Payroll taxes for companies in the New York City area would rise and the minimum wage would increase alongside inflation as part of the $227 billion budget plan advanced Wednesday by Gov. Kathy Hochul.

The proposal has business organizations in the state on edge as the economy remains on potentially shaky ground in the coming months.

"New York must do more to provide relief to taxpayers and support our regional economies," said Justin Wilcox of the pro-business group Upstate United. "We urge Gov. Hochul to work with the Legislature and do better for New Yorkers.”

The budget would raise $800 million from a payroll mobility tax from firms in the Metropolitan Transportation Authority's service area in order to fund mass transit. Hochul wants to index the minimum wage to rate of inflation, though would include a cap on raises if the cost of living were to sharply increase.

And Hochul's budget did not address the billions of dollars in unemployment insurance interest employers are paying in New York in order to pay off a debt owed to the federal government," said Ashley Ranslow, the state director of the National Federation of Independent Business. "State lawmakers and business groups in New York have urged the Hochul administration to tackle the problem and provide relief from the debt costs, which are being paid as a monthly surcharge."

The state owes billions of dollars in unemployment insurance debt while at the same time a comptroller's audit last year revealed New York's Department of Labor was defrauded by as much as $11 billion in jobless benefits by scammers.

Hochul's budget does not include any increases in the personal income tax rate and backs more spending for infrastructure projects. But the budget also comes at a delicate time for the economy. New York has struggled to regain the jobs lost in the initial months of the COVID-19 pandemic and the Hochul administration is expecting billions of dollars in deficits due to slowing tax revenue in the coming years.

"If New York legitimately wants to bring its economy back to pre-pandemic levels and address issues of affordability, Main Street businesses and local jobs must be prioritized," Ranslow said. "All this budget does is make it more expensive to do business in New York."