Your Guide to the 2025 State Budget Fight

Where They’re Split

Tax Hikes: The Senate and Assembly want to pay for some of their additional spending by raising taxes on New Yorkers who make more than $5 million a year. The Assembly proposed creating two new tax brackets for uber-wealthy New Yorkers who make more than $10 million and $100 million a year. Both houses also proposed raising the corporate tax rate for large businesses.

These ideas might not fly with the governor: In the past, Hochul has resisted calls to raise taxes on the wealthiest New Yorkers. Her office didn’t provide details about her stance on that issue this year.

Unemployment Insurance Deficit: During the Covid pandemic, the state had to borrow more than $10 billion from the federal government to pay the unemployment claims of millions of New Yorkers who lost their jobs.

The state still hasn’t fully paid the federal government back. A portion of the Unemployment Insurance Trust Fund debt has been paid for by a tax on employers — which businesses have complained about — while benefit levels have been frozen since 2019. As of February, the state owed about $6.5 billion.

Hochul’s budget proposed having the state pay $165 million in interest payments that businesses would otherwise pay for with a tax.

The Assembly proposed using $7 billion in state reserves to pay off the entire debt this year and increase the benefit level. And the Senate proposed a tax credit for small businesses to cover the additional cost on employers caused by the debt.

Where They’re Close

Total Spending: Hochul proposed a $252 billion budget, a small jump from last year’s final $243 billion sum, once inflation is factored in.

The Assembly’s budget proposal is slightly larger, at $257 billion. The Senate’s budget comes in at $259 billion.

Middle-Class Tax Cuts: Hochul proposed slashing taxes by 0.2 percent for all New Yorkers making up to $323,200 filing jointly or $215,400 filing individually. The Senate agreed with this proposal. The Assembly went further by proposing a 1 percent tax cut for all but the highest and lowest tax brackets. Under this proposal, New Yorkers in the lowest brackets would still get a cut, but it would be smaller.

Inflation Rebate: A unique element of the governor’s “affordability agenda” is her idea to mail checks of up to $500 directly to New Yorkers, to give them a refund on higher-than-expected tax returns that the state has received.

Both conservative and liberal budget watchdogs have criticized the plan as a poor way to promote affordability, since it is a one-time benefit and doesn’t offer a large sum of money.

But that didn’t stop the Assembly from signing onto the idea. The Senate modified it to apply only to senior citizens, and to last three years, instead of one.

Reserves: The state currently has about $37 billion in cash on hand; a little less than half of that is a rainy day fund reserved for emergencies. Hochul has fought to grow the reserves since she became governor, when the state barely had any spare cash.

Now, she’s willing to tap those savings a little. Under the governor’s proposal, the state’s unused cash supply would shrink to $32 billion by the end of the next fiscal year. The Senate estimated a similar change. The Assembly’s longer wish list would shrink the fund to $22 billion.

Where They Agree

MTA Funding: One of the thorniest issues in this year’s budget is how to fund the Metropolitan Transit Authority, which runs New York City’s subways and buses, and the Metro-North and Long Island railroads. The agency’s repair and upgrade plan for the next five years has a $68 billion price tag and is still short by more than $2 billion a year.

So far, no lawmakers have put forward any concrete ideas for how to fill that gap, though some vague proposals like taxing ride-shares or deliveries have been floated.

Where They’re Split

Free Community College: The governor proposed free community college for some New Yorkers under a new initiative called the New York State Opportunity Promise Scholarship. But students would have to meet specific criteria to qualify: They must be between 25 and 55 years old and pursuing first-time associate degrees in certain fields, including teaching, nursing, and engineering.

Hochul proposed $47 million to cover the program for the next fiscal year, with $35 million for the 2025-26 academic year in particular. The Senate matched that number but wants to expand the program to students of all ages pursuing an associate degree.

The Assembly also seeks to expand the program, which it wants to rebrand as the New York College Access Program, and proposed boosting funding to $55 million.

CUNY Funding: Hochul proposed allocating a total of $6.4 billion for the City of the University of New York, an increase of about $400 million from last year. The Assembly proposed bringing the total this year to $7.2 billion, while the Senate seeks an even bigger boost to $11.6 billion, with most of the additional funding going to capital projects.

