Senate, Assembly eye tax hike for top earners, corporations to fund MTA

ALBANY — The state Assembly and Senate on Tuesday proposed hiking income tax rates on high-earning individuals and corporations to help fund the financially troubled MTA, setting up a budget confrontation with Gov. Kathy Hochul.

The tax hikes were some of the key elements in budget resolutions unveiled by the Democratic-led legislative houses — documents that spell out differences and agreements with the Democratic governor as lawmakers try to adopt a state spending plan by April 1.

Besides transit funding, legislators disagreed with Hochul on hiking public college tuition by 3% and raising the cap on the number of charter schools permitted. The house resolutions also omitted some of Hochul’s non-budgetary policy proposals, such as amending the state bail law.

As Newsday reported Monday, another key difference is on how to spur the building of affordable housing. Legislators oppose Hochul’s idea of allowing a state panel to override local zoning and instead propose creating a $500 million fund of incentives for locals to reach affordable housing targets.

Among the areas of agreement with the governor, the Senate and Assembly will back the idea of lending $455 million to renovate Belmont Park for year-round horse racing, with some strings attached.

They agree with Hochul’s call to hike cigarette taxes by $1 per pack — bringing the total tax to $5.35 per pack. But lawmakers oppose her call to ban flavored tobacco products. They generally agree with Hochul’s proposal to expand the state’s lucrative tax break for film/television production.

The Senate and Assembly also agree with Hochul on tying minimum-wage hikes to an index — but the houses want to raise the wage immediately and tie it to inflation later.

Funding for the Metropolitan Transportation Authority, which operates in 12 downstate counties, has been one of the high-profile issues of the 2023 legislative session — because the agency is facing a recurring $2 billion annual shortfall, largely attributed to the pandemic’s impact on ridership fares and other revenue.

However, Hochul and legislators want different approaches.

The Assembly and Senate oppose Hochul’s idea of raising the top rate of the MTA payroll tax paid by companies with more than $1.75 million in annual revenue.

Instead, legislators called for raising income taxes on big earners. For those earning $25 million or more annually, the rate would go from 10.9% to 11.4%. For those earning between $5 million and $25 million, it would go from 10.3% to 10.8%.

On corporations, the houses differ slightly. The Assembly calls for raising the corporate tax rate while the Senate says increase MTA surcharge rate paid by corporations.

The Senate also called for establishing a residential parking permit system for New York City to help fund transit; the Assembly did not.

The Assembly agrees with Hochul’s idea of earmarking for the MTA some share of future revenue from downstate casinos. The casino bidding process opened earlier this year; siting decisions could be made the last quarter of 2023 at the earliest.

Further, the legislators oppose an MTA fare hike.

Also for the MTA, the Senate called for adding a 50-cent-per-ride surcharge on fees for using Lyft, Uber and similar ride services in New York City.

On Belmont, the legislators largely back Hochul’s idea to lend the New York Racing Association $455 million to upgrade and winterize the facilities to hold racing year-round. If the project moves forward, NYRA would close racing at Aqueduct, where Resorts World is expected to compete for a casino license.

The legislative plans call for more oversight of the implementation of the loan agreement and guarantees for union labor. The loan would be repaid over 25 years.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy