ALBANY – Gov. Kathy Hochul won’t rely on an income tax hike to balance her record-high $260 billion state budget proposal that will be unveiled Tuesday, The Post has learned.
Hochul’s budget proposal for the 2026-2027 fiscal year will blast past last year’s $252 billion executive proposal and set the stage for weeks of fights with a Democrat-dominated state legislature that has consistently pushed taxing the rich for the last several years, according to preliminary figures.
“Our revenue projections in the current year, thanks to the strength of Wall Street and a progressive tax code, have really provided an outsize level of returns to make the investments, particularly in child care,” Hochul’s budget director, Blake Washington, told The Post ahead of the anticipated release of the plan.
Gov. Kathy Hochul’s 2026-2027 state budget proposal won’t include new income taxes, despite facing pressure from her left for a hike. Aristide Economopoulos for NY Post
A progressive push toward universal childcare – in large part led by Democratic socialist New York City Mayor Zohran Mamdani – is a big driver in the budget’s ballooning spending.
Hochul has promised $4.5 billion toward expanding childcare programs statewide – a $1.7 billion increase from the current state budget. That will include launching a new “2-Care” program for all 2-year-olds in the Big Apple and $210 million to expand pre-K for 4-year-olds statewide.
But while Hochul’s proposal helps fulfill a key promise by her newfound ally Mamdani, the governor has pointedly rejected calls to fund it by taxing the rich.
“She thinks it’s a last resort to raise taxes on anybody at any time,” Washington noted.
The budget will not increase income taxes, though it will extend the top corporate franchise tax rate of 7.25% that was originally implemented under former Gov. Andrew Cuomo in 2021 and renewed under Hochul in 2023.
State budget director Blake Washington says his boss considers a tax increase a “last resort”. Hans Pennink for NY Post
Mamdani, for his part, is now pushing the state to hike taxes on high-income earners to fund his freebie-filled agenda including the childcare program. Fiscal watchdogs have warned the city faces combined deficits of $12 billion in the next two fiscal years – a potentially damaging blow to his big campaign promises.
Hochul’s plan will also hike Medicaid spending by an eye-watering 11.4%, which Washington said will include more funding for hospitals after they took a hit as a result of the feds refusing to subsidize spending on some Obamacare-era health care plans.
New York ultimately decided to kick about 450,000 people off its Essential Plan last year as a result of the move, with hospitals crying poverty as they expect to have to pick up the tab when patients show up without insurance.
“Absent any changes on the congressional level, you’re going to see an increase in uncompensated care especially,” Washington said.
“Those hospitals will still provision the care, but they would do so at great cost, so we’re trying to bolster on the state side, providing some resources to them to do just that,” he added.
New York City Mayor Zohran Mamdani is openly calling for tax hikes after taking a more muted approach when asked about the topic after Hochul’s state of the state address last week. Robert Miller for NY Post
The state is facing a $10.3 billion reduction in federal funding overall, per the budget office, with Hochul still retaining the option of raising taxes should Washington continue to further turn the screws on blue states like New York.
The executive budget is not expected to contribute new cash into the state’s $14.6 billion reserve funds even after Hochul raided them for $7 billion last year to pay off unemployment insurance debt owed to the federal government.
Hochul will lay out her executive proposal in a closely-watched address Tuesday morning, kicking off weeks of negotiating – largely behind closed doors – with the state legislature.
The state’s fiscal year turns over on April 1, though Hochul has purposely blown past that deadline in recent years as a negotiating tactic with the lawmakers, who do not receive pay while the spending plan is late.
Last year’s budget was finalized on May 8.
Start your day with all you need to know
Morning Report delivers the latest news, videos, photos and more.
Thanks for signing up!
It’s unclear how much Hochul will be willing to play hard ball this year ahead of her re-election, where she is facing a Democratic Party primary challenge from her estranged Lt. Gov. Antonio Delgado.
She’s already choosing to dodge a potential knock-down-drag-out fight over changing the state’s controversial Raise the Age law, which restricts 16- and 17-year-olds from being tried as adults for non-felonies.
Many moderates and conservatives, along with NYPD Commissioner Jessica Tisch, argue the law led to a surge in violent crimes committed by and against teens in recent years.
Far-left Democrats and criminal justice groups, however, have preemptively dug their heels in over the last few months, sending a message to Hochul that she would potentially face immense political blowback if she took on that fight this year.
Hochul’s office told Spectrum News late last week she’d ultimately opt to avoid the fight altogether.