Queens).

The surcharge’s rollout is already the subject of a lawsuit filed in state court by attorney Randy Mastro, a former deputy mayor to both Eric Adams and Rudy Giuliani who received a pied-à-terre notice for his Upper West Side townhouse. On Tuesday, Mastro added to his lawsuit the owners of three more properties who were threatened with the tax.

‘Burdensome Scheme’

That included Kenneth Fishel, who said the Finance Department sent a surcharge notice to another resident in his Park Avenue co-op that the address listed on the notice indicated was actually meant for him. The notice claimed he owed $58,479 on a coop the department had determined was worth $1.46 million.

“Fishel only learned of and obtained a copy of the notice because he ran into his neighbor living 27 floors below him on the elevator,” the lawsuit alleged.

Fishel applied for an exemption but was told that one had already been filed, according to the suit.

“Without relief, Petitioner Fishel will be required to continue navigating the City Respondents’ burdensome scheme in an attempt to obtain an ‘exemption’ from a Surcharge that does not apply to him,” the lawsuit asserted.

The suit is set for a hearing on Aug. 31.

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Mayor Zohran Mamdani has directed every city agency to identify 2.5% in savings ahead of an estimated $6 billion budget hole next year, launching his first full cost-cutting initiative weeks after he and the City Council inked this year’s budget. 

The administration said it would survey city workers for inefficiencies across the sprawling city government. Some $1.77 billion in potential savings have already been identified this year by “chief savings officers” the mayor has appointed to each city agency. 

Mamdani in January ordered city workers to find 1.5% savings for the 2026 fiscal year, which ended July 1. Now he’s upped the ante for the 2027 and 2028 fiscal years, seeking 2.5%.

“By setting these ambitious savings targets early, we’re giving agencies ample time to thoughtfully review their operations, eliminate inefficiencies and strengthen the important work they do without compromising service,” Mamdani said in the press release. 

City Hall did not respond to queries about whether the cost-cutting would impact the city’s headcount or services. 

Hard Choices

A similar effort by Mayor Eric Adams — that sought to shave as much as 5% from city spending — saved $2.7 billion in fiscal year 2025.

Mamdani’s 2.5% is “a good target that is ambitious, but it’s not wildly so,” said Andrew Perry of the progressive Fiscal Policy Institute. 

Assuming no agency receives an exemption, Perry estimated the targets would produce roughly $2.5 billion to $3 billion in savings for the next fiscal year. City Hall has not responded to questions about whether some agencies are exempt from Mamdani’s budget axe.

Perry said repeated savings exercises by past administrations have identified much of the low-hanging fruit, leaving Mamdani’s administration with harder choices. 

Deficit ‘Large and Growing’

In a statement, Andrew Rein, president of the fiscally conservative Citizens Budget Commission, said the mayor is right to get an early start on finding savings. “The City’s budget gaps are large and growing,” he said. “It will need these savings and even more to balance next year’s budget and become fiscally sound.”  

Councilmember Phil Wong, a Queens Democrat who sits on the finance committee, said this target comes as a surprise. “It’s odd to hear about new savings targets just weeks after we were told the FY27 budget was balanced and everything was on solid financial footing,” Wong said. “The shell game has to end.”

His colleague, Councilmember Frank Morano, a Staten Island Republican who voted against the budget, called the targets a “positive first step,” but questioned why the city is spending $53 million for a new, outreach-focused Office of Mass Engagement when “New Yorkers have been told every agency needs to tighten its belt.”

Morano called for the Department of Veterans’ Services to be exempt from the savings, calling it already among the smallest and most underfunded agencies in city government.

Henry Garrido, executive director of DC 37, the city’s biggest municipal union, said his members are preparing their own list of recommendations. “City workers know how City government works better than any consultants,” he said in a statement.

In June, as the mayor and the City Council agreed on a $125.8 billion spending plan, city Comptroller Mark Levine warned of a significant budget gap for the 2028 fiscal year. “We will face that gap without the option of the many one-shot measures that we used up this year,” he said in a press release. 

On Tuesday, Levine praised Mamdani’s cost-cutting directive. “These kinds of measures are never easy,” he said in a social media post, describing the coming budget hole as “at least $6 billion.”

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Mayor Zohran Mamdani’s administration last week set off a wave of anxiety when it published a list it stated was “related” to a new pied-a-terre tax on luxury second homes in New York. 

The list included more than 900,000 properties and was so broad it included the Flushing, Queens, home of Richard Lee, Mamdani’s finance commissioner, whose agency put out the list. A rowhouse former Mayor Bill de Blasio owns in Park Slope also made the list.

Simultaneously, 17,000 homeowners on the list began receiving ominously worded letters from the Department of Finance stating, “Our records indicate that the property referenced above may be subject to the new surcharge,” threatening longtime New Yorkers with a new tax if they can’t adequately prove residency.

The “j’accuse” letters give property owners four weeks to prove they actually live where they say they live to avoid paying what could amount to thousands of dollars more above what they already pay in property taxes.

