Happy Budget Day, New York

Jan 16, 2024

By Nick Reisman, Jeff Coltin and Emily Ngo

Presented by

With help from Shawn Ness

Gov. Kathy Hochul and New York City Mayor Eric Adams sit side by side at a New York State Financial Control Board meeting on the Fiscal Year 2024 NYC adopted budget and financial plan, on September 5, 2023.

Gov. Kathy Hochul (left) and Mayor Eric Adams will both release their budgets Tuesday amid an ongoing migrant crisis and a slowdown in tax revenue. | Michael Appleton/Mayoral Photography Office

Gov. Kathy Hochul and Mayor Eric Adams will present their budgets today as both officials face pressure from the ongoing migrant crisis, a slowdown in tax revenue and calls to boost spending.

How they negotiate and finalize their spending plans over the coming months will have a sweeping effect on how services are funded and how New Yorkers are taxed.

Here’s what to look for:

Will migrant aid be enough? Hochul is expected to propose spending at least $1.9 billion on migrant costs in her $233 billion budget plan. The money is expected to cover housing at sites like Floyd Bennett Field and Creedmoor as well as legal aid, job placement and other services. The city will also be able to continue to seek reimbursements from the state for migrant spending. And we’ve already seen the state has been willing to dip further into its coffers to provide resources for migrants.

Last year, Hochul and state lawmakers backed a $1.1 billion package of aid, which reached nearly $2 billion when factoring in costs like housing. Adams has called the migrant crisis a budget buster for the city. But absent federal aid in the form of direct spending, the state may be his only immediate option for financial help.

Fight for a tax hike? Hochul’s budget proposal will not include plans to hike taxes on the richest New Yorkers. But progressive advocates are gearing up for a fight over the issue, arguing the affordability crisis in New York is hitting middle-income and lower-income people the hardest and accelerating a nation-leading outmigration.

The Fiscal Policy Institute, meanwhile, in an analysis to be released later today pointed to the “substantial” loss of revenue if New York allowed higher tax rates on corporations and people making more than $1 million to expire beginning in 2028.

Back to school: Hochul will propose a smaller increase in funding for schools after several years of significantly raising school spending when the state’s tax coffers were flush with revenue. The billions of dollars in additional, direct aid to schools was cheered by progressives who had pushed for years to reach that target.

Hochul’s budget team will argue spending needs to be “normalized” as many schools have their cups literally overflowing with cash on hand reaching their statutory limits. But a bigger and more complex fight could be had over the state’s arcane funding formula for how money is doled out to districts.

Budget cuts? In November, the mayor announced agencies would need to cut their budgets by 5 percent on account of migrant spending, dwindling federal stimulus money and a dire economic forecast. He indicated the city would need to go through two more rounds of trimming before a looming gap could be closed.

However, last week Adams paradoxically restored several small reductions at the FDNY, the NYPD, the Department of Sanitation and elsewhere — including a reversal of spending reductions that had sparked a lawsuit from a politically powerful union — while still claiming the city was in a tough spot financially. That has budget observers guessing about what will be in the next so-called “program to eliminate the gap.”

Revenue picture: When announcing the restorations last week, Adams hinted that the city’s revenue picture was better than the last set of predictions released over the summer. City Hall often estimates revenue far more conservatively than the City Council and other budget watchdogs, who have pushed back against the spending reductions.

With projections now expected to come in much higher than previously anticipated, the extra cash could allow Adams to reverse more deeply unpopular cuts. The rosier prognostication, however, would undercut his argument that the city needs aid from the state and federal governments to afford the migrant crisis. — Nick Reisman and Joe Anuta

IT’S TUESDAY. Got news? Send it our way: Jeff Coltin, Emily Ngo and Nick Reisman.

A message from New Yorkers for Local Businesses:

Small businesses are the lifeblood of New York’s economy, employing millions of New Yorkers in hard hit communities. But rising costs and an unstable economy pose a direct threat to the jobs they create and equity they've ensured. That's why New Yorkers for Local Businesses is urging Albany to reject proposals that could kill middle class jobs and raise food prices in New York. Learn more here.

WHERE’S KATHY? Presenting her budget proposal for fiscal year 2025 in Albany.

WHERE’S ERIC? Speaking at the funeral for former NYPD chief of department Joseph Esposito, discussing the budget in a series of meetings (first with Speaker Adrienne Adams and Councilmember Justin Brannan, then with Public Advocate Jumanne Williams and City Comptroller Brad Lander and later with members of the City Council), presenting his budget for fiscal year 2025, hosting an in-person media availability session and, lastly, speaking at New Life Cathedral’s “Man of the Century Celebration of Life and Ministry.”

QUOTE OF THE DAY: "The young senator doesn’t have a scratch on his face yet; I’ll see you next year.” — Rep. Adriano Espaillat, a loyal supporter of Mayor Eric Adams, to state Sen. Zellnor Myrie, who is considering primarying Adams. Espaillat was joking about how he’s older than Myrie, but may have also been previewing the race.

ABOVE THE FOLD

Gov. Kathy Hochul updates New Yorkers on an impending storm on Jan. 12, 2024.

Gov. Kathy Hochul raised a record $6.3 million in the past six months. | Susan Watts/Office of Gov. Kathy Hochul

HOCHUL’S HAUL: Hochul will report today that she raised $6.3 million for her 2026 reelection campaign since last July.

The top lines were shared with Playbook ahead of the release of her disclosure report later in the day.

The governor, who also raised $2.5 million for the state Democratic Committee, has about $9 million in the bank. The money for the state party is expected to help it with state and House races this year.

The Democratic governor’s six-month haul is the largest a New York governor has ever reported in a biannual filing period that falls in the first two years of the four-year election cycle. Former Gov. Andrew Cuomo raised $4.5 million in the comparable filing period in 2020.

And Hochul’s efforts come despite her facing more stringent fundraising rules than prior candidates.

Governors, including Cuomo, were previously allowed to raise up to $70,000 per donor, while Hochul is limited to $18,000. That’s because of reforms made to create the public financing system that took effect at the start of 2023. — Bill Mahoney

CITY HALL: THE LATEST

Honoree Michael R. Bloomberg and Mayor Eric Adams attend the Museum of the City of New York's Centennial Gala.

Former Mayor Michael Bloomberg donated the legal maximum of $5,000 to Mayor Eric Adams' legal defense trust. | Ilya S. Savenok/Getty Images for Museum Of The City Of New York

MAYOR-TO-MAYOR: The list of who gave, and how much, to Eric Adams’ legal defense trust is due today, but we already know one high-profile donor: Mike Bloomberg.

The ex-mayor’s team exclusively told Playbook that he gave the legal maximum of $5,000 to Adams’ fund, which he created to pay private lawyers to represent him amid a federal investigation into Turkish government influence.

“Mike thinks it’s in the city’s interest for Mayor Adams to succeed, and it’s not in the city’s interest for him to be distracted,” said Howard Wolfson, a longtime Bloomberg adviser. Adams’ schedule shows occasional calls with the three-term former mayor.

(Given his $96 billion net worth, that’s like the average New Yorker giving less than 1 cent, it should be noted.)

Adams has raised $650,000 since opening the fund in November, his lawyer told NY1 — an impressive haul given laws limiting donations from people with business before the city.

Adams’ typical campaign fundraising disclosure is also due today, which will give a sense of his campaign’s health amid record low poll numbers a year and a half ahead of the scheduled 2025 primary. — Jeff Coltin