On February 1st, the Governor unveiled a $227 billion Executive Budget that makes significant investments in mental health and continues to address the relatively high crime rates through community based services and further changes to the bail laws. During her presentation, she stated “We will make bold, transformative investments that lift up New Yorkers while maintaining a solid fiscal footing in uncertain times.”
Governor Hochul and legislative leaders will now start the process of negotiating the state’s financial plan, along with myriad policy initiatives included in the budget. It will also offer a test after a particularly narrow victory in November for Hochul about whether she seeks a more moderate position on policy initiatives or takes a posture to placate progressives. The New York State new fiscal year starts on April 1, 2023.
When examining the New York State budget, it is important to note that the vast majority of expenditures are in two areas: School Aid accounts for $31.3 million and the Medicaid Program expends $25.8 million leaving only $122.7 for state agency operations.
- “Transformative Infrastructure Projects” targeted at New York City. Those projects include the Gateway Tunnel under the Hudson River, a $500 million investment in the MTA, and continuing renovations at New York City’s Penn Station and JFK Airport;
- Continued funding for the next round of the Regional Economic Development Councils’ competition of up to $225 million in grants and tax credits;
- A new office called GO-SEMI what would work with Empire State Development to drive continued growth at Micron and other computer chip companies seeking to expand in New York;
- An additional $7.6 billion in childcare over 4 years and automatic eligibility for certain families;
- $34.5 billion for pre-K to grade 12 schools and expanding full day pre-kindergarten to 95% of all 4 year olds;
- $7.5 billion in higher education spending, a decrease of $8.1 billion from last year. It proposes tuition increases at SUNY state-operated campuses and CUNY;
- $1 billion for a fifth round of the Statewide Health Care Facility Transformation project to modernize health care facilities. That includes $500 million to “enhance New York’s health care IT Infrastructure;”
- $700 million to bolster mental health programs statewide;
- $1 billion to help New York City pay some of the cost of sheltering some of the 40,000 migrants who arrived in New York City after illegally crossing into the United States;
- Hochul devoted an entire section of her budget to improving hiring and retention of the State Workforce. Proposals include modernizing the civil service pay structure through a new job evaluation system that “better meet the needs of employers and the current job market.” Also highlighted was an effort to renovate and reconfigure state offices to facilitate hybrid work schedules;
- Fund an aggressive $25 billion multi-year plan to build more residential units in the state afflicted with a severe housing crisis;
- Indexing the minimum wage to inflation. Annual increases would be capped at 3%;
- A commitment to improving public safety with $337 million to combat gun violence, $1 billion for comprehensive mental health investment and reform;
- Several extensions of the tax law including extending the current $7.25 business income tax rate through 2026 on businesses with incomes of over $5 million generating around $800 million a year;
- A $15 million appropriation to “modernize the State’s paper-based procurement systems by transitioning it to an electronic procurement system;” and,
- Beginning a pilot program at the Dormitory Authority of New York State (DASNY) for MWBE reciprocity between NYC and New York State certification and increasing the discretionary procurement threshold for MWBEs.
Some of the biggest points of disagreement might come from the non-fiscal issues presented in the Executive Budget. Issues likely to make the budget negotiations difficult may include:
- Bail Reform – the budget proposal includes changes to the State’s cash bail law negotiated three years ago;
- Cap and Invest – Hochul proposes to create a “cap and invest program” to raise billions of dollars and lessen the impact of the investments needed to meet the goals around reduced emissions and increased renewable energy; and,
- Gas Hook-Ups – the Governor’s electric buildings proposal would ban gas hook ups/equipment in new construction.