Simmering Tax Hike Debate Thickens Between Hochul And Mamdani

ALBANY, New York — Gov. Kathy Hochul is pitching an election-year budget that delivers popular new programs without raising taxes. But it’s still exposing friction with the party’s left flank — including New York City Mayor Zohran Mamdani.

The moderate Democratic governor’s state spending proposal, unveiled on Tuesday, reignited the new mayor’s call to raise taxes on rich people and large corporations, with Mamdani declaring his rejection of “austerity politics” as he grapples with a $12.6 billion hole in the city’s budget.

Hochul responded by digging in, suggesting she does not want more taxpayers leaving New York.

“I know he’s calling for a tax increase. I’ve heard that,” she said. “I’m sensitive to the impacts.”

The governor outlined her $260 billion budget plan Tuesday in Albany, touting the Empire State’s better-than-expected cash position due in large part to Wall Street’s success last year. Her plan would leave the highest income tax rates on the state’s sizable millionaire and billionaire class untouched. It extends a corporate franchise tax by three years, but does not include an increase.

Mamdani released a carefully worded statement as Hochul unspooled her largely workman-like budget, which praised her “meaningful investments” to make the state more affordable. But he hinted that a larger battle over taxes is on the horizon.

“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 in a statement.

The governor’s opposition to increasing taxes and Mamdani’s desire to do so is colliding with the broad effort to address New Yorkers’ cost-of-living concerns. The new mayor rode the affordability push to City Hall in his successful bid last year and Hochul has framed her agenda this year as one that recognizes the pocketbook concerns facing New Yorkers.

Politically, Hochul is contending with a Democratic primary challenge from her estranged lieutenant governor, Antonio Delgado, who has backed a tax hike on wealthy people. He has tried to draft off the enthusiasm surrounding Mamdani’s campaign to wrest the nomination away from the incumbent governor.

On the right, Hochul’s likely GOP opponent, Nassau County Executive Bruce Blakeman, has hammered the governor over the cost of living in New York and its current tax climate, which private sector organizations routinely rank nationally at the bottom.

“There’s no income tax relief, no property tax relief, no utility cost relief — nothing that helps families and seniors keep up with the rising cost of living,” Blakeman said in a statement slamming her budget.

Both Blakeman and Delgado trail Hochul by double digits in polls.

On the federal level, there’s the added dose of uncertainty from President Donald Trump, who has yanked cash from blue states for child care, citing fraud in Minnesota, and plans to pull aid on Feb. 1 from cities with sanctuary policies.

The mayor and governor have a deal to expand free child care that will be funded by the state without tax hikes over the next two years. The priority is a signature one for them both — but a more fraught debate with Mamdani is shaping up over taxes.

Hochul unveiled a modest budget that appeared designed, in part, to avoid major conflict as she runs for a second full term. The spending proposal includes tax proposals such as applying the state’s tobacco tax to nicotine products like Zyn. She also wants to extend a corporate franchise tax by three years, but without an increase like the one Mamdani sought during his successful campaign.

That posture will test her nascent relationship with Mamdani, a democratic socialist who was elected last year on a sweeping — and expensive — platform of significantly expanding free child care, no-cost bus service and government-run supermarkets. Much of his agenda — including a tax hike on wealthy Big Apple residents and the blue chip firms headquartered there — is dependent on Hochul and the Democratic-dominated Legislature in Albany.

Hochul has downplayed her differences with Mamdani and his call for the state to bolster the city’s finances. And she continued to do so on Tuesday.

“He’s doing his job as the mayor, who’s supposed to advocate for his community,” she said. “I have no problem with someone making a strong case to us on what their needs are.”

Hochul also pointed to the financial support the city has received during her five years in office. And she said the Big Apple’s fiscal picture will likely improve in the coming weeks given the city benefits from a healthy financial sector.

The governor endorsed Mamdani following his Democratic primary victory last year and immediately faced calls from his supporters to raise taxes — including "tax the rich" chants during an October rally.

Mamdani’s left-flank allies now plan to mobilize to get his agenda through the often opaque and Kafkaesque statehouse, where mayoral wish lists — Michael Bloomberg’s dream of a West Side football stadium, for example — often die on the vine.

The new mayor, who arrived in office this month with far less experience than his predecessors, wants a far different outcome.

Our Time, a group composed of former Mamdani campaign volunteers, is planning a door-knocking campaign and demonstrations in Albany later this year to whip up popular support for his agenda.

Invest in Our New York, a left-leaning advocacy group that supports higher taxes on rich people, blasted Hochul’s budget over the issue.

“Gov. Hochul is clearly kicking the can down the road to score points with her wealthy donors,” said the group’s campaign manager Brahvan Manga. “But New Yorkers know — and support — the truth: you cannot fully fund universal childcare, replace lost federal funding, and build the New York we deserve without making the super-rich and highly profitable corporations pay what they owe in taxes.”

Fiscal watchdogs, though, praised Hochul’s restraint.

“The governor is right not to raise taxes,” said Andrew Rein, president of the Citizens Budget Commission, a centrist think tank. “Holding the line helps keep New York competitive for families and businesses.”

Governors have outsized leverage over the state Legislature in the high-stakes spending negotiations, which will play out over the next 10 to 12 weeks. Democratic leaders in the state Senate and Assembly have not said whether they will place an emphasis on taxing the rich.

Assembly Speaker Carl Heastie, a Bronx Democrat, acknowledged the budget gap is a concern for state officials.

“I want to make sure I can go home,” he said. “How the city’s finances are and if they can close their budget gap is something that’s important to all of us.”