The release of the Legislature's counter budget proposals to Gov. Kathy Hochul's $233 billion spending plan started the next stage of budget negotiations in Albany, and lawmakers are bracing for their toughest fight yet this session: reaching a deal on housing.

Housing is expected to be the biggest sticking point for the governor and legislative leaders, which could prevent the budget from getting done on time before the April 1 deadline.

The Senate and Assembly's one-house budgets dropped late Monday and Tuesday morning, respectively, setting the tone for upcoming budget talks. The proposals show lawmakers' priorities to build more housing units align more with Hochul's than this time last year, but they continue to clash on the details of tax incentives and the need for stronger tenant protections.

"I feel like I do every year – it all begins now," Hochul told reporters Tuesday in Albany.

State senators proposed a $246.2 billion budget, or $13.2 billion more than Hochul's spending plan released in January.

Lawmakers in the upper house want new tax breaks for developers similar to New York City's expired 421a program to build more affordable units. Senators also earmarked $250 million to create a new state entity to fund developments on state-owned land, modeled after the bipartisan-sponsored Mitchell-Lama program, which has helped develop affordable housing since 1955.

Gov. Hochul often refuses to publicly respond to proposals before negotiating with leaders behind closed doors, and that isn't changing. But she said she's encouraged by the Senate's ideas to spur construction.

"I'm glad to see people are now coming around to the idea that housing needs to be built," Hochul said.

Assemblymembers did not reach a consensus on subsidies for developers in their one-house budget, but proposed $500 million each to support existing Mitchell-Lama developments and the Foundations for Futures program to support homeownership and create limited equity cooperative housing on state- and municipal-owned sites, community land trusts, property owned by nonprofits and others.

The Assembly's budget reinstated $250 million for the Housing Access Voucher Program and restored $40 million for the Homeowner Protection Program that Gov. Hochul slashed in her executive budget.

"This sets forward a framework on how we want to approach the housing discussion, which includes increasing supply, protecting tenants and making sure as well that there’s labor standards," Assembly Housing Committee chair Linda Rosenthal said.

But members of the Legislature agree a housing deal must be comprehensive with a variety of solutions, including stronger tenant protections – a stalemate that caused housing negotiations to break down twice last year.

Both the Senate and Assembly one-houses included vague language to include principles of "Good Cause Eviction" legislation in the final budget, or a proposal backed by progressives to cap rent increases and make it more difficult to evict a tenant.

"We're talking about making sure that people have, you know, a reasonable way to stay in their homes," Senate Majority Leader Andrea Stewart-Cousins said.

The Senate leader has long said a housing deal must include tenant protections.

Stewart-Cousins on Tuesday said leaders will explore a broad range of opinions and ideas to create the best opportunities during negotiations.

"We have a holistic approach," she said. "We think that tenant protection is as important as building a big statewide plan in the future. Because it's all important to us."

Rosenthal, a staunch supporter of Good Cause, said legislative leaders have discussed the best ways to tackle the housing crisis for months, but they have not decided which tenant protections will be non-negotiable or where the Legislature is open to compromise. Serious negotiations will begin in the coming days.

“No matter what side you’re on, all of these measures are necessary in order to address the housing supply need as well as the tenant eviction issue,” the assemblywoman said. “We need tenant protections for everyone, and that includes people who live across the state.”

Meanwhile, labor unions – a powerful voice in negotiations – rallied in the Capitol on Tuesday in favor of the legislation and other proposals to increase housing supply.

"We have to do something to cap crazy rent increases," Local SEIU 32BJ President Manny Pastreich said. "There's just no question about that. We have to do that. We have to figure out vouchers."

Housing advocates have pushed back against a watered-down version of Good Cause, saying it should not be included in the budget if provisions are removed. And lawmakers don't want to pass housing policy that won't protect tenants or affordable housing.

"Whatever we come up with needs to be a real good strong version of Good Cause, otherwise, we won’t be accomplishing very much at all," Senate Deputy Majority Leader Mike Gianaris told Spectrum News 1 after the rally.

Rosenthal said negotiations will not start with a watered down version of the bill, and she will remain optimistic.

“We know where the two houses are, we know where the developers are, we know where the tenants are and we know where labor is,” she said. “And we have to coddle together something that meets everyone’s needs. As that will shake out, stay tuned, as they say.”

Lawmakers are expected to vote and adopt their budgets Thursday. More serious budget talks are expected to begin Friday and this weekend as leaders rush to finish the budget before the Easter and Passover holidays at the end of the month.

With all eyes on housing after last year's failure to reach an agreement, lawmakers are feeling the pressure to strike a deal this session they can use to campaign for re-election when they return to their districts.

But it will depend where leaders and Gov. Hochul will agree to bend in order to reach middle ground, and the governor says she's ready to get to work.

"I think we're going to get something done," Hochul said. "There will be robust discussion about the approach, but walking away from this session not doing something and building more housing is not acceptable to me."