Updates: New York ‘Conceptually’ Has a Budget

Almost a month after the original deadline, budget negotiations are — finally — finished. | Maia Hibbett for New York Focus

Kathy Hochul and the legislators are closing in on a final state budget. As they settle their differences, we’ll keep you up to date on the latest.

New York Focus   ·   April 25, 2023
Sam Mellins

MAY 1, 1:10 PM — The governor holds most of the power in budget negotiations — but she’s had trouble wielding it this year. Governor Kathy Hochul was forced to scale back or eliminate many of her signature proposals for the final state budget, such as changing the state’s bail laws and increasing the number of charter schools.

The biggest winner in the budget might be suburban moderates outside New York City, who defeated Hochul on several fronts — most notably, her proposals to raise their taxes to fund mass transit and to require them to build more housing.

Suburban Democrats mounted fierce opposition to the “New York Housing Compact,” the governor’s plan to double the state’s housing production over the next decade, largely by mandating more housing near train stations and requiring every town to grow its housing stock by a set amount. They argued that rather than ordering towns to add new housing, the state should offer them cash incentives to build. Similar incentive programs have been tried in other states and largely failed.

Unable to win over suburban opponents or get leaders in the legislature to override them, Hochul pulled the compact from the budget in late April, reasoning that an incentive-based program would be worse than doing nothing. She said that she will take executive actions and work with the legislature after the budget to increase housing supply, but hasn’t yet said what that will look like.

MAY 1, 11:05 AM; updated May 2, 4:31 PM — The long wait is almost over. On Sunday night, one month late, the Assembly and Senate began publishing the legislation that will make up New York state’s final budget for the coming year. The full budget is a package of 10 bills, broken into two categories: appropriation bills, which deal directly with revenue and spending, and Article VII bills, which detail a wide range of associated policies. As of Tuesday, all the bills have been printed, and five have passed. (One bill, governing the state’s debt payments, was already voted on back in March.) All 10 bills are expected to be voted on this week, with Governor Kathy Hochul’s signature likely to follow in short order — finalizing this year’s budget, at long last.

Appropriation Bills

Article VII Language Bills

  • Public Protection and General Government (S4005C / A3005C) — Passed 5/1/23

  • Education, Labor and Family Assistance (S4006C / A3006C) — Amended 5/1/23
  • Health and Mental Hygiene (S4007C / A3007C) — Passed 5/1/23

  • Transportation, Economic Development and Environmental Conservation (S4008C / A3008C) — Amended 5/1/23

  • Revenue (S4009C / A3009C) — Passed 5/1/23

Sam Mellins

MAY 1, 10:15 AM — In the lead up to this year’s budget, Governor Hochul and lawmakers publicly disagreed on issues ranging from bail to housing to clean energy. But in one area, there was near total agreement: shelling out billions of dollars in corporate subsidies.

With next to no public opposition from lawmakers, Hochul and the legislature agreed to include a package of new subsidies worth more than $8 billion in this year’s budget. Three industries will see most of the benefit: movies and TV, musical theater, and horse racing.

There’s one thing that these subsidies have in common: flimsy economic evidence to justify them. Studies produced by their backers are often riddled with flaws, while independent reviews find little or no evidence that the programs work to promote economic growth.

“It’s pretty amazing and terrible that that’s the one thing they can actually agree on,” said Elizabeth Marcello, analyst at the nonprofit Reinvent Albany, which has opposed the subsidies. “At the end of the day it’s all corporate giveaways, none of it works, and none of it will grow a more just and equitable New York.”

By far the biggest subsidy item is an increase in funding for the “film tax credit,” a program that essentially allows film companies to bill the state for up to 30 percent of their production costs. First created in 2004 as a $25 million program, the budget bumps its cost up to $700 million annually, adding up to more than $7 billion before the program’s current 2034 expiration date.

Colin Kinniburgh

APRIL 28, 1:55 PM — Housing was the big loser in this year’s state budget, as Governor Kathy Hochul and the legislature failed to reach agreements on tenant protections, building more apartments, or rental vouchers for the most vulnerable New Yorkers. But it wasn’t a total wash for low-income tenants. Hochul announced on Thursday that the final budget will include $391 million in new funding for the Emergency Rental Assistance Program (ERAP), a pandemic-era rent relief program. That money will be directed to public and subsidized housing residents who had previously been excluded.

