What’s in and out of the state budget

It’s nearly three weeks late, but the $237 billion state budget has finally been passed. State lawmakers wrapped up voting on the ten budget bills Saturday afternoon.

The process was held up by negotiations around a number of contentious issues, perhaps most notably housing. In the end, state leaders agreed to a package of bills that creates a new incentive program for developers to build affordable housing in New York City and implement a version of “good cause” eviction tenant protections. But the compromise seems to have left few happy with housing in the budget.

Other sticky issues got thrown into the mix late in the game, like an extension of mayoral control of New York City schools. What was once thought to have been killed weeks earlier came back from the dead after the original budget deadline to make it into the final budget deal – with some caveats.

Education funding was also a sticking point in the budget, as Gov. Kathy Hochul had initially proposed the elimination of a provision known as “hold harmless,” which ensures that districts receive at least as much aid as they did the year before. Districts around the state were set to receive cuts due to the proposal, which the Legislature vehemently opposed. “Our eyes during this budget have only looked forward because we all know that we cannot let our state slip back to the days of underfunded schools, business opportunities only for the wealthy few, families kicked to the streets during hard times out of their control, people being forced into the shadows for healthcare and our natural resources being treated as landfill,” said state Senate Majority Leader Andrea Stewart-Cousins in closing remarks on Saturday. 

Still, Stewart-Cousins went on to thank Hochul, along with state lawmakers, the legion of staffers serving lawmakers during negotiations and even the Bill Drafting Commission, which had suffered a cyberattack. “The reality is that the budget is a result of hard work (and) collaboration and it's brought us to this moment, but as we know, budgets are not just fiscal documents, it’s a reflection of our values,” Stewart-Cousins said.  

Plenty of other items also made it into the budget, like plans to combat retail theft and illegal cannabis stores, changes to a popular home care program and an expansion of take-out cocktails. 

Here are the key policies included in this year’s state budget. This story was last updated April 20 at 4:30 p.m.

Retail theft and hate crimes

The public protection bill includes provisions to combat retail theft – including increasing penalties for assaulting a retail worker – and expands the list of hate crime-eligible charges. Under the new language, assaulting a retail worker will become a Class E felony. Both the state Senate and Assembly had originally rejected that increased penalty, with Assembly Speaker Carl Heastie saying repeatedly that he did not believe that harsher consequences would act as a deterrent and protect workers. Hochul had originally pitched making the assault a Class D felony.

The final language also includes a provision, which the state Senate included in their budget proposal, that would aggregate connected retail theft crimes committed over a period of time in order to enable prosecutors to charge offenders with a more serious offense. Additionally, it will create the crime of “fostering the sale of stolen goods,” a Class A misdemeanor. The Assembly had originally removed that provision in their budget proposal, but the state Senate kept it in. 

The legislation also includes Hochul’s pitch to expand the list of offenses that could be charged as hate crimes. Both the state Senate and the Assembly had removed the proposal originally, with state Senate Deputy Majority Leader Michael Gianaris saying last month that the issue could be addressed outside of the budget. The expanded list includes gang assault and various sexual assaults, but does not include graffiti offenses, as Hochul had originally proposed.

Cannabis enforcement

Long-sought reforms, allowing the Office of Cannabis Management, as well as local agencies and law enforcement, enhanced powers to shut down illegal dispensaries made it into the state public protection and general government budget bill. 

Authorities will now be able to seal the premises of illicit dispensaries while disciplinary proceedings play out, addressing the current system where storefronts are closed down, only to reopen days later. According to the budget legislation, unlicensed dispensaries would have seven days to request a hearing, and final decisions will be rendered within four days of a hearing. 

New provisions – like penalties that would suspend liquor, lottery and tobacco licenses from storefronts selling cannabis under the table – were also included. 

In addition to the new enforcement mechanisms, the final budget agreement also removes the potency tax on cannabis when sold by distributors or growers to dispensaries. It instead replaces the unpopular tax with a 9% sales tax.

