New York’s political stage is no stranger to high-stakes drama, but the latest act—centered on universal child care, taxes, and looming federal challenges—has drawn together two powerful figures with divergent philosophies: Governor Kathy Hochul and New York City Mayor Zohran Mamdani. Their cautious partnership, forged amid mounting fiscal uncertainty and ideological pressure, may shape the state’s social safety net for years to come.
On January 20, 2026, Governor Hochul sat down for an exclusive interview with Capital Tonight, exuding confidence in her administration’s ability to weather whatever fiscal storms the federal government might send New York’s way. “It’s a constant attack. We’ve been successful in court. We need the Supreme Court to back us up here as well on some other cases,” Hochul explained. “So, we are preparing for this, Susan. My budget contemplates the volatility that comes with a Donald Trump administration.” Her message was clear: the state is bracing for unpredictability, but Hochul believes New York is prepared.
That preparation includes a robust rainy day fund—$14.5 billion set aside for emergencies. Hochul is already pressuring the state’s seven Republican congressional representatives to support a crucial federal Medicaid waiver, which would allow New York’s Essential Plan to continue. Should that waiver be denied, she indicated she’d dip into the rainy day fund to bridge the gap. “It’s a multi-pronged war,” she said.
But fiscal maneuvering isn’t happening in a vacuum. Just months before, Hochul faced a different kind of storm: a stadium full of Zohran Mamdani’s supporters, chanting “tax the rich” so loudly that it nearly drowned out her speech. Mamdani, the city’s new mayor and a self-proclaimed democratic socialist, had campaigned on a pledge to tax New Yorkers earning over $1 million annually to fund a universal child care system. Yet, when it came time to govern, Mamdani proved more pragmatic than some expected. He accepted Hochul’s offer of nearly $1 billion from existing state revenues—plus an additional $425 million the following year—to jumpstart the expansion of child care across New York City, sidestepping the tax debate, at least for now.
“I think you pick your spots, and a win’s a win,” Rebecca Katz, whose firm produced campaign ads for Mamdani, told The New York Times. Behind closed doors, Mamdani’s aides made it clear to Hochul’s team that the mayor was willing to accept the funding on offer, even if it meant postponing his tax-the-rich ambitions. For Mamdani, policy victories trumped ideological battles, a side of him that wasn’t always visible during his insurgent campaign.
Still, the truce is fragile. Speaking to reporters after Hochul’s State of the State address, Mamdani reiterated his belief that raising taxes on the wealthy and corporations will be “a critical part” of funding the city’s basic operations and his expansive policy agenda. “We have to tax the wealthiest New Yorkers, the most profitable corporations,” he said during a television interview. Hochul, however, remains steadfast: “I don’t support raising taxes just for the sake of raising taxes.” Her approach reflects not only her moderate political instincts but also concerns about driving businesses out of New York and jeopardizing Democratic seats in battleground districts.
Observers draw parallels to a decade ago, when former Mayor Bill de Blasio’s plan to fund prekindergarten with a tax on the wealthy was ultimately quashed by then-Governor Andrew Cuomo, who found alternative funding. Hochul appears determined to avoid a similar feud. “It’s the program that matters,” said Christine Quinn, former City Council speaker. “New Yorkers don’t care how it’s funded.”
For now, the state’s 2026 budget includes $60 million for three pilot universal child care programs in Monroe, Broome, and Duchess counties. The outcomes of these pilots will determine the timeline for a broader rollout. “One thing we’re doing is, you have to have more capacity. You have to have locations. You have to have the workers,” Hochul explained. To that end, the state is offering free community college tuition to adults 25 and older who want to become early childhood educators—a move designed to build the workforce needed to support universal child care.
The funding agreement between Hochul and Mamdani is, in many ways, a temporary fix. While the state can cover the first two years of child care expansion with surging revenues—thanks in part to Wall Street bonuses and a buoyant stock market—the big question remains: what happens when that money runs out? As The New York Times notes, the duo’s détente “could set them on a collision course in the not-too-distant future,” with progressives and democratic socialists already pressing for higher taxes on the wealthy to make the program permanent.
Advocacy groups like the local chapter of the Democratic Socialists of America and Our Time for an Affordable NYC have focused their criticism on Hochul. “If Governor Hochul continues to refuse to tax the richest individuals and corporations, who are about to enjoy a $12 billion federal tax cut, she will be handing the wheel to the Trump administration as it destroys our social safety nets,” they warned in a joint statement. Meanwhile, policy experts like Nathan Gusdorf, executive director of the Fiscal Policy Institute, suggest that modest tax increases for most New Yorkers—not just the ultra-wealthy—may ultimately be necessary to sustain universal child care. “We couldn’t have public schools if only millionaires paid taxes, and the same logic should be extended to child care,” Gusdorf argued.
Not all voices are calling for higher taxes. Bill Hammond, a senior fellow at the fiscally conservative Empire Center for Public Policy, praised Hochul’s restraint: “If the state’s leaders truly care about affordability, they should be cutting taxes, not raising them.”
Hochul’s political calculations are evident in her proposed $260 billion budget. It includes increased school aid, billions more for Medicaid to offset federal cuts, an extension of a corporate tax hike from 2021, and a tax on smokeless tobacco products. She’s signaled some openness to raising business taxes if federal budget cuts worsen New York’s finances, but has avoided the sweeping increases progressives desire. Her caution also extends to public safety and immigration policy. Hochul declined to back the “New York for All” Act, which would bar police from aiding U.S. Immigration and Customs Enforcement, citing current policies that already limit state police involvement in civil ICE enforcement. “Already we do not use state police officers to assist with civil ICE enforcement. We just don’t do that,” she said, emphasizing the need for flexibility in cases involving serious crimes.
On climate policy, Hochul faces another looming deadline. A judge has given the state until February 2026 to implement regulations for the Climate Leadership and Community Protection Act (CLCPA). Hochul acknowledged that the federal government has “eviscerated our whole strategy for meeting these goals,” but affirmed her commitment to environmental progress: “I want to meet these goals more than you can imagine. I really do. I believe in fighting for our environment. I understand climate change; but I have to deal with realities. The cards that have been dealt us right now.”
As the state embarks on this ambitious child care expansion, Senator Kristen Gonzalez, a DSA member, put it succinctly: “These two years gives us an actual concrete data set to say, ‘This is what families need to make the city more affordable.’” The coming years will reveal whether the partnership between Hochul and Mamdani can survive the inevitable fiscal and political tests—or if their temporary alliance will give way to renewed battles over how, and who, should pay for New York’s future.