Dem lawmakers eye alternatives to Hochul plans on housing, payroll tax

ALBANY — Rank-and-file legislative Democrats are set to offer major rewrites to Gov. Kathy Hochul’s proposals on affordable housing and MTA payroll taxes, officials said Monday.

They also are balking at the governor’s initiative to give judges more discretion to set bail on defendants.

The developments come as the State Assembly and Senate, led by Democrats, are preparing to unveil their separate “budget resolutions.” The legislative resolutions will set the table for negotiations with Hochul, also a Democrat, as lawmakers try to craft an agreement by the April 1 fiscal deadline.

On housing, the legislative resolution will oppose Hochul’s plan of allowing a state panel to override local zoning decisions. Instead, legislators would create a new $500 million fund to offer cities, towns and villages incentives for meeting benchmarks for adding affordable housing units. Sources called it going with a “carrot” approach rather than a “stick” to boost housing.

Under the Assembly budget resolution, municipalities would receive an initial payment for submitting a housing growth plan. They would receive a secondary payment for meeting housing growth targets over a three-year period beginning in 2024.

But the state could take back the initial payment if communities don’t follow through by meeting goals.

Similar to Hochul’s idea, the housing growth targets would be 3% downstate and 1% upstate.

The idea for offering municipal incentives instead of threatening zoning overrides was floated last month by Assemb. Fred Thiele (D-Sag Harbor).

“This is really the marrying of two concepts: Localities desire to increase state aid and the governor’s desire to increase housing stock in the state,” Thiele said Monday. “We’ve accepted the governor’s goal and recognition of the (housing) problem. We’re just charting a different course for solving it.”

On transit, Democrats will oppose Hochul’s plan to raise the payroll tax paid by companies in the highest tax bracket of the 12-county region served by the Metropolitan Transportation Authority.

Instead, they will propose a new surcharge on high-earning corporations and individuals to help fund not only the MTA, but also upstate transit systems, sources said. For individuals, the new surcharge would apply to those earning $5 million or more annually, a source said.

But that might be a harder bargain to drive as Hochul has said she opposes income tax hikes.

If lawmakers are successful in reworking Hochul’s housing and MTA tax plans, they will neutralize two issues Long Island Democrats have seen as politically damaging.

In addition, legislators want to take off the table some of Hochul's policy ideas they believe don’t have to be part of the budget, such as lifting the cap on charter schools and amending the state bail law.

In 2019, legislators and Gov. Andrew M. Cuomo overhauled the law so that bail cannot be imposed for most misdemeanors and nonviolent felonies. Facing a backlash, lawmakers already have gone back and reworked it twice: Once to add more crimes to those where bail can be used, and again to allow judges to impose bail for repeat offenses of otherwise bail-ineligible crimes.

Now, Hochul wants to eliminate a guidance provision that says judges should use the “least restrictive” option available (release, supervised release or bail) to ensure a defendant shows up for the next court date.

Progressive Democrats not only don’t want to hitch bail discussions to the state budget, but also say eliminating the “least restrictive” provision would totally undermine the 2019 law.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy