New York State Budget

Here’s Your Guide to the 2023 State Budget Fight

We added up the governor and the legislature’s joint priorities and broke down their major divisions. The splits will define the year’s big legislative battles.

New York Focus · March 16, 2023

From left: Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, Assembly Speaker Carl Heastie | Photos: Office of Governor Kathy Hochul, NY Senate Media Services, Carl E. Heastie | Illustration: Maia Hibbett for New York Focus

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IT’S MORE LIKE an agenda than a budget. Every year, New York’s governor and two legislative chambers hash out how the state should spend its money — and a stack of other policy priorities. They usually promise record spending: this year, a proposed $227 billion from Governor Kathy Hochul and $233 billion from the Assembly. (The Senate hasn’t published its total.)

Where the governor and the legislatures’ budgets agree, the transformation of priority into policy is likely. Their divisions will define the year’s big legislative battles. This year’s fights include how to set bail, where the governor pitched reversing decades-old precedent against the wishes of the legislature; the governor’s “cap-and-invest” plan to reduce climate-harming emissions, which the Senate wants to flesh out and the Assembly left out; and – in what could be the fiercest dispute of the season – Hochul’s signature plan to force localities to build more housing, which both chambers flatly rejected.

The executive holds most of the leverage in budget negotiations, but an emboldened legislature that just flexed its muscles by shooting down the governor’s chief judge pick could put up more of a fight than usual. Last year, legislators wrung about $2 billion out of Hochul beyond what she’d proposed; this year, with the state’s reserves flush with cash, they may aim for more.

Below, New York Focus broke down each player’s spending and policy priorities. Survey the items in our table, and use the drop-down arrows to read more about where state leaders agree, where there’s debate, and what they left out.

Topline Figures

Education

Where They’re Split

Charter Cap: Taking aim at a longstanding charter school cap, Hochul proposed allowing dozens more charter schools to open in New York City. She wants to remove the city’s existing charter school limit — 275, since 2015 — while keeping an overall statewide cap of 460.

Neither house included this proposal.

CUNY Funding: Hochul’s proposal would cut $397 million in funding from the City University of New York system. Most of that cut would be taken out of the system’s construction and renovation budget, and would come on top of a proposed $168 million cut in the funds that New York City provides to CUNY.

Neither house included this proposal. They instead suggested significant additions to CUNY’s budget: The Senate by about $950 million and the Assembly by about $1.3 billion.

SUNY and CUNY Tuition Increase: Hochul proposed tuition hikes of three percent at most SUNY and CUNY schools, and hikes of six percent at the flagship SUNY schools. This would generate nearly $130 million a year for the two systems, but it would place additional financial strain on their predominantly middle- and working-class student bodies. Under this plan, in-state tuition at the flagship SUNY schools could reach $10,000 per year by 2027, a significant jump from the current $7,000.

Neither house included these proposals.

Where They’re Close

Pre-K: Hochul’s budget proposal would increase funding for pre-kindergarten education by $125 million.

The Senate proposed boosting that sum to $250 million, and the Assembly proposed boosting it to $200 million.

Child Care: Under Hochul’s budget proposal, the state would increase funding for child care by $198 million. That would be used in part to expand eligibility for state-subsidized child care to households making up to 85 percent of New York’s median income, or about $60,000 annually.

The Senate proposed another $623 million to expand eligibility up to 103 percent of median income, and $500 million to provide bonuses to child care workers, who tend to be low paid. The Assembly accepted the governor’s proposal.

SUNY Funding: Hochul proposed increasing funding for the State University of New York system by $879 million. Under her proposal, the number of faculty would remain constant, but the system would receive additional funding for hospital operations, building an endowment, and other projects.

The Senate and the Assembly both proposed further boosts to SUNY funding: about $440 million from the Senate and about $900 million from the Assembly.

Where They Agree

Foundation Aid: Hochul proposed a $2.7 billion boost to “foundation aid,” the term for the main mechanism the state uses to fund public grade schools.

Both houses accepted this proposal.

Health

Where They’re Split

Medicaid Expansion: Hochul asked to delay a measure from last year’s budget, which sought to make undocumented immigrants over 64 eligible for Medicaid. The expansion was slated to go into effect at the start of 2023, but it hasn’t yet. This year, Hochul proposed a new start date of January 2024.

Neither house accepted the delay.

Where They’re Close

Essential Plan: Hochul’s budget seeks to expand the Essential Plan, a state-funded program that provides health insurance to over one million low- and moderate-income New Yorkers who make too much money to qualify for Medicaid. The expansion would make New Yorkers who earn up to 250 percent of the poverty line eligible for the plan. A family of four that brings in up to $75,000 a year would qualify, compared to the current limit of $60,000 or 200 percent.

The legislature adopted the same proposal.

Not included in Hochul’s Essential Plan proposal is coverage for undocumented New Yorkers, which Hochul pledged last year to try to cover with federal funds. She broke that promise earlier this year by announcing plans to submit a request for federal funding to expand the plan, but still exclude undocumented people.

Neither house adopted that measure. Both called for undocumented New Yorkers to be included.

Nursing Homes: Hochul proposed a five percent increase in the size of Medicaid payments to nursing homes that care for low-income elderly New Yorkers. The measure would cost an estimated $158 million this year.

Budget proposals from both houses doubled this amount.

Opioid Settlements: The governor’s proposal lays out plans to spend $320 million in payouts from opioid settlements set to land in the state’s coffers this year. The plan would direct the money to addiction services through a number of initiatives outlined by the state’s Opioid Settlement Fund Advisory Board, including housing, recovery, and prevention services.

But the governor’s office rejected the board’s proposal to fund overdose prevention centers, where people can safely administer substances while under supervision. While the centers are a major priority for drug policy advocates, the Hochul administration argues doing so would violate state and federal law.

The Senate’s budget proposal does not address overdose prevention centers by name, but it says it supports the board’s recommendations and adds an additional $40 million to implement them. The Assembly’s proposal doesn’t address the matter.

Opioid Stewardship Investments: Hochul outlined a plan to use about $200 million in revenue from a fee on opioid sales on harm reduction services. The spending proposals include drug testing and programs to train police in harm reduction methods.

The Senate and Assembly proposals did not address how the funds should be allocated.

Tobacco Control: In a measure that has divided Black leaders, Hochul is pushing to ban the sale of menthol cigarettes. Menthols are preferred by many Black smokers, but criticized by health experts for making cigarettes more addictive and difficult to quit. Hochul also called for increasing New York’s cigarette tax by $1 per pack – the first increase in over a decade – which the American Cancer Society has projected will save over 15,000 lives.

The legislature adopted the cigarette tax increase but not the menthol proposal. Tobacco is the state’s leading cause of preventable death, costing the lives of over 28,000 New Yorkers each year.

Cost of Living Adjustment: Hochul proposed a 2.5 percent pay increase for nonprofit workers that the state hires to provide health care services to elderly, disabled, and other New Yorkers, at a cost of about $190 million.

Both houses bumped that up to an 8.5 percent increase, at an additional cost of $487 million.

Where They Agree

Mental Health: Hochul called for a $1 billion investment in mental health infrastructure, almost all of which would go to creating 3,500 new beds around the state for long-term patients.

Both chambers agreed to this plan.

Housing

Where They’re Split

New Homes: The centerpiece of Hochul’s budget this year is the “New York Housing Compact,” a set of policies that she says would cut into New York’s dire housing shortage by building 800,000 homes in the next decade, double the current rate. The compact relies mostly on two policies: requiring every locality in the state to grow its housing supply by between one and three percent every three years, and requiring New York City and its suburbs to allow more housing near most train and subway stations.

Both houses rejected these proposals. They offered no alternatives to mandate new housing. The Senate and Assembly budgets did adopt the one and three percent targets, but they replaced the enforcement mechanism with a cash incentive program that housing experts say will not produce anywhere near as much housing.

Infrastructure Fund: To complement her housing production requirements, Hochul wants to create a $250 million fund to pay for infrastructure improvements in towns that boost their housing supply.

The legislature proposed boosting this fund to $500 million. The fund would serve as a substitute for Hochul’s plan to require towns to build more housing.

Housing Access Voucher Program: Hochul once again snubbed a top priority of housing activists: a Section 8-style rental voucher system geared towards housing people experiencing homelessness or threatened with eviction.

And just like last year, the Senate and Assembly proposed funding the program at $250 million.

What They Left Out

421-a Extension: Hochul didn’t propose a replacement for the controversial 421-a tax break, which compensated developers for building large housing developments until it expired last year. Replacing it is one her priorities, though, and she’s said she wants to work with the legislature to craft a replacement.

The legislature may not be interested: Neither house included a proposal for a replacement.

Hochul did ask to extend the deadline for projects begun before 421-a expired. Currently, projects must be completed by 2026 to qualify for the break; Hochul wants to extend that to 2030.