The city’s new pied-a-terre tax is expected to raise $500 million as the Mamdani administration looks to plug an estimated $6 billion budget gap next year. The democratic socialist won office in part on an agenda to raise taxes on the wealthy and corporations, but Gov. Kathy Hochul, while agreeing to the tax on second homes, has so far stymied Mamdani’s demands for other increases. 

‘They Live Here Full Time’

A wave of anxiety swept owners of residential properties and co-op units who received warning letters demanding proof of primary residency. Some homeowners erupted after the administration published its roster of potentially eligible properties, accusing the Mamdani administration of performing zero due diligence before putting them on the list. 

“I have full-time residents calling me” who got warning letters, said Councilmember Gale Brewer, D-Manhattan.

Brewer didn’t receive a letter herself but nevertheless found the Upper West Side brownstone she’s called home since the 1990s on the list. Constituents who reached out who’d received a warning letter told her they fear an uphill struggle to prove their properties are not second homes.

“They have to fill out paperwork and call lawyers and pay them to get help with old documents,” Brewer said. “They live here full time.”

‘Verify First’

Gail Gregg has lived in her co-op apartment near Central Park on the Upper West Side since 1992, and in New York City since 1981.

Gregg’s letter arrived Monday. Her first thought was why the agency couldn’t check that she qualified for the city’s condo and co-op tax abatement — which is only available for primary residences.

“This letter is from the Department of Finance and all of these records are sitting right there in the same computer,” she told The City Reporter. “Why were they not crosschecked?”

Gregg said she found the finance department website unusable when she tried to submit proof that her apartment is her primary residence.

Councilmember Frank Morano, R-Staten Island, said he’s been fielding calls from constituents who found themselves on the list and questioned why the Mamdani administration didn’t do a better job vetting properties.

“My concern isn’t that people have to prove where they live,” Morano said. “My concern is the sequence. The city should verify first.”

How the New Tax Works

Finance department spokesperson Ryan Lavis said in a statement: “As per State law, the supplemental property tax roll was published for public inspection. From this list, DOF identified properties that may be subject to the surcharge. Anyone who has received a DOF letter is encouraged to inquire or appeal if they believe their property meets the criteria for an exemption.”

The letters and the finance department’s website both list specific exemptions from the pied-a-terre surcharge, which applies to properties worth more than $5 million that are not primary residences.

The surcharges on residential properties range from 0.8% to 1.3% of the property’s market value on a sliding scale that depends on the property’s value. For a $5 million residential property, that would amount to a $40,000 surcharge.

For co-ops and condos it’s even steeper. Any unit whose market rate is worth more than $1 million but less than $3 million faces a 4% surcharge, with the rate sliding north to 6.5% for units valued at $5 million or more.

The owner must provide proof that the property is their primary residence, or that it’s the primary residence of a tenant, immediate family members of the owner, the sole beneficiary of a trust or one or more individuals who hold the majority interest in a limited liability corporation that claims ownership of the property.

Deadlines Loom

The finance department website is clear that property owners only have to submit their most recent state or federal tax return to prove primary residency, but finding out what documents to provide for the other categories is a bit more difficult.

The results are multiple clicks into the site and inside the Frequently Asked Questions.

Former Mayor de Blasio didn’t return a call for comment about his rowhouse. 

In response to The City Reporter’s questions, finance department spokesperson Jae Ko offered more details.

If the property is a tenant’s primary residence, the owner must submit a copy of the lease and a “rental document” such as a utility bill or proof of rent payment. For family members the owner must provide a birth certificate, marriage certificate, or immediate family member affidavit. For a trust beneficiary the owner must provide a trust agreement, while with LLC members the owner must provide an LLC operating agreement, articles of incorporation, partnership agreement, or majority interest affidavit.”

Time is of the essence, however. The deadline to do all that is just weeks away: Aug. 21 for residential properties and Aug. 24 for co-ops.

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Mayor Zohran Mamdani’s charter revision panel approved five ballot proposals Thursday for the November election, including moves to speed up the creation of bike lanes and outdoor dining setups.

The other measures would accelerate the city contracting process for nonprofits and small businesses, simplify permitting for construction projects and set a target for the city’s financial reserves.

Under the City Charter, a majority of voters would have to vote yes on the ballot questions for the changes to become law.

Mamdani announced the Commission on Government Efficiency — or COGE, a nod to Elon Musk’s federal Department of Government Efficiency — in late May, saying its goal was to identify ways to streamline city operations and put proposals before voters. The announcement came at the same time the mayor dissolved another charter review commission former Mayor Eric Adams had unveiled last year on the final day of his term.

Following several public sessions since last month — and a much shorter timeline than those for previous charter revision commissions — the Mamdani panel released its final report earlier this week. New Yorkers who spoke at hearings across the five boroughs said they wanted the city to use public space better and expedite project reviews, according to the report.

