As It Happened: Kathy Hochul on the State of the State

Perhaps the most glaring omission from Hochul’s speech was any substantive discussion of climate change, which got just one passing mention.

“We’re enacting a vision of New York where veterans who embark on incredible careers fighting climate crisis, in green energy, offshore wind,” she said. “Where unions are strong and our infrastructure is resilient to withstand those 100-year storms.”

That’s sure to disappoint climate hawks. “So alarming!!!” said Liz Moran, northeast policy advocate at Earthjustice, over text.

The snub comes at a moment when the state’s energy transition is going through a major reset: Wind and solar developers have canceled scores of projects in recent months after the state refused to hike subsidies in response to inflation. That’s imperiled the state’s target of getting 70 percent of its energy from renewables by 2030, and left green groups eagerly awaiting fresh plans to close the gap.

Hochul’s briefing book zeroes in on one key obstacle to the energy transition: the lack of power lines to move energy around. She points out that it can take two years for a new transmission line to even get a permit, jeopardizing the broader renewable energy buildout.

The State of the State book announced “significant new resources” for New York State’s Division of Homeland Security and Emergency Services (DHSES), which will put more “boots on the ground, improve training and preparedness, and address evolving threats as they come.” The state office takes the lead in responding to both weather-related and human-caused emergencies in New York.

Last year, a consulting firm retained by DHSES issued a report reviewing the office’s response to a December 2022 blizzard in Buffalo that killed 47 people. The report, issued by Guidehouse Inc., stated DHSES did not activate its emergency operations center until the morning whiteout conditions began, and that some staff had previously been unavailable because of holiday plans. The report did find that by the time the storm hit “all positions and responsibilities were covered.”

In her briefing book, Hochul pledged to “continue to prioritize cracking down on wage theft” — language that clashes with the “hands-off” approach to wage enforcement that Department of Labor staffers described to New York Focus over the summer.

The labor department has seen a steep decline in the amount of stolen wages it has recovered since the pandemic — a trend that the agency staffers attributed largely to workforce problems like severe understaffing and low pay for labor investigators. Perhaps Hochul’s most prominent policy effort to bolster wage theft enforcement to date came in July 2022, when she publicly broadcast a wage theft task force of state and county prosecutors. Experts said the group had already been coordinating their efforts against labor violations with the state for decades.

Also mentioned in her book, but not in her speech, was the Governor’s plan to bolster workforce development, a repeat goal from last year’s address. She’s proposing youth apprenticeship programs and expanding an existing pilot program called Teacher Ambassador that helps teachers and counselors prepare students for the workforce. The expansion would double the number of participating teachers statewide to 60.

Hochul is putting forward another housing measure, but did not mention it in her speech: reforming the State Environmental Quality Review Act, a law meant to protect the environment against overdevelopment. It’s a wonky subject, but one that may be key to taking on the state’s housing shortage. Even if they don’t succeed in blocking new housing, lawsuits based on the act can drag on for years and impose punishing legal fees on builders.

Under the law’s current format, private citizens or groups can sue to stop projects on grounds ranging from wildlife habitats to traffic patterns, making it an effective tool for well-heeled communities to fight any development they don’t like. Hochul said she wants the state’s Department of Environmental Conservation to streamline the regulations that govern how the act is applied in order to “promote environmentally friendly housing growth.” This wouldn’t require action from the legislature.

Hochul is proposing measures to reduce the wait time for bars, restaurants, and others in the alcohol business to gain approval for a liquor license — a problem that has plagued the State Liquor Authority in recent years.

According to Hochul’s briefing book, the average processing time for license applications operating under a temporary retail permit — which allow the service of alcoholic beverages while licenses are pending — is approximately nine months, with a current backlog of approximately 6,000 applications.

Though Hochul briefly touted the fast rollout of opioid settlement funds, the opioid crisis received little substantive discussion in her speech. There wasn’t much new in the strategy outlined in the briefing book, either; most of the points made were rehashes of existing policies, such as expanding harm reduction and access to medication-assisted treatment.

Hochul didn’t address a recommendation from her own advisory group, the Opioid Settlement Fund Board, to declare the crisis a public emergency.

Nor did she offer a specific strategy for reducing the impact on Black and Latino New Yorkers, who saw the most significant increase in overdose deaths this past year.

Global warming is pushing temperatures in New York to deadly highs. In New York City alone, heat kills an estimated 370 people every summer. In her briefing book, Hochul announced that she will expand a program to fund cooling systems in schools, which can serve as cooling centers for the general population during heat waves. She also plans to add coverage for ACs for New Yorkers with asthma who are enrolled in the state-run Essential Plan. And she proposed a $150 million program to build pools, pay lifeguards, and fund swimming instruction, which her office calls the “largest statewide investment in swimming since the New Deal.”

