New York state senators voted in favor of the budget agreement overnight, while the state Assembly approved the budget late Wednesday.
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Governor Andrew Cuomo held a briefing ahead of the Assembly's anticipated vote, once again framing the spending plan as an opportunity to reimagine the future of New York as the state emerges from the coronavirus pandemic.
He cited three main goals: COVID management, COVID relief and the updating and renewal of the state's infrastructure.
Raw Video: Gov. Cuomo outlines budget highlights
Under the plan approved by the Senate and Assembly, the highest-earning New Yorkers would also face the nation's steepest income tax rate.
It would serve as a win for the Democratic party's left wing, who say that millionaires in Manhattan penthouses have fared far better amid the pandemic then struggling small businesses and low-income New Yorkers.
States including California, Minnesota and Washington are also considering wealth taxes, raising taxes on capital gains or setting new top income tax rates. President Joe Biden - who said on the campaign trail he'd raise income taxes on high earners - has proposed tax hikes on wealthy individuals and families and a corporate tax rate increase to pay for his infrastructure plan.
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Democrats in New York hope the tax increase could bring in at least $2.8 billion this upcoming year and prevent the need for spending cuts in years to come.
New York's top income tax rate is currently 8.82% for income over roughly $1 million, while New York City residents face an additional 3.88% top tax rate.
New York is now set to raise the combined top tax rate for New York City millionaires above California's top income tax rate of 13.3%.
New Yorkers who make over $1 million would face a 9.65% income tax rate. That increases to 10.3% for taxpayers who make between $5 million and $25 million, and 10.9% for those who make over $25 million.
"Working and middle-class taxpayers will receive the relief they desperately need, while the wealthiest New Yorkers will help their neighbors," Stewart-Cousins said in a statement announcing that legislative leaders and Cuomo reached a budget deal Tuesday.
The exact language of the tax hike wasn't available online until late Tuesday evening. New York was also set to raise the corporate tax rate from 6.5% to 7.25% for taxpayers with net incomes over $5 million. That move - along with a reinstatement of the capital base tax - would raise $750 million this upcoming year.
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Democrats won control of the state Senate in 2018, but they gained more leverage last year by winning a veto-proof supermajority.
Cuomo expressed newfound openness to raising taxes on top-earners this year - his budget proposal included a limited, temporary tax increase on high-earners if New Yorkers didn't receive extra COVID-19 aid.
He's also long warned that raising taxes on the wealthy could drive them out of New York at a time when the state's economy is still recovering from COVID-19 economic shutdowns last week. His budget director, Robert Mujica, has said the top 1% of earners pay 40% of New York's income taxes.
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And Mujica has said an additional $12 billion in expected federal COVID-19 aid could prevent the need for a tax hike.
But Democratic legislative leaders who have pushed forward with a proposed tax hike said there's no conclusive evidence that tax hikes drive out the rich. And they criticize years of "fiscal austerity" under Cuomo, as health care costs rise and educational advocacy groups call for more spending on schools.
Medicaid costs have skyrocketed as New York has boosted enrollment, raised the minimum wage for all workers and taken on more Medicaid bills once shouldered by counties.
Cuomo, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie said the final budget accomplishes major legislative priorities, including:
--A record $29.5 billion in aid to schools aid
--$29 billion in public and private green economy investments
--$2.4 billion for rent and homeowner relief
--$2.4 billion for child care
--$2.1 billion for excluded workers
--$1 billion for small business recovery
--A first-in-the-nation plan to make broadband internet affordable
--Legalizing mobile sports betting
--Implementing comprehensive nursing home reforms
"This budget continues funding for the largest-in-the-nation $311 billion infrastructure plan, establishes a groundbreaking program to provide affordable internet for low-income families and enhances public safety through police reforms, all while continuing to provide relief to New Yorkers and small businesses as we recover from the pandemic," Cuomo said. "I thank the legislative leaders -- Senate Majority Leader Stewart-Cousins and Assembly Speaker Heastie -- for their partnership in helping make this critical budget a reality and delivering results for the people of this state."
Additionally, the budget closes the deficit and invests in the ongoing response to the pandemic and recovery efforts.
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"New York State approached this year's budget with many challenges and the ongoing COVID-19 pandemic." Stewart-Cousins said. "However, driven by a commitment to long-term equity and prosperity for all, we have accomplished a great deal. I am proud of the strides we have made in funding our schools, helping businesses rebuild, and protecting New York's most vulnerable. Working and middle-class taxpayers will receive the relief they desperately need, while the wealthiest New Yorkers will help their neighbors."
The budget agreement includes spending in the following categories:
--Total State Operating Funds: $111 billion
--All Funds spending $212 billion
--School Aid: $29.5 billion, a $3 billion increase.
"Budgets are a statement of values, and in my two decades of service to the people of New York, I can't think of a more far-reaching and impactful budget than this," Heastie said. "It meets longstanding goals of our Assembly Majority and addresses the historic inequities that have existed for too long. My colleagues and I have worked tirelessly to deliver a budget that will help New York rise from this health crisis and recover from its devastating economic impacts while upholding our commitment to putting New York families first."
Employment in New York declined by nearly 2 million jobs from February to April 2020, according to DiNapoli. Less than half of the jobs lost during that time have been recovered, according to new state Department of Labor data, and employment is still more than 1 million jobs below its pre-pandemic levels.
The leisure and hospitality sector was the most hard-hit, representing 30% of New York's total employment decline "despite representing only 9.8 percent of total employment," according to DiNapoli.
The industry has recovered nearly 260,000 jobs since May 2020 - fewer than half of jobs that were lost overall.
"Even as overall job growth has resumed in New York, some industries -- educational services, government, and financial activities -- have continued to lose jobs," DiNapoli said.
The Associated Press contributed to this report.
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