ALBANY, N.Y. — Residential parking permits in New York City. Higher taxes on the rich. No changes to the state’s bail laws.
The series of proposals unveiled on Tuesday by the State Legislature shows just how far apart ruling Democratic lawmakers and Gov. Kathy Hochul may be on reaching a timely deal on the state’s gargantuan budget, which is due on April 1.
It remains to be seen if the more eye-popping proposals come to pass, but they — along with others floated by lawmakers and Ms. Hochul — will be the subject of negotiation and horse trading as the annual ritual of closed-door deal making over the state budget begins in earnest.
Last month, the governor unveiled a $227 billion budget that seemed aimed at tackling New York City’s most pressing challenges, including the housing shortage, the migrant crisis and the subway system’s finances.
On Tuesday, however, Democrats who control the State Legislature countered with financial blueprints of their own that rejected some of Ms. Hochul’s core policy plans around housing, public safety and education. Both chambers also proposed hiking the personal income tax rates on the superrich as a way to fund more state spending, directly challenging the governor’s pledge to not raise taxes.
This year, Ms. Hochul is expected to enter the negotiations politically weakened after the State Senate, in an extraordinary rebuke, flexed its political muscle and rejected her chief judge nominee last month. The governor must also contend with some last-minute personnel changes: Late last month, she abruptly replaced her acting budget director, Sandra Beattie, with Robert Megna, an Albany veteran recruited to spearhead budget negotiations.
Here is what to know as budget negotiations heat up.
A fight over hiking taxes on the rich
Ms. Hochul, a centrist Democrat, has repeatedly vowed not to raise taxes on the state’s wealthiest residents, arguing that doing so could prompt some of them to move elsewhere and erode an essential part of the state’s tax base.
But heeding calls from a coalition of left-wing activists who support new taxes on the rich, Democratic lawmakers proposed increasing the personal income tax rate on residents making over $5 million to 10.8 percent, up from 10.3 percent. Those who make over $25 million would see their rate rise to 11.4 percent from 10.9 percent.
The tax hike, which would apply from 2023 to 2027, would amount to the second tax increase on the richest New Yorkers in recent years. Lawmakers passed a similar surcharge in 2021 that is still in effect and subjected wealthy New York City residents to the highest combined local tax rate in the nation, bringing in a windfall of money to the state’s coffers.
Lawmakers did find common ground with the governor on one tax: They supported Ms. Hochul’s proposal to raise taxes on cigarettes by $1 to $5.35.
But they came out against her proposed ban on the sale of flavored tobacco products, a measure that has been opposed by convenience stores and some Black clergy but favored by public health groups and parent and teachers associations.
Lawmakers challenge Hochul on bail
Ms. Hochul has made fighting crime one of her top priorities after winning her first full term in November following a grueling general election that centered heavily on voters’ fears over public safety.
As such, the governor, echoing similar calls from Mayor Eric Adams, proposed amending the state’s contentious bail laws a third time to effectively give judges more latitude when setting bail.
But Democratic lawmakers flatly rejected Ms. Hochul’s bail amendments on Tuesday, once again showing how fiercely protective they are of the bail law they passed in 2019 that allowed judges to set bail only for the most serious crimes. Some Republicans have focused on the law to successfully portray Democrats as soft on crime.
Disagreements over revisions to the law delayed the state budget for over a week last year before lawmakers agreed to some of Ms. Hochul’s requested changes.
In response to the Legislature’s proposals, Hazel Crampton-Hays, a spokeswoman for Ms. Hochul, said in a statement that the governor “looks forward to working with the Legislature on a final budget that meets the needs of all New Yorkers.”
Andrea Stewart-Cousins, the Democratic majority leader in the Senate, and Carl E. Heastie, the Assembly speaker, are expected to address reporters in the State Capitol on Wednesday after the legislative session was suspended on Tuesday as a result of the snowstorm.
Residential parking permits to help the M.T.A.
Ms. Hochul had proposed a multipronged plan to help fill the Metropolitan Transportation Authority’s budget gap of nearly $3 billion by 2025 through a mix of new revenue streams, including $500 million a year from New York City.
But lawmakers shot down the pillars of her plan.
Both the Senate and Assembly opposed her proposal to raise payroll taxes on businesses that benefit from the transit network, as well as the $500 million yearly contribution from the city. The Senate also rejected her move to divert revenues from three planned casinos in the New York City region to help the authority.
Instead, the Senate proposed giving the New York City Council the authority to create a parking permit system in the city’s residential neighborhoods. Revenues from the parking permits would be dedicated to the M.T.A.
The State Senate also proposed raising money by increasing the M.T.A. corporate franchise tax and imposing a new fee on so-called for-hire vehicle rides, such as those provided by Uber and Lyft.
Legislators voiced their opposition to the subway fare hikes that the authority has planned for 2023 and 2025, with the Assembly proposing to provide nearly $200 million to avoid a 5.5 percent hike. Both chambers also supported a pilot program to test two free bus routes in each borough.
Altering Hochul’s housing plan
Lawmakers significantly picked apart Ms. Hochul’s ambitious plan to curb the state’s housing shortage and high living costs by constructing more than 800,000 new units of housing over the next 10 years, or about twice what New York has built in the last decade.
The governor’s plan is centered on getting municipalities to meet specific housing targets: Localities downstate must increase the number of homes by 3 percent over three years, while places upstate have a target of 1 percent. Ms. Hochul proposed certain mechanisms to coerce cities, towns and villages to ease restrictions that have stunted housing production in the state, especially in the New York City suburbs.
The governor’s plan would mandate the construction of more housing along public transit lines. And if a municipality does not meet its target, the state could allow developers to override local zoning rules, a provision that provoked backlash among both Republican and Democratic officials in the suburbs.
Responding to the suburban opposition, Democratic lawmakers rejected Ms. Hochul’s plan to encourage transit-oriented development, as well as the state’s ability to override local zoning.
Instead, lawmakers proposed a $500 million fund to award incentives to localities that meet the housing targets, a move that was decried by supporters of Ms. Hochul’s housing plan as lacking enough teeth to boost housing production in neighborhoods that have blocked it for years.
Divergent paths on education
Democratic lawmakers took issue with some of Ms. Hochul’s most divisive education proposals.
They rejected her plan to allow dozens of new charter schools to open in New York City by eliminating a cap on licenses. The expansion of charter schools is heavily favored by the charter school industry, as well as the governor’s Republican opponent last fall, former Representative Lee Zeldin, but forcefully opposed by the state’s influential teachers’ union.
Lawmakers also opposed the governor’s proposed tuition increase of up to 3 percent for both the State University of New York and the City University of New York.