Mentioned in her briefing book, but not in her speech, was Hochul’s proposed increased investment in “shovel-ready” sites — like the STAMP industrial park in Genesee County — to attract businesses. In 2022, Hochul created the Focused Attraction of Shovel-Ready Tracts New York (FAST NY) program and promised $200 million in state funds to develop industrial sites for manufacturing and distribution. Shovel-ready sites are a part of a “build it and they will come” philosophy — and corporate subsidy watchdogs warn against it.

Hochul’s briefing book announced that 2024 would be “a new era of clean water investments,” but she did not mention the proposal in her speech. It’s not yet clear whether she plans to significantly increase spending: The book said Hochul will build on previous investments made under the 2022 environmental bond legislation that created $4.2 billion in revenue for climate resilience and environmental spending, and would make a “continued commitment” to the 2017 Clean Water Infrastructure Act.

Hochul cited “the philosopher Taylor Swift” in her closing comments.

Wrapping up her speech, Hochul said “I can understand why some people feel that the sun is setting on the Empire State,” then pivoted to an optimistic message.

“Just imagine the possibilities,” Hochul said, proposing to make New York the nation’s leader in artificial intelligence research. She wants to achieve this by using $275 million in state funds to start Empire A.I., an artificial intelligence research consortium with a center in upstate New York. Part of Hochul’s justification for funding the research center is that the “infrastructure is increasingly concentrated in the hands of large, well-funded multinational technology companies that maintain outsized control.” 

But the actual buildout will be an expansive and complicated undertaking, and experts are urging the state to proceed with caution.

“Just look at what Micron’s historic $100 billion investment is doing for Central New York,” the governor urged five pages into her 181-page briefing book. There are few things New York politicians prefer to talk about than the 2022 deal to create a giant computer chip factory just north of Syracuse, in return for up to $5.5 billion in state tax breaks. It’s a fixture in TV ads, was namechecked in the Senate Majority Leader’s own opening salvo last week, and been touted by President Joe Biden.

Yet Micron has not made a $100 billion investment, or even promised to. The much-quoted figure comes from the company’s press release announcing the deal, in which it said it “intends to invest up to $100 billion over the next 20-plus years.” (The italics are ours, as you may have guessed.) Just a month later, Micron announced it would cut memory chip production by 20 percent. Two months after that, it laid off 10 percent of its workforce. Micron’s stock did well in 2023, but its revenue was down by nearly 50 percent by the end of the year.

Hochul referenced a proposal to limit hospitals’ ability to sue low-income patients for medical debt. As we covered in October, most hospitals rarely sue patients for debt — but some do, aggressively. And in 98 percent of cases, patients don’t even defend themselves, leaving hospitals to win by default.

Hochul is now discussing how the high cost of housing is driving people out of New York. “People aren’t moving for warmer weather or lower taxes,” she said, noting that New Jersey, Pennsylvania, and Connecticut are 3 of the top 5 states that New Yorkers are moving to.

Housing was front and center as Hochul’s signature issue last year, but no longer. She’s focusing on it only well into the speech, and with the frank recognition that what she’s proposing isn’t enough to solve New York’s housing cost and supply crisis.

The more ambitious policies she’s proposing focus on New York City, where she wants to lift a state-imposed cap on the height of residential buildings, legalize basement apartments, and offer tax breaks for developers that convert offices to housing or build new mixed-income housing. That last provision has been rejected by the legislature two years in a row after a similar tax break expired in 2022. Third time’s the charm?

“For too long, many insurance companies have refused to adequately pay for mental health support,” Hochul said. New regulations would up reimbursement rates while requiring insurers to provide out-of-network coverage, with the threat of fines for failure to comply.

After declaring “the chaos must end,” to a quick round of applause, Hochul proposed a plan to combat retail theft. She promised a joint federal, state, and local operation that includes a tax credit to cover additional security and a new state police unit.

“New Yorkers will not be able to let their guard down until we fix our mental health system,” Hochul said, calling it the “defining challenge of our time." She pledged to expand outpatient care and establish new housing for people with mental health concerns, but did not elaborate on whether there has been any progress in her existing plans to roll out 3,500 housing units.

Hochul pledged to expand inpatient psychiatric care, with a plan to open 200 new beds, according to the state of the state book circulated by her administration ahead of her speech. But the plan is a minor dent in a nearly decade-long decline in service access. The number of psychiatric beds in New York declined 20 percent from 2014 to 2022, from 9,320 to 7,471.

The governor also plans to double down on criminal justice measures to deal with the state’s mental health crisis. While she didn’t address it in her speech, the state plans to intensify parole supervision, create a new team at the Office of Mental Health that will coordinate with law enforcement, and expand the state’s mental health courts, according to the planning document.

Hochul is renewing her call to curb the use of “addictive” social media by children — and the proposal has already generated plenty of Albany lobbying from tech titans.

