Two years ago, Democratic lawmakers in the state Legislature wielded supermajorities to win tax increases on New York's wealthiest earners in order to fund billion-dollar increases in direct aid to schools.
Now, another debate over whether to increase taxes once again is brewing in the state budget negotiations as progressives urge Gov. Kathy Hochul to reverse her opposition to increasing the personal income tax rate for rich people.
At the same time, Republicans have argued Hochul's budget — which includes a payroll tax increase for counties in the Metropolitan Transportation Authority's service area and support for linking the minimum wage to inflation — as too harmful for businesses.
Hochul has said her $227 billion budget, expected to pass by the end of March, is meant to provide safeguards against a potential economic downturn as inflation has remained high and interest rates rise.
New York is projected to close out its fiscal year on March 31 with an $8.7 billion surplus. Still, if tax revenue falters and doesn't keep up with spending, Hochul has set aside money in New York's so-called rainy day fund to help offset the effects of a cloudy economy.
"It's not a news flash: New Yorkers already believe they pay too much," Hochul said when presenting her budget.
But progressive lawmakers and advocates believe taxes need to increase this year on the richest earners. Assemblyman Ron Kim wants the added revenue for schools, infrastructure and health in order to support lower-income New Yorkers.
New York's budget debate is taking place against the backdrop of concerns over rising costs in an already expensive state. Hochul is pushing plans meant to bring down the cost of housing; some lawmakers argue these plans need to go further.
"More and more people are waking up to the sad truth that there is no American dream in New York," he said. "They're working 12-, 14-hour shifts and not getting anywhere."
Hochul does have a suite of tax and fee increases in her proposal, however, including an increase in the payroll tax for the New York City metropolitan area to fund mass transit and boost the MTA's finances. She wants to increase tuition at public colleges and universities, a move her fellow Democrats have been opposed to as well.
"Those are all regressive taxes that rely on working New Yorkers and she doesn't want to touch the top 1%," Kim said.
Governors in New York wield more leverage in the budget negotiations over lawmakers. For now, Democratic members of the Legislature have rhetorically embraced Hochul's remarks that she wants to work with them cordially on the budget.
"We're here to continue to extend that olive branch, that our working and middle class families are struggling, they're leaving New York," Kim said.
But Republicans like Assemblyman Ed Ra are also finding problems with Hochul's tax plans, as well as her support for linking minimum wage increases to inflation.
"I think you have to look at all of it through the lens of a possible minimum wage hike coming in this budget," Ra said. "So, as a package, I think that's very concerning to businesses."
Hochul's plans to set aside billions of dollars may not be enough, he added.
"We're still a little out of whack there because if we're counting on those rainy day funds to plug that, then there's not much left there to plug when our revenues do take a hit," Ra said.
Budget gaps are expected in the coming years, which could make questions over taxes and spending even harder in the near future.