Gov. Kathy Hochul (D-NY) unveiled a $268 billion state budget for New York on Thursday that stopped short of fully embracing New York City Mayor Zohran Mamdani’s aggressive “tax the rich” agenda while still moving leftward on taxes, childcare, and immigration enforcement.
The spending plan, reached more than a month after the April 1 deadline, represents an increase from Hochul’s original $260 billion proposal unveiled in January.
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The final agreement boosts spending on childcare, imposes new taxes on luxury second homes, provides tax relief for tipped workers, provides aid to local governments to prevent property tax increases, and places restrictions on immigration enforcement.
One of the most Mamdani-aligned provisions is the proposed “pied-a-terre” tax program targeting luxury second homes worth at least $5 million that are not primary residences.
The tax would primarily affect wealthy owners of Manhattan condos and high-end properties used only part-time by out-of-state or international residents. Hochul said the proposal is expected to raise roughly $500 million in tax revenue annually.
The proposal emerged as a compromise between Hochul and Mamdani, who had pushed for broader tax hikes on millionaires and corporations to address New York City’s growing budget gap. Hochul repeatedly rejected statewide income-tax increases on high earners, arguing they could drive wealthy residents and businesses out of the Empire State.
Also included is a $1 billion investment in local governments and schools outside New York City, with Hochul framing the spending as a way to ease pressure on counties and municipalities facing rising costs and potential property tax hikes.
Another major initiative is a $4.5 billion statewide childcare and pre-kindergarten package, including $1.7 billion in new investments, and establishing an Office of Child Care and Early Education that will work toward implementing universal childcare.
The childcare expansion overlaps with priorities championed by Mamdani, who has pushed for universal childcare funded through taxes on wealthy New Yorkers, though Hochul’s approach relies more heavily on state investment than broad tax increases.
The budget also mirrors part of President Donald Trump’s federal tax agenda by eliminating state income taxes on up to $25,000 in tipped wages beginning in tax year 2026.
On immigration, Hochul’s budget includes additional funding and coordination measures tied to cooperation between state and local law enforcement and federal immigration authorities.
Her plan prohibits New York local police from being “deputized” by Immigration and Customs Enforcement, barring state and local police from acting as “civil immigration agents” or using taxpayer-funded resources and personnel to carry out ICE operations.
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Hochul also established a “state right” to sue ICE officers for constitutional violations while also barring them from entering “sensitive locations,” which include schools, libraries, healthcare facilities, polling locations, and homes, without a judicial warrant.
She additionally banned law enforcement, including those working for the federal government, from wearing masks while on duty.
