NEW YORK — A budget battle is unfolding in Albany as state lawmakers in their budget proposals unveiled a push for tax hikes on both wealthy individuals and corporations to supply New York City with more money, aligning with Mayor Zohran Mamdani but posing a challenge to Gov. Kathy Hochul.

The proposals, known as “one-house” resolutions, have typically in years past also included raising personal income taxes, which have been shut down by past governors. However, this year Mamdani is bringing the political clout of the mayor’s office into the mix, advocating for the tax hikes to fulfill his ambitious affordability agenda and close what he’s said is a $5.4 billion budget gap.

The state lawmakers’ proposed income tax hikes are smaller than those Mamdani has advocated, while the business tax increases are in line with the mayor’s asks.

The budget resolutions kick off the negotiation process that’ll play out over the next month between Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie. Hochul has said personal income tax hikes are a nonstarter.

The proposals, released late Monday, kick about $5 billion to New York City – enough to close that gap.

Legislators proposed raising the tax rate for business and residents with incomes over more than $5 million. That’s scaled down from the more-dramatic hike Mamdani has proposed: 2% increase on city dwellers making more than $1 million a year.

Mamdani said he was thankful the state lawmakers included the tax hikes in their budget proposals, as well as an extension of the free bus pilot he championed as an Assembly member.

“I want to thank Majority Leader Andrea Stewart-Cousins and the Assembly and Senate Democratic conferences for having taken meaningful steps to addressing this budget deficit, and the one that we inherited, including by asking wealthier New Yorkers to pay that little bit more and by creating a fair balance between the city and the state when it comes to our fiscal relationship,” Mamdani said at an unrelated press conference on Tuesday.

But the mayor criticized the proposals for leaving out mayoral control of the schools system — something he previously stood against on the campaign trail but has revised his stance on as mayor.

“As we build a school system that delivers the academic rigor our students deserve, the safe and supportive learning environments our families need, and a truly integrated school system that moves our communities forward, mayoral control allows us to dedicate real resources to this work,” Schools Chancellor Kamar Samuels said in a statement.

Hochul faces more pressure this year to raise taxes on the wealthy, though it’s still an uphill climb for state legislators and Mamdani, who has made raising taxes a cornerstone issue.

A recent Siena University poll found that 54% of voters statewide and 62% in New York City supported the push to raise taxes. Independent groups have also upped the pressure, with a “Tax the Rich” rally organized by allies of the mayor drawing over a thousand people to Albany last month. On Tuesday, PAC DREAM for NYC unveiled a billboard in Albany pushing for the tax hike.

If the state doesn’t give the city more money, the mayor’s threatened to raise the property tax rate by nearly 10%.

Andrew Rein, president of the fiscally conservative Citizens Budget Commission, said that raising taxes would be “simply bad fiscal mismanagement.”

“New York City and state don’t have a funding problem; they have a ‘bang for our buck’ problem,” Rein said. “With looming federal cuts and economic uncertainty, not to mention fierce competition for residents and businesses, the state must better manage critical services and hold the city accountable for doing the same — not risk New Yorkers’ futures by destabilizing the budget.”

Hochul released her roughly $260 billion preliminary executive budget in January. The state budget is due April 1, although lawmakers regularly blow past that deadline.

Also on Tuesday, the New York City Council released an updated budget forecast.

The Council said that its analysis found $1.7 billion in additional savings, making it not necessary to draw down from the city’s reserves in order to balance the budget in this fiscal year, which runs through June 30.

“The Rainy Day Fund was created to help protect New Yorkers during a true fiscal emergency, and has never been tapped,” Council Speaker Julie Menin said in a statement. “Our analysis suggests we are not in such an emergency position today.”

Money could be saved on debt service adjustments, axing “longstanding” vacant jobs and unrecognized interest earnings, according to a release, though details about those possible savings were not immediately available.

Mamdani slammed the Council’s analysis at an unrelated press conference on Tuesday, saying it “raises more questions than it answers” and questioned that the potential savings it put forward actually exist.

“It does not account for the work that we have already done in our preliminary budget to both responsibly reduce unfilled positions without also sacrificing service delivery,” the mayor said, adding that the Council’s plan “undermines the city’s ability to function or deliver the services that the city relies on.”

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(With Cayla Bamberger.)

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