The state budget: What they're saying

Your afternoon must-read briefing informing the daily conversation among knowledgeable New Yorkers

Jan 16, 2024 View in browser   By Bill Mahoney Gov. Kathy Hochul presented her state budget Tuesday for the fiscal year that starts April 1. | Mike Groll/Office of Governor Kathy Hochul Legislative leaders had a generally amicable response to Gov. Kathy Hochul’s budget presentation on Tuesday — for now. “I like the fact that most of the time we are talking about the same things; we see the same issues as important,” Senate Majority Leader Andrea Stewart-Cousins told reporters. “We need all those things – environment, housing, education, health care.” But there will be plenty of room for speedbumps as lawmakers begin to go over the details that will be made public in the coming hours. Hochul’s plan to “right-size” healthcare spending is the type of proposal that tends to attract multimillion dollar campaigns in opposition, and legislators are unlikely to embrace new housing plans that come without added tenant protections. Education might wind up being one of the main sticking points, as it usually is. Hochul wants to end a policy that guarantees funding increases to school districts, no matter how wealthy. Notably, that comes at one of the first times in modern state history in which the state Senate’s majority isn’t dependent on members from Long Island, thanks to a poor Democratic showing there in recent elections. Sen. Jack Martins, a Republican who represents northwestern Nassau County, said he’s opposed to “disenfranchising certain districts for others. Every child has a right to a fair share of education funding.” Hochul also wants to use the budget to extend Mayor Eric Adams’ control of New York City schools for four years. Legislators blocked that when she proposed it as a budget item in 2022, dealing with it later in the year. “You all know how I feel about policy in the budget,” Assembly Speaker Carl Heastie said when asked about mayoral control on Tuesday. The Assembly has long been critical of governors’ attempts to shoehorn bills that don’t deal with finances into the state spending plan. And the left is likely to push back on Hochul’s general plan to reduce revenue increases. “The governor seems to say yes to every corporate subsidy scheme that comes down the pike,” progressive activist Michael Kink said. “But she says she’s going to say no to taxing the rich to invest in affordable housing.” But legislators are confident they’ll come to a deal. “Since the beginning of time, governors like to come in low and legislators like to come in high,” Heastie said. “You have to look at the whole story of where she’s going and where the members want to go, and at the end of the day, we always seem to figure things out.” From the Capitol Gov. Kathy Hochul poked fun at Assembly Speaker Carl Heastie after the Buffalo Bills beat the Pittsburgh Steelers and his beloved Dallas Cowboys lost. | AP HOW ‘BOUT THEM BILLS: Hochul, the state’s Bills-fan-in-chief, couldn’t help but revel in her team’s pounding of the Pittsburgh Steelers on Monday. Hochul, just before delivering her budget presentation, also couldn’t help but poke at Heastie’s Dallas Cowboys, whose playoff dreams died against the Green Bay Packers.   “We won’t talk football necessarily,” Hochul said after welcoming Heastie to the budget talk. “It was a little bit of a rough weekend for you.” Heastie, perhaps still smarting from the upset loss, quickly pointed out that in terms of championships, the Bills are infamously lacking. “It’s still Cowboys 2, Bills nothing,” Heastie said to some laughs and more than a few groans from the audience. The governor, about to unveil a $233 billion budget proposal, joked about cutting spending for Heastie. “How much does the speaker get?” she said before quickly ending the football talk. “OK, love you all.” — Nick Reisman FROM CITY HALL Mayor Eric Adams released a $109 billion driven largely by additional tax revenue to limit spending cuts. | Michael Appleton/Mayoral Photography Office NOT SO BAD AFTER ALL: The mayor was set Tuesday afternoon to reveal a $109.4 billion budget that strains the city’s purse far less than he had been warning. Despite a migrant crisis that has caused a multibillion drain on the municipal ledger, Adams was able to balance the upcoming spending plan while reducing the need for agency cuts. The rosier financial picture was driven largely by additional tax revenue that came in nearly $3 billion above the previous projections. Add to that around $2 billion