Governor Hochul Proposes Ambitious Housing Agenda

ALBANY—Gov. Kathy Hochul in her 2026 Executive Budget message on Tuesday (Jan. 21) continued her push for the construction of new housing to address the housing shortage crisis, while also calling for $5 billion in various rebates and incentives to be “put back into the pockets of New Yorkers.”

While the governor and the State Legislature must now hold discussions on the $252-billion budget and changes are expected in some key areas, the additional funding for housing construction and other policy changes geared at addressing housing costs were sure to be welcomed by real estate and housing advocacy organizations.

While Congress is expected to debate a full or partial repeal of the SALT deduction, Gov. Hochul was unequivocal in her budget address, telling New York Congressional representatives, “Full repeal or no deal. Let me repeat. Full repeal or no deal.” Gov. Hochul said the current limit of $10,000 on state and local taxes in New York State costs New Yorkers up to $12 billion a year.

In her attempt to foster her affordability agenda, the governor has proposed $5 billion to be put back into the pockets of New Yorkers. The plan includes: $3 billion to provide Inflation Refund checks to 8.6 million New Yorkers, including $500 for joint filers making less than $300,000 and $300 for single filers making less than $150,000; $1 billion in middle-class tax cuts across five of the state’s nine tax brackets, cutting rates to their lowest level in nearly 70 years for New Yorkers who file jointly and earn up to $323,000 annually; $825 million to expand the Child Tax Credit over two years, giving eligible parents $1,000 for kids under 4-years-old and $500 for kids ages 4-16 and $340 million to provide free school breakfast and free school lunch for every student in New York.

In addressing the housing shortage, Gov. Hochul said, “Costs will never come down if we don’t increase supply. That’s why we must build, build, and build some more.”

Housing

Governor Hochul is proposing the following funding measures to increase the housing supply with:

$1 billion over five years to support housing construction in New York City through the “City of Yes” initiative.
$760.5 million in discretionary funding available for Pro-Housing Communities, including a $100-million infrastructure fund exclusively for the 266 certified Pro-Housing Communities and other municipalities who join the program.
$250 million to build housing on state-owned land through the Redevelopment of Underutilized Sites for Housing (NY RUSH) initiative.
$100 million for first-time homebuyers, including $50 million in capital for starter homes and $50 million for down payment assistance.
$50 million for the Resilient and Ready program to help homeowners impacted by extreme weather.
$50 million to create the first-ever Mixed-Income Revolving Loan Fund to spur development of mixed-income rental housing outside New York City.
$30 million in affordable housing by doubling the tax credits available through the New York State Low Income Housing Tax Credit Program, expected to generate $210 million in private investment.
To help curb predatory private equity firms acquiring properties, the state would institute a 75-day pause on their ability to bid on residential properties.

Economic Development

In her budget address, she proposed the following economic development initiatives:

$750 million for economic development projects that serve communities across New York, like the Downtown Revitalization Initiative and the New York Works Economic Development Fund.
$400 million for a first-of-its-kind investment in the City of Albany to strengthen the state’s capital city.
$300 million to create power-ready sites for advanced manufacturing through the Promote Opportunity with Electric Readiness for Underdeveloped Properties (POWER UP) Fund.
$165 million to alleviate the impact of interest payments that employers would otherwise be charged due to Unemployment Insurance Trust Fund debt.
$47 million to fund free community college for New Yorkers aged 25-55 pursuing in-demand degrees like nursing, technology and engineering.

The following are other highlights of the governor’s 2026 Executive Budget proposals of interest to the construction industry:

MTA, Hudson Valley Upgrades, Upstate Transit

The budget includes $25 million for planning and design of improvements to Hudson Valley rail service, working to shave as much as 15 minutes of commute times for certain trips. A total of $344 million is earmarked for Upstate transit systems and $588 million for non-MTA Downstate transit systems.

Climate Investment

In what has been described as the largest climate investment in New York State’s history, the governor’s 2026 Executive Budget calls for:

$1 billion for the clean energy transition, including thermal energy networks on State University of New York campuses, retrofitting homes with clean devices like heat pumps and supporting business decarbonization.
$500 million for clean water infrastructure that supports municipal drinking water, wastewater treatment and more.
$125 million for the state Superfund program to remediate hazardous waste, and a 10-year reauthorization of the State Superfund program.
$108 million to build climate resiliency, including $78 million for coastal resiliency and $30 million in Green Resiliency Grants.