Long Island Dems wary of Hochul's housing, payroll tax proposals

ALBANY — One legislator called them potential “extinction-level events” for Long Island Democrats.

The reference to electoral danger isn’t over Gov. Kathy Hochul’s goals for improving mass transit and affordable housing, Long Island Democrats say, but rather two key elements of her plans that some believe could cost them in the next election cycle.

One would increase the so-called MTA payroll levy paid by employers in the highest tax bracket. The other would allow a state panel to override local zoning laws.

“Those are extinction-level events,” Assemb. Fred Thiele (D-Sag Harbor) said about the possible impact on Democrats in Nassau and Suffolk counties if Hochul’s proposals were to be adopted as is.

Typically, when lawmakers in Albany begin the annual state budget negotiation, aid to local school districts is the No. 1 priority for the Island delegation.

But with Hochul proposing a generous 10% school aid increase, her transit and housing initiatives have emerged as top issues so far, legislators said.

“It’s all anyone in my community is talking about,” Assemb. Taylor Darling (D-Hempstead) said.

Island Republicans are opposed to both Hochul initiatives. But with fewer than one-third of the seats in the Assembly and Senate, their influence on state budget negotiations is limited largely to applying public pressure.

Democrats, on the other hand, will have an important role in shaping the Assembly and Senate budget counterproposals, which are usually unveiled in mid-March and set the table for negotiations with the governor. And most Long Island Democrats — but not all — say they want changes to the governor’s proposals.

Housing

Hochul wants 3% growth in housing stock every three years in downstate areas. For the Island, the target would mean 38,128 new housing units between 2023 and 2025. Her administration says, for comparison, Nassau and Suffolk counties increased housing by just 0.56% from 2018 to 2019.

The governor especially wants to encourage housing growth near train corridors. She has said her initiatives mirror what other states have done to boost affordable housing and that New York is behind the curve.

But the provision that is drawing the most opposition is one that would allow a state panel to override local zoning decisions if the housing goals aren’t being met.

“I don’t believe local zoning should be removed from local control,” said state Sen. Monica Martinez (D-Brentwood), one of two Island Democrats left in the Senate following last November’s elections. “We’re not against building — we know there is an affordable housing crisis.”

Her colleague, state Sen. Kevin Thomas (D-Levittown), struck a similar note, saying he wants to “ensure that any final plan maintains local input and control over housing development.”

“Each community in our state is different — and we, as community members — know their needs the most,” Thomas said.

Darling acknowledged the housing conversation can be fraught because “there are some racial overtones at times” when people use the phrase “protecting the integrity of the community,” history shows that local zoning has been used to keep out minorities.

At the same time, she said there is validity in the notion of community integrity. And she said housing growth has been uneven, with some parts of her district offering lots of affordable units and others very few.

“My nightmare would be if certain places were allowed to opt out, which could overburden other areas of Long Island,” Darling said, while saying there should be “as much local control as possible.”

“If we want community buy-in, it can’t be this one-size-fits-all" approach, Assemb. Michaelle Solages (D-Elmont) said. 

“We need to make sure we’re not implementing policies that take control totally out of municipalities’ wheelhouse,” she said. “But the municipalities, they also need to come to the table with something” to help meet housing goals.

“The governor’s proposal was bold. It’s very aggressive,” Assemb. Kimberly Jean-Pierre (D-Wheatley Heights) said. “But as we go forward, she’s going to have to meet folks halfway.”

Thiele called the potential zoning override “bad politics and the wrong policy.” He said one of the problems is Hochul’s proposal doesn’t provide enough incentives for municipalities.

One possibility Thiele is floating, as chairman of the Local Government Committee in the Assembly, is for the state budget to boost a category of assistance called “Aid to Municipalities.” Known as AIM, it’s been more or less frozen for a decade.

Thiele suggests increasing AIM by $200 million — he says the equivalent of a cost-of-living adjustment for the fund over the last decade — but attach it to achieving housing goals.

“That way we can give them the AIM they’ve deserved all these years but make them earn it,” Thiele said.

Assemb. Phil Ramos (D-Brentwood), in contrast to his colleagues, said of Hochul’s initiative: “I support it 100%.”

“‘Local control’ has been code word for a long time, for shutting out people of color in certain communities,” Ramos said. “Her efforts to increase affordable housing in various towns — not just certain areas — will diversify Long Island, which is very segregated.

“You know when we hear pushback against affordable housing, we hear a lot of other buzzwords as well,” Ramos continued, noting the phrase “community character.”

“To people in diverse communities, we know all too well what community character they’re referring to,” the Democrat said.

Payroll tax increase

Ramos said he fully supports Hochul’s proposal for raising the MTA payroll tax for the top bracket of employers in the 12-county MTA region, which runs north to the mid-Hudson Valley. So far, he’s the lone member of the delegation on board.

Hochul’s plan would raise the rate paid by companies with $1.75 million or more in annual payroll from 34 cents for every $100 of payroll to 50 cents. She’s also called for the state and New York City to contribute more money to the MTA and for the authority to cut costs.

Hochul said it’s needed to help the MTA recover from a huge deficit triggered in part by a steep decline in subway and train ridership during the COVID-19 pandemic. MTA officials say the tax hike would impact less than 5% of employers.

“This payroll mobility tax is part of a larger story of everybody having to share in the pain,” Hochul told Newsday.

But veteran Democrats recall the launch of the MTA payroll tax in 2009 cost the party seats on the Island — and control of the State Senate. Though the party is firmly in control of both houses now, most Democrats don’t want to touch the subject.

“I think there is more than enough money in this budget that we don’t have to raise the payroll tax,” Assemb. Charles Lavine (D-Glen Cove) said.

“There’s alternatives out there,” Solages said, referring, for instance, to a bill she sponsors to “transform” the state’s inheritance tax.

A few Democrats back a bill to exclude suburban counties from the tax hike, though others see that as an unlikely possibility.

Darling said the generalization that all Long Islanders could afford to pay more is off base. “This is not a place where everyone is wealthy and everyone is doing well,” she said.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy