New York State Budget Deal Brings Congestion Pricing, Plastic Bag Ban and Mansion Tax

ALBANY — After weeks of intraparty bickering, the New York State Legislature and Gov. Andrew M. Cuomo on Sunday signed off on a $175 billion budget that was wreathed with progressive initiatives, including changes to the cash bail system, a new tax on high-end homes and a groundbreaking plan to charge motorists to drive into Manhattan’s busiest stretches.

The budget deal was immediately hailed as “transformative” by Mr. Cuomo, and it will clearly have an impact felt far beyond taxpayers’ wallets. The agreement included deals that will likely change the way millions of New Yorkers shop, commute and vote: bans on plastic bags from retail stores, billions in new funds for New York’s troubled subway system and a new paid three-hour break on Election Day.

The budget’s progressive theme was a victory for Mr. Cuomo and the newly elected Democratic majority in the State Legislature, most notably Democrats who helped give the party control of the State Senate for the first time in a decade. They largely lived up to pledges to address big money in politics, raise taxes on the wealthy and overhaul a criminal justice system that disproportionately targets minority communities.

But the deal announced in the wee hours of Sunday morning also showed the limits of those campaign promises. Activists criticized a plan to empower small campaign donors as halfhearted. A measure to tax luxury homes was refashioned at the last minute after the powerful real-estate industry intervened. And, perhaps most significant, hopes for legalizing the recreational use of marijuana were dashed, though lawmakers could still approve that later in the legislative session.

Still, for veteran observers of Albany, the sheer variety of issues settled since January — from infrastructure to the environment, from voting rights to transgender rights — was a relief from years of divided government, when interests of Republicans in the Senate often stood in contrast to the state’s overwhelmingly Democratic electorate.

“The process seems very similar,” said Blair Horner, the executive director of the New York Public Interest Research Group, and a former aide to Mr. Cuomo. “But the product is obviously very different because you have a new majority in the Senate.”

Most of the deals announced on Sunday were largely made behind closed doors, and left to the 11th hour: Voting was likely to push right up to, and perhaps past, the midnight deadline.

Chief among the new policies was congestion pricing, which is likely to affect the habits of anyone who works or plays in Manhattan. Under the plan, the first of its type in the nation, vehicles traveling below 60th Street will be subject to a toll, revenue that will be funneled into the city’s beleaguered subways and other regional transportation needs.

The congestion pricing deal deferred many of the difficult decisions — how much to charge drivers and who will receive exemptions — to the Triborough Bridge and Tunnel Authority and a new traffic mobility review board. Eighty percent of the revenue will be directed to the subway and bus network, and 10 percent each to the Long Island Rail Road and the Metro-North Railroad.

The agreement also calls for an overhaul of the Metropolitan Transportation Authority, the agency that oversees New York City’s bus and subway system. Mr. Cuomo, who effectively controls the authority and who has been heavily criticized for the subway’s shoddy performance, has scapegoated the agency in recent months. As part of the budget deal, the authority’s policies will be changed to encourage speedier capital projects and to increase oversight.

A wave of new progressives in the Legislature believed the issue of criminal justice reform was of critical importance, and the new budget reflected that. Under the budget legislation, the state will eliminate cash bail for most misdemeanors and nonviolent crimes, though it will not be completely eliminated, as some of the Legislature’s more liberal members — still recalling the case of Kalief Browder, who took his own life after spending three years on Rikers Island because his family could not raise $3,000 bail — had hoped it would be.

Lawmakers and Mr. Cuomo also agreed to a number of changes to discovery — allowing defendants more access to evidence that prosecutors intend to use against them — and processes to ensure speedy trials.

The compromise on bail, which came after law enforcement officials expressed concerns about the total elimination of such a system, is one of many compromises that appear in the budget.

Another saw a proposed pied-à-terre tax, an annual recurring tax on second homes that were valued at $5 million or more, eliminated. Although the tax had the backing of state leaders, it evaporated under pressure from real estate interests and legal concerns.