Neither house included the extension.

Good Cause: Though not included in any of the budget proposals, “good cause eviction” measures, which would cap yearly rent increases and give tenants the right to renew leases in most apartments statewide, are expected to be a major item of discussion in budget negotiations or the rest of the legislative session.

Both the Senate and Assembly signaled support for elements of good cause, without embracing the proposal outright. Hochul hasn’t taken a position on the measure.

Taxes and Subsidies

Where They’re Split

Individual Tax: Hochul has pledged not to raise income taxes, but both houses proposed half-percent tax increases on ultra-wealthy New Yorkers. Individuals making over $5 million a year would see their taxes rise to 10.8 percent, and individuals making over $25 million a year would see their taxes rise to 11.4 percent through 2027. The measures would raise about $700 million a year, according to the nonprofit Fiscal Policy Institute.

Start-Up New York/EPIC: Hochul’s budget included a plan to revamp and expand the Start-Up New York program, a Cuomo initiative launched in 2014 that provides tax breaks to small businesses that open near college campuses. It was supposed to boost upstate New York’s economy, but instead it became a poster child for wasteful subsidies. In 2015, the program created less than one job per every $100,000 spent on advertising. Hochul’s revamp, which she calls Extended Prosperity and Innovation Campuses, would offer 10 years of tax breaks to a wider range of businesses statewide.

The legislature did not include the proposal.

New MTA Funding: Hochul proposed over $1.6 billion in new MTA funding to boost the New York City metro area’s struggling transit system. With ridership still below pre-pandemic levels, and federal COVID aid tapering off, the MTA faces multi-billion dollar deficits in the coming years. Half of the proposed new funding would come from a new tax on employers and self-employed workers in the area that the MTA serves; another $500 million would be paid by New York City; and the state would pony up the remaining $300 million. Mayor Eric Adams opposes her proposal to raise the city’s share.

Hochul’s budget also assumes a 5.5 percent fare hike, which the MTA has already approved. Future budget gaps would be partially filled by tax revenue from gambling: The state is preparing to auction three licenses to open casinos in New York City.

The legislature took a different tack to filling the MTA’s budget hole, shifting more of the burden to the state. Neither house adopted Hochul’s proposed fare hikes or her “payroll mobility tax” on employers, and both proposed slashing New York City’s contribution. Instead, they want to increase corporate taxes and create a new parking permit system in New York City, whose proceeds would go to the MTA. They also proposed a free bus pilot program of two lines per borough. They didn’t, however, seek to provide “six-minute service” or otherwise dramatically ramp up service as some transit advocates have sought.

Both houses accepted that casino licenses will help fund the MTA in future. The Senate sought one additional source of revenue: lifting Madison Square Garden’s longstanding tax exemption, currently worth some $43 million a year, and directing the new revenue to transit.

Where They’re Close

Corporate Tax: Hochul and both legislative chambers proposed extending New York’s corporate tax hike for another three years. In 2021, the state raised top corporate tax rates from 6.5 to 7.25 percent for three years, set to expire in 2024.

The Assembly also proposed raising the tax rate on companies with over $5 million in profit to 9.25 percent. The Fiscal Policy Institute estimated that this would raise $1.2 billion per year.

Belmont Park: Among the governor’s most notorious proposals is a $455 million dollar loan for New York’s horse racing industry, which the industry would use to renovate the Belmont Park race track on Long Island. Hochul and the industry claim that the loan would reverse racing’s decades-long decline, but independent experts say the evidence for these claims is deeply flawed.

The Senate and Assembly both included the loan in their proposals, with some slight modifications.

Where They Agree

Film Tax Credit: One highly controversial measure from Hochul’s budget is the expansion of a tax credit for the film industry by $280 million a year, bringing its annual cost to $700 million. The move has been decried by budget watchdogs, since the state has never demonstrated that the credit brings in more money than it costs, or creates jobs that otherwise wouldn’t exist.

The Senate and the Assembly both signed on to the plan.

Musical Theater Tax Credit: In addition to the film tax credit boost, all three parties also proposed boosting tax credits for Broadway shows by $100 million, bringing that program’s cost to $300 million a year. The program was created in 2020 as the pandemic shuttered theaters, but now looks on its way to becoming a permanent fixture of New York’s tax landscape.

