Full Episode: New York (Finally) Has a State Budget. Here's What's In It, and Why It Matters

Full transcript of New York (Finally) Has a State Budget. Here's What's In It, and Why It Matters

Dan Clark: After more than a month of pushing the deadline, New York finally has a state budget. It's a $229 billion spending plan which is $9 billion more than last year, and all that money will go toward a lot of things. Most of it is funding for schools and the state's Medicaid program and despite being a month late, legislative leaders and governor Hochul say they feel good about where things wound up.

Assembly Speaker Carl Heastie said this on Tuesday.

Carl Heastie: You know, I would say when you take out some of the policy stuff, I think this checked a lot of boxes on the things that the members of the Assembly support. Maybe not at the levels that the members would have liked, but I would say this might be the best non-pandemic budget I’ve seen in my 23 years in the Assembly.

DC: Lawmakers finished passing the budget Tuesday night and it had a lot of the changes we've been telling you about. We'll go through each of them and tell you what governor Hochul wanted at the start of the year and what actually made it onto the budget.

On the minimum wage, Hochul wanted to tie future increases to inflation. Lawmakers ultimately agreed to first raise it to $17 downstate and $16 upstate over the next three years, and then all future increases will be tied to inflation.

On cigarettes, Hochul wanted a higher tax on each pack and a ban on menthol. Lawmakers agree to the tax hike up to $5.35, but rejected the ban on menthol.

On charter schools, Hochul wanted to lift a state-imposed cap to allow more of them in New York City. Lawmakers rejected that and instead will allow 14 inactive charters to be reopened.

On income taxes, Hochul didn't want any changes this year. Lawmakers wanted higher taxes on the wealthy, but couldn't reach a deal with Hochul. So, income taxes will stay flat this year for everyone.

On fossil fuels, Hochul wanted to phase out the use of gas and oil in new buildings, and that is happening. Fossil fuel hookups won't be allowed for new buildings with less than seven stories starting in 2026. For larger buildings, it's 2029. There are exceptions for emergency generators, hospitals, and commercial kitchens.

Finally, on bail reform, Hochul wanted to give judges more power to hold defendants before their trial, and that's what she got. Lawmakers agreed to remove the least restrictive needs standard for decisions on bail.

Democrats largely supported the budget allowing it to pass, but Republicans were opposed saying the spending plan doesn't do enough for struggling New Yorkers.

Senate minority leader Rob Ortt.

ROB ORTT: They say good things come to those who wait. Certainly, from my vantage point, New Yorkers should have to wait a little longer then, because I do not see this budget as a good thing. It does not move the state forward, it does not put us on a path to success.

DC: But Democrats didn't get everything they wanted either. Governor Hochul’s massive housing plan to create 800,000 new homes over the next decade was dropped from the budget after she failed to reach a deal with the legislative leaders. They were against the mandates in the plan that would have required localities to grow their housing stock, but there is about a month left in this year's legislative session. So Hochul and lawmakers could still do something on housing this year, but when asked if that could happen, Senate majority leader Andrea Stewart-Cousins said they may need more time.

Andrea Stewart-Cousins: I think even if we address it again next year, I want to think that we would have put the requisite pieces together so that when we're addressing it next year, we're actually addressing it with some sort of stakeholder aware plan that we can actually get this thing moving.

DC: That doesn't mean Hochul’s housing plan is dead. With big issues like housing sometimes it takes a few years to get to a deal. We’ve seen that happen over the last decade with things like the state's minimum wage and funding for education. 

Hochul said this week that for her, the issue of housing will be a priority as long as she's in office.

Kathy Hochul: This is a movement that is long overdue to recognize that people have a right to live in all communities, that there are rights that go along with being a New Yorker and it says that you should be able to find a home and be able to pay the rent or pay the mortgage. That right is so far out of reach for so many New Yorkers. That's untenable, so that is going to be my commitment throughout my entire duration as Governor.

DC: Let's start there with this week's panel. Anna Gronewold is from Politico and Yancey Roy is from Newsday. Thank you both for being here.

So, with the housing issue, it's really interesting. We were talking to the Senate Majority Leader the Governor this week, and both were asked about housing and the possibility that because they threw housing out of the budget and because they couldn't get a deal, that maybe they could try to work on something by the end of session.

Yancey, I will start with you. Do you think that's realistic in the next month? Usually with these big items, I don't see it this way, but they've also been talking about this since February presumably.

Yancey Roy: Yeah, I don't think it's very likely at this point. I mean, look at it this way. She unveiled it like you said on February 1st, they worked for three months or so and couldn't come up with something and now they're going to magically come up with it in four weeks, probably not. You know, the session now ends at the beginning of June, there's not that many actual days in Albany. So, the likelihood of them fixing all the different issues and disagreements with this in that short timeframe seems unlikely.

Look ahead next year, next year's an even number year, an election year for all the legislative officials, and you kind of wonder is that the year it's likely to get fixed either? I don't know. Sometimes election years are not the years for controversial policy, so maybe it skips all the way into 2025, I don't know.

DC: Right, especially in 2024 when we're talking about those elections, I mean, one of the big issues with this was the perception of infringement on local authority, especially how they want to do their housing. I don't know if that would work out so well for local lawmakers if they did include the part of governor Hochul’s plan that would have required housing growth.

YR: Not only is it for state assembly and senators next year, but I think congressional delegations especially in suburbia might not want these kinds of issues on the table when there's going to be a presidential election.

