The New York State Legislature and Governor Kathy Hochul will not agree on a state budget by Monday’s deadline.
Lawmakers this week passed a measure to resume budget negotiations on April 4th.
In 2023, Hochul signed a state budget more than a month late. To learn more about what’s delaying the spending plan in 2024, and why the Democratic governor does not appear to be in any rush, WAMC's Lucas Willard spoke with WNYC Capitol Reporter Jon Campbell.
Well, Governor Hochul’s made pretty clear since she took office in 2021 that she isn't terribly concerned about the budget deadline, quite frankly. I mean, this is her third budget since she took office and this is the third one that's going to be late. And there aren't a ton of immediate consequences from that. They did pass a budget extender to essentially fund government through April 4th, and that'll ensure that state workers will get paid, which is the biggest deal when the budget runs out. But it's a rite of passage in Albany for a late budget. There were some exceptions during Andrew Cuomo’s tenure because he tried to make on-time budgets a symbol of government functioning, but, for the most part dating back to the 70s and 80s, budgets have been regularly late and that is going to be the case again this year as well.
How far apart are, one, both chambers in the legislature, the State Assembly and the Senate, and then the legislature as a whole with the governor on coming together on a spending plan?
Well, when we spoke to Assembly Speaker Carl Heastie this week, his analogy was planetary. He said, ‘Sometimes when you're negotiating a budget, you're not in the same galaxy. And in this case, they're in the same galaxy, but perhaps not the same state or country.’ So, this is something that, in general, they are pretty close on the big picture. They all want housing policy in the budget but perhaps they differ on exactly how they get there. Governor Hochul has been focused more on supply while the legislature has been focused more on tenant protections. And it's looking like there could be paths to compromise for that and on issues like education funding and Medicaid funding, but they're not quite there yet. And even if they were to strike a deal tomorrow, it would still take quite some time to put the bills together and to actually get them through a vote. So, we've got some time left here before they actually have a final budget.
Now, let's take a couple of those big items that you mentioned one by one, the first being housing. Governor Hochul last year pushed for an ambitious housing plan and that didn't quite make it through the legislature and the housing shortages and price of housing continue to be an issue for many New Yorkers. So, how certain are you that the governor and the legislature will come to agreement on a large housing deal in the new budget?
Well, housing seems to be the biggest thing holding things up to a broader budget deal at this point and part of that is because there are so many layers to be negotiated here. I mean, the governor's big push has been to require local governments to create new housing or to commit to creating new housing if they want to be eligible for certain state grants. Say, the Downtown Revitalization Initiative where local governments can compete for a $10 million grant to revitalize their downtowns and the governor comes to town with a big check, a big fancy $10 million check and you get to work. So, the governor wants to make it so you have to commit to being a pro-housing community to be eligible for that. So, there's that part of it but really the big part now are these negotiations over a tax break for New York City developers known as 421-a that expired two years ago. The governor wants to revive that. The legislature, on the other hand, wants some sort of new anti-eviction protections for tenants. It’s generally known as Good Cause Eviction. It would require landlords to have good cause before they evict somebody such as, say, non-payment of rent. Also, it would effectively cap annual rent increases. It would set a percentage by which you can't exceed without a tenant being able to challenge it in court. So, that's setting the stage for a compromise between the legislature and the governor. They're working toward that but they're not there yet and they're still locked in these closed-door negotiations.
Now, the governor and the legislature have had a rift over school funding and a pitch by the governor to tweak the formula from which school districts would receive aid. What can you tell me about those discussions and do you think that the governor and the legislature can come to agreement?
