Gov. Kathy Hochul announces $254 billion state budget deal

Nearly a month after the state budget was technically due, Gov. Kathy Hochul announced a “general agreement” to pass a tentative $254 billion budget. Included as part of the spending plan are versions of several policy priorities from the governor – like changing the state’s discovery laws and adding criminal penalties for masking while committing a crime – as well as a funding mechanism for the Metropolitan Transportation Authority’s five-year capital plan. But with an eye towards potential federal cuts and a looming recession, Hochul also included some reductions to her affordability agenda.

In a short speech announcing the budget deal on Monday evening, Hochul highlighted the uncertainty facing New York and other states around the nation due to the threat of major funding cuts from the Trump administration and a possible recession on the horizon. “You will see we’ve made some responsible adjustments to the original State of the State that I proposed as we monitor and navigate a volatile economy,” Hochul said in Albany. She acknowledged that she and lawmakers may need to return later in the year to make additional changes in order to address the actions of the federal government. “We've already been hit with over $1.3 billion in cuts,” Hochul said. “This may just be the tip of the iceberg, and the scale of these potential cuts is simply too massive for any one state to absorb.”

Although the $254 billion budget represents a record high, it’s only $2 billion bigger than what Hochul had originally proposed in her January executive budget pitch. Both the Assembly and state Senate had made the case to go even higher.

One notable change came to a marquee proposal in Hochul’s affordability agenda. At the start of the year, she pitched using $3 billion in surplus tax revenue to send checks to millions of New Yorkers. Now, only $2 billion will be used and the check amounts will be smaller. Qualifying individuals will get $200 checks rather than $250 checks, and families will get $400 checks instead of $500 checks.

Hochul’s conceptual agreement included some caveats as she acknowledged that a variety of measures are still getting finalized with legislative leaders – both of whom were absent from the announcement. “As is the case every year, some final details are still getting worked out,” Hochul said, before providing scant information on “a few key priorities” and “approximate numbers we do not expect to change significantly.”

Why announce it now, when things were not quite fully baked? “What I wanted to focus on today was to report on my priorities that I laid out in my State of the State address,” Hochul told reporters. “And I'm really proud to say we got it done.” She quipped further when asked about jumping the gun – “So you’re saying let the budget go longer?” – but short of printed bills and votes from lawmakers, the governor’s announcement does not actually mean the budget is done.

Earlier in the day, Assembly Speaker Carl Heastie told reporters that many fiscal questions remained outstanding. “I think we are probably close to figuring out most of the policy issues, and now we're starting to talk about the financial stuff,” Heastie said. Speaking to Spectrum News, state Sen. Liz Krueger, a top Democrat in budget negotiations, said that an announcement of a deal on Monday would come as a surprise to her, much like last year’s announcement, and described the state of negotiations as “not great.”

On education, Hochul’s bell-to-bell smartphone ban in schools also made it into the final budget. The governor also said that the state will invest at least $37 billion toward education, but she did not provide any more information about Foundation Aid, other than to say that they will replace antiquated poverty metrics with current census data. At the end of last year, the Rockefeller Institute released a lengthy study with recommendations on how to make adjustments to the state’s main avenue allocating education funds. Debate over what that may look like was originally expected to play a large role in budget talks after Hochul proposed a fairly significant change last year. But those discussions seem to have taken a back seat.

A looming child care cliff was also addressed by Hochul in her budget announcement, as she committed $400 million to child care vouchers in the state and invited New York City to match that amount. Advocates were concerned that an additional $900 million would not be provided to keep the state’s childcare assistance program running. 

Hochul didn’t mention a few topics that her negotiating partners in the state government appear to still be considering, like the Housing Access Voucher Program and tweaks to the public campaign finance tweaks. She did tell reporters her push to have lieutenant governors run on the same ticket, a late addition to negotiations, made it into the budget. 

The Metropolitan Transportation Authority’s $68 billion capital plan will be fully funded, with some of the money being used to pay for projects such as the Interborough Expressway, additional Metro North stations and needed repairs. Hochul said the plan would be at least in part funded by a “modest” change to the payroll mobility tax on large businesses with over $10 million in payroll. That change would also cut the tax rate for small businesses by 50%. It would apply to the entire MTA region, and NY1 reported earlier that the adjustment would allow for bonding up to $31 billion. Another $1.2 billion for the MTA will be redirected from the Penn Station redevelopment project, which the federal government recently took over from the MTA. 

The final budget codifies statutes that allow the involuntary commitment of individuals who are at “substantial risk of physical harm due to an inability to meet their basic needs.” In addition to physicians, nurse practitioners will have the power to involuntarily commit individuals, and emergency medical services will be required to transport involuntary commitment cases to receive care.

Hochul declared victory on her bid to make changes to the state’s discovery laws, an issue that contributed significantly to budget delays. She and her surrogates spent a lot of time pushing her proposal that she said would reduce the number cases dismissed due to discovery issues. Public defenders and criminal justice reform advocates vehemently opposed Hochul’s pitch. 

Specifics were still elusive Monday, but Hochul’s counsel Brian Mahanna said that changes include changing discovery requirements from “related” materials to “relevant” ones, and allowing judges to consider prejudice that missing evidence causes against the defendant. Mahanna also suggested a significant decoupling of the speedy trial law and discovery requirements, meaning that a judge can use cures other than dismissal even if the speedy trial clock ran out.

On the issue of masking, the governor had originally used as a jumping-off point legislation from state Sen. James Skoufis and Assembly Member Jeffery Dinowitz that would have created a new crime of masked harassment. Instead, after intense debate from fiercely divided Democratic conferences in both chambers, legislative leaders and the governor agreed to create a secondary crime – which will be a Class B misdemeanor – that can be charged whenever someone is accused of committing a Class A misdemeanor or a felony while wearing a mask.

It wasn’t to the letter, but Hochul still got everything she wanted from the state budget, including all  her big ticket items of a cellphone ban, discovery reform, involuntary commitment, inflation rebates and even the late addition of a mask ban. Although she acknowledged that she and the state Legislature may need to return to Albany later in the year to address federal budget cuts, in her eyes, a win is a win. 

“We still got it done,” Hochul said.