Gov. Kathy Hochul’s proposal to raise revenue in New York City by taxing second homes is prompting another lawmaker to bring the idea to the rest of the state.
Hochul rolled out a plan last month that could help the city bring in as much as $500 million by taxing second homes valued at $5 million or more.
State Sen. Pat Fahy, a Democrat from Albany, wants to allow other local governments to opt into the pied-à-terre tax.
Fahy’s plan would apply to homes that have a five-year average value of at least $5 million and are not a primary residence for the owner, one of their family members or a renter. She is calling for an annual tax between 0.5% and 4% of the property’s average value.
New York City dwellers with luxury second homes in places like upstate or Long Island would be subject to the tax, but Fahy’s spokesperson said the senator is open to limiting it to out-of-state residents.
Half of the tax revenue brought in from the plan would go toward the state’s Aid and Incentives for Municipalities fund, a 20-year-old program that provides unrestricted money to most cities, towns and villages. The other half would remain with the local government.
“I have many … many towns and villages that really could use extra help,” Fahy said. “The AIM money has been really critical in upstate.”
She said home values in resort areas like Lake George and parts of the Finger Lakes have soared since the COVID-19 pandemic, with many homes sitting vacant for much of the year or being used as short-term rentals. A second home tax may tamp down the market some, she said.
“Many of the workers and many of the community members have really been, or their children, have been priced out of the community that they grew up in,” Fahy said.
While the proposal is just an idea at this point, it’s already seeing some opposition.
“Absolutely not,” said state Sen. Pam Helming, a Republican who represents portions of the Finger Lakes.
She said the focus should be on making New York more affordable, not adding more taxes.
Others said the owners of second homes are already contributing to their communities.
“A lot of second homes pay the freight … for the school systems and for all the municipalities,” said Daniel Davies, a real estate agent in the southern Adirondack region, including Lake George. “But they really don’t send school kids to the school system. … They are paying their way, in my opinion.”
Hochul and legislative leaders are still engaged in budget talks. Late on Friday, Hochul expressed skepticism Fahy’s proposal could make it into the budget.
“This was an objective to help the city out with this particular crisis, and we haven’t had time to talk about those other areas [of the state],” Hochul said. “I’m not looking to add a whole lot more to this budget.”
Earlier in the week, Senate Majority Leader Andrea Stewart-Cousins, a Yonkers Democrat, said she would be “willing to entertain” a conversation about the upstate proposal.
“I think it’s worth a broader conversation because it would be an opt-in. And … you know those senators who are talking about it really feel that there is an opportunity for revenue raisers that would help their particular municipalities,” she said.
Assembly Speaker Carl Heastie also told reporters he would be open to listening to members on the idea.
“We haven’t conferenced that, but me, personally, I’d be open to other places looking at pied-à-terre tax,” Heastie said Wednesday.
He said leaders just started discussions on the financial portions of the budget, including taxes, while still trying to reach an agreement on policy issues like auto insurance reform and immigration.
Jon Campbell contributed reporting.
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