Criminal Justice

Where They’re Split

Bail: In what is becoming an annual budget tradition, Governor Hochul’s proposal included legislation aimed at expanding pretrial incarceration. And despite countless media outlets framing her plan as another rollback of New York’s 2019 bail reform law, it’s not. Instead, her proposal upends the decades-old foundation of New York’s bail system: It would remove the requirement that courts only consider a person’s likelihood of returning to court when setting bail, offering judges near limitless discretion in the roughly 20 percent of criminal cases that are bail-eligible.

Neither the Senate nor the Assembly included Hochul’s change in their budgets, proposing to keep bail law as it is.

Clean Slate: Hochul’s proposal does not include the Clean Slate Act, a bill that would automatically seal conviction records for people who have been found guilty of crimes and completed their sentences. There’s a built-in delay that varies by offense — records would seal three years after sentencing for misdemeanors and seven years for felonies excluding sex offenses.

The Senate added the bill, as well as $1 million to implement it, to its budget proposal.

The Assembly left it out.

Last year, the governor proposed a version of Clean Slate that would have started the clock only after a person completed their full sentence, including probation and parole — adding years in most cases. The gulf between the proposals prompted Albany to scrap the issue in the hopes of coming to an agreement later.

Prosecution and Defense: Hochul’s budget proposal offered $40 million for prosecutors to implement New York’s 2019 discovery reform law and $47 million for district attorneys’ offices to hire new staff, including “hundreds of new prosecutors.” She offered no similar increases for public defense, despite high attrition levels and a history of crisis conditions.

In its proposal, the Senate included all of that additional prosecutorial funding, plus an extra $50 million for New York City’s five district attorneys’ offices to implement discovery reform. It also offered public defenders the $87 million that Hochul offered to prosecutors.

The Assembly proposed funneling even more money to criminal attorneys: $100 million for prosecutors to implement discovery reform, plus an additional $100 million to create discovery-sharing systems. For public defenders, the lower chamber proposed another $100 million for discovery reform, plus over $32 million more for the state’s general Aid to Defense fund, which would more than quintuple the program.

The governor also proposed increasing rates for “assigned counsel” public defense contractors, as defense advocates have been requesting for years. But she offered no state funding for the pay bump.

The Senate proposed $25 million for the raise, plus $10 million for parental representation in family court, and the Assembly proposed paying for the raise via a nearly $200 million increase in funding for the state Office of Indigent Legal Services.

Fentanyl Analogues: Hochul’s budget would criminalize numerous fentanyl analogues, meaning drugs with similar effects but slightly modified chemical structures. Drug policy advocates have slammed the proposal, with 58 organizations signing a petition comparing it to the 1970s Rockefeller Drug Laws that drove mass incarceration in New York. Hochul didn’t call attention to the proposal in the executive summary of her budget, instead burying it in the 1,100-page budget proposal for mental health services.

Neither chamber of the legislature included Hochul’s plan in their proposals.

Where They Agree

Police Grants: Hochul proposed doubling the Gun Involved Violence Elimination (GIVE) police grant program to $36 million, after doubling it in last year’s state budget. The aim, in the governor’s words, is to fund “evidence-based” strategies to “focus on the small number of individuals” responsible for “persistent violent crime.” As New York Focus has reported, that mostly means aggressively policing and surveilling crime-dense communities.

The GIVE program works hand in hand with New York’s regional Crime Analysis Center Network, a series of police intelligence hubs. In her budget draft, Hochul also proposed adding $1 million in state funding to create a crime analysis center dedicated to the New York City area.

Both the Senate and the Assembly adopted Hochul’s plans for GIVE and the Crime Analysis Center Network for their proposed budgets.

Parolee Surveillance: GIVE grantees and the Crime Analysis Center Network already spend much of their time surveilling parolees — but Hochul wants to ramp it up even further. She has proposed giving the Department of Corrections and Community Supervision funding to “facilitate intelligence gathering” between its parole officers and local cops, as well as spending $7.4 million to create an enhanced parole program in GIVE jurisdictions, which would identify people “at the highest level of risk” and place them under “intensive supervision.”

Both legislative chambers adopted Hochul’s parolee surveillance proposals in their budget documents.

State Police Funding: In addition to local police departments, Hochul has proposed beefing up the New York State Police: She wants funding for four new academy classes, as well as $12.8 million to expand the State Police’s Community Stabilization Units, the Troopers’ version of aggressive hotspot policing teams.

Both the Senate and the Assembly adopted the governor’s plans for the State Police in their budget proposals.

Climate and Environment

Where They’re Split

Cap and Invest: Hochul’s plan to create a “cap-and-invest” system to ratchet down New York’s carbon emissions is her most sweeping approach yet to implementing the state’s climate law. But her budget proposal would leave its design mostly in the hands of the Department of Environmental Conservation and the energy authority NYSERDA — and many questions about the program unanswered.

