$268 billion state budget will include NYC pied-à-terre tax, targeting wealthy second home owners

New York Gov. Kathy Hochul announced a handshake agreement Thursday on a $268 billion state budget that includes a pied-à-terre tax for New York City.

The governor unveiled the framework for the budget, which is more than a month late, having missed its April 1 deadline. If it passes, it will be beyond generous to the Big Apple, CBS News New York's Marcia Kramer reported.

Hochul put forth her initial proposal in January, saying her goal was to improve affordability while managing dramatic cuts in federal aid, without raising taxes.

"We were able to do this budget, with all its accomplishments, without raising statewide taxes at all," Hochul said.

The pied-à-terre tax

New York City Mayor Zohran Mamdani has repeatedly called for the state to "tax the rich."

"It is time to ask New York City's wealthiest and large corporations to pay their fair share, while also working toward a fiscal relationship with the state that better reflects New York City's status as the economic engine of the state," he said previously.

Hochul said Thursday the pied-à-terre tax will help close the city's multi-billion dollar budget gap, "without eroding its tax base or burdening hardworking New Yorkers."

The new tax will target second homes in New York City valued over $5 million with an annual surcharge. It is projected to bring in more than $500 million annually.

While the agreed-to budget includes that new proposal, it is notably missing any action on raising other taxes on the wealthiest people and corporations in the state, which Mamdani has said is essential to balancing the city's budget.

Also not in the deal is the mayor's last-ditch effort to reduce the Pass-Through Equity Tax credit (PTET).

"I said I was not doing that. There's not a corporate tax. There's not an income tax. I held true to what I said," Hochul said.

New York City stands to win big

If the budget is passed, New York City will receive $28 billion, which is a $9 billion increase since 2021.

"My commitment to New York City has been and always will be iron-clad," Hochul said.

Assembly Speaker Carl Heastie said there is not yet a deal because there are a lot of money issues still to be worked out.

Bruce Blakeman, the Republican candidate for governor, condemned the budget.

"Kathy Hochul's budget is a triple threat to your wallet: more taxes, record spending, and a utility bill crisis with no end in sight. In fact, it should be labeled hazardous for your bank account. When I'm governor, I'll put an end to Hochul's war on the middle class by cutting income taxes, slashing your utility bill in half, and stopping the state from taking another dime of your hard-earned money," Blakeman wrote in a statement. 

What else is in New York's proposed budget?

Some of Hochul's ideas include: 

• Eliminating taxes on the first $25,000 of income from tips
• Reducing child care costs in the city and extending 3-K and pre-K programs in other localities
• $1 billion for climate projects
• $1 billion energy rebate
• $40 billion in school aid 
• $77 million for subway safety
• $35 million to protect houses of worship
• $6 million to develop soccer programs in underprivileged communities 
• Extending the Second Avenue Subway west to Broadway
• Reimagining Jamaica Station
• $35 million to eliminate hate crimes