When Zohran Mamdani, the New York Democratic mayoral nominee, defends his idea of socialist grocery stores, he says he can pay for them by cutting city subsidies to “corporate grocery stores.”
This claim is based on a basic misunderstanding of the city’s current grocery subsidies. The money he plans to use to pay for his city-owned grocery stores is money the city doesn’t have.
Specifically, he wrongly believes that the city is spending $140 million to subsidize private grocery stores, and he thinks he can take half of that money and use it to build government groceries.
“We will redirect city funds from corporate supermarkets to city-owned grocery stores whose mission is lower prices, not price-gouging,” Mamdani said in one scripted video.
In another interview, he went into a bit more detail, saying he had already detailed “how we are going to pay … for the entire agenda.”
According to Mamdani, his five grocery stores would cost $60 million.
“That should be compared to the city’s existing program called City FRESH, where they are set to spend $140 million, subsidizing corporate grocery stores … So we would take less than half of the money the city is already set to spend, and actually deliver results,” he said.
What is this FRESH program?
The Food Retail Expansion to Support Health is a bundle of tax breaks and special regulatory relief for grocery stores that open up in so-called food deserts: poor neighborhoods where the city has concluded residents don’t have adequate access to produce and other healthy foods.
The subsidy includes some tax breaks: building taxes stay at the pre-improvement level for a few years, land taxes are abated, there are some tax breaks for building the store, and some of the transfer taxes are cut. (The store still collects and remits sales tax, pays payroll taxes, pays corporate income taxes, et cetera.)
The FRESH program can also include some zoning and regulatory relief.
The tax breaks have saved the grocery stores a few million dollars each year.
Here are the hard numbers: All in all, the city has given up about $30 million in tax revenue through this program. In the last six years, since FRESH got into full swing, the program has reduced revenue by about $20 million total, according to the city’s estimates. That is, it costs an average of $3.3 million per year. So, this program would take 42 years to cost the city the $140 million that Mamdani says “the city is set to spend” on it.
So why does Mamdani use that $140 million number?
He misread the city’s webpage.
The city’s Economic Development Corporation estimates that grocery stores have invested $140 million of their own money thanks to the FRESH program. Mamdani is counting the $140 million in private spending as government spending.
Here’s the relevant graphic below:
THE DANGEROUS APPEAL OF ZOHRAN MAMDANI
That money was invested not by the city, but by “corporate grocery stores.”
The really socialist way to read this is that Mamdani believes that money invested by private grocery stores is his to spend. The more likely explanation is that Mamdani misunderstands the government website and thus is planning to pay for his grocery stores with money that doesn’t exist.