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Hochul's budget plan holds line on spending increases, draws on reserves to fund migrant crisis

Gov. Kathy Hochul details her state budget proposal on Jan. 16, 2024. To her right is state budget director Blake Washington.
Karen DeWitt
New York Public News Network
Gov. Kathy Hochul details her state budget proposal on Jan. 16, 2024. To her right is state budget director Blake Washington.

New York Gov. Kathy Hochul on Tuesday unveiled a $233 billion state budget plan that holds the line on spending increases and dips into the state’s reserve funds to help pay for the migrant crisis.

Hochul said while she plans to increase school aid by around 2.4% and spend more on the state-funded Medicaid health care program, the spending rate increase will be far lower than the record increases seen over the past two years.

“We can’t spend like there’s no tomorrow,” Hochul said. "Because tomorrow always comes.”

The governor’s education plan sets up potential tensions with suburban state lawmakers. She’s proposing to end a longtime tradition known as “hold harmless,” which guarantees that no school district — even the state’s wealthiest — ever receives less state aid than it did the previous year. 

Hochul said some of those schools are “sitting on very healthy reserves” and could weather the change.

“A number of our school districts have actually exceeded the statutory limit of what they're able to hold in reserve because so much money has come from the federal government, state government,” Hochul said. “Now, of course, one would think that that can be used to reduce property taxes. But it's still being held in reserve.”

The governor also outlined more spending to shore up the state’s mental health care system, crack down on retail theft, and increase money to public colleges and universities.

A housing plan, scaled back from an unsuccessful proposal last year, would require communities to sign a “pro housing” pledge to receive grant money. It also would revive a tax credit for real estate developers who include affordable housing in their projects.

Hochul distanced herself from a push by progressive groups and some Democrats, who control both houses of the Legislature, to raise taxes to pay for key programs. She made it clear that new taxes will not be part of a final spending plan, even if the Senate and Assembly try to include them.

“I will say no,” she said. “No income tax increase.”

Some of those progressive groups immediately attacked the spending plan.

Jasmine Gripper, the co-director of the state’s Working Families Party, said the governor is trying to balance her budget on the “backs of working New Yorkers” who she said are already struggling with an “affordability crisis.”

“New York's wealthiest, the billionaires and millionaires, are doing great. They continue to thrive in New York,” Gripper said. “And asking them to do a little bit more to pay their fair share is a reasonable request.”

The state’s largest health care workers union, SEIU1199, along with the Greater New York Hospital Association decried Hochul’s plans to hold the line on Medicaid increases. They said the state must end “drastic underfunding” that has led to deep financial woes for many hospitals and eroded health care in low-income communities.

NYS Assembly Speaker Carl Heastie answers questions from the media on the state budget on January 16, 2024
Karen DeWitt
New York Public News Network
New York State Assembly Speaker Carl Heastie answers questions from the media on the state budget on Jan. 16, 2024.

Democratic Assembly Speaker Carl Heastie said he still needs to review the governor’s plan more carefully, but he said he’s not drawing any lines in the sand when it comes to higher taxes.

“I don't want to commit to anything until I talk to the members and we see what their wish list is. So, I'm not ruling out raising revenue,” Heastie said. “Because I don't know where we are yet on spending.”

Hochul received praise for her budget plan from the state’s Business Council and the conservative-leaning budget watchdog group, The Empire Center, which credited the governor for “telling it like it is.”

Hochul also detailed how much she thinks the state will have to pay to deal with the ongoing migrant crisis, which is bringing in over 13,000 asylum-seekers a month to New York. 

She said she’s budgeting nearly $2.5 billion to help house and feed the migrants. Some of that will come from the state’s reserve funds.

“I am proposing that we draw $500 million from state reserves that are intended for one-time emergencies like this,” Hochul said.

The governor is planning a trip to Washington later this week to lobby for more aid and for immigration reform.

Karen DeWitt is Capitol Bureau chief for the New York Public News Network, composed of a dozen newsrooms across the state. She has covered state government and politics for the network since 1990.