Story perspectives

Hochul Rejects Tax Credit Cut, Adds $500M Second-Home Surcharge

5/1/2026

Summary

Story summary

Governor Kathy Hochul rejected Mayor Zohran Mamdani and Council Speaker Julie Menin’s proposal to cut the pass-through entity tax credit.
The city said reducing the credit from 100% to 75% would generate $1 billion, narrowing a $5.4 billion two-year budget gap.
Hochul pledged $1.5 billion in aid and announced a $500 million-annual surcharge on $5 million second homes.
Mayor Zohran Mamdani delayed the budget deadline to May 12 to give Albany time for its overdue budget.

History

Historical Context

In February 1975 New York City faced a $2.3 billion budget shortfall that threatened default. Governor Hugh Carey responded by creating the Municipal Assistance Corporation, which issued $2 billion in bonds backed by $1.5 billion in federal loan guarantees and state-controlled taxes, while Mayor Abraham Beame imposed layoffs and wage freezes. The crisis set a precedent for state-city financial coordination still cited in today’s revenue-boost debate.

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Story summary

Governor Kathy Hochul rejected Mayor Zohran Mamdani and Council Speaker Julie Menin’s proposal to cut the pass-through entity tax credit.
The city said reducing the credit from 100% to 75% would generate $1 billion, narrowing a $5.4 billion two-year budget gap.
Hochul pledged $1.5 billion in aid and announced a $500 million-annual surcharge on $5 million second homes.
Mayor Zohran Mamdani delayed the budget deadline to May 12 to give Albany time for its overdue budget.

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