SUNY Funding: Hochul wants to boost funding for the State University of New York system to $15.3 billion, a roughly 10 percent increase over last year. The Assembly wants to go slightly higher to $16.8 billion. The Senate is proposing investing more in capital projects for a total of $21.8 billion, though that would be split up over five years.

Where They’re Close

School District Aid: Hochul proposed spending $26.4 billion this year on Foundation Aid, the state’s primary mechanism for distributing funding to school districts. That would be an increase of $1.5 billion over last year.

The Foundation Aid formula determines funding levels based on several metrics, including local salary, poverty, and school attendance data. Just about everyone agrees that it’s outdated — for instance, it currently relies on poverty data from 25 years ago. Hochul wants to update the formula to more accurately reflect current poverty data based on suggestions from a report published last year by the nonpartisan Rockefeller Institute.

The Assembly and the Senate proposed bigger overall increases: $27 billion and $27.07 billion, respectively. In addition to Hochul’s formula updates, both chambers also want to use data that better reflects labor costs. The current formula uses data from 2006. The Assembly also seeks to provide more funding for English Language Learners.

Where They Agree

Universal Free School Meals: One of Hochul’s key proposals this year is a statewide universal free lunch and breakfast program. Already, about 90 percent of students in the state receive free meals, and her proposal would close the remaining gap with an added $160 million.

The legislature is aligned with Hochul on the initiative, which would bring total spending to $340 million.

Where They're Split

Medicaid: Medicaid is funded by a combination of federal, state, and local money, but federal support has declined and Congress is likely to make deep cuts to the program to finance another round of Trump tax cuts. The program accounts for the largest chunk of the state’s budget and provides comprehensive free or low-cost healthcare for over 7 million New Yorkers.

According to Hochul, the Department of Health is expected to increase Medicaid spending by 13.7 percent, or $4.3 billion. But the Fiscal Policy Institute points out that underlying program growth is actually just 3.7 percent — largely due to declining federal support.

Both chambers proposed higher provider reimbursement rates for community clinics, hospitals, and nursing homes, as well as restoring $500 million for distressed safety-net hospitals that was removed in the executive budget. According to an analysis provided to New York Focus by the Empire Center, the Assembly and Senate plans would add at least $575 million and $747 million, respectively, to the governor's proposed state share of Medicaid expenses. Funding for these initiatives could come from a new tax arrangement that could bring in $1.4 billion this year.

Targeted Inflationary Increase: The vast bulk of New York’s social services is administered by nonprofits that provide a range of contracted services like mental health counseling and homeless shelters. Providers have long complained of a system teetering on collapse due to chronic underfunding and understaffing.

Under Governor Kathy Hochul, the sector has received annual cost-of-living raises for the first time in years. This year, Hochul is calling for a modest 2.1 percent increase, while the legislature’s proposals include a 7.8 percent increase backed by nonprofits that have faced crippling turnover and high vacancies.

Energy Affordability Programs: Both chambers support adding $200 million to the Energy Affordability Program, which provides monthly utility discounts to 2.7 million low-income households. The governor’s proposal doesn’t currently include the program.

If expanded, EAP could address rising utility costs from “sky-high” rate hikes and newly imposed Canadian tariffs impacting the electrical grid.

It could also augment the federally funded LIHEAP program, which faces an uncertain future in Washington. In January, New York scrambled to reopen HEAP applications after funding for the popular program unexpectedly ran out months early.

Where They're Close

Unmet Needs: New York’s aging population is growing. Across the state, county waiting lists for in-home senior services have grown, too.

Funding for “unmet needs” provides meals, housekeeping and other supportive services that allow the elderly to live independently. The program is billed as a way for the state to avoid expensive long-term care such as nursing homes, which make up a growing sector of the state’s Medicaid spending.

The governor’s proposal increases funding for the program by $45 million from $8 million, a move the Assembly agrees with. The Senate would like to see the state invest $10 million more, for a total of $63 million.

New York State Supportive Housing Program: Funding rates for New York’s oldest supportive housing model have remained nearly unchanged since the program’s inception in 1987.

