Hochul announces the framework of a budget deal

Gov. Kathy Hochul announced the “parameters of a conceptual agreement” of a $237 billion budget deal on Monday, seemingly marking the beginning of the end of negotiations on the spending plan that is now over two weeks late. She touted a “landmark” housing package, measures to combat retail theft and a plan to change the state’s school funding formula. But specific details remained elusive, as neither the state Senate nor the Assembly had agreed to a final deal yet.

Hochul congratulated her staff, along with state Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, for their work in negotiating the spending plan, which was due on April 1. “Each of us came to the table with really strongly held beliefs, but in the interest of our state, we’ve pulled it together to deliver in a really collaborative way,” Hochul said at a press conference announcing the deal framework. Neither legislative leader joined her.

“There is no agreement, but we are close,” said a state Senate Democratic spokesperson following Hochul’s announcement. A spokesperson for the Assembly Democrats offered a similar sentiment. “The negotiations are moving in the right direction, but there are still many issues to discuss with our members,” he said. And state Senate Finance Committee Chair Liz Krueger said on the floor that “it was a surprise for all of us in the Senate” when they got word of Hochul’s impending announcement.

Hochul said she and legislative leaders made a handshake agreement Sunday night, but acknowledged that some details still need to get worked out.

Despite taking an apparent victory lap regarding budget negotiations, Hochul offered little to no details on some of the biggest issues that have held up the spending plan for the past two weeks. She offered almost no details on what she called a “landmark” housing package. Hochul said the package would include a new 485-x tax incentive to spur affordable housing production in New York City and six-year extension of its now-expired predecessor, 421-a, to complete projects already in the works, as well as new tenant protections and measures to get vacant units back online. “I’m so proud to say that we’ve reached an agreement that will make this happen and extend protections to tenants in New York that have never been available before,” Hochul said. Her counsel, Liz Fine, confirmed that the protections include the “framework” of “good cause” eviction.

Sources in the Legislature and others with knowledge of negotiations said that many of the housing specifics were still being finalized. As of Monday, the potential deal included significant carve-outs to “good cause” eviction legislation that drew the ire of tenant advocates. Small landlords also opposed the provisions of the proposed deal. Sources previously told City & State that with the new 485-x program, construction trades won strong wage standards to build housing that qualified for the tax incentive.

Hochul’s reference to getting vacant units back online likely referred to increasing the cap for individual apartment improvements to allow rent-stabilized landlords to raise the rent on apartments after completing renovations. The governor included no specifics, but City & State previously reported on a tiered system that would raise the recoupable costs of repairs slightly, but still well below what landlords had asked for.

In a statement after Hochul’s speech, the Real Estate Board of New York praised some parts of the housing package but criticized the deal overall. “We are confident that this package falls far short of addressing the city’s housing needs and must be reassessed in the coming years to put the rental housing market on a solid footing,” Real Estate Board of New York President James Whelan said in a statement.

Hochul said her plan to fund K-12 education had gone through some changes. “In the long term, it just doesn’t make sense to keep paying for empty seats in classrooms,” she said. Hochul announced the Foundation Aid formula would see a tweaked inflationary factor in the upcoming school year to “right size” state aid. Hochul plans to have the Rockefeller Institute of Government and the state Department of Education study the funding system and report back “this time next year” with a proposed formula that she and legislative leaders feel makes more sense.

While Hochul plans to have the Foundation Aid formula studied in search of an alternative, this fiscal year, the proposed elimination of “hold harmless” – a provision guaranteeing school districts won’t see less aid than the year prior – will not be a factor for districts. 

She said districts could expect “a smaller increase and that’s just kind of hard for people to grasp.” Her Budget Director Blake Washington added that problems attributable to the elimination of “hold harmless” and an updated Foundation Aid formula wouldn’t come to bear this year.

Hochul was mum on mayoral control, rumored to be a late addition to this year’s budget deal, saying “the devil was in the details,” and stressing the budget deal was still conceptual in nature. However, she did reaffirm her support for the current system of New York City school governance. 

“In my budget, I decided I want to do this and have that conversation and have some certainty for the New York City school district,” Hochul said. “They should know what’s going to be happening.”

Hochul’s conceptual budget deal announcement was not totally lacking details, however. She touted the inclusion of new penalties for assaulting retail workers – something that legislative leaders had originally opposed – and over $40 million for retail theft enforcement. Hochul also announced the expansion of hate crime-eligible offenses, which both chambers had not included in their one-house budget proposals.

Hochul also outlined long-awaited changes to cannabis enforcement powers for state and local agencies, allowing the issuance of padlock orders on illicit dispensaries to remain in effect while the legal process plays out. She did caution, “They won’t disappear overnight.” Again, the details were hazy, but her Empire AI consortium also made it through budget negotiations, in line with her plan to make New York a hub for the artificial intelligence industry. The proposal relies on a $275 million investment from the state as well as $125 million from private sources.

Lawmakers passed a fifth budget extender on Monday that expires Thursday, giving Hochul and lawmakers three more days to hash out the rest of their conceptual agreement before they need to pass yet another extension.