While passage in the City Council seems like a foregone conclusion (given the support of Council Speaker Christine Quinn and Mayor Bloomberg), any revocation of the break would require action by the state Legislature.

So why is the Council taking action now, more than two decades after it was put into effect?

For one, the city could be facing a budget gap after seeing billions in surpluses in recent years, said David Weprin, chairman of the Council's finance committee.

“If we’re talking about future deficit, it’s the only responsible thing to do for the finance committee of the City Council to look for ways to find additional revenue, and this is one that’s jumping out at us,” he told The Observer. Also, Mr. Weprin said earlier action would have been seen as retribution for the Garden’s opposition to a West Side stadium, which the Dolans spent millions opposing.

Of course, the Dolans may only be eligible for the break for a few more years to come given that developers Related Companies and Vornado Realty Trust are trying to build them a new stadium in the rear of the Farley Post Office across Eighth Avenue as part of the larger Moynihan Station project. The Dolans are in talks there, where city, state and federal subsidies have yet to be determined.

A spokesman for Madison Square Garden, Barry Watkins, said in a statement that the company will have “responsible dialogue concerning this issue at the appropriate time.”

A spokesman for Assembly Speaker Sheldon Silver, who would likely play a significant role in any decision to strike the tax break, did not offer comment given that there is no legislation on the matter yet before the Assembly.