New York Assembly and Senate Release One-House Budget Bills

Democratic lawmakers want to raise taxes on corporations and high earners to help Mayor Zohran Mamadani close the city’s $5.4 billion budget deficit.

The Democratic majorities of the state Senate and Assembly are proposing raising taxes in their respective one-house budget bills, resolutions that set the stage for budget negotiations but are non-binding.

Both chambers pitch increases on the transfer tax rate on sales of one- to three-family homes valued at more than $5 million in New York City. The rate would increase for such deals from 1.425 percent to between 3.675 and 5.325 percent, depending on the price.

The Senate’s proposal includes previously proposed legislation to increase personal income rates for the top two tax brackets, raising the rate for those earning more than $5 million to 10.8 percent and to 11.4 percent for those making $25 million or more. It also includes an increase in the statewide corporate tax rate from 7.25 percent to 9 percent for businesses bringing in more than $5 million in income.

The resolution additionally incorporates a provision that would grant the city authority to hike taxes for unincorporated businesses with incomes higher than $5 million from 4 to 4.4 percent, and to increase corporate tax rates for financial sector firms from 9 percent to 10.8 percent and for other firms from 8.85 percent to 10.62 percent. Senate Democrats estimate that these and other changes could net the city more than $5 billion in revenue,

The Assembly similarly calls for tax increases on those earning more than $5 million, which it estimates would raise $2.9 billion in additional revenue in the first year. The resolution includes the same unincorporated businesses increase proposed by the Senate, as well as the raises that would apply to financial and other firms.

Both chambers have previously proposed hiking taxes in their respective one-house budget bills, but this year’s comes after Mamdani threatened to raise the city’s property taxes if the state didn’t do so.

In a statement on Tuesday, Mamdani thanked both chambers for taking “meaningful steps toward closing the deficit.”

Still, the proposals would have a long road to becoming a reality. Gov. Kathy Hochul has opposed efforts to increase taxes.

Real estate and business groups have opposed the tax increases, as well as the mayor’s proposal to increase property taxes and tap into the city’s reserves absent additional revenue from taxes on New York’s wealthiest. Higher mansion taxes elsewhere in the country have drawn criticism for freezing deals and financing.

“Raising taxes again is not the answer,” Jim Whelan, president of the Real Estate Board of New York, said in a statement. “Burdening the housing market with new taxes will discourage investment, halt housing production and worsen the city’s affordability crisis for all New Yorkers.”

The Senate resolution includes reforms to the State Environmental Quality Review Act, or SEQRA, but follows a bill proposed by Sen. Rachel May, which would exempt certain infill housing projects in the city with fewer than 1,000 units from SEQRA. The budget resolution, however, doesn’t specify that the projects must be affordable to qualify for the exemption, as is the case in May’s bill.

Hochul’s proposal would exempt housing projects in the city that have 500 or fewer units, if located in a medium- or high-density district, or 250 or fewer units in a low-density district.

The Senate measure also includes changes to the property tax break J-51, but favors a version put forward by Sen. Brian Kavanagh, who chairs the Senate’s housing committee, over the governor’s proposal. Kavanagh’s bill differs from Hochul’s in a few key ways, including by expanding eligibility to buildings where at least 90 percent of the units are rent-regulated.

The Assembly, which typically eschews policy in its budget resolutions, leaves out J-51 and SEQRA reform. Both resolutions call for $200 million more than the $50 million that Hochul allocated for the Housing Voucher Access Program, a state-based housing voucher program that serves families or individuals who are homeless or in imminent danger of losing their homes. Both chambers have previously demanded more funding for the program, which also received $50 million last year.