Around 1,200 people attended the meetings and hearings, with 250 people testifying. There were also 625 written submissions with suggestions, the report stated.

The commission’s 16 members include Chair Patrick Gaspard, who advised Mamdani during his mayoral campaign, and other well-known civic figures, such as former Partnership for New York City Chair Kathy Wylde, municipal union DC 37’s executive director Henry Garrido and former City Councilmember Carlina Rivera.

What the Proposals Would Do

The first ballot question simplifies approvals for outdoor dining — cutting the application timeline by an estimated 75% compared to how long it takes now — and those for public space features, such as ramps and planters. 

The second question streamlines the procurement process for city contractors, requires regular meetings of the city’s Procurement Policy Board and allows the mayor to delegate certain contract approvals to agencies.

The third question speeds up certain street-safety projects, including bike lanes, by simplifying the city’s review process. It also expedites leasing of offices by city agencies.

The next question moves waterfront permitting from the Department of Small Business Services, which currently has jurisdiction over waterfront permits, to the Department of Buildings and centralizes a construction permitting hub.

The final question establishes a goal for the amount of money that should be socked away in the city’s rainy day fund, or reserves: 12% of city tax revenue. Today there is no mandated target amount to put aside.

Some budget experts said the measure isn’t enough to safeguard the city’s finances, especially in the event of an economic downturn.

“As written, city policy could allow withdrawals for practically any reason and avoid deposits even when revenues are strong,” Andrew Rein, president of the nonprofit Citizens Budget Commission, said in a statement Thursday.

He called it “deeply disappointing” that the commission didn’t go beyond the rainy day fund to prevent cuts to city services and public-sector layoffs.

A spokesperson for City Council Speaker Julie Menin said the Council is “concerned by the speed and process through which the administration advanced these Charter Revision Commission proposals.

“In just a few weeks, the commission developed a series of sweeping changes to city government with far-reaching implications for oversight, transparency, and public accountability,” the spokesperson, Henry Robins, said in a statement. 

Meanwhile, former Mayor Adams’ charter revision commission was dealt a major blow Wednesday when a Staten Island judge ruled Mamdani was legally allowed to disband it. It’s not clear if they will appeal the decision.

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Months after scrapping a $9.9 million McKinsey & Co. consulting contract as part of an effort to rein in city spending, Mayor Zohran Mamdani on Wednesday turned to a veteran McKinsey partner who had worked on that contract to lead New York City’s top economic agency.

Mamdani appointed Anthony Shorris — a former first deputy mayor under Bill de Blasio who joined the consulting giant after leaving City Hall — to head the city’s Economic Development Corporation (EDC).

During  the de Blasio administration, Shorris hired McKinsey in a failed effort to use an algorithm to reduce violence on Rikers Island, even as mayhem at the jail complex increased.

In his new role, Shorris will head an agency that provides tax incentives and grants to businesses and real estate developers to encourage economic growth in New York City.

“We believe that economic development and economic justice must go hand in hand. This is no radical concept; if anything, it is unified,” Mamdani said while introducing Shorris at City Hall. “Time and again he has proven himself unafraid to use the levers of city government to deliver real benefits for working New Yorkers.”

Shorris joined McKinsey as a partner in 2021 after more than four decades in public service and the nonprofit sector. According to his biography on the firm’s website, he advises state and local governments, public authorities, health care systems, universities and real estate developers on strategy and management.

Shorris’ appointment comes just months after Mamdani canceled one of the city’s largest consulting contracts with McKinsey, a $9.9 million retainer to advise the Department of Social Services (DSS) on various topics, as part of an effort to find $1.7 billion in savings. 

At a press conference at City Hall, Shorris acknowledged that while he was a partner at McKinsey he “did spend some time working on that” contract. He did not elaborate on his role.

The McKinsey contract, which was scheduled to run through March 2026, had already netted the consulting firm about $7.2 million before the city pulled the plug. 

City records offer a small window into what taxpayers received for that spending. 

The contract’s first assignment, for which McKinsey received roughly $3.4 million, is described simply as “business consulting services” without further explanation. Another major component focused on reducing errors in the city’s administration of the Supplemental Nutrition Assistance Program, or SNAP, as states faced increased federal scrutiny over erroneous benefit payments.

A City Hall spokesperson did not respond to questions Tuesday about why, out of the hundreds of thousands of city contracts, the administration singled out the McKinsey contract. The DSS contract was expected to continue through next year but city records show the last payment to McKinsey was made on Monday. 

The city recently announced it would use artificial intelligence to help reduce the SNAP error rate. 

City records also show McKinsey has a $909,000 contract tied to the Mayor’s office, but zero payments had been made as of this week. 

‘Sour’ Rikers Island Contract 

Shorris worked with McKinsey during his time in the de Blasio administration — including on a failed attempt by the consulting giant to reduce violence on Rikers Island. 