The State Supportive Housing Program (NYSSHP) includes over 20,000 permanent units that have fallen into disrepair with “leaky roofs, faulty elevators, and recurrent floodings.”

Under the governor’s proposals, the program could see reimbursement rates rise by at least 40 percent. The legislature is pushing for higher investment proposed by housing advocates who say the program has been “slowly imploding for decades.” In recent years, over a third of nonprofit providers have closed their doors, merged operations or left the program entirely.

Where They’re Split

Child Care Workforce: Child care workers are some of the lowest-paid employees in New York, earning a median wage of about $33,000 in 2023. The low pay and poor benefits have contributed to a child care worker shortage, which many advocates and legislators blame for an overall lack of child care availability in the state.

For each of the past two years, child care workers in New York received a small bonus from the state, paid for with federal pandemic funds. Some workers will see a pay cut if the state does not provide a bonus again this year.

But only the Senate proposed funding — $500 million — to boost child care workers wages. Hochul and the Assembly did not include any such funds.

Child Care Assistance Program: In recent years, Hochul and lawmakers have nearly quadrupled the state’s spending on the Child Care Assistance Program, a voucher system that helps people who are working or in school afford child care.

But this year, only the Assembly proposed increasing the program’s overall funding, by $212.5 million. The Senate proposed a $50 million increase specifically to expand coverage to parents with irregular or unpredictable work hours, while Hochul wants to keep funding flat at $1.8 billion per year.

New York City officials have warned that they need hundreds of millions more dollars for the program this year or they will soon have to start removing 4,000-7,000 children from the program each month.

Where They’re Close

Family Tax Credits: Hochul and both chambers of the legislature proposed substantially increasing tax credits for parents with children.

Currently, low- and middle-income parents with children under 17 get an annual tax credit of up to $330 per kid.

Hochul proposed tripling the maximum credit for kids under four to $1,000 this year, and boosting the maximum for kids between four and 16 to $500 the following year. The Assembly accepted her proposal but would have the full increase happen in the first year.

The Senate proposed its own Working Families Tax Credit to replace existing tax credits for parents, with a maximum of $1,600 per kid.

Birth Allowances: The governor, Senate, and Assembly all proposed new programs to send cash to pregnant New Yorkers and new parents.

Hochul’s “birth allowance” would send $100 per month to pregnant people, plus a one-time $1,200 payment upon birth. It would be limited to people already receiving public assistance.

The Assembly proposed a larger birth allowance that would send public assistance recipients $400 a month in each of the final three months of pregnancy, as well as for the first twelve months of the baby’s life.

The Senate proposed an even larger allowance of $1,000 per month during the final three months of pregnancy and the first nine months after birth, and then $500 a month in the nine months after that. The program would be limited to 15,000 families.

Both the Assembly and Senate allowances would be temporary pilot programs.

Where They Agree

Substitute Teacher Pool: Thanks to strict child care staffing ratios in the state, when child care workers call in sick, parents are often turned away when dropping off their children.

Hochul has a proposal to spend $3 million creating a substitute caregiver pool — essentially a registry of pre-vetted child care workers who providers can call in a pinch. The idea was proposed by the state’s Child Care Availability Task Force last year.

The Assembly and Senate matched Hochul’s spending proposal but want to tweak the program design.

Where They’re Split

Banning Rent-Setting Software: Hochul proposed a ban on algorithmic software that landlords use to set rents, which some housing experts and the US Department of Justice have charged illegally inflates prices through quasi-monopoly tactics.

Neither chamber included this measure in their budget proposals, though the Senate said that it plans to address the issue after the budget is completed.

Where They Agree

Zoning Reform: New York’s top politicians all agree that inadequate housing supply statewide is driving up rents and mortgages, and pushing New Yorkers out of state.

That doesn’t mean that they’re going to do anything about it.

This year’s budget proposals don’t include any major initiatives to remove barriers that block new housing across the state.

That was true last year, too, when Hochul struck a deal with the legislature that she said was a generational achievement. That bargain contained legal changes and funding to boost housing in New York City, but little that affected the rest of the state.

