NY Gov. Hochul Announces ‘General Agreement’ on $268B State Budget

New York Public News Network | By Jon Campbell, Samuel King, Jimmy Vielkind

New York Gov. Kathy Hochul on Thursday announced a framework deal on a $268 billion state budget that includes money to help New York City and other municipalities close their deficits, adds limits on local police cooperating with federal immigration authorities and creates new rebate checks to help defray the cost of utility bills.

What Hochul described as a “general agreement” with legislative leaders will also roll back the state’s climate change mandates, reshape the state’s auto-insurance laws and eliminate an income tax on tips, she said.

But details on many areas are still not settled, Assembly Speaker Carl Heastie said soon after Hochul’s Thursday morning announcement.

The Democratic speaker said Hochul spoke prematurely, and that nearly 50 items were still unresolved.

New York Assembly Speaker Carl Heastie speaks to reporters on Thursday, May 7, 2026.

“There’s no budget deal,” he said. “We have a list of requests that we talked about last night when I left the leader’s meeting. I said, ‘I’m fine if you say to the press things are close,’ but … I don’t have a final (financial) picture.”

He said even the $268 billion total spending figure wasn’t settled.

Despite her projected $10 billion increase in spending from the previous year, the governor said the budget would make New York more affordable for its citizens.

“We’re delivering on affordability, on safety, on childcare, on the environment and on housing,” Hochul said Thursday at the state Capitol. “This budget is the culmination of an ambitious agenda I laid out in January.”

Hochul hoped her announcement would break what’s been a weekslong stalemate over a final spending plan, which was due April 1. Heastie said he was sending rank-and-file members away from the Capitol, perhaps complicating negotiations on what is already the latest spending plan of Hochul’s tenure.

Even if there are no major changes to what Hochul announced, final details still need to be ironed out before the terms are written into legislation and put to a vote. Should lawmakers approve the bills as expected, it will be the most delayed New York state budget since 2010, when negotiations dragged into the summer.

Here is the status of what has been agreed to, according to Hochul:

Money for municipalities

Under the deal, the state will make billions of dollars available to New York City and tens of millions of dollars available to other cities to help them deal with ongoing financial struggles.

In New York City, that means $1.5 billion in additional aid and $1.2 billion for a childcare expansion. It also includes a tax on pricey unoccupied second homes that state officials expect to bring in $500 million a year for the city.

Mayor Zohran Mamdani, a democratic socialist and unlikely ally of the moderate governor, had sought steeper income and corporate tax hikes to fund even more programs. Hochul pared back that ambition, backing the so-called pied-à-terre tax instead.

But the final details of how the tax will be implemented still haven’t been hammered out, despite Hochul’s announcement Thursday.

State and city finance officials have struggled to come up with a reliable method for determining which second homes have an actual market value of $5 million or more, the threshold for qualifying for the tax.

The governor’s hometown of Buffalo is slated to receive at least $40 million. Albany, Rochester and Syracuse are also in line for additional funding, though final details have not yet been released.

Limiting immigration cooperation

Under the budget, state and local police agencies would be prohibited by law from contacting federal immigration authorities about people they encounter during non-criminal enforcement, like traffic stops.

Places with stricter sanctuary policies, including New York City, would continue to restrict a broader subset of coordination.

The deal also bans formal 287(g) cooperation agreements with U.S. Immigration and Customs Enforcement and bars county jails from renting space to the agency.

Lawmakers agreed to versions of Hochul’s proposals to expand sanctuary locations, including schools and hospitals, where civil immigration enforcement is barred.

The immigration-related measures drew a threat earlier this week from Tom Homan, President Donald Trump’s border czar. Homan threatened to send additional immigration enforcers to New York if state policymakers followed through with legislation to limit cooperation with ICE.

Utility rebates, climate change and more

Hochul first introduced her budget proposal in January, painting several of her priorities as a way to reduce costs for New Yorkers, or at least stem their growth.

As part of the budget agreement, she was able to convince legislative leaders to get on board with changes to the state’s auto-insurance laws that will limit payouts to people found mostly responsible for a wreck. But she agreed to tighter rules for insurance companies, who will have to seek prior state approval before implementing any rate hikes and face stricter limits on profits — both of which were priorities for lawmakers.

The insurance changes mark a major win for Uber, the ride-hailing app that spent more than $9 million on an advertising campaign urging lawmakers to get on board.

The changes were opposed by the New York State Trial Lawyers Association, which argued they would take legal rights away from crash victims.

Lawmakers, meanwhile, got Hochul on board with rebate checks for New Yorkers dealing with soaring gas and electric costs.

First proposed by the state Assembly and embraced by the state Senate, Hochul came around to the idea of sending $1 billion in checks to utility-paying households, depending on their income.

Hochul and lawmakers are also set to eliminate a lengthy environmental review for some housing projects in New York in hopes of getting apartments and condos built more quickly, a move backed by Mamdani.

On climate change, Hochul insisted on scaling back a 2019 mandate that requires the state to cut its carbon emissions 40% by 2030, a goal the state was on track to miss. A separate mandate of cutting emissions 85% by 2050 will remain in place.

The move put Hochul at odds with environmental groups angered by her about-face on the climate mandates, which the governor had previously touted.

But Hochul’s administration warned that complying with the 2030 mandate had the potential to hike utility rates and gasoline prices, which ran afoul of her affordability agenda in her reelection campaign.

“New York has led and will continue to lead on clean energy and climate. But reality is harsh,” she said. “We can not meet the current timelines without driving energy costs higher. The facts bear that out, and I cannot let that happen.”

Next steps

Hochul’s office and legislative staff will now work to write the deal into a series of nine bills that lawmakers will put to a vote over the course of multiple days.

Even before the deal was struck, legislative leaders expressed confidence that voting would take place next week.

”We’re nearing the beginning of the end,” Senate Majority Leader Andrea Stewart-Cousins said Tuesday. “I really do believe that.”

Image: New York Gov. Kathy Hochul announces a framework deal on a $268 billion state budget on Thursday, May 7, 2026, at the State Capitol in Albany. (Samuel King/New York Public News Network)