in savings in projected migrant costs and additional state aid and the mayor had a hefty chunk of change to work with. The rosier budget projections could help Adams counteract record-low polling numbers from New Yorkers upset by service cuts he mandated in November — cuts he began reneging on last week. However, the change in the city’s math could complicate the mayor’s pleas for more money from the federal government to address migrants while also delivering a political win to the City Council — which had pushed back on the spending reductions and released revenue projections of its own. — Joe Anuta MIGRANT CURFEWS BEGIN: The city will begin imposing a curfew tonight on migrant shelters run by the Emergency Management Department, matching a long-time Department of Homeless Services policy, an Adams spokesperson said. The policy helps to ensure “the health and safety of both migrants in our care and longtime New Yorkers who live in the communities surrounding the emergency shelters we manage,” the spokesperson said. Migrants must remain indoors between 11 p.m. and 6 a.m. The curfew at this stage will impact four respite centers in three boroughs. It comes in part amid complaints from nearby residents about panhandling, but it also is expected to help with bed capacity management. Migrants who need to leave shelters at night for work, school, medical appointments or other reasons can apply for exemptions. Some have been scrambling to gather the necessary paperwork. — Emily Ngo On the Beats Gov. Kathy Hochul proposed $250 million over the next two years to develop clean water infrastructure. | Mike Groll/Office of Governor Kathy Hochul MEDICAID MATH: Thanks to billions of dollars in unanticipated Medicaid expenses logged in the current fiscal year, the state’s massive Medicaid program is slated for what’s effectively a budget decrease in the upcoming year, according to a POLITICO analysis of state budget records. Hochul’s executive budget calls for $96.4 billion for Medicaid in the 2024-2025 fiscal year. That’s more than the $94.4 billion devoted to Medicaid in the enacted budget for the current fiscal year, but a decrease of 3.5 percent from the $99.9 billion that the program is expected to actually spend. The decrease accounts for declining Medicaid enrollment, following the end of Covid-era continuous coverage requirements and over $1 billion in savings initiatives. Hochul did not identify a source for much of the savings, saying only that her administration will work with industry stakeholders to find them. But she did propose nixing a wage parity policy that requires supplemental pay for certain home care workers downstate, saving about $200 million. — Maya Kaufman WATER INFRASTRUCTURE: Hochul is including funding for flood control projects in her executive budget but wants to reduce the annual amount for water infrastructure projects. Hochul proposed only $500 million over two years for clean water infrastructure, setting up a battle with top environmental leaders in the Legislature and advocates. The chairs of the Environmental Conservation Committee want to see the amount kept at $500 million annually, and environmental groups and other advocates are organizing to push for $600 million. The program has been funded at $500 million each year since 2017. It provides grants to local governments for drinking water and wastewater projects. The state expects to receive $2.6 billion in funding from the federal infrastructure law for water infrastructure projects as well. “This is not a moment that we should be taking our foot off the gas. Our goal when we pushed to pass the bond act and when we advocate for environmental funding is to make sure the resources are closer to meeting the need,” said Jessica Ottney-Mahar, The Nature Conservancy’s policy director. “There’s a lot of water infrastructure needs in New York State… so to see a reduction in that program is concerning.” — Marie J. French A LIFE FOR DEATH ISSUE: The push to make New York the latest state to legalize euthanasia is once again coming to a head, with lawmakers vowing 2024 is the year the Empire State will join neighboring New Jersey, Vermont and eight other states in legalizing the practice. Sen. Jessica Scarcella-Spanton and Assemblymember Amanda Septimo gathered at the Capitol on Tuesday morning to promote the Medical Aid in Dying Act — with faith leaders, public health organizers and other advocates standing behind them. “I think death is just an uncomfortable thing for people to talk about,” Scarcella-Spanton said when asked why it