New York Gov. Kathy Hochul on Thursday announced she had reached a deal with the state legislature on a $268 billion spending plan – though the speaker of the Assembly is reportedly not on board.
The tentative agreement that comes weeks after the April 1st budget deadline includes many policy items laid out by the Democrat during her State of the State address.
WAMC's Lucas Willard spoke with the New York Public News Network’s Jon Campbell about the state budget deal, which includes a new tax on wealthy, second-home owners in New York City...
Kathy Hochul, since she's taken office, has been steadfastly opposed to raising income taxes on the wealthy or anyone, and she's been facing a lot of pressure from Mayor Mamdani in New York City, as well as Democrats on her left to increase taxes on the wealthy.
She has opposed that to this point, but she did agree to add what's known as a pied a terre tax, and that is a tax on unoccupied second homes in New York City. There are a lot of units in New York City that are owned by wealthy people, sometimes as an investment, that are not occupied by people on a regular basis. So, she wants to implement a tax on that to raise $500 million for New York City to help them close a $5.4 billion budget deficit. And it's a way of increasing taxes on the wealthy, but also on the wealthy that do not generally reside in New York State.
She says, that's going to be part of this, this $268 billion budget deal, but there are a lot of details that they have not worked out with the legislature yet or with the city, including, how do you find the right value for this? She says it'll apply to units that are above $5 million but the city's property tax system is notoriously difficult and has very low valuations on properties, so they need to come up with some sort of metric, and they've really struggled to do that to this point.
And there's been some conversation about bringing the pied a terre tax upstate as well. State Senator Pat Fahy from the Capital Region has pitched legislation that would use that same $5 million number. But did the governor seem like she's grabbing on to this legislation at all?
No, absolutely not. The governor has said that the pied a terre tax in New York City is specific to New York City, because New York City is a particularly tricky financial situation right now with their deficit. And she, you know, it kind of goes against her point of trying to tax non-New Yorkers, because a lot of these homes that are, that are worth millions of dollars upstate, quote, unquote, maybe some in the Adirondacks, maybe even out on Long Island in the Hamptons. A lot of those are owned by New York residents. They're often summer homes. I mean, which must be very, very nice to have a summer home of that, that magnitude. But, you know, so the governor has not gotten on board with that, and it does not seem to be gaining traction in the budget.
One of the other items that was the subject of a lot of debate, and, you know, posed a big problem, is how to lower the cost of auto insurance. This was something that Hochul pitched during her State of the State, but that's a pretty complicated system when you consider you have insurers and lawyers involved, and the rest of it. What happened with the proposal to lower auto insurance?
Yeah, this was a big fight between Uber, the ride hailing app, and the New York State Trial Lawyers Association, which is one of the very biggest lobbyists in Albany. They represent the lawyers who represent plaintiffs in civil cases and often car crash lawsuits.
So, this is a measure that the governor was pushing as a way in her mind to decrease auto insurance rates. She wanted to make it so that somebody who is found mostly at fault for a car wreck isn't entitled to a big payout at the end of the day in a lawsuit. So, she seems to be getting that part of it. But lawmakers pushed back, and the trial lawyers pushed back and tried to get some added restrictions on insurers to try to insure…
Nice one
…Thank you…that the rates will actually go down, and some of the way they're going to do that, they're going to implement a measure that that says that insurers can't raise their rates at All without prior approval from the State Department of Financial Services. That's the regulator that oversees insurers. As it stands right now, they can do that. They can increase their rates by up to 5% without prior approval. Although there are ways to claw that back, that's something that's going to be clawed back. And also, they're going to make changes to a law that limits the amount of profit that insurers can make and make sure that excess profits are returned to rate payers.
And I do want to mention that the governor has said that if all of this goes through, there will not be an immediate relief in your car insurance bill. This is something that has to sort of adjust and take some time.
Yeah, absolutely.
Now, I also want to talk about Governor Hochul’s budget proposal…there is some of what she had asked for as far as policy goes, to crack down on ICE's crackdowns, arrests of immigrants. So, what actually ended up in the budget plan?
So, there are going to be some sanctuary-style policies that are part of this budget plan, when they finally do lock down a final agreement here. And that is, it would get rid of formal agreements between…it would prohibit, I should say…formal agreements between local governments and federal immigration enforcers, which some local governments counties across the state do have…
…And to varying degrees. In Rensselaer County, for example, the sheriff's deputies inside the jail are allowed under this 287g agreement to refer people to federal immigration authorities.
Right. And so, we would prohibit local governments from using entering into those 287g agreements. It would also prohibit them from leasing out their jails for use by federal immigration authorities in civil matters. And there's also a measure in there that would prohibit federal law enforcement officials, all law enforcement officials in New York state, from wearing masks when they're performing their duties Now that said, the Department of Homeland Security says they have no intention of following that measure, whatsoever. So that almost certainly will set up a court battle here, and one that we'll have to watch going forward.
And there are some other things in the budget that I just want to make mention of: Governor Hochul's proposal to delay implementation of emission limits and green energy targets under the Climate Leadership and Community Protection Act; the Let Them Build Agenda, which would allow the state to fast track development on impacted sites like brownfields for housing development. There's a lot of stuff in there, but almost immediately after the budget announcement was made by the governor, today, the Speaker of the Assembly, Carl Heastie, spoke with reporters at the Capitol and seemed to throw cold water on the whole thing.
Yeah, he was really mad. He was really mad. I mean, the governor went out and announced a, what she called a general agreement on a $268 billion budget. First thing this morning, it was nine o'clock in the Red Room at the Capitol. And by 10:45 after right after the governor was done, Assembly Speaker Carl Hastie, who would have been one of the three parties in that quote, unquote general agreement, came out and said, “What agreement? We don't have an agreement.” He said that he told the governor that he was fine with her saying that they were close to an agreement, but he was not comfortable saying that there is a deal. He has been railing against the budget process for weeks now. He does not like that so much. Non fiscal policy, much of which we just talked about, is crammed into what is supposed to be a spending plan, a fiscal document. And he said, “Hey, we've got no deal.” He also said that he is done negotiating policy until they get the fiscal part of the budget done first. So, he's really kind of trying to flex his muscle here, and, you know, it really just threw the whole day for a loop. It was not the governor's announcement kind of backfired on her in some way, because she's really riled up at least that section of the state legislature.
Jon Campbell with the New York Public News Network, thanks so much.
Thank you.