“This is the one thing that’s survived the talks over the past month,” in contrast to every other housing issue, said Assemblymember Grace Lee, who pushed for the funding. The $391 million is slightly higher than what the legislature requested, reflecting a dire need on the part of subsidized tenants and the housing authorities they rent from. Unpaid rents tipped the already struggling New York City Housing Authority into financial crisis during the pandemic, further hampering its efforts to conduct repairs and keep its buildings in livable condition.

The rent relief deal will provide a much-needed Band-Aid. But it falls far short of the total need, said Iziah Thompson, senior policy analyst at the Community Service Society, pointing to estimates NYCHA has provided of its total arrears.

As of March, NYCHA had $466 million in rent arrears, according to a spokesperson. But it was only able to submit $128 million worth of ERAP applications, covering 33,000 households, before the portal closed in January.

Senate housing committee chair Brian Kavanagh said he was confident NYCHA would get “significantly more” than the $128 million needed to cover existing applications, but wouldn’t give an exact number, citing ongoing negotiations.

Kavanagh said the ERAP application portal would not reopen for individual applications, but that additional funding would go through NYCHA directly. He called the state budget deal a “very significant achievement” but said New York City and the federal government will also need to pitch in to close NYCHA’s yawning budget gap.

Thompson, of CSS, lamented the state’s decision to exclude subsidized tenants from ERAP in the first place, and said it was dicey to count on the city as a backstop.

“The really scary thing is that NYCHA is going to have trouble managing housing. … They are coming up really close on having no reserves left” to fund their day to day operations, Thompson said.

Chris Gelardi

APRIL 28, 9:49 AM — On bail, Governor Kathy Hochul has gotten what she wanted — or so she says.

Announcing a “conceptual” agreement for the annual state budget Thursday night, the first policy Hochul highlighted was a measure to eliminate what is known as the “least restrictive” standard in New York’s pretrial law. It was a core demand of her budget proposal — and one of the biggest holdups in the nearly month-too-long budget negotiations. She presented it as a win at her press conference, but on a closer read, the key change looks largely cosmetic.

The original measure Hochul proposed in February — which eliminated “least restrictive” plus other legal language — would have upended the way judges are instructed to make bail decisions. Instead of only considering what is necessary to ensure that defendants “return to court,” as has been New York law for decades, it would have given them essentially free rein. The plan would have opened the door for judges to consider defendants’ perceived “dangerousness,” which law enforcement and tough-on-crime politicians have held as a goal for years.

But that’s not what the agreement is.

While current law states that judges must set the “least restrictive” conditions to ensure that defendants return to court, the new agreement tells them to set the “kind or degree of control or restriction necessary” to get them to show up, a Hochul cabinet member explained at the press conference.

While many have fixated on the “least restrictive” language, the more essential legal condition is that judges focus on getting defendants back into court. The new agreement doesn’t change that.

Colin Kinniburgh

APRIL 27, 5:35 PM — Negotiations continue over the push to enable the state-owned New York Power Authority to build renewable energy projects. Backers of the legislation say talks between the governor’s office and the legislature have brought the budget proposal within striking distance of the full Build Public Renewables Act (BPRA), which has twice passed the Senate but has yet to find consensus in Albany.

Assembly BPRA sponsor Robert Carroll of Brooklyn said he was “cautiously optimistic” that the final legislation would include a mandate for NYPA to build if the state falls short of its renewable energy targets — something Governor Kathy Hochul’s budget proposal didn’t include. Public power backers are hopeful that the final version will include labor protections, in line with draft language Politico obtained last week. And Lee Ziesche, a spokesperson for the Public Power NY Coalition, said there has been discussion of closing NYPA’s fossil fuel peaker plants by 2030, five years earlier than Hochul proposed.

But Carroll doesn’t expect a final budget announcement until at least Monday, and he said there could yet be surprises.