Still, Hochul’s budget would legislate a few key elements of the program. It would direct at least one-third of proceeds from sales of carbon allowances to a “Climate Action Fund,” which would in turn send direct rebates to New Yorkers. And it would grant free allowances to “energy-intensive and trade-exposed facilities” — though only after state agencies decide who fits the bill.

The Senate expands considerably on Hochul’s proposal, adding detailed guidelines for how DEC and NYSERDA should address sticky subjects like energy-intensive businesses. (For starters, they wouldn’t automatically be granted free allowances.) Moreover, it establishes a “Climate and Community Protection Fund” that would direct spending into four specific buckets, as the NY Renews coalition has pushed for.

The Assembly leaves cap and invest out of its budget proposal altogether. Without it, New York’s climate law would remain a largely unfunded mandate. This sharp divergence could make cap and invest a major political football this budget season — or mean it gets punted until later.

Building Public Renewables: Hochul proposed her own version of the Build Public Renewables Act, a bill that became a flashpoint last year after it passed the Senate but stalled in the Assembly. Her proposal would authorize the New York Power Authority to build renewables, but it omits elements of the BPRA that climate and progressive groups, which originally pushed for the legislation, say are key. The first is an annual review that would require NYPA to step in if private developers are falling short of renewable energy targets. Hochul’s “BPRA lite” also strips extensive labor protections and governance reforms that would expand NYPA’s board.

The Senate passed the full BPRA in recent weeks and included a nod to the bill in its budget proposal, dropping Hochul’s slimmed-down version. The Assembly’s budget also drops Hochul’s proposal and notes that it “remains committed” to passing a BPRA-like bill, including an annual review and labor protections.

Waste Reduction and Recycling: A major waste reduction plan in Hochul’s budget largely matches what she proposed last year, when the state failed to reach a compromise with green groups. Her current plan has the support of the New York League of Conservation Voters, Citizens’ Campaign for the Environment, and New York City Mayor Eric Adams. Other green groups, including Beyond Plastics, argue that the plan is too slow to reduce packaging and gives industry too much say in implementation.

The Senate included a bill from Senator Pete Harckham that would establish much stricter targets, meeting a list of criteria Beyond Plastics has set out. The body also proposed strengthening New York’s bottle recycling law, which Hochul left out of her budget.

The Assembly cut Hochul’s waste proposal without an immediate replacement. It did not include the bottle bill. This suggests that the chamber wants to handle waste reduction outside of the budget, as both some green groups and paper and recycling companies have asked.

Phasing Fossil Fuels Out of Buildings: Perhaps the most contentious part of New York’s climate plan yet has been Hochul’s proposal to phase fossil fuels out of buildings, which account for the largest share of the state’s carbon emissions. The first step proposed in her budget is to ban fossil fuels from new construction starting at the end of 2025, then to start replacing heating equipment in existing buildings in the 2030s.

The governor has not proposed banning gas stoves, nor requiring owners to convert to electric appliances until their existing heating system needs replacing.

The legislature has broadly endorsed Hochul’s plan for new buildings, with some tweaks. But both chambers scrapped the proposal for existing homes. Instead, they added legislation to fully decarbonize state-owned buildings between 2030 and 2040.

The Senate’s budget proposal also included the NY-HEAT Act. Its key provision is eliminating the “100-foot rule,” which requires utilities to provide gas to new customers for free, provided they are within 100 feet of an existing main. The clean energy group RMI estimates the rule cost utilities $1 billion over five years — which affected all utility customers, adding to their bills.

Hochul sought to eliminate the 100-foot rule in her initial budget proposal last year, but dropped the idea in negotiations and did not revive it this year.

Where They’re Close

Energy Affordability: Hochul’s draft budget included a fresh $200 million round of relief for utility debt, which has strapped hundreds of thousands of New Yorkers during the pandemic and reached a sum of nearly $2 billion last spring. Lawmakers approved $250 million in relief last year, but utility debt still stands at more than $1.5 billion across 1.4 million households as of January, according to data compiled by the Public Utility Law Project.

In addition to the new relief, Hochul wants to put $200 million toward a new “EmPower Plus” program to help homeowners weatherize and electrify their homes. The program comes with a guarantee that participating households would never pay more than six percent of their income on electricity.

The Assembly and Senate embraced both proposals, with some tweaks.

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