Gov. Kathy Hochul on Thursday signed New York’s $268.5 billion budget, funding pension boosts and an expansion of New York City’s free childcare program, while watering down the state’s climate goals — all eight weeks after the tax and spending plan was first due on April 1.
The deal allows Hochul to claim some legislative victories amid her re-election campaign this year, including changes to the state’s car insurance laws and a rollback of the state’s climate goals that was heavily opposed by many environmental advocates and Democrats, though welcomed by several business groups.
“I am here signing a budget that reduces costs for New Yorkers,” Hochul said Thursday at a press conference in Albany, adding that her spending plan puts “everyday people above excessive corporate profits.”
The budget also secured some victories in New York City for Mayor Zohran Mamdani and the party’s progressive wing.
The deal includes billions in state funding to close the city’s budget gap and a tax on some luxury second homes — a compromise that Mamdani and progressives celebrated even as Hochul refused to raise income taxes on the wealthy. In January, Hochul and Mamdani jointly announced a pilot to expand the city’s universal childcare program for two-year-olds, which is expected to cost $75 million in its first year.
Still, fiscal watchdogs warned the deal leaves the state on shaky fiscal ground even as it aims to boost affordability and housing production.
“Despite exceedingly strong revenues and economic uncertainty, the budget adds nothing to the rainy day reserves and leaves the state with a structural gap exceeding $17 billion,” said Andrew Rein, president of the fiscally conservative Citizens Budget Commission.
Weakened Climate Law
The biggest obstacles to nailing down the budget were Hochul’s push to roll back the state’s 2019 climate law and to shoehorn legislation to reform a car insurance law into the budget, both of which were opposed by members of her own party.
She outlined several elements of the budget in an announcement earlier this month that the leader of the state Assembly slammed as premature.
Hochul successfully weakened the Climate Leadership and Community Protection Act, by replacing a target of cutting emissions 40% from 1990 levels by 2030 with a new goal of 60% by 2040. A change in the way the state accounts for methane emissions makes it easier to hit those goals.
There’s also a new deadline of the end of 2028 — five years later than the original — by which the state must issue regulations to slash emissions.
Lawmakers also approved long sought-after changes to the state’s pension system estimated to cost taxpayers $557 million annually — far less than what unions initially sought. The changes impact workers hired after April 2012, who belong to a pension category known as Tier 6. In addition to lowering the retirement age for teachers, sanitation workers and corrections officers, lawmakers also approved modest pension boosts for all state employees in Tier 6, including police, firefighters and healthcare workers at public hospitals.
The budget includes at least $300 million for programs to address the root causes that often lead young people into the criminal justice system. The money is tied to the Raise the Age law passed in 2017 to stop treating most 16 and 17 year olds facing criminal charges as adults.
State Sen. Julia Salazar (D-Brooklyn) hailed the funding as a “victory for public safety.”
“Even as I deeply lament some of the executive-driven policy changes in this year’s state budget, there are also many components to celebrate,” she told THE CITY. “Securing hundreds of millions of dollars dedicated specifically to the implementation of the Raise the Age law in New York City, and ensuring that municipalities can equitably access this funding, is crucial progress.”
Also included in the budget — and a potential $500 million boon for New York City’s coffers — is the tax on luxury second homes. For two years, the pied-à-terre tax will apply to condos and coops with assessed values starting at $1 million, with higher tax rates as the value increases. After those two years, the city Department of Finance must create a new way to assess condos and coops based on the value they’d sell for on the market.
The budget also reformed an environmental review process for development in an attempt to cut red tape and make it easier and cheaper to build housing. In New York City, the streamlined process applies to buildings with up to 500 apartments, as well as for new public schools, parks and nature-based stormwater management projects.
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