“What exactly is in the budget is still to be determined, but I do think that we’re going to have a proposal that allows for NYPA to build, own, and operate renewable energy” and “to meaningfully step in when the private sector is not working,” Carroll said.

BPRA opponents are still working to limit the reach of the legislation, which they worry could encroach on private developers’ efforts to build clean energy in New York. Gavin Donohue, president of the power industry trade group Independent Power Producers of New York, told New York Focus he has backed various provisions to “contain NYPA’s authority” — including a sunset clause that would give the bill an expiration date, limiting NYPA’s expanded authority to a certain number of years.

Sam Mellins

APRIL 26, 3:13 PM  New York’s lowest paid workers will see a raise in this year’s state budget, Governor Kathy Hochul announced Tuesday — but one that will leave New York trailing other states and dozens of cities.

Under a deal worked out with leaders of the Democratic-controlled legislature, the minimum wage will rise to $17 by the end of 2026 in New York City and its suburbs, and 2028 upstate. After that, it will rise automatically each year in tandem with inflation.

The proposed hike, which was first reported by Spectrum News, is slightly more generous than Hochul’s original proposal, which she unveiled in January. That plan would have tied the minimum wage to inflation with no initial increase, and was likely to result in raises about 50 cents per hour smaller than the current version.

It’s also far less than what major labor unions and political figures like Attorney General Letitia James were pushing for. They backed a bill, sponsored by labor committee chairs Senator Jessica Ramos and Assemblymember Latoya Joiner, to raise the state minimum wage to $21.25 by 2027. “It is time we pay you what you deserve,” James told a rally of union members on April 10. “It is time we address the felt needs of New Yorkers and members of unions.”

It’s been seven years since New York politicians last agreed to raise the minimum wage — and that time, workers saw a much bigger boost. In 2016, Andrew Cuomo struck a deal with the legislature, which at the time was partially controlled by Republicans, to gradually raise New York’s minimum wage from $9 to $15 per hour. The full bump took effect in New York City in 2018, its suburbs in 2021, and is still being phased in for upstate New York.

Colin Kinniburgh

APRIL 25, 2:57 PM — With criminal justice and housing debates wrapping up after weeks of stalemate, climate issues are finally having their day in the negotiating room. Talks went on through the weekend on big-ticket items like building public renewables, banning gas in new buildings, and cap and invest — the latter of which has faced stiff resistance from the Assembly. But on Tuesday, sources told New York Focus that a cap-and-invest deal may be emerging after all.

The policy, Hochul’s flagship proposal to slash greenhouse gas emissions, would put a price on carbon, with potentially major implications for the state’s economy — starting with energy bills.

After Hochul proposed a bare-bones version of the plan in February — leaving the stickiest decisions up to her executive agencies — the Senate counter-offered a detailed version that would ban the trading of emissions allowances, limit exemptions for energy-intensive businesses, and steer revenues from the program into four spending areas, as demanded by the NY Renews coalition. The Assembly declined to include cap and invest in its budget proposal at all.

In late March, environment committee chair Deborah Glick and energy chair Didi Barrett told New York Focus that the policy would have no fiscal impact this year and didn’t belong in the budget. Assembly leadership held that line for weeks.

But as the ice began to thaw on Monday, an Assembly staffer told New York Focus, “Everything is tied into cap and invest right now.”

Jake Indursky

As the state budget begins to take shape, a well-connected construction firm is pushing for a last-minute cut – and is providing the latest example of Albany's lax campaign finance rules for companies that do business with the state.

LeChase Construction, a Rochester-based firm, is seeking over 200 million dollars to revamp 27 service areas along the New York State Thruway. Although Empire State Thruway Partners, a state contractor overseeing the project, once assured Albany that the project would not require any taxpayer dollars, State Senator Jeremy Cooney – chair of the chamber’s contracts and procurement committee – is now pushing for a state rescue.

LeChase is already a major recipient of state contracts: Currently, the company has over $100 million in active contracts for construction projects. It’s also a prolific funder: in the past 20 years, the company and its employees have spent over $1.2 million in New York State elections.

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