Shortly after de Blasio took office in 2014, then-First Deputy Mayor Shorris spearheaded a $27.5 million contract for McKinsey to overhaul how the Department of Correction classified and housed detainees at Rikers Island.

The firm’s algorithm-based system, known as the Housing Unit Balancer, was intended to reduce violence by using dozens of factors to determine where detainees should be housed — but violence continued to rise. The system was widely criticized by correction officers and jail officials, and it was abandoned in 2022 after just four years.

“There was a lot of disappointment with the McKinsey stuff,” then-Correction Commissioner Vincent Schiraldi told The City Reporter after ending the program. “It made the whole city sour.”

The ‘McKinsey Family’

Shorris’ appointment prompted questions from government watchdogs about the revolving door between public office and private consulting firms — where former officials take prominent jobs in the private sector before returning to positions where they oversee public policy and spending — sometimes to the benefit of their former firms.

“McKinsey is much more than just a specific firm; it is a network,” said Jeff Hauser, executive director of the Revolving Door Project, a watchdog group focused on corporate influence in government. “If you just said Shorris can’t be involved in a contract with McKinsey, that means one thing. But if he is involved with companies that are run in part or in whole by McKinsey alumni… that’s very much still within the McKinsey family.”

McKinsey’s work for government and corporate clients has been widely criticized. 

In 2024, the firm agreed to pay $650 million to settle claims tied to its work advising opioid maker Purdue Pharma, though it denied wrongdoing. That work reportedly entailed advising the pharmaceutical company how to better target doctors who were prescribing opioids. 

It has also faced criticism for consulting work on behalf of U.S. Immigration and Customs Enforcement (ICE) during the Trump administration.

McKinsey consultants working on an ICE contract identified ways to cut costs at immigrant detention facilities, including recommending reductions in the amount of food served to detainees, the New York Times reported. The firm’s work for ICE prompted backlash from employees and immigration advocates. 

In-House Sceptic

There is no indication Shorris was involved in McKinsey’s work for ICE or the firm’s other controversial engagements. He joined McKinsey as a partner in 2021, years after the ICE consulting project and the recommendations involving detention facilities.

But even Lina Khan, a progressive former head of the Federal Trade Commission, who Mamdani named Wednesday to chair the EDC board — overseeing Shorris’ work — has questioned the legitimacy of governments relying on McKinsey to solve its problems.

In an interview last week with economist Paul Krugman, Khan said: “I think we’ve all seen the news stories about New York City having paid millions of dollars to McKinsey to produce a report saying, effectively, ‘Put your garbage in garbage cans’.” 

She added, “Over-reliance on outside consulting firms can also deprive the state of building in-house state capacity, which can be incredibly important for the long term.” 

‘Lack of Accountability’

Shorris’ previous tenure at City Hall was not without controversy. 

In 2016, the city’s Department of Investigation criticized the de Blasio administration’s handling of the sale of the former Rivington House nursing home on the Lower East Side after officials lifted a deed restriction that required the property to remain a nonprofit nursing home, allowing it to be sold for luxury condominium development.

Investigators questioned Shorris’ role in the transaction. He told DOI that he had instructed city staff to keep the deed restriction in place but acknowledged there was no written record of that direction. Shorris also said he never read a subsequent memo informing him that the restriction had been removed. 

Investigators concluded that senior city officials “knew or should have known” the restriction had been lifted and said the episode exposed “a complete lack of accountability” and significant communication failures within City Hall.

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The City Council voted unanimously to approve a one-time $10,000 payment to most of the public school paraprofessionals on Thursday, an effort to boost retention and recruitment for the badly-needed – but low-paying – jobs with students. 

But Mayor Zohran Mamdani, who could try to stop the bill, said it is in “direct violation” of state labor law. 

The bill was sponsored by nearly every member of the Council, and passed 49 to 0, with two members absent. 

$244 Million Price Tag

“This is a mandate from the entire city of New York. This is a mandate because we heard the numbers — $32,000 starting salary, in the most expensive city in the world,” Councilmember Carmen de la Rosa, the bill’s lead sponsor, said at a press conference earlier in the day. 

“We know that we are in the throes of an affordability crisis, the way we can quell some of the issues of poverty is by putting money directly into people’s pockets,” De La Rosa said. “And this is what this bill does.”

The “Respect” check, as it’s called, would give public school paraprofessionals $10,000 in four installments, starting on Jan. 1, 2027, and going through Aug. 1 of the same year. Substitute paraprofessionals would have their money pro-rated based on how many days they worked. 

The cost to the city would be around $244 million for payments to an estimated 26,000 paraprofessionals. The starting pay for paras is around $34,000, and rises to a top rate of more than $56,000 within 15 years, according to the United Federation of Teachers.

Labor Law Conflict?

Mamdani — who, as a candidate, supported an earlier version of the bill — expressed concerns as mayor over any payment made outside collective bargaining while also praising the work of paraprofessionals.

