As New York’s budget negotiations stretch weeks past their deadline, a growing group of upstate Democratic lawmakers is looking to expand a controversial new tax proposal beyond New York City—bringing it to communities across the state.
The push comes in response to Governor Kathy Hochul’s proposed “pied-à-terre” tax, which targets high-value second homes in New York City. Now, lawmakers representing areas far outside the five boroughs say their regions should also benefit from similar revenue streams.
Hochul’s proposal would apply to second homes in New York City valued at $5 million or more that are not used as primary residences or rented out full-time. While details remain limited, the governor has estimated the tax could generate roughly $500 million annually to help close the city’s projected $5.4 billion budget deficit.
But upstate Democrats argue the issue isn’t unique to New York City.
They point to communities such as Saratoga Springs, Lake George and Lake Placid—areas where high-end second homes often sit vacant for much of the year while still relying on local services.
State Senator Pat Fahy has emerged as a leading voice behind the effort to expand the tax’s reach.
“During COVID, the second home market went on steroids,” said Fahy. “It has, in so many ways, crushed the affordability in many of these upstate and Long Island communities. This is a way to level the playing field.”
Fahy and others are proposing a system that would allow municipalities outside New York City to opt into a similar tax structure. Unlike the city-focused proposal, they are also calling for a lower threshold – potentially around $2.5 million – to reflect differences in housing markets across regions like the Hudson Valley and Adirondacks.
A key component of the upstate push is how the revenue would be distributed.
Fahy has suggested that a portion of the funds generated – potentially half – should be directed toward Aid and Incentives to Municipalities (AIM) funding, a program designed to support financially strained local governments.
Supporters argue the tax would help offset the burden placed on communities where second homeowners contribute less consistently to the local economy.
“Expensive second homes are mostly unused, yet, when the owners are there, they are still using police, fire, water and infrastructure,” said Fahy. “They’re still using all the services that are barely compensated for because those places are left empty most of the time.”
“We have seen an exponential growth in luxury housing, which has priced out the residents … local residents can’t afford to live,” she added.
The proposal is also being driven by broader frustration among non-New York City lawmakers who say too much of the state’s budget focus is centered on the city.
Assembly Member Sarahana Shrestha, who represents Kingston, voiced that concern directly.
“Non-New York City members are getting frustrated that it seems like the governor is only trying to solve New York City problems,” Shrestha said. “The governor is not the mayor of New York City. The governor is the governor of the state of New York.”
Upstate cities are dealing with their own financial challenges. Buffalo is facing a projected deficit exceeding $100 million while Albany and Kingston are also grappling with budget shortfalls.
For lawmakers in those regions, the idea of expanding the tax is as much about equity as it is about revenue.
While the concept is gaining traction, significant questions remain about how such a tax would work outside New York City.
Shrestha noted that any upstate version would need safeguards to prevent property owners from avoiding the tax through limited liability companies or other ownership structures. She also suggested that local governments should have flexibility in determining thresholds based on their specific housing markets.
“In my district, if you go to the town of Ulster, there may not be many, but if you go to Rhinebeck, if you go to Red Hook … some of the homes are literal mansions,” said Shrestha. “When I canvass, sometimes some of the homes are mansions, tucked in there (with) very long driveways … completely shuttered because they’re not there.”
Ultimately, the fate of any expansion depends on Hochul who has indicated she is not interested in broadening the tax beyond its current scope.
Her administration has framed the New York City version as a targeted measure aimed at ultra-wealthy individuals who do not primarily reside in the state.
Hochul has made clear that local governments – including those outside New York City – must take responsibility for their own fiscal challenges.
“It is the responsibility of the mayor and the City Council to find more savings, as they will have to do in Buffalo and Albany and Syracuse and elsewhere,” said Hochul. “Working together,that’s the collaboration that is essential to bring to us more savings as we continue to try and start closing out our budget as well.”
The governor has also pointed to targeted state aid, including $40 million allocated to Buffalo, as evidence that upstate communities are not being overlooked.
As negotiations continue, the proposal to expand the pied-à-terre tax has added another layer to an already complex budget process.