Hochul and Attorney General Letitia James, along with state lawmakers, first introduced the idea in October. The Stop Addictive Feeds Exploitation for Kids Act would require social media companies to restrict “addictive features that harm young users the most.” It would allow users under 18 to receive a default chronological feed from social media users they already follow — the way that social media feeds functioned before the advent of addictive feeds, according to Hochul’s State of the State briefing book.

Hochul is signaling her support for law enforcement. She announced that firearms and domestic violence have created an “atmosphere of anxiety” and that she will support measures to strip domestic abusers of firearms.

The governor expanded on her recently announced plans to overhaul the way reading is taught throughout New York by requiring teachers to utilize the Science of Reading technique when providing literacy instruction. The Science of Reading is an evidence-based approach to teaching literacy, focusing on phonics and vocabulary, as opposed to a popular approach called “balanced literacy,” which focuses on context clues and independent reading. Balanced Literacy has come under fire in recent years as literacy proficiency has lagged.

Hochul won’t address immigration in the State of the State. She said instead that she will present a plan for how the state will tackle the issue next week, when she presents her budget proposal.

In a promotional video streamed before the governor’s address, the Hochul administration touted state-provided child care support. On December 22, Hochul vetoed a bill expanding access to child care, citing a cost estimate that experts say was inflated.

While we wait for the address to begin, we know, thanks to Politico, that Hochul will propose to repeal the “100-foot rule” and other provisions of New York’s public service law that effectively require all utility customers to subsidize expansion of the gas system. But her plan will not go as far as the HEAT Act, which aims at a planned phaseout of gas distribution in favor of electrified heating and cooling.

Still, HEAT Act proponents are cheering Hochul’s proposal.

Since last year’s legislative session ended without significant progress on New York’s housing crisis, Hochul has made the issue a major theme of her public appearances, promising ambitious action across the state. She has also abandoned last year’s plan to deal with it: using mandatory growth targets to add 800,000 new homes statewide. This year, I’m looking out for what will replace that plan. Will it be commensurate with the scope of New York’s housing need?

The first day of 2024 marked a key milestone in New York climate politics: a major deadline in the state’s landmark climate law, intended to transition New York away from fossil fuels and direct climate investments to disadvantaged communities. It came and went with crickets.

Two of the state’s key climate agencies, the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Agency (NYSERDA), are behind schedule to issue regulations. They’ve published only a “pre-proposal outline” of the state’s cap-and-invest program that leaves key details up in the air.

Hochul is proposing using $275 million in state funds to start Empire A.I., an artificial intelligence research consortium with a center in upstate New York. The state’s research institutions, like the State University of New York and the City University of New York, would share access to the center, and Hochul promises that the consortium will create jobs. 

New York’s mental health crisis is ballooning. In last year’s State of the State, Hochul reported that as of 2019, 663,000 adult New Yorkers had a serious mental illness. In New York City, an estimated two out of five people with a mental health condition did not receive needed treatment. Paired with a burgeoning housing crisis, the toll has been crushing.

The governor has signaled that her administration will make mental health a cornerstone issue. In last year’s address, Hochul announced a $1 billion plan to reverse the tide by expanding access to services and creating 3,500 new housing units for people struggling with mental health. A year later, it remains to be seen how that vision will pan out.

New York funnels $10 billion a year into economic development incentives, while experts argue that the subsidies are a waste of taxpayers’ money. In last year’s address, Hochul proposed 15 new or expanding economic development incentives, including increasing subsidies to semiconductor manufacturers through the GREEN CHIPS program and creating a replacement for 421-a, the controversial program that gave tax breaks to housing developers in New York City. What will she propose this year? 

With tax revenue and federal dollars declining, the state faces an estimated budget gap of over $4 billion in the coming fiscal year. One way to plug that hole is by raising taxes, but Hochul has been firm that she isn’t interested, especially in an election year. 

Another would be using some of the nearly $20 billion in rainy day funds that the state has built up mostly under her watch, but Hochul has expressed that she doesn’t want to do that either. The budget gap could shrink, if tax returns come in higher than expected. But if that doesn’t close the gap, cuts to state services could be necessary. How will Hochul present this unappealing prospect — or try to paper over it? 

Overdose deaths in New York have reached historic highs, with nearly 7,000 estimated drug-related deaths in 2023 based on the most recent data from the federal government. Meanwhile, access to life-preserving services continues to shrink. From 2016 to 2021, admissions to licensed treatment programs plummeted by 40 percent.

The governor rejected recommendations from her state advisory board to expand overdose prevention centers over the past two years, citing conflicts with federal law. In August, the same month that the centers reported preventing 1,000 overdose-related deaths, the U.S. attorney responsible for Manhattan threatened to shut them down. 

It’s unlikely Hochul will reverse her position on the overdose prevention centers. What remains unclear is how she plans to curb an explosion in overdose deaths that has disproportionately affected Black and Latino New Yorkers — as well as reverse the downward trend in admissions to treatment programs.