New York Gov. Kathy Hochul has announced a handshake deal on a $268 billion state budget that includes a controversial tax on luxury second homes in New York City, a measure aimed to help ease the city’s fiscal pressures.
The “general agreement,” as Hochul described it on Thursday, would increase state spending by more than 5.5 percent over the current fiscal year. It also includes measures to expand housing production, increase child care subsidies, scale back parts of the state’s climate mandates, and eliminate the state income tax on tips.
The announcement came more than five weeks after Hochul and state lawmakers missed the April 1 deadline to approve the spending plan.
“I’m not going to mince the words: The negotiations were not easy,” Hochul said at a press conference in Albany.
“They were very substantive disagreements, tough choices, and powerful special interests trying to influence the outcome, and the dysfunction out of Washington certainly doesn’t help.”
Under the current version of the deal, the state would scale back a 2019 mandate requiring a 40 percent reduction in greenhouse gas emissions by 2030, a target the state was on track to miss. A separate requirement to reduce emissions by 85 percent by 2050 would remain in place.
It would also make billions of dollars available to New York City and tens of millions more to other municipalities facing ongoing financial strains.
For New York City, that means $1.5 billion in additional aid, as well as a one-time $1 billion utility rebate program for New Yorkers facing high gas and electric costs.
The plan also includes a pied-à-terre tax on unoccupied second homes in New York City valued at $5 million or more. Hochul has said the measure could raise $500 million, although a report from City Comptroller Mark Levine estimated it would generate between $340 million and $380 million.
Mayor Zoran Mamdani has praised the measure as a “tax the rich” plan that would help the city close a budget gap projected to reach as much as $5.4 billion. Mamdani, a self-proclaimed democratic socialist, campaigned on raising taxes on the city’s millionaires and billionaires, as well as on some high-earning corporations.
The budget plan, however, does not include the broader corporate or personal income tax hikes Mamdani has pushed for. Neither does it include a proposed reduction in the Pass-Through Entity Tax credit from 100 percent to 75 percent, a change advocated by Mamdani and City Council Speaker Julie Menin, who argued that the credit primarily benefits people earning more than $1 million a year.
Hochul has consistently opposed Mamdani’s calls for broad tax increases on the wealthy, instead standing by her own proposal.
“I want to be very clear, my commitment to New York City has been and always will be ironclad,” Hochul said on Thursday, pushing back against calls for more city aid.
“This budget already includes $28 billion in total aid for the city, a $9 billion increase since I came into office. So the facts matter.”
Some key details remain unsettled, according to State Assembly Speaker Carl Heastie, who emphasized that lawmakers had not finalized the budget.
“There’s no budget deal,” the Bronx Democrat told reporters in Albany shortly after Hochul's announcement.
Heastie said he had told Hochul he was “comfortable” with her saying publicly that the sides were close to an agreement, but added that he still did not have a “final picture.”
The Epoch Times has reached out to the governor's office for comment.