In its place, lawmakers and Mr. Cuomo agreed to a “mansion tax” coupled with a real estate transfer tax, two one-time levies that would be charged at the point of sale on multimillion-dollar homes. The tax rate would top out at 4.15 percent on the sale of properties worth $25 million or more.

A plan to ban plastic bags in the state was also included in the budget, but it makes a fee on paper bags optional, which some environmentalists worry will lessen the popularity of reusable bags. New York would be the second state, after California, to ban plastic bags. (Hawaii also effectively has a ban in place, since all the state’s counties bar such single-use bags.)

Mr. Cuomo trumpeted several other accomplishments, including a permanent property tax cap of 2 percent, something he had said was nonnegotiable, and a new tax on “internet marketplace providers” which he anticipated would generate $320 million a year to help fund the M.T.A. The state also approved a tax on opioid pills.

The budget also increases education spending by more than $1 billion. Mr. Cuomo had initially proposed a number about $50 million lower; the Legislature had requested about $600 million more. Education is consistently one of the biggest spending increases, as well as spending commitments, in the budget.

Mr. Cuomo, who has been criticized for sponsoring big-money fund-raisers, also announced a commission to develop a plan to provide up to $100 million annually in public financing for campaigns for legislative and statewide offices, including his own. The commission’s recommendations, due in December, would be legally binding unless the Legislature convened specifically to overrule them.

A small-donor matching program was a central demand of many of the new legislators who won seats last year by defeating better-financed incumbents.

Under such programs, candidates can collect government assistance for their campaigns as long as they meet certain criteria. Such programs are usually intended to encourage small contributions, and don’t offer a match for large ones.

And while the inclusion of public financing in Sunday’s budget seemed like a victory for proponents, many remained unsatisfied, noting that many details, such as the ratio of matching funds and contribution limits, remained undetermined. That has led some activists to worry that the commission’s recommendations would be weak. Asked why he had chosen to form a commission rather than allowing public hearings and a legislative solution, Mr. Cuomo said that the issue was “too complicated” to be taken up by the state’s 213 elected lawmakers.

Still, if New York adopts a 6-to-1 matching system modeled after New York City’s, it would become the first state in the nation to match small donors’ contributions by a ratio of more than 1 to 1, according to Lawrence Norden, deputy director of the democracy program at New York University’s Brennan Center for Justice. (Hawaii matches donations 1 to 1.)

The negotiations over the budget were the first of Mr. Cuomo’s more than eight years in office in which he dealt with an entirely Democratic-controlled Legislature, and they came at a time of increased financial stress for the state, which had its income tax revenue dip sharply in recent months.

Mr. Cuomo consistently railed against the 2017 federal tax overhaul and the policies of President Trump for worsening the state’s financial problems, but still increased state spending to record levels. His administration also said it would codify protections of the federal Affordable Care Act, such as insurance exchanges and protections for pre-existing conditions, into state law.

During a news conference in the Capitol’s ceremonial Red Room on Sunday afternoon, Mr. Cuomo likened the trouble caused by Mr. Trump’s government to those caused by “extreme weather” and “political extremism.”

“This is a difficult time for government,” the governor said. “It’s a difficult time for New York State.”

It was also difficult, at times, in Albany, as the new Democratic majorities in the Legislature flexed their independence and power, creating significant intraparty tension with Mr. Cuomo.

During negotiations, the governor and other members of his administration repeatedly accused lawmakers of having unrealistic expectations and a lack of experience, a situation that was inflamed by the loss of a giant, multibillion-dollar Amazon deal in Queens in mid-February. Tension boiled over last week when a senior aide of Mr. Cuomo verbally attacked several newly elected lawmakers after they criticized Mr. Cuomo’s fund-raising habits, calling them “idiots,” preceded by a profanity.

Still, Mr. Cuomo seemed to want to glide past such unpleasantness on Sunday, saying that “all Democrats are not the same,” and thanking the legislative leaders for their hard work.

Indeed, even as his exhausted aides left the room, Mr. Cuomo stopped and spoke again.

“This is the best budget that has been produced,” he said, as the room cleared, “since I’ve been governor.”