Many areas, particularly in New York City’s suburbs, use restrictive zoning codes to curtail or ban new housing. Experts generally agree that changing this will be key to solving the housing crisis. But it seems 2025 won’t be the year that happens.

Help For First-Time Homebuyers: Hochul proposed creating a $50 million fund to help low- and moderate-income New Yorkers afford down payments. Both chambers accepted this proposal, with minor modifications from the Assembly.

Private Equity Restrictions: Hochul’s budget included a measure banning investors with large real estate portfolios from bidding on single- or two-family homes until they’ve been on the market for at least 75 days. It would also make large investors ineligible for some tax benefits usually associated with home ownership.

These measures are meant to remove the competition that families face from large investors when looking to buy a home, and thus would hopefully bring down prices. The Senate and Assembly included nearly identical measures.

A New Fund for New Housing: Hochul proposed one measure that aims to directly boost housing supply: the creation of a $50 million fund to offer low-cost loans to developers who include affordable housing units in their buildings. When the loans are repaid, the cash can be reused to finance more projects. Several other places around the country have successfully implemented similar funds in recent years.

Both the Senate and Assembly accepted this proposal, which will focus specifically on projects outside New York City.

Though housing experts generally praised this proposal, a $50 million investment is unlikely to make a large difference to the housing market in a high-construction cost state like New York.

Where They’re Split

Discovery Reform Rollbacks: For the third time in four years, Hochul’s flagship criminal justice policy proposal involves altering New York’s 2019 criminal justice reforms. This year, she’s targeting the process — known as discovery — by which prosecutors share the evidence they have against criminal defendants. Her proposal would give prosecutors power to decide what they initially need to share and make it harder for judges to dismiss cases over discovery violations. While district attorneys have hailed the proposal, defense lawyers have warned that it would “blindfold” defendants.

The defense and reform advocates seem to have won over the legislature: Neither chamber included discovery changes in their budget counters.

Involuntary Commitment: In New York, authorities can hospitalize people with mental illnesses against their will if they appear to be at risk of self-harm or suicide or are outwardly violent. Hochul proposed expanding those parameters to include an “inability or refusal, as a result of their mental illness, to provide for their own essential needs,” including shelter. Some advocates worry that the change would allow officials to forcefully hospitalize people for living on the street. The governor claims that it would help people get care they need faster.

Again, the legislature seems to disagree with Hochul: Neither chamber adopted her proposal.

Where They’re Close

State Commission of Correction Expansion: In 2023, New York Focus published a series of investigations into the State Commission of Correction, a little-known agency with tremendous legal authority to regulate jails and prisons. The problem: It rarely uses that power.

Since then, legislators have tried to beef up SCOC. Hochul appears willing to help: She proposed adding to SCOC’s responsibilities, including by requiring staff to inspect every county jail and state prison once a year.

The Senate and Assembly both echoed her proposal. And they paired it with an extra $2.5 million for the commission, which nearly double its budget over last year.

Prison Oversight and Reforms: In the past few months, New York state prison guards allegedly beat two incarcerated people to death and launched a 22-day wildcat strike. In response to the mounting crisis, both Hochul and the legislature added a slate of prison oversight and reform measures to their budget proposals.

The governor and both chambers proposed requiring corrections officers to wear body cameras and turn them on when interacting with incarcerated people. Hochul and the Senate proposed making it easier for the state Department of Corrections and Community Supervision to award time off incarcerated people’s sentences, while the Assembly proposed requiring the agency’s internal accountability office to issue quarterly reports.

The Senate also put forth a number of smaller prison policy proposals. One would create a program to give people state IDs when they’re released from prison or jail. Another would authorize the state Office of the Inspector General to investigate complaints of sexual assault in jails and prisons. Yet another would require DOCCS to offer limited transportation for family visitation.

Where They Agree

Prison Closures: Hochul proposed reupping a provision passed in last year’s budget that would allow the state to close up to five prisons on an expedited timeline over the next year. (Last year, officials closed two.) It’s part of the state’s attempts to remedy a prison staffing crisis by consolidating its diffuse incarcerated population.

The Senate and Assembly both included the proposal in their budget counters.