Education

Total school aid is set to increase by $1.3 billion to $35.9 billion, including $24.9 billion in Foundation Aid. Originally, the governor had pitched the elimination of a provision known as “hold harmless” that ensures that school districts receive at least as much funding as the year before. That did not make it into the final budget, but Hochul did successfully include a reduction to the inflationary factor used in the Foundation Aid formula, the main source of school funding. It was originally projected to have a 5% increase, but the final budget will include a 2.8% increase, slowing the rate of growth for education aid and resulting in some districts receiving less money than they originally anticipated.

The governor and legislative leaders also agreed to a study of the Foundation Aid formula to be performed by the Rockefeller Institute of Government in coordination with the state Education Department. Hochul intends to implement changes recommended by the study next year.

School districts will now need to verify that all high school seniors complete either the Free Application for Federal Student Aid or an application for the José Peralta New York State Dream Act (which provides aid to undocumented and other non-citizen students), unless they receive a waiver exempting them from completion. The State Department of Education commissioner will develop regulations ensuring districts notify students of scholarship opportunities and financial aid options twice a year, while providing referrals for support and assistance to complete necessary forms if necessary. Districts will also be required to collect and report to the state data on FAFSA and Dream Act application completion and the total number of seniors enrolled beginning July 1, 2025.

Mayoral Control

Mayoral control of New York City schools was extended until June 30, 2026. But there are some stipulations attached. Any budget passed by New York City lawmakers would have to include funding and provisions to ensure that class size requirements are met, and portions of foundation aid would be withheld if the city does not comply. 

Additionally, the City’s Panel for Education Policy will be expanded from 23 to 24 voting members and a new independent chairperson will be installed. The chairperson must be selected by the mayor from a pool of three candidates, with the state Senate majority leader, Assembly speaker and chancellor of the Board of Regents each nominating one candidate. An independent auditor will also review the city’s ledgers to ensure that increases in foundation aid were used in addition to education funding, not as a replacement for that funding. 

Medicaid changes

The legislation dealing with health contained details of the expected changes to a popular home care medicaid program called the Consumer Directed Personal Assistance Program. Hochul had pitched the changes in order to save $200 million in Medicaid costs per year. Under the language in the bill, the state will bar all fiscal intermediaries for the program save for one approved by the state. The governor said getting rid of those hundreds of middlemen organizations will cut down on fraud in addition to saving money, but the move was strongly opposed by home care advocates and providers.

The final budget deal will also permit the state health commissioner to apply for a federal waiver to impose a tax on managed care plans. Lawmakers have estimated that such a tax could result in as much as $4 billion in new revenue, but the governor’s office has projected lower revenue numbers.

Additionally, the spending plan increases the rate of Medicaid reimbursement for hospitals, nursing homes and health care providers. Payments will increase by an aggregate $525 million to hospitals, $285 million to nursing home services and $15 million to assisted living programs. But 1199SEIU and the Greater New York Hospital Association say that the increased reimbursement rates are still not high enough.

The future of SUNY Downstate

Following local uproar over the governor’s plan to close the Brooklyn teaching hospital, state leaders have reached an agreement to postpone the shuttering of the fiscally struggling medical center for at least a year. The spending plan instead will create a nine-person community advisory board to study and gather input on the next steps for SUNY Downstate. The board, which will include the SUNY chancellor and appointees of the governor and legislative leaders, will need to release a report in one year on their findings.

To-go cocktails

Hochul and legislative leaders reached an agreement to temporarily extend the law that permits take-out cocktails that was set to expire. The governor had originally sought to make the pandemic-era rule permanent. The final language extends the provision for an additional five years.

The budget will also permit the sale of alcohol at movie theaters statewide.

Environment

Despite the push from environmental advocates, the NY HEAT Act did not make it into the environmental conservation bill. Hochul had originally included part of the bill in her executive budget that would eliminate a subsidy for utilities to install new gas hookups within 100 feet of an existing hookup. The Assembly included another part that would cap utility bills for low-income New Yorkers. The state Senate included the full bill in their one-house proposal. Assembly Ways and Means Committee Chair confirmed during debate on Thursday that the measure is out of the budget.