“I have been clear that questions of compensation are best resolved through the collective bargaining process that respects workers and their unions,” he said in a statement after the vote. “However, the Council’s passage of this legislation is in direct violation of the Taylor Law. Our administration is reviewing the final language carefully and working to determine the appropriate next steps.”

The mayor could veto the bill, but given the strong support in the Council they could then vote to override his veto. 

United Federation of Teachers President Michael Mulgrew said Thursday that the bill was written in a way to not run afoul of the state labor law. The bill, he said, is a last-ditch effort to help his workers.

“We would prefer to do this through collective bargaining, but you need a willing partner on the other side,” Mulgrew said.  

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The City Council will vote this week on a bill to boost underpaid paraprofessionals in the city school system with a $10,000 payment that’s separate from their negotiated salary – even though it sparked concerns from the mayor’s office over whether it’s legal.

The bill, which was re-introduced in February by Councilmember Carmen De La Rosa, would approve a “workforce stabilization payment” of $10,000 to thousands of Department of Education paraprofessionals until they reach a contract with a raise that’s greater or equal to that sum. The funds would be doled out over four payments. 

The starting pay for paras is around $34,000, and rises to a top rate of more than $56,000 within 15 years, according to the United Federation of Teachers, which represents the workers. 

The UFT argues that the low pay makes it hard to recruit the crucial staffers, and that a current paraprofessional vacancy of around 1,600 hurts students with disabilities the most. 

But the annual cash infusion could also run afoul of state labor rules, known as the Taylor Law, which says raises and other payments must be negotiated through collective bargaining.

Daniel Pollak, the first deputy commissioner for the Mayor’s Office of Labor Relations, testified during a March hearing that, while the administration supports the bill, they had concerns.

“We have significant legal, practical, and fairness concerns with an approach that would provide a substantial pay increase for these employees through local legislation,” he said.

Mayor Zohran Mamdani supported an earlier version of the bill which proposed the same $10,000 bonus, calling it “critically important.”

“I supported it in the primary and I continue to support it today,” he told The City Reporter before he was elected in the fall. “And the reason I do is that we have an increasing number of vacancies of paraprofessional positions within New York City. Part of it is because we are paying people a wage they cannot afford to live in New York City.” 

He dialed back that support as mayor in an interview with The City Reporter in April. 

“I think that it’s still something that’s critically important, that those who work for the city can afford to live in the city, I also think we want to look at the process by which we do this to ensure that it’s sustainable and that it’s tenable,” he said. His spokesperson did not respond to repeated requests for comment. 

Speaker Julie Menin said the payment is needed to boost recruitment and retention for a critical job, and doesn’t violate current labor rules.

“I pushed to address this during the budget process, but the administration failed to make this workforce a priority both in its budget and at the bargaining table,” she said in a statement. 

“We can’t sit idly by as our public schools suffer from a workforce retention crisis of paraprofessionals who earn just $32,000 a year,” she said, noting that the city pays more than $1 billion on settlements over students who haven’t received required services — and more paras could help stop that.

“Investing in the workforce that helps deliver mandated services, strengthens school stability, and improves student outcomes is one of the smartest investments we can make,” she said.

UFT President Michael Mulgrew said the payment is to help rectify an emergency situation, not skirt labor laws.

“We’re very protective of the Taylor Law, which is why we made this part of a program and not collective bargaining,” he told The City Reporter.

He thanked the City Council for its work but said the mayor hadn’t done enough to rectify the issue. 

“The mayor, throughout his entire campaign and since he’s been in office, has said he wants to fix this problem,” Mulgrew said. 

Some paraprofessionals, though, feel the payment isn’t enough and doesn’t address longstanding issues that they say have been ignored by the union.

Marie Wausnock is a paraprofessional on Staten Island who also co-founded Fix Para Pay, a union caucus slate that opposes Mulgrew.  Some paras leave for other city jobs that require less training and have better pay, she said.

“How do you give respectable pensions and dignity to paras when you want to give them non-pensionable money?” she said. “Paras are so underpaid. We get crumbs every time.”

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Two years ago, Jessica Kaplan had about three months to move her entire theatrical scenery shop.

The building where Sightline Fabrication had operated since 2008 had been sold, she said, and the landlord needed Kaplan and her partner out. In a frenzy to find a new place, Kaplan toured 30 alternative spaces, but none were affordable or seemed safe for employees to reach by subway after dark. 

Less than a month away from having to haul her equipment and sets to the curb, she called Evergreen Exchange, a nonprofit that works with industrial businesses in North Brooklyn. Evergreen put her in touch with the Greenpoint Manufacturing and Design Center, which had a space that worked. Sightline stayed open.

“Without them, I never would have even thought to look there,” Kaplan said in an interview with The City Reporter. “We had tried on our own for months.”

Evergreen Exchange offers services like these because of a city program called Industrial Business Service Providers, or IBSP. But after four decades, the city is phasing out the $1.2 million earmarked for the program, which supporters say poses an existential threat to industrial booster groups that have long helped manufacturers and other firms navigate bureaucratic hurdles. The groups sort out relocation grants, financing, lease reviews, tax incentives, loading-zone permits and many other challenges of running a factory in New York.