Yeah, the governor has two major changes that she wants to make. One is she wants to get rid of a measure known as hold harmless and that was basically a long-standing measure by which you plug ... the state has these complicated formulas to determine how much money each school district gets from the state. The state spends more than $30 billion a year on education. And there was a provision that said, basically, if you plug in those numbers and a school district is supposed to get less aid than they got the year before, they're held harmless. They get the same amount as they got the year before. So, the governor wants to get rid of that and she says, essentially, there are a lot of districts that have been losing enrollment. So, why are they getting the same amount of money that they did in previous years? But by changing that, by getting rid of that, nearly half of the state's more than 600 school districts would actually see less funding than they did the year before. And that's unpalatable to many state lawmakers who really pride themselves on being able to go to Albany and bring home the bacon for their school districts and their local governments. So, lawmakers have pushed back very hard against that. There's another provision that the governor wants that would change the way they calculate inflation. It would smooth it out over a 10-year period so you wouldn't see big spikes in school aid when there are annual spikes in inflation. The legislature seems a little more open to that. That is one that's still being negotiated at this point and you saw some comments this week from Senate leader Andrea Stewart-Cousins that kind of suggested that maybe the legislature's willing to play ball on that a little bit. But again, this is all happening behind the scenes in these closed-door negotiations. So, we just have to kind of get these little dribs and drabs from lawmakers and the governor when they actually speak to the media.
Now, Jon, you also mentioned Medicaid. There's been a discussion ongoing about a raise that home health care aides would get, whether it's 1.5% or 3%. Are lawmakers and the governor coming together on a raise for home health care aides?
Yeah, that's one of the things that is under negotiation. Home health care aides are pushing for an increase in Medicaid, an increase in the rate and Medicaid reimbursements. The hospitals are pushing for the same thing and nursing homes are pushing for the same thing but all of that costs a considerable amount of money. The state spends, again, $30 billion on Medicaid, just like they do on education, and it makes up a huge chunk of the state budget. One thing that lawmakers are pushing is this tax on health plans. The idea would be you tax them, you put that money into the Medicaid system, and then the federal government matches it. Budget watchers say, ‘Well, maybe that'll work.’ It worked in California but the federal government has warned that they might change that formula in the future because it doesn't really go with the spirit of the law. So, there are some budget watchers who think they might be playing with fire if that's the case. That maybe they get it initially, but then the federal government disallows it in future years and then you're right back to trying to figure out how to pay for it. But that's all being negotiated as we speak.
So, Jon, one of the items that didn't make it out of the legislature last year, although the governor has included some of its language in her proposal, is what we call the New York HEAT Act. That's legislation related to the electrification of homes and moving new buildings off of fossil fuels. What's the status with negotiations there?
Well, the Senate passed that in recent weeks, just as they did last year. The big thing that would do is get rid of what's known as the 100-foot rule. Basically, there's a rule right now that says if you're within 100 feet of a natural gas main and you want natural gas hookups in your house, the utility has to provide that to you free-of-charge and the cost gets distributed among all utility ratepayers. So, getting rid of that rule would kind of move the state more toward its goal of bringing more and more renewable energy into the fold. And it's been pushed by environmental groups for years now to try to make that happen. The state has its own climate goals that are very ambitious and, right now, they perhaps aren't on track to hit them. So, they need things like this in order to hit the goals. The governor surprised some people in January when she kind of included the bulk of that in her budget proposal, but the Assembly hasn't at least publicly got on board yet. They did not pass it when the Senate passed it last year. They have not passed a version of that bill yet. It has been involved in some level of budget negotiations, but whether it makes it into the final budget remains to be seen. That said, if it doesn't, it still could come up before lawmakers in their legislative session in June.
So, of course, it is a presidential election year, Jon. What's the role politics is playing in New York state budget negotiations?
Well, politics always play some level of role in budget negotiations or anything that happens in Albany because lawmakers are up for election every two years. Certainly, you could argue politics comes into play with the education funding because there's no way that lawmakers would want to go back to their districts in an election year and say that their local districts got less money than they did the year before. That would be fodder for their opponents. Another example is Governor Hochul, since 2022, has really, really tried to paint herself as being tough on crime and, in part, that's because Lee Zeldin, her Republican opponent, used that issue against her in a very effective way in 2022 when Governor Hochul won by only five and a half points. So, she has pushed criminal justice changes in recent years. One that she's pushing this year is a measure that would increase penalties for assaulting a retail worker. That does not look like it's going to get through. The legislature is pretty averse to increasing criminal penalties and that is certainly the case on this as well. But it's another signal that Governor Hochul is trying to paint herself as tough on crime.
