State Democrats welcome the $1.3 billion in unexpected revenue projections New York budget officials found last week, but said Wednesday that it will not prevent a potential budget fight over the need to increase personal income tax rates for the wealthiest New Yorkers to shift fiscal reliance away from the middle class.

Lawmakers anticipate hours of negotiations through the weekend to finish their one-house budgets as a counter to Gov. Kathy Hochul's $233 billion proposal. That will include finalizing their top budget priorities, and deciding which New Yorkers, if any, will see a tax increase.

Most Democrats in Albany lament that high-income earners in the state pay insufficient taxes, or should be required to pay more than the state's largely flat 6.5% income tax rate. And it's no longer an argument perpetuated by the party's most progressive members.

"People should pay their fair share and the ultra-wealthy in this state need to pay their fair share," Assembly Labor Committee chair Harry Bronson said. "And so we need to take a look at that."

Senate Democrats on Wednesday conferenced their budget revenue and Assembly Democrats are expected to discuss the issue in-depth Thursday before one-house budgets drop Monday. The Senate is expected to propose a more progressive wealth tax, but it's unclear how the $1.3 billion will impact lawmakers' appetite to impose tax reform in the state spending plan.

State Budget Director Blake Washington argued Tuesday the governor's proposal doesn't require tax increases and the extra $1.3 billion should quiet demands for a wealth tax or other revenue raisers. Budget officials had hoped the additional revenue would stave off a probable stalemate between the Legislature and Executive Chamber over a tax hike on New York's millionaires and billionaires. 

"We think the revenue consensus will go a long way to smooth out any rough edges that are seen by the Legislature," Washington told reporters in Albany. "So hopefully, it will mute some of the calls for increased taxation."

Democratic lawmakers know of Hochul's staunch position against tax increases in the 2024-25 Fiscal Year budget — and that she would refuse to accept such a spending plan — but it's not stopping many of them from putting up their best fight.

Legislative leaders Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins are both open to the idea, but continue to keep details of those discussions close to the vest.

"We're still discussing what we can do and we'll have to wait until the introduction [of the one-house budget]," Stewart-Cousins told reporters Tuesday. "But again, this is a conversation."

It's a critical election year, and Hochul's budget cuts $1.2 billion to Medicaid and would remove millions of dollars from school districts with declining student populations.

But the governor has been clear — she fears more taxes on the wealthy will drive high-income earners out of the state.

"She's not looking to increase personal income taxes on anybody in the state of New York," Washington said.

Taxes were increased in 2021 for New Yorkers who make over $1.1 million, which expires in 2027. An increased outmigration of New York residents in that tax bracket followed, swelling as high as 6%. Those levels of outmigrations have slowed, but remain elevated above prepandemic levels. 

But the number of billionaires living and filing taxes in New York has increased.

The supposed hard line form Hochul's administration on the issue has not stopped advocates or clergy members from lobbying for more support to tax the rich this session.

Sen. Robert Jackson, a Manhattan Democrat, has long sponsored a bill to create a progressive personal income tax rate, and increase the bill for filers who make more than $500,000 annually.

He urged Hochul to see the thousands of people lining up at food pantries in his downstate district, and said tax reform in the budget should not be such a difficult debate.

"Tens of thousands of people are asking for affordable housing, so we ask all those that have a little bit more to give a little bit more to help those to survive in this economic time," the senator said.

Officials with the Citizens Budget Commission, or the state's nonpartisan fiscal watchdog, recommend the $1.3 billion would be best spent in state reserves, or its rainy day, fund.

Patrick Orecki, CBC's director of state studies, said he knows the conversation with the Legislature is inevitable, and advised lawmakers be as specific as possible when proposing tax changes in their one-house budgets for the most effective debate.

"Three pages of tables that show how big your budget is, if it's balanced, what the out-year impacts are would help us understand all these policy proposals much better," he said.