Final budget hearing frames tradeoffs: receipts up but lawmakers spar over decoupling, re‑registration and policy priorities

Albany — Chair Gary Pretlow convened the 14th joint hearing on the Governor’s proposed fiscal‑year 2027 budget, where Acting Tax Commissioner Amanda Hiller outlined revenue trends, modernization work and a set of executive proposals that touch tax relief, compliance and selective decoupling from federal rules.

Hiller said New York’s tax system remains highly progressive and concentrated: "More than half of New York's personal income tax receipts are paid by fewer than 2% of New York's personal income taxpayers," she told the committee, and added the state processed 28 million tax filings and collected roughly $162 billion last year. She said the state looks on track to end the fiscal year with income tax receipts up $6.7 billion and sales tax up $1.2 billion over the prior year.

Those strong receipts, Hiller said, let the governor propose a budget that largely holds tax rates steady while pursuing targeted relief and administration changes. Hiller cited recent measures that returned $2.2 billion via rebate checks, cut low‑ and middle‑income rates and expanded the Empire State Child Credit. The executive budget, she testified, also would "decouple" from certain federal tax rules in order to expand the child and dependent care credit and to protect charitable deductions if federal changes strip 501(c)(3) status from organizations.

Hiller described a multi‑year plan to re‑register sales‑tax vendors — the first re‑registration in 18 years — proposing to phase the effort over three years and offer a sales‑tax discount program with penalty abatement and interest discounts for vendors that resolve liabilities before re‑registration begins. "Our goal is to conduct an effective re‑registration that functions as a reset for active businesses with sales tax debts and ensures we have accurate information," she said.

Committee members pressed the commissioner on a range of items. Assemblywoman Williams asked whether STAR credit disputes would still be handled through the Office of Real Property Tax Services; Hiller replied they would and deferred enrollment statistics to published department charts. Several legislators pressed Hiller for data on who benefits from provisions in the federal Tax Cuts and Jobs Act now under consideration for decoupling; Hiller said some issues are analytically complex but committed to providing further detail.

Lawmakers also questioned enforcement capacity if the state expands taxable categories — notably proposed wholesale taxes on alternative nicotine products — and whether cross‑border illicit sales would undercut collections. Hiller said the executive budget would increase the department’s enforcement role for vapor products and cited the department’s criminal enforcement division, but acknowledged enforcement challenges in the face of high tax‑driven incentives.

On administration issues, Hiller said the tax department is in year five of a five‑year IT modernization, has rolled out new withholding and online services components, and is scoping further projects to replace legacy property tax systems and other older tools. She emphasized cybersecurity and employee training, noting the department uses segregation, audit trails and geofencing to protect tax data.

Multiple panels of witnesses later echoed the tradeoffs framed in Hiller’s testimony: tax‑policy experts and fiscal advocates pressed for new revenue to absorb federal cuts, while business groups warned that some decoupling choices could deter investment. Chair Pretlow closed the long session by saying written testimony will inform each house’s one‑house budget and that leaders aim to reconcile proposals before the April 1 budget target.

Next steps: the Ways & Means and Finance committees will fold this hearing’s testimony into staff analyses and the one‑house budget drafts that both chambers circulate ahead of final negotiations.