The Senate and Assembly passed the $136 billion budget which includes a 5 percent cut in school aid, and also calls for the return of the 4 percent tax on clothing and shoes under $110 dollars. That policy begins October 1.
"Ugh, that's ridiculous..that's really ridiculous," said Lucrecia Sample.
Governor Paterson puts the blame on the state legislature and says the clothing tax was a last resort, in order to pass a budget.
"Begrudgingly, to get the budget done, we accepted the sales tax but it's really gonnna hurt low-income people," said Paterson.
The question is, will those people decide to leave places like 125th street and go across the bridge to New Jersey which has no clothing tax? The manager of Lazarus in Harlem fears they will.
"I would say, about, maybe 20 percent (will leave)," said Robert Dweck.
Now, there is some light at the end of the tunnel for shoppers with the least amount of money to spend. A sales tax exemption for clothing under $55 will come back this April.
Still, some say a measure designed to bring in revenue could end up backfiring for the state.
"I think they'll end up getting some revenue from it, not as much as they orignally hoped for, but at the end of the day, they're gonna hurt the retail merchants," said Jeffery Edelman of McGladrey's Retail Consultants.