(The Center Square) — New York Gov. Kathy Hochul rolled out a $260 billion budget Tuesday that holds the line on taxes but calls for increased spending to expand child care and school aid and housing options.
The preliminary spending plan, which requires legislative approval, calls for spending about $8 billion more than the current fiscal year but projects about $10.3 billion less in federal funding, mostly as a result of the Trump administration’s cost cutting efforts and dwindling federal pandemic aid.
In remarks Tuesday, Hochul boasted that New York has the highest reserves of any administration — or more than $14 billion — in state history, and said the proposed spending plan would “protect New York’s fiscal stability” at a time of uncertainty for state governments.
“Here’s the good news, revenues have continued to exceed projections, driven in part by record Wall Street bonuses,” she said. “That reflects a basic reality of New York’s tax system. When the economy is strong, and particularly when high-net worth individuals and employers earn more, our revenues rise, and that’s why we’re able to invest more, without asking New Yorkers to pay more.”
While Hochul’s budget doesn’t include any wholesale tax increases, it calls for taxing nicotine pouches like Zyn at the same rate as cigarettes, which currently face an excise tax of $5.35 per pack. Critics have long warned that New York’s highest-in-the-nation tobacco taxes contribute to smuggling and black market sales.
The governor also announced a three-year extension of the 7.25% corporate tax rate on companies that earn more than $5 million, which was originally implemented in 2021 by then-Gov. Andrew Cuomo. Hochiul’s budget also includes $30 million for New York farmers she claimed have been impacted by the tariffs imposed by Trump over the past year.
Hochul said she wants lawmakers to approve a plan to increase funding for a state-run care voucher program by $1.2 billion and provide around $500 million in new funding for pre-kindergarten programs around the state serving 3- and 4-year-old children.
“Now I want to be clear: We can fund this expansion in the near term because the revenue is there,” she said. “We are not pretending we can predict enrollment utilization or federal policy five years from now. So we’re doing what responsible government does: Using existing resources today and building toward long-term sustainability.”
Hochul has previously pledged $4.5 billion to expand child care programs statewide as part of a deal with New York City Mayor Zohran Mamdani, a $1.7 billion increase from the current state budget. She has vowed not to increase taxes to pay for the expansion of child care services.
Nassau County Executive Bruce Blakeman, a Republican seeking the party’s nomination to challenge Hochul this year, blasted the governor’s spending plan, saying it “doubles down on the policies that have made New York unaffordable by pouring billions into migrant services while leaving families, seniors, and hardworking New Yorkers with higher bills.”
“New York is one of the most unaffordable states in America because Kathy Hochul chooses migrants over hardworking families and seniors,” he said in a statement. “People can’t afford rent, groceries, energy, or property taxes, and Hochul’s answer is to spend billions on migrants and stick everyone else with the bill. That’s why New York is unaffordable.”
He pointed out that Hochul’s budget calls for spending $4.3 billion on migrant shelters, health care, and legal services “with no cap and no end date” and would increase Medicaid spending he claimed would benefit “illegal” immigrants.
“The migrant crisis isn’t paid for in Albany; it’s paid for at your kitchen table,” Blakeman said. “Billions spent on migrant housing, health care, and legal services show up as higher taxes, higher insurance premiums, and higher utility bills for families who are already struggling.”