Mayor Zohran Mamdani’s administration says it has a new plan to replace IBSP. In the spring, the Department of Small Business Services issued a request for proposals for a new model. Instead of nine place-based organizations, it would fund a single citywide industrial coordinator at $300,000 a year, structured so the industrial groups now doing the work cannot realistically apply because they are localized to specific neighborhoods, according to the current service providers. The Department of Small Business Services said that all existing and new vendors were invited to apply to the RFP. The proposal closed for submissions on June 17.

Jesse Solomon, executive director of the Southwest Brooklyn Industrial Development Corporation, which has served Sunset Park, Red Hook and Gowanus since the 1970s, called the city’s new plan a multiyear award that “effectively dismantles the IBSP program.” She said the move is at once a funding cut, a strategy shift away from neighborhood-based economic development and a reduction in services. 

“It doesn’t really seem aligned with the principles of this administration, who seem to value local development, especially in communities with low- to moderate-income folks,” Soloman said.

The Department of Small Business Services emphasized that it is not eliminating industrial support, but relocating it. Julianne Cho, spokesperson for SBS, said in a statement that the department “invited New York’s best and brightest to help us modernize our network of NYC Business Solutions Centers to serve small businesses.”

Cho explained that, under the revised system, NYC’s Business Solution Centers will grow from 16 centers to at least 20, with every one of them equipped to serve industrial businesses. 

This will be in addition to the one centralized provider that the RFP called for, which will provide specialized industrial knowledge.

The rationale for this modernization is that only a quarter of the city’s industrial jobs are inside the Industrial Business Zones the nine providers serve, a claim that the industrial providers dispute. Archibald said the city’s statistic includes registered business addresses rather than the addresses where industrial work is actually performed, a methodology that ranks Manhattan as the most job-rich borough for industrial employment.

By the agency’s count, its seven existing Business Solutions Centers deliver roughly 16,000 services — individual interactions in which a staffer helped a business with a specific problem — per year. The nine IBSPs deliver about 1,000. 

By Archibald’s accounting, the changes will ultimately mean lower capacity for helping industrial businesses. She pointed out that though four people may be hired in the growth of the Solution Centers, the new model does not account for the 18 IBSP employees who will likely be lost in the reforms. Plus, in the RFP, she said, each center would require only one industrial-focused staffer. By her count that is five citywide, which she called “a very significant reduction in capacity.”

The city has extended the current providers’ contracts through next June to “ensure continued service delivery while the new system is being developed,” said Cho. She emphasized that this change aims to help more industrial businesses thrive: “New Yorkers deserve a government that evolves with them, meets them where they are, and provides equity of access to services.”

Localized Knowledge is Central 

The industrial providers and those they serve say the years of local knowledge and connections they have accrued cannot be reproduced by a centralized office, as the Mamdani administration is aiming to do.

Daniel Sklaar, who founded Bushwick chocolate maker Fine & Raw, has worked with Evergreen for close to 20 years, according to Sklaar and Leah Archibald, executive director of Evergreen. The organization’s workers sat on his stoop around 2010, walking him through the red tape around opening a food business in the city, and later helped him secure a tax abatement that would have cost tens of thousands of dollars to navigate alone.

Sklaar said the city’s plan for a centralized service provider makes him “disappointed and sad.”

“If it gets spread too thin, then it’s not going to be effective,” he said.

Martina Salisbury and Franco Götte, who run the East Williamsburg design-build studio TwoSeven and employ about 50 people producing window displays for fashion houses, such as Dior and Hermès, credit Evergreen with keeping them in the city.

After Williamsburg and Greenpoint were rezoned in the mid-2000s and the business partners’ landlord wanted to charge more than double their rent, Evergreen pointed them to a city relocation grant of up to $50,000 that covered moving their machinery. Without those funds, Götte said, the company likely would have closed.

“The IBSP program is literally what funds their [the industrial providers] ability to act on this local level,” Salisbury said. 

Tod Greenfield’s business Martin Greenfield Clothiers manufactures suits in an East Williamsburg factory his father bought in 1977. Greenfield said his family business has weathered industry changes and still insists on using union labor. 

Evergreen played a crucial role in helping him navigate confusing and often burdensome regulatory fines, he said. In 2011, when a neighbor who had moved into an industrial building complained about noise from a vacuum pump in the factory, an inspector wrote a violation, though the noise level was legal for the industrial zone. Evergreen produced a zoning map and an engineer who could read the code, which eventually got the judge to waive the fine.

“I’m not capable of doing that myself,” Greenfield said.

Evergreen Exchange was founded 44 years ago, when neighborhood businesses banded together against crime and disinvestment. Today it serves about 200 businesses a year with a staff of five, according to the organization. The IBSP funding from the Department of Small Business Services is crucial to keeping the organization afloat, as Evergreen’s program contract covers about $170,000, roughly a fifth of the group’s budget.

