What do free bus rides, new taxes on the wealthy and a stiff drink in a movie theater have in common? All three have the support of lawmakers in the New York State Legislature.
These ideas and thousands of others were tucked into the Senate and Assembly budget proposals released this week, offering a glimpse of legislators’ positions as Albany’s annual budget battle royale kicks off. Gov. Kathy Hochul must come to a consensus with leaders in the State Senate and Assembly on how to spend more than $230 billion by the state’s April 1 budget deadline.
The fact that all three leaders are Democrats does not mean there is any less to haggle over: Taxing the rich, tenant protections and school funding are all up for debate once more as Ms. Hochul, a centrist from Buffalo, will be forced to find common ground with an increasingly left-leaning Legislature.
And while those debates have sometimes become intractable — last year’s budget was a full month late, after Ms. Hochul insisted on tightening the state’s bail laws — Democrats in both houses are eager to avoid a prolonged ordeal with a consequential general election on the horizon.
In January, Ms. Hochul unveiled her $233 billion spending plan, which called for significant investments in mental health care, public safety and artificial intelligence research, as well as $2.4 billion to address the migrant crisis in New York City. But she also proposed cuts to education funding and health care that have drawn criticism.
In their proposals, Democrats in the Senate and Assembly pushed back against Ms. Hochul’s desired changes to education funding while offering their own proposals on how to solve the state’s housing crisis, make transportation more effective and accessible, and more.
Here’s what to know as budget talks commence.
A fight over education funding
Both the Senate and Assembly rejected key changes to school aid that Ms. Hochul proposed in an effort to reduce education spending, and instead kept in place the formula that the state uses to determine how much aid is distributed to individual districts. They allocated $1 million for a study on the issue.
Ms. Hochul’s proposals have been a point of contention on both sides of the aisle. Though the governor’s budget would increase overall education aid by about 2.4 percent compared with last year, about half of the state’s school districts would receive less state aid, and no districts would receive as much as they had anticipated under the current formula.
Ms. Hochul’s budget would base funding in part on the average cost of living over the past 10 years, as opposed to the previous year. It would also end a decades-old practice that guarantees districts never receive less state funding in a school year than they did the year before, even if enrollment declines.
The governor argues that these changes would help distribute aid in a way that more accurately reflects districts’ level of need. But district leaders and lawmakers have said the changes would negatively affect many schools across the state, including in many low-income, rural areas.
The Assembly and Senate also rejected the governor’s proposal to offer Eric Adams four more years of control of New York City schools. The New York City mayor has had control of city schools since 2002, subject to renewal by the Legislature — an arrangement that has frustrated some lawmakers and parents who would like to see a new model.
Raising taxes on the wealthiest New Yorkers
Both the Senate and Assembly proposed raising personal income taxes by half a percent for people earning over $5 million until 2027. Such an increase could add nearly a billion in new revenue each year, they estimated.
Asked on Tuesday about the proposal, Ms. Hochul was clear: “Raising income taxes is a nonstarter for me,” she said.
The governor has been staunchly opposed to raising taxes, seeing the move as counterproductive to her goal of stemming New York’s nation-leading population loss.
There has been much debate, however, on whether tax increases on the wealthy actually drive New Yorkers out of state: An analysis from the Fiscal Policy Institute found that it was in fact the working and middle classes who were leading the exodus, trends they tied to affordability issues more broadly.
Both houses also proposed an increase to the corporate tax and new tax credits for working families. The Assembly would expand two existing credits, the earned-income tax credit and the Child Tax Credit. The Senate proposed a new credit, known as the Working Families Tax Credit, that would offer $550 to married couples earning under $130,000.
Could this be the year for housing?
Last year, Ms. Hochul proposed an ambitious plan to spur housing construction across the state. But that proposal and all others collapsed last year as all sides failed to agree.
Democrats in the State Senate advanced a package that aims to keep people in their homes while building new affordable housing. The proposal includes initiatives to speed commercial to residential conversions, legalize basement apartments and free up funds to help upstate renters avoid eviction.
Parts of the package — including proposals to replace an expired tax break for developers, and raise the cap on what landlords who own rent-stabilized buildings can charge after improving a unit — are sure to be celebrated by landlords and developers.
But the package comes with one major condition: Senate Democrats say they will not make any deal that does not include protections similar to those in the Good Cause Eviction legislation — a controversial bill that would limit landlords’ ability to evict tenants or raise their rent above 3 percent in times of low inflation.
The Assembly’s proposal also includes incentives for office conversions and for building new housing on state-owned land. And while it makes reference to protecting tenants from “capricious rent increases and unreasonable evictions,” it makes no mention of the tenant protection legislation the Senate prioritized, in a blow to progressives.
Addressing climate change
Both chambers proposed allocating millions for climate projects, including electric vehicle infrastructure, heat pumps and solar panels.
But the Senate went further, removing a raft of tax breaks for the fossil fuel industry and throwing its weight behind a piece of legislation prized by environmental advocates under which companies that have released a significant amount of fossil fuels into the atmosphere must also contribute to a fund to help the state adapt to climate change.
The Senate also put forth legislation to remove subsidies for gas companies and cap energy bills. Ms. Hochul had embraced a portion of the proposal in her budget, but jettisoned some of the measures that the bill’s proponents said would help keep costs down for ratepayers.
A high-speed train, free bus lines, and movie theater cocktails
While most of the budget language focuses on changes to New York’s existing programs, there are also some newer ideas.
The Assembly and Senate proposed an extension of New York City’s free bus pilot program to include three lines in each borough. The Senate also allocated $10 million for a “higher-speed rail” project, though it offered scant details on what that might be.
The Senate also rejected Ms. Hochul’s proposal to make to-go drinks permanent. But in its place, lawmakers proposed a change that would allow moviegoers to enjoy cocktails at theaters, regardless of whether those theaters serve food.