Madison Square Garden’s tax breaks are hurting New York City’s revenues as the city faces a major drop-off in property assessments, a new report from the Independent Budget Office found.

The tax exemption, granted in 1982 to the arena known as "the mecca" of basketball, equates to a $42M-per-year hole in NYC’s tax revenues, per the IBO. Unlike other tax breaks, Madison Square Garden’s doesn’t sunset — an arrangement that the city can no longer afford, state Sen. Brad Hoylman-Sigal, who commissioned the report, said in a statement.

“Every stadium in New York City pays the equivalent of property taxes,” he said, citing the combined $167M paid by Yankee Stadium, Citi Field and Barclay’s Center via their payment-in-lieu-of-taxes deals. “At the same time, MSG pays nothing, zero, bupkis.”

Yankee Stadium paid $84M in PILOTs, while Barclays Center paid $39M and Citi Field paid $44M, the report found. By contrast, Madison Square Garden was assessed at a value of $867M, which would translate into $42M in property taxes or an equivalent amount in PILOTs, but its owner pays neither.

“With our subway system in near financial collapse, it’s time for Albany to end the taxpayer giveaway to MSG in this year’s budget and put that money to good use by supporting the MTA,” Hoylman-Sigal said.

Madison Square Garden’s agreement happened under then-Mayor Ed Koch, who believed he was signing off on a decade’s worth of abatements worth $5M annually to stop the New York Rangers and the New York Knicks from moving to New Jersey, The New York Times reported.

But the arena, which sits atop Penn Station, has been under scrutiny in recent months, finding itself at the center of a scandal over its use of facial recognition technology just months before the July expiration date for its permit to operate in the city.

The Manhattan arena argued that the IBO’s report demonstrates that it receives very little public subsidy, and that other stadiums are afforded benefits including rent credits and capital replacement reserves, The City reported.

“All of New York City’s major sports venues benefit from public subsidies, and as the analysis clearly indicates, MSG’s is one of the smallest," an MSG Entertainment spokesperson told Crain’s New York Business.

The Garden's future is wrapped up in the plans to redevelop Penn Station. New York Gov. Kathy Hochul had planned to fund a new Penn Station — and move the arena — by allowing Vornado to build 18M SF of new development in the immediate vicinity, but the Times reported this week an alternative plan to renovate the station and enclose MSG in glass is gaining momentum with key officials.