The Empire State will enjoy an $8 billion revenue surplus heading into next year — even as the far-left keeps up its demands for tax hikes on wealthy residents.
Gov. Kathy Hochul’s budget director Blake Washington downplayed the calls for new taxes Tuesday, as he revealed the substantial surplus in tax revenues flowing into state coffers.
“It’s hard to talk about new taxes when revenues are performing the way they are,” Washington said on the Capital Pressroom radio show.
Hochul, following her resounding re-election to a second term last week, is already under pressure from Mayor Zohran Mamdani’s Democratic Socialists of America allies to “tax the rich.”
State lawmakers are likely to push Hochul for higher taxes on the wealthy to pay for priority programs such as universal childcare — as she faces larger super majorities of fellow Democrats in both the state Senate and Assembly come January.
While she did not raise taxes this year, Hochul gave Mamdani the authority to enact a pied-à-terre tax on luxury second homes in New York City and last week teased new taxes to fund her and Mamdani’s free childcare programs.
At a Manhattan press conference on Tuesday about artificial intelligence, Hochul said the $8 billion surplus was a one-time “windfall” that can’t be depended on beyond this year for spending programs — and did not close the door on tax increases.
“It’s always nice to receive this windfall, but I’m not counting on it for next year, the year after. That would be very imprudent on our part,” Hochul said.
“So, we take it, we pay down our debt, we bolster up our reserves, and then we can look at … what is left. There’ll be nowhere near eight billion dollars by the time we do what we need to do.”
Hochul’s budget division reported the larger-than-anticipated tax revenues — attributed in part to strong financial performance in the Wall Street financial services industry — in it’s mid-year budget plan, amending projections from when the $268 billion spending plan was approved in May.
“We’re not presenting new taxes. We’re presenting a new favorable financial plan,” Washington said.
“The State of New York is in a good fiscal position. It’s something to be proud of.”
Discussions about Hochul’s budget plan for next year are in their infancy, Washington said, adding he would give more detailed recommendations to the governor in the coming weeks.
About $4 billion of the surplus will go into the state’s rainy day fund to better weather a financial downturn or recession, he noted.
Washington also said the state and local governments will likely have to pick up costs for cuts made to federal in social service programs, such as the Supplemental Nutrition Assistance Program or SNAP.
He acknowledged that the phase-in of Hochul’s multi-billion dollar universal childcare program — being implemented in partnership with Mamdani — was “not a small expense,” though he cautioned it will take many years to fully implement.
Washington did not rule out a dedicated revenue stream — a tax hike or new tax — to pay for the expansion, saying voters last week responded “very favorably” to Hochul’s “investments” for the popular program.
But he said new taxes were not on his radar right now, adding that Hochul considers them a “necessary evil” to fund worthy services, only when needed.
“We need to treat New York taxpayer dollars with the respect they deserve,” Washington said.
Hochul has twice approved increases in the payroll tax on businesses in the New York City region to help fund the MTA and public transit. She also backed the new congestion pricing toll — now $9 — for motorists to enter the Manhattan business district south of 60th Street.
The governor, during her press conference, said she expected the New York City budget to benefit from a comparable windfall in tax revenues.
For his part, Mamdani said he will continue to press Albany to give the city authority to raise income taxes on the wealthy, following the approval of the property tax hike on pricey second homes.
He called childcare “critically important” to the city.
“We keep asking ourselves, ‘Why are families not settling down? … We have more than $20,000 as the annual cost of childcare. It doesn’t make sense,” he said during an unrelated press conference in Brooklyn. “So we’re proud of delivering free childcare for two-year-olds for the first time in New York City history, proud of expanding out those seats this year, and we’re going to do more.”
Meanwhile, Washington said one area of the state budget that will get more scrutiny is the scandal-scarred Medicaid-funded adult day care program for senior citizens, particularly in New York City. The state picks up part of the tab for the federal program.
The budget chief admitted the the program needs to be cleaned up following federal investigations and prosecutions into more than 100 sites suspected of Medicaid fraud involving everything from money laundering to kickbacks and phantom clients
“We have to really assess whether that program is serving the intended people, whether state dollars are being used appropriately and wheter that program is in need of refinement,” Washington said.
— Additional reporting by Haley Brown
