Gov. Kathy Hochul’s announcement of a tentative state budget deal Thursday attempts to satisfy voters demanding action on affordability while holding the line against the sweeping tax‑the‑rich platform that propelled Zohran Mamdani into the mayor’s office. The centerpiece of the revenue package is a new recurring tax on luxury pied‑à‑terre homes — second residences in New York City owned by people who primarily live elsewhere. Hochul said the tax would apply to properties valued above $5 million and would bring in at least $500 million a year for the city.
But the deal does not include the broader income‑tax increases on the state’s wealthiest residents that Mamdani, a Democratic Socialist, has made the signature ask of his administration. Hochul, a Democrat running for reelection, has repeatedly argued that such hikes would encourage high‑income individuals and businesses to relocate to lower‑tax states. “We were able to accomplish this extraordinary budget, with all these accomplishments, without raising statewide taxes at all,” she told reporters Thursday.
Legislative leaders immediately pushed back on the notion that the budget was settled. Assembly Speaker Carl Heastie, a Democrat, said flatly, “There is no budget deal,” adding that much of the financial backbone of the plan remained unresolved. The statement underscored that the tentative agreement announced by the governor still requires legislative approval and may undergo significant changes.
Mamdani has tried to frame the pied‑à‑terre tax as a victory, even as he continues to press, sometimes in personal terms, for further levies on the ultra‑wealthy. Last month he posted a video standing outside a luxury building where hedge fund billionaire Ken Griffin had purchased a penthouse for roughly $239 million. “When I ran for mayor, I said I was going to tax the rich,” Mamdani said in the clip, which has been viewed more than 52 million times on X. “Well today, we’re taxing the rich.”
Griffin responded sharply, calling the video “frightening” and saying it could threaten his safety. He noted that UnitedHealthcare CEO Brian Thompson had been shot to death in the same neighborhood, allegedly by someone upset about perceived corporate greed. At an economic conference in California this week, Griffin said his company had decided to accelerate its push into Florida. “What the mayor of New York has made clear to my partners, and principally my New York partners, is we need to double down on our bet in Miami,” he said. “Because we want to be in a state that embraces business.”
Meanwhile, the mayor’s own political base has expressed dissatisfaction. The New York City chapter of the Democratic Socialists of America sent text messages to supporters arguing that the budget proposal falls far short of closing the city’s multibillion‑dollar deficit or funding expanded social programs. Co‑chair Gustavo Gordillo said in a statement that “Hochul is trying to shove a deal down our throats with no new taxes on the rich besides the pied‑a‑terre tax, which only fills 10% of NYC’s deficit.”
The dispute highlights the tensions within the Democratic Party as it navigates a midterm‑election year in which affordability is a central voter concern. Hochul’s decision to pair a narrow, symbolic tax on absentee luxury owners with a refusal to raise statewide income‑tax rates seeks to balance the demands of a Democratic primary electorate with the warnings from business leaders that higher taxes would prompt an exodus of wealth from the state. Whether that balance will hold through the final legislative negotiations remains an open question.