New York’s legislature approved a budget that hikes the state’s minimum wage to $9 per hour. But taxpayers, not businesses, could actually be the responsible party for paying those extra wage costs, if a closed-door tax credit agreement among politicos made the final budget cut.

The new wage minimum will be phased in over three years, United Press International reports. The current level of $7.25 will hike to $8 by the end of 2013; to $8.75 by the end of 2014; and to $9 by the end of 2015, UPI says.

The minimum wage increase reflects a win for Democrats, who have fought hard against Republicans and business interests who see the mandate as a wall to economic growth. But the big loser may actually be the taxpayer, The Associated Press reports. Original budget language for the “minimum wage reimbursement credit” actually says employers will receive compensation for their higher wage costs — by way of taxpayers, AP says.

Once the minimum wage rises by $1.75- to its full $9-per-hour mandate, employers will only be paying 40 cents of that difference, AP reports. The remaining $1.35 will be paid by taxpayers, in the form of a reimbursement credit that goes back to employers.

“It’s a big subsidy for the corporate low-wage economy,” said Mark Dunlea of the Hunger Action Network advocacy group, in the AP report.

AP reports the tax credit deal was forged during closed-door meetings with Gov. Andrew Cuomo and legislative leaders, and was subsequently buried within the budget bill.

UPI did not clarify whether that tax credit was contained within the budget that passed the legislature earlier this week.

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