Gov. Kathy Hochul is so eager to overhaul Penn Station — a project that will benefit a top donor to her campaign — that she’s willing to use state funds to make up for the giant hole in the city budget created to fund the plan in the first place.

The state will pay the city to make up for some of the commercial tax revenue Hochul plans to siphon off — which watchdogs estimate at $5 billion — for renovations at the transit hub, the governor said Monday in a joint announcement with Mayor Eric Adams.

“To ensure that the City maintains its tax revenue stream, the City will continue to collect amounts equal to current taxes on each development site with a 3 percent increase each year,” the governor and mayor said in a joint press release.

Hochul’s plan lets Vornado Realty Trust — and its CEO Steve Roth, who is a big Hochul donor — build extra-tall towers around Penn Station while side-stepping the city’s onerous zoning process. Taxes collected on the towers will go to the state, not the city.

To account for that lost revenue, the state, which expects to raise billions from redevelopment, will pay the city back the same amount it currently collects from the properties, about $60 million, plus an additional 3% each year, Hochul and Adams said.

The properties will return to the city’s tax rolls after 80 years — or when the state finishes paying for Penn Station’s rehab, according to the leaders’ agreement.

In the meantime, the state will rake in so-called “payments in lieu of taxes,” or PILOTs — which the press release said will be “significantly more” than current revenues.

That money — which would otherwise go to the city’s general fund — will fund the state’s $7 billion station renovation, $1 billion worth of new plazas above-ground and potential expansion of Penn, an estimated price-tag over $10 billion — all at Vornado’s doorstep.

Roth donated $69,700 to Hochul’s re-election shortly after she took office, according to campaign finance records.

The improvements paid for by the taxes on Vornado new skyscrapers will directly benefit the value of Vornado’s buildings, Reinvent Albany Executive Director John Kaehny said.

“If anything Vornado should pay more because the value of the property around them is being increased by public investment,” Kaehny said. “They’re making out like bandits here.”

Adams batted away criticisms that his deal with Hochul amounted to a donor giveaway.

“Some would like to say we’re just giving rich cats tax breaks – no, they’re going into
improving the infrastructure, and when you start dealing with that infrastructure, it costs money,” the mayor said during a press conference in Manhattan.

State and city officials on Monday declined to say how much the PILOTs would raise or how much of that would go to the city versus to the Penn project.

Regional Plan Association President Tom Wright said the potential loss of tax revenue to the city will be worth it in the long term.

“New York City is forgoing potentially increased property tax revenues, but it’s also getting billions in capital investment, in transit, in the public realm, and New York City is paying nothing for that,” he said.

Additional reporting by Bernadette Hogan and Zach Williams