“It’s really keystone money,” Archibald said, “because it covers almost two entire staffers, plus some overhead, and there’s only five of us.” It’s even more dire for some other industrial service providers to lose city funding, she added, because many might face the possibility of shutting down.

At a public hearing before the city’s Commission of Government Efficiency last month, Daniel Garcia, who owns Salsa Catering and Special Events and employs more than 50 people at an 18,000-square-foot production facility in a Bronx industrial business zone, testified that the provider network had helped him access $750,000 in contract financing when city agencies fell as much as $2 million behind on paying him.

“For businesses like mine, the program is not a nice-to-have,” he said. “It’s a lifeline.”

Disappearing Path to the Middle Class

The controversy over the program is unfolding against a half-century of contraction in the city’s factories. New York City’s manufacturing employment fell from about 271,000 jobs in 1990 to approximately 50,000 today, with the city shedding at least 5,000 manufacturing jobs every year over that stretch. 

That decline meant the disappearance of a crucial path to good wages, according to Maulin Mehta, the New York director at Regional Plan Association. The city’s factories were once the rung that generations of immigrants and working families climbed without a diploma. Seven in 10 industrial workers do not have a college degree, many of them immigrants and people of color, according to RPA’s testimony.

New York came out of World War II with more manufacturing jobs than Philadelphia, Detroit, Los Angeles and Boston combined, and it has lost more than 90% of them since.

Those figures help explain why advocates are frustrated that Mamdani, whose campaign and governing platform centers on affordability and economic equity, is moving forward with phasing out the program. 

“These people are exactly who Mamdani wants to help,” Archibald said. “This is not giving incentives to real estate developers in Midtown. These are communities, working-class communities, mostly communities of color with a majority-minority workforce.”

Advocates said they are worried about what the shakeup indicates for Mamdani’s broader economic policy. The city’s December 2025 industrial plan has already unsettled the sector by proposing to allow housing development in parts of some designated Industrial Business Zones.

Cutting the program signals to industrial businesses that the city is deprioritizing them, Solomon of the Southwest Brooklyn Industrial Development Corporation said.

Kaplan, the scene builder, said she does not trust a citywide office to know a neighborhood as deeply as a local provider does.

“If you have someone running it from Coney Island and we’re over in Greenpoint, they know nothing about Greenpoint,” she said. “These smaller groups know about the areas they’re in, and they’re making sure the businesses can stay there.”

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Mayor Zohran Mamdani says his $125.8 billion budget for the fiscal year beginning July 1, which closed a gap which was a large as $12 billion last year, shows that democratic socialists “not only understand economics just as well as the capitalists” but “can solve their years of mismanagement through an embrace of our principals.”

Fiscal experts ranging from city Comptroller Mark Levine to the Citizens Budget Commission have a very different take, since the budget relies on some $8 billion in “one shots” — measures that provide money only for the 2027 fiscal year — and a stretching out of pension payments which will cost billions more in future years.

When the final numbers are released in the coming days, the adopted budget is expected to forecast a deficit for the 2028 fiscal year of more than $7 billion — much larger than is typical and one that could grow substantially if there is any downturn on Wall Street or a recession.

“Yes, next year is balanced, but closing most of the gap with one-shots, short-term savings, and a pension stretch-out which shifts costs to future taxpayers leaves the city facing a gaping hole next year,” said Andrew Rein, president of the Citizens Budget Commission. 

“Groundhog day was a great movie, but it’s no way to manage a budget,” he said.   

Attention in recent days focused on resolving a standoff between the mayor and the City Council over the city’s increasingly expensive housing voucher program, whose cost has increased four-fold in the last four years to almost $2 billion. The closing of the huge $12 billion gap is primarily the result of a Wall Street boom which is boosting income taxes, additional state aid and a new tax on expensive second homes.

But along with those steps are a series of short-term savings that have raised the ire of fiscal watchers. 

“This agreement gets the city through an exceptionally difficult year, but it does not resolve the structural challenges ahead,” said Levine. “With large out-year gaps, limited reserves, and significant economic uncertainty, next year’s budget could be even more difficult.” 

The moves that make it likely next year will see another budget crunch include $5 billion in so-called one-shots, which means revenue the city found for 2027 to support ongoing programs that won’t exist next year. Actions like a delay in a state mandate to reduce class sizes were worth almost $3 billion in the new budget, but those costs can’t be held off forever..

For example, state aid to help the mayor expand the city’s child care programs is only guaranteed for two years.

Also controversial is a pension maneuver which delays payments required to bolster the retirement funds for city employees. The administration argues that its plan merely smooths out those payments, but the Citizen Budget Commission notes that the effect will be to lower contributions by $11 billion through 2032 but then increase payments by $15.6 billion for the following five years. 

