Hochul, New York lawmakers, reach deal on $268B budget

(The Center Square) — New York Gov. Kathy Hochul and Democratic legislative leaders have agreed to a tentative $268 billion budget that includes money to bail out New York City, an overhaul of the state's auto insurance industry, and restrictions on police cooperation with ICE, despite threats of a federal crackdown.

The "handshake" agreement, announced Thursday, increases state spending by more than 5.5% over the current fiscal year and also includes plans to expand housing production, roll back the state’s aggressive climate change mandates and eliminate the state income tax on tips. It comes more than a month after the state's April 1 deadline to approve the spending plan.

"I'm not going to mince the words: The negotiations were not easy," the Democrat said in remarks Thursday announcing the tentative deal. "There were very substantive disagreements, tough choices and powerful special interests, trying to influence the outcome."

Hochul also blamed the Trump administration, in part, for complicating the state's efforts to balance the budget. She said the "dysfunction" in Washington, D.C. didn't help with the negotiations.

New York City will receive another $1.5 billion in state aid under the proposal, as well as $1.2 billion for expanded childcare assistance. Legislative leaders also agreed to Hochul's controversial plan to tax the second homes of wealthy New York City residents, which could drum up another $500 million a year in revenue for the city.

The tentative deal also includes protections for immigrants and restricts cooperation between state and local police and U.S. Immigration and Customs Enforcement agents, Hochul said. Its inclusion in the final spending plan comes despite threats from Trump administration's border security czar Tom Homan to "flood the zone" with ICE agents if state leaders move ahead with the proposal.

In her remarks Thursday, Hochul blasted ICE, calling it "an out-of-control $85 billion agency" and said New York needs to put "guardrails" on its immigration enforcement in the state.

"We're putting those guardrails in place: local cops focused on local crime, protections for sensitive locations, unmasking law enforcement, and real accountability when rights are violated," she said.

The budget also includes Hochul's plans to crack down on auto fraud by toughening state regulations, ramping up investigations of alleged insurance fraud, and targeting physicians who provide bogus diagnoses for victims of staged crashes.

Hochul said the plan also includes new protections for churches, synagogues, mosques and other houses of worship by creating anti-protest buffer zones and providing $35 million for security upgrades.

The budget has been delayed by closed-door negotiations over taxing proposals focused on helping New York City reduce a $5.4 billion revenue gap, auto insurance reforms, changes to the pension system and the state's new climate law, among other contentious issues.

Lawmakers blew past an April 1 deadline to approve the spending plan, and have enacted nine interim budget bills to keep the government open as the talks dragged on. Last year, lawmakers approved a $237 billion budget that was more than two weeks late.

The delayed state budget prompted New York City Mayor Zohran Mamdani and Democrats who control the City Council to move up the city's budget deadline by nearly two weeks to May 12, giving it more time to figure out how to close a projected $5.4 billion revenue gap as Albany lawmakers continued negotiations.

Mamdani, a democratic socialist, rolled out his preliminary $127 billion budget in January that called for fulfilling a campaign pledge to raise taxes by 2% on millionaires and increase the corporate tax rate to just over 22% to reduce the deficit and foot the bill for his lefty agenda. Hochul rejected the plan despite a group of Democratic lawmakers filing bills giving Mamdani power to hike taxes.