No New Taxes, but Plenty to Fight Over in New York’s Looming Budget

ALBANY, N.Y. — The yearly race to cobble together New York State’s gargantuan budget is officially on.

Gov. Kathy Hochul, buoyed by an influx of federal aid and unexpectedly robust tax revenues, unveiled a $216.3 billion budget proposal in January aimed at jump-starting the state’s pandemic recovery through investments in infrastructure, education and health care.

This week, however, Democrats who control the State Legislature countered her plan with far-reaching proposals of their own, putting forth financial blueprints that would cost at least $6 billion more than the governor’s proposal.

Ms. Hochul and state lawmakers have until the end of the month to bridge their differences on competing spending priorities ranging from higher wages for health care workers to helping families afford child care, and finalize a budget that is not expected to include raising taxes.

Here is what you need to know as budget negotiations heat up.

More money for child care, home care and universities

One of the top priorities for Democrats this year is to substantially invest in the child care industry by expanding subsidies for low-income families, as well as offer support for new and existing day care centers.

Ms. Hochul put forth an ambitious $1.4 billion plan earlier this year, only to be outdone by even more far-reaching legislative proposals: The Assembly proposed a $3 billion plan, while the Senate’s version would cost $4 billion.

The proposals were portrayed as the first steps toward a universal child care system that would eventually provide free child care for all New York families, regardless of income.

They also proposed allocating $345 million to provide health care coverage for undocumented immigrants, a move that could cover more than 150,000 low-income people currently barred from insurance because of their immigration status. To address a dire shortage of such workers in a state with a rapidly aging population, both chambers backed spending to increase the minimum wage for home care workers.

Andrea Stewart-Cousins, the Democratic majority leader in the Senate, said the increased spending was aimed at making up for years of disinvestment that the pandemic had laid bare.

Democrats also proposed a substantive infusion of money aimed at recruiting new full-time faculty and bolstering the operating and capital expenses of the State University of New York and the City University of New York. And they want to boost the state’s tuition assistance program, following a push by a coalition of student and staff calling for a “New Deal” to restore funding to the public university systems.

Potential friction with Governor Hochul

The budget proposals were just as noteworthy for what they omitted.

Left out were some policies Ms. Hochul supports and would want to see in the final budget, which is due April 1. The exclusion of some of Ms. Hochul’s priorities could amount to a negotiating tactic by lawmakers, meaning it is still possible they wind up in the final budget after the traditional horse trading that typifies the last hours of budget negotiations.

The Legislature, for example, did not embrace Ms. Hochul’s plan to overhaul the state’s troubled ethics commission or her proposal to extend mayoral control over New York City schools for another four years, a top priority of Mayor Eric Adams.

Carl E. Heastie, the Speaker of the Assembly, said his members have generally supported advancing mayoral control, but that it was a policy discussion that could be had outside the state budget since it didn’t expire until June.

Governors have long used the leverage they wield over state budget negotiations to pass items unrelated to the budget, especially on issues that could be more politically difficult to get through as stand-alone legislation. That practice grew under former Gov. Andrew M. Cuomo, but Mr. Heastie said his chamber was intent on reining it in.

The legislative proposals also did not include language to allow restaurants and bars to sell alcoholic drinks to go, temporarily made legal during the pandemic. Ms. Hochul has proposed a plan to make to-go drinks permanent, but the measure has faced stiff opposition from the influential liquor lobby, which contends it would hurt the bottom line of liquor stores.

The Assembly also rejected Ms. Hochul’s plan to pay bonuses for most health care workers, proposing instead to reallocate $1.2 billion to help pay for recurring wage increases for employees of the Health Department and other state agencies. Both houses also rejected or tweaked measures Ms. Hochul was seeking that would have given her unilateral powers to spend and borrow certain funds with little oversight.

In contrast to Ms. Hochul, Democratic lawmakers proposed using more than $1 billion in federal money to fund the Emergency Rental Assistance Program, which is meant to help low and moderate-income tenants at risk of eviction pay rent.

Changes to the state’s bail law

When Mr. Adams visited Albany last month to press for changes to the state’s bail laws, legislative leaders gave him the cold shoulder.

But now that Ms. Hochul is also supporting a broad array of changes to the bail laws, the issue seems back in play. The governor wants to expand the number of crimes eligible for bail and allow judges to consider the “dangerousness” of a defendant in making bail decisions for those accused of serious felonies.

Legislative leaders have not responded to Ms. Hochul’s proposals, but have said that they were open to discussions even as they insisted that the 2019 changes to the bail law had nothing to do with recent increases in crime.

“Can we stop blaming bail reform when the sun comes up?” Mr. Heastie said in January.

Concerns over spending

Ms. Hochul’s financial plan was more fiscally conservative than the Legislature’s proposals, placing an emphasis on using the influx of pandemic aid from the federal government to finance one-time infusions of money rather than new programs.

Fiscal watchdogs, who had praised Ms. Hochul for steering a significant amount of funds into the state’s reserves, raised concerns about the state’s ability to pay for the new recurring expenses proposed by Democratic lawmakers once federal aid dried up. While Ms. Hochul’s financial plan projected balanced budgets through 2027, the legislative proposals left more unclear its effects on future budgets.

Republicans, citing the economic uncertainty that inflation has caused, cast the legislative proposals as examples of out-of-control spending by Democrats that did little to address rising prices and could potentially lead to higher taxes down the road.

“This is the very definition of an election-year budget,” said State Senator Peter Oberacker, a Republican from Otsego County in Central New York. “It’s not fiscally responsible.”

Democrats argued that the spending they were proposing in areas around education and increasing wages amounted to investments that would help strengthen the economic standing of New Yorkers in the long run.

They also noted other measures that would provide immediate relief to some New Yorkers, such as fast-tracking an existing middle-class tax credit, a move that Ms. Hochul supports.

A gas tax holiday? $1 billion for casino licenses?

With gas prices skyrocketing, Senate Democrats proposed a plan to suspend a state tax on gasoline for eight months, from May 1 through Dec. 31, a move also supported by Republicans to provide relief to drivers at the gas pump.

While the Assembly did not put forth a similar proposal, Mr. Heastie said he was “open” to a discussion on suspending the gas tax, which is used in New York to help finance mass transit and road repairs.

Ms. Hochul has expressed some apprehension about a gas tax holiday, saying she was discussing it with her budget officials to make sure it had a tangible impact for consumers even as gas prices continue to go up.

Ms. Hochul is also pushing to fast-track the issuance of three new casino licenses this year, likely in the downstate area. Senate Democrats are now proposing a hefty price tag for the coveted licenses: a minimum of $1 billion for each license, a potential boon for state coffers.