“This costs more in the long run and unfairly requires New Yorkers in the 2030s to pay for services delivered over the next six years,” the commission noted in a report headlined “How He Did It.”

The mayor may also have to find money for raises for city workers as he negotiates new contracts with all of its unions. The financial plan includes money for annual increases of less than 2%, which are unlikely to be acceptable to the unions.

Most mayors make the most politically difficult budget moves in their first year when they can blame their predecessor. But a big budget deficit for the 2028 fiscal year is likely to be a key talking point when the mayor and his allies resume their effort for tax increases on the wealthy and corporations when the state legislature reconvenes in Albany.

For example, the Fiscal Policy Institute, a left-leaning group, on Tuesday, quickly pivoted to the need for higher taxes.

“Future expansions of public services — especially childcare and housing — that are central to the Mayor’s affordability agenda must be funded sustainably through new recurring revenue. This revenue must be authorized by Albany as part of the next state budget,” it said in a statement.

Mamdani supporters sent the same message last week when democratic socialists won a series of key races for Assembly and state Senate seats.

On election night, Gustavo Gordillo, a DSA co-chair in New York, said that his organization was already casting its attention to next year’s budget fight in Albany and beyond. “We’re going to start thinking about 2028 and what comes next,” he said

How Gov. Kathy Hochul will respond to the pressure isn’t clear if, as expected, she wins a new term in November. A few weeks ago she made it clear she thinks restraining spending, not more revenue, should be the priority.

“He inherited a financial shortfall that could hurt the bond rating of the city and result in a loss of confidence of investors as well as the business community, and I couldn’t let that happen — that was my motivation this year,” Hochul said in an interview with POLITICO. “Now they have their own team in place. They control the budget. They need to look hard at spending.”

Meanwhile, the fate of the city’s finances depend on economic factors beyond his control. 

Because Wall Street profits are soaring as the stock market continues to show gains and AI spurs its lucrative initial public offerings and business arranging corporate mergers, the city since November has increased revenue for the 2027 budget by $5.5 billion and for 2028 by a little more than $4 billion.

“Recession remains the number one risk for the city, particularly given current revenue projections,” said Rahul Jain, state deputy comptroller for New York City. “The additions made to the budget during the adoption process underline the importance of monitoring policy choices to expand affordability to ensure they are reaching those who need it in a cost-efficient manner.”

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Negotiations on the final city budget will go through the weekend as Mayor Zohran Mamdani and the City Council are at an impasse over funding for a housing voucher program.

“Right now we are stuck on FHEPS, so that is where we are,” Council Speaker Julie Menin told reporters Friday at City Hall, after rallying with other Council members and advocates to increase funding to the program. 

The council passed laws in 2023 that would expand  the city-funded voucher program known as CityFHEPS, which Mamdani supported as a candidate.

But earlier this year, he appealed a court ruling that would require the implementation of those laws.

Menin said the mayor’s side should drop its litigation against the expansion and find a compromise to the program, which provides rental assistance to people leaving homeless shelters.

“There’s no point in having this costly, continued litigation that only serves to delay a responsible settlement,” she said. “We want a responsible settlement on FHEPS.”

CityFHEPS’s cost has ballooned from around $26 million in 2019 to over $1.8 billion this year. 

The city Department of Housing Preservation and Development projected the cost to grow to over $3 billion annually by 2030 — for a total cost of $12.6 billion between now and 2030. 

People familiar with the budget talks said negotiations would continue throughout the weekend. The Council scheduled its budget vote for Tuesday, which only comes after a ceremonial handshake between Mamdani and Menin. 

But without a deal on CityFHEPS, some of Mamdani’s fellow Democrats say they won’t vote in favor, including Councilmembers Pierina Sanchez of The Bronx and Sandy Nurse of Brooklyn. They and others gathered Friday morning on City Hall’s steps to demand Mamdani keep his promise, noting the benefits of the voucher program. 

“The lowest income New Yorkers desperately need this relief,” Sanchez, who led the rally, said. 

“What is the point of electing super progressives if they abandon the most needed in the most significant of ways in the city’s budget process?” Christine Quinn, a former Council speaker and president and CEO of WIN, which is the largest provider of family shelters and supportive housing in the city.

A spokeswoman for the mayor, Dora Pekec, said Mamdani knew that the program was a “lifeline for thousands of New Yorkers leaving the shelter system and seeking stable housing.”

“As the stewards of CityFHEPS, and as an administration that firmly believes in its purpose, we want to protect it by placing it on firm financial footing,” she said. “That is why we are pursuing major reforms that protect the program’s future.”

Mamdani released his $124.7 billion executive budget proposal in May, relying heavily on state funding support to fill major budget holes.

As negotiations continued, the Council shared some of its biggest asks – including an additional $130 to $135 million for Fair Fares, which helps fund MTA bus and subway fares for low-income New Yorkers. 

Menin said the Council is requesting an additional $300 million for CityFHEPS, while some housing advocates said an additional $500 million was needed.

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