The New York state budget will be late this year — again.
Gov. Kathy Hochul and the Democrat-led state Legislature failed to reach an agreement ahead of Wednesday’s deadline, marking the seventh consecutive year the budget will be passed after the April 1 start of the state’s fiscal year.
Lawmakers passed a one-week budget extender on Tuesday, ensuring state workers will get paid as scheduled this week.
The governor and lawmakers are still tussling over several weighty policy measures that have been swept up into budget talks despite having little effect on the state’s revenues or spending. That includes a proposal to restrict local governments from cooperating with federal immigration authorities and another to reshape auto-insurance laws.
Then there are taxes.
Democratic lawmakers, in alignment with New York City Mayor Zohran Mamdani, are hoping to raise taxes on the wealthy and corporations to help fund the mayor’s agenda and plug the city’s estimated $5 billion budget gap. Hochul opposes income-tax hikes and has resisted other tax increases as she runs for re-election on a broad affordability agenda.
“ For now, we are where we are,” said state Senate Finance Chair Liz Krueger, a Manhattan Democrat. “We are hoping negotiations continue. I do know that senior staff are having three-way discussions and leadership is having three-way discussions on a variety of topics, but I don't have any details of finalization on anything major.”
Late budgets have been a rite of passage in Albany for decades.
Hochul, who took office in 2021, hasn’t had an on-time budget yet, with last year’s stalemate lasting until May 8. That marked the latest state budget since 2010, when lawmakers finished passing it July 1, according to data from the state comptroller’s office.
Just 10 of the last 40 budgets have been on time. Of those, seven came under then-Gov. Andrew Cuomo, who prioritized on-time budgets to use as a symbol of government functionality.
“We always like to have an on-time budget,” Assembly Speaker Carl Heastie, a Bronx Democrat, said earlier this month. “But as I've always said, a better budget is more important than an on-time budget.”
Republican lawmakers criticized Democrats for failing to meet the budget deadline.
“There’s a very concerning … lack of urgency in moving this budget forward,” said state Sen. Tom O’Mara, a Republican from the Elmira area. “It just seems to me that while everyone talks about affordability, everything that’s coming out of this Legislature makes things more expensive.”
Hochul and legislative leaders have been meeting in private for weeks in hopes of hammering out a final deal on a spending plan expected to be at least $260 billion, which was the size of the governor’s initial proposal in January.
They’ve struggled to reach consensus on policy issues the governor has insisted on being included in a final plan.
Car-insurance battle
Hochul’s car insurance proposals in the budget, which would change the state’s process for awarding damages in car crash cases, are at the center of some of the most contentious debates. If approved, Hochul’s plan would limit payouts to a person found mostly responsible for causing a crash and narrow what counts as a “serious injury.”
Hochul says her auto insurance proposals, which ride-hailing giant Uber has backed with an $8 million ad campaign, would drive down car insurance premiums for drivers and cut down on litigation costs for government entities. The New York State Trial Lawyers Association, a longtime lobbying power in Albany, is leading the opposition, arguing the measure would strip the rights of injured people and boost insurance company profits.
“There's a reason why the insurance companies and Uber have been funding the governor's campaign,” Andrew Finkelstein, the Trial Lawyers Association’s president, said Monday at a news conference at the Capitol. “It's because they expect a return on their investment and the return on their investment is going to come on the backs of New Yorkers who have been injured.”
Hochul, meanwhile, has accused opponents of her insurance proposals of having ”a financial self-interest in keeping the status quo,” though she has not mentioned the Trial Lawyers Association by name.
“The governor's common-sense proposals will root out fraud, waste and abuse that makes a few New Yorkers rich while sending costs skyrocketing for the man,” Hochul spokesperson Kristin Devoe said in a statement.
The state of play
Among the other issues still under negotiation:
- The governor is looking to scale back New York’s 2019 climate law, which requires the state to cut its greenhouse gas emissions 40% by 2030 and 85% by 2050. She wants to delay issuing regulations for the law — which would effectively render the 2030 mandate moot — and change the way the state accounts for emissions in such a way that it would make it easier to hit its targets.
- Hochul also wants to streamline the environmental review process for certain housing projects, which she says would make it easier to build expeditiously.
- The governor and Democratic lawmakers agree they want to prevent local police departments from sharing information with federal immigration authorities. But they haven’t been able to reach a deal on the types of crimes that would trigger an exception when cooperation would be permitted.
Hochul says policy is OK
The governor defended her inclusion of policy in the budget, saying most of her proposals have “costs associated with them,” even if tangentially.
“This is really an opportunity for us to focus on the needs of New Yorkers,” she said last week. “I’ve been laser-focused on affordability, and this is part of an affordability agenda.”
The consequences of a late state budget are limited, at least since lawmakers passed the short-term extender.
State workers will receive their pay as scheduled later this week. The Legislature will return to the Capitol on Wednesday for non-budget votes, but the extender ensures they then won’t have to return to the Capitol until after Easter and the early days of Passover.
There are some affected by a delayed budget, however.
School districts and local governments, for example, are left to wonder how much state funding they’ll get for the coming fiscal year, which complicates their ability to craft their own budgets. That includes New York City, which continues to press for additional state money to help close its own budget gap.
”We need to have a budget for many different reasons,” said Assembly Minority Leader Ed Ra, a Long Island Republican. “Our school districts need to know what they're getting so they can put their budgets out.”
State lawmakers will not be paid while the budget stalemate continues. Under state law, their paychecks will be withheld until a final budget is approved. That law doesn’t affect the governor, who will continue to collect her pay.