has taken almost a decade for the measure to be passed in New York. The bill was initially introduced in New York state in 2015 and Oregon became the first state to legalize the practice in 1997. The renewed enthusiasm comes as a Siena College poll in November found New York voters support medically assisted death by a nearly 2-to-1 margin. “I don't think there's even a lack of support. I just think that there is an unwillingness to kind of put their name on it,” Scarcella-Spanton said. “I don’t think you think about death as something that’s legislated all the time.” New York Gov. Kathy Hochul arrives to present her 2024 executive state budget in the Red Room at the state Capitol Tuesday, Jan. 16, 2024, in Albany, N.Y. | Hans Pennink/AP Photo CANNABIS POTENCY TAX NO LONGER BASED IN POTENCY: Hochul is proposing to repeal and replace the cannabis potency tax with a wholesale excise tax of 9 percent and a local retail excise tax of 4 percent. The tax would be based on cannabis quantity instead of THC content. The Office of Cannabis Management is proposed to receive $68 million in funding from the state budget if approved by the state Legislature. Also outlined in the budget is legislation to combat the unlicensed sale of cannabis, which would give the agency and local government agencies more discretion to seal or padlock businesses selling cannabis without the proper licenses. — Shawn Ness EDUCATION: Hochul is advocating for a four-year extension of mayoral control of city schools — a boost to Adams amid growing dissatisfaction with the school governance structure. “I once again support New York City Mayor Eric Adams’ request to continue mayoral accountability for the school system for another four years, which has been granted to every mayor since the year 2002,” Hochul said on Tuesday during her budget address. The mayor is preparing to make his case for retaining control of the school system, following a bruising fight in 2022 that left him with a two-year extension with some strings attached, including changes to the Department of Education’s governing body and a costly measure to reduce class sizes. The state Education Department has to submit a report to Hochul and the Legislature by the end of March on the effectiveness of mayoral control. Speakers at hearings that state education officials have held to get feedback on the policy have called for eliminating mayoral control or making adjustments to it. Legislators also signaled concerns about continuing mayoral control if Adams fails to comply with the law requiring lower class sizes. Michael Mulgrew, president of the city’s teachers union, who wants tweaks to mayoral control, said: "We are looking forward to a fascinating debate on the merits and failings of mayoral control." — Madina Touré HOUSING PLANS: Hochul is hoping state funding will entice towns and cities to build more housing after backing off her plan to mandate residential growth across the state, which was rejected by the state Legislature last year. “I heard loud and clear from my friends in the Legislature that they believe more in carrots than sticks,” Hochul said Tuesday when unveiling her budget for the 2024-25 fiscal year. “We’ll do that — we’ll put the carrots to the test.” Under her proposal, localities would need to make sufficient progress toward growing their housing stock in order to qualify for $650 million in discretionary funding. Communities would have to go through a process to be certified as “pro-housing” to receive money through programs like the Downtown Revitalization Initiative and the Regional Council Capital Fund. — Janaki Chadha AROUND NEW YORK — State legislature’s environmental conservation committees are pressing Hochul to reject a Texas company’s bid to expand the Seneca Meadows landfill. (Democrat and Chronicle) — Rep. Elise Stefanik is urging other Republican presidential candidates to drop out of the 2024 race after Trump trounced the Iowa caucus. (NY State of Politics) — Buffalo’s metropolitan area can expect another winter storm Tuesday night extending all the way into Thursday. The storm could drop as much as three feet of snow. (The Buffalo News)   Follow us on Twitter Joseph Spector @JoeSpectorNY   Subscribe to the POLITICO Playbook family Playbook  |  Playbook PM  |  California Playbook  |  Florida Playbook  |  Illinois Playbook  |  Massachusetts Playbook  |  New Jersey Playbook  |  New York Playbook  |  Brussels Playbook  |  London Playbook View all our political and policy newsletters Follow us

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