However, the final budget deal does currently include language similar to the RAPID Act, which is meant to speed up electric and other renewable energy transmission siting, a proposal that Hochul first introduced in her State of the State plan in January. 

The budget also includes $500 million for the Clean Water Infrastructure Act, maintaining the same level of funding as last year. Hochul had initially proposed cutting that number in half.

Migrant funding

The state budget includes $2.4 billion for New York City to assist with handling the continuing influx of migrants. Although Mayor Eric Adams had tried pushing for more, this still represents a $500 million increase compared to the amount the state spent last year.

Prison closures

New bill language gives Hochul the authority to close up to five state prisons this year.

Aid to municipalities

For the first time in over a decade, the Aid and Incentive for Municipalities funding has gotten a marked increase. The money for local governments has remained largely stagnant at about $715 million since 2012, but this year was increased to slightly over $758 million, a little more than a $43 million bump. The New York Conference of Mayors and other local leaders had pushed for the increase prior to the budget getting finalized. However, the increases are tied to specific grant programs and tax credits that require state approval to benefit, as opposed to the rest of the funding allocated to local governments as part of the program with no restrictions on use.

Artificial intelligence

Hochul’s plan for Empire AI, a state-of-the-art artificial intelligence consortium based at the University of Buffalo, was included in the budget. Also included were requirements that any construction related to the project include a project labor agreement.  

The final budget also includes new penalties for so-called “deepfakes” that recreate a person’s likeness with AI without their permission, and requires political ads that use AI to include a disclosure.

Sammy’s Law

Legislation that has languished in the Assembly for several years that would allow New York City to lower its speed limits to combat traffic deaths will get included in the final budget, Hochul said on Thursday. Although it was taken out of the transportation budget bill where it originally lived, Hochul confirmed that the provision will still make it into the spending plan. Both the governor and the state Senate had included it there originally, while the Assembly had removed it. It has languished in the Assembly for several years.

Prenatal leave

In addition to mandatory sick leave, employers will also be required to provide 20 hours of prenatal leave for pregnant employees.

State Financial Aid

New York’s Tuition Assistance Program was expanded in terms of both availability and funding in this year’s budget. Part-time students in New York will now be eligible to participate in the program, which was previously limited to only full-time students, and the parental income threshold for applicants will be increased from $80,000 to $125,000.

Newspaper and Broadcast Media Jobs Program

Eligible news outlets will be able to claim a $5,000 tax credit for each new full-time employee hired, up to a maximum of $20,000. (The tax credit is based on net new jobs created, so a newsroom can’t lay off a whole team and then hire one new reporter to replace them and still get the credit.) Outlets will also be able to claim a tax credit equal to 50% of the wages of full-time employees, up to $300,000. Outlets are eligible for the program if they are independently owned and have seen a reduction in circulation or in full-time employment by at least 20% over the past five years. The program will pull from a $30 million pot of funding each year it is active. 

Housing

After years of negotiations, the state Legislature and Hochul fleshed out a housing deal this year that addressed the twin fronts of tenant protections and housing development, angering almost all stakeholders along the way. The deal includes a version of “good cause” eviction, though with far more exemptions and exceptions than the original four-page bill did. Most notably, the policy will only apply to municipalities outside New York City that proactively “opt-in” to the program, rather than automatically covering all rental units statewide. It also includes specific carve-outs for high-rent units and apartments owned by smaller landlords and is set to sunset in 10 years. 

The budget also includes 485-x, which will provide tax incentives to developers who build apartments containing some affordable housing, similar to the expired 421-a program. In a win for trade unions, projects that receive the tax break will be required to pay unionized construction workers relatively high wages and benefits. This tax break is also set to sunset in 2034.

In addition, the budget includes a provision that would allow landlords to recoup higher repair costs for rent-stabilized apartments than are currently allowed through rent increases. It also includes a pilot program to legalize basement apartments in New York City, funding to assist with the conversion of offices into residential housing and the removal of a cap on building density in New York City.

A provision that would allow the state to convert underutilized state property into housing, a holdover from the governor’s executive budget proposal, was included in the final budget.