DC: Maybe that's how George Santos wins re-election, he goes against the housing plan.

Anna, can you remind us where kind of the road blocks were for housing as it fell apart? Why couldn't this come together, do you think?

Anna Gronewold: I think there's a couple issues and a lot more that we probably haven't heard, but one of them was that there was so much time taken on trying to figure out a bail deal, and that was something that Hochul said she was very specific about getting done and I don't know that you could say she sacrificed her housing plan, but it was something that she wanted to finish before anything else moved forward.

It sounds like they were working on one issue at a time, and nothing was really done until everything was done. So, if there weren't those conversations before the plan was unveiled and even during the budget talks, it's not really a surprise that they couldn't figure it out in a couple of weeks.

DC: You know we did ask legislative leaders and the Governor kind of like, you know, this is a month late, is that frustrating? Was it worth the wait? And they gave a very nice, canned answer of basically, we had to work for the right budget not the on-time budget or timely budget, however you want to phrase it.

Do you see that as genuine? Like behind the scenes, do you think lawmakers just don't want to deal with this Governor at this point?

AG: Well, I don't think that there's necessarily anything good about a late budget. Everyone can say all-in-all it's not affecting the real lives of New Yorkers by being a few weeks late, but it is the one thing that legislators are supposed to do. They have a timeline that they know about it every year, and it does, as some of Hochul’s predecessors would have said, it does point to a government that can't get things done when they need to get things done.

Overall, that's not a great perception even though leaders and Hochul have said it's not that big of a deal.

DC: You know, we've been talking about housing and bail for so long that I think it's easy for us to forget that there's a lot of other stuff in the budget. This is a $229 billion spending plan, and Anna, I’ll start with you here. What stood out to you here?

There's a lot in this as we were talking about earlier in the show, but a lot of very important things that affect a lot of people.

AG: Definitely, I think that there are a lot of things that the Hochul administration and legislators will be able to sell pretty nicely over the next couple of months. There's a minimum wage increase and it's not quite as high as some people would like it to be, but that will change people's lives. There's an expansion of childcare for a lot younger children, hundreds of thousands of more kids who are going to be covered. That's going to be a huge difference and unfortunately, we've talked about these very, very small policy issues that few people really understand, but those will have impacts and they should over the next couple of years.

DC: Yancey, what about you? What stood out to you?

YR: Looking at it politically, Hochul did lose on the housing plan, but she did win on some other things. She got a change on bail, which she wanted. She beat back any push for tax increases on the wealthy or on corporations. She said that was kind of a non-starter for her and she did win that. Democrats in suburbia won on some issues, MTA payroll tax, housing, bail, but as Anna said, there's thousands of issues in this thing. 

One of the things that we covered, and the New York Times covered, was a new law that describes how to handle unmarked burial grounds. Especially for Native American tribes but maybe Revolutionary War burial grounds, very important. There are all sorts of other little things. 

There's an authority for Suffolk County to finally get a countywide sewer district, which is a really huge issue down there.

DC: They don't have one?

YR: No, it's been piecemeal, local jurisdictions governing different sewer and septic systems. The voters will have a referendum to put together a countywide system so it's more integrated.

Those are like the hidden things that go into the budget. They don't drag down negotiations and therefore we don't write about them as much, but they're very important to the locals.

DC: Absolutely.

I hate to go back to bail reform, but I think it's important in this context, the way that they didn't get to some issue because they were discussing bail for several weeks. We saw the same thing happen last year, the governor in that case brought up bail at the last minute and that's kind of what kept things from moving forward. They made this change to bail this year, Yancey, but do you think it continues to be an issue in the state in politics until I don't know when?

YR: Absolutely. I mean, look at it this way. The Republicans have found it to be a winning issue in campaigns and you can't realistically expect them to give that up. They will keep banging the drum on this issue because they say they want a full repeal. A full repeal will probably never happen. So, they've been chipping away at little changes here and there. The Democrats will say, we changed it to give judges more discretion, Republicans will say not enough. So, in terms of electoral politics, yes, I think it continues as an issue.

DC: I think so, too. I think especially next year, Republicans will really try to make up some ground in the state senate where they were not able to last year. I think that's really where they really want to win some seats for sure.

So, we have four or five weeks left of the rest of the session. I want to ask each of you, what will you be watching in that time? You know, so much was done in this budget and there's so little time that I really don't know what they can do.

Anna, let's start with you. What are you watching?

AG: Like we discussed, I think there will be more conversations around housing. I don't think that people get too much further on that and I think those conversations will continue for, like Yancey said, weeks, months, years maybe, but I think there will be pushes. I don't think there's anything that they actually have to get done.

In previous years, we've seen laws that have sunsetting or things they have to get passed before the end of session. It's really kind of open to how we might want to move forward next session, that's the sense that I get.

I think there will be some talks about potentially some more criminal justice or public safety issues. I know the Clean Slate Act would seal some records for people, that has been in discussions, but whether or not there's movements on those I think remains to be seen.

DC: Clean slate is such an interesting topic, because it has been so close to passing for two years. Two years ago, we were told, as reporters, that it was technical issues, that's why the bill didn't pass. Then for whatever reason last year, it didn't pass because they no longer had the support. I guess there was an election in between, but something just didn't feel totally honest about that situation. Clean slate, I think definitely Carl Heastie, the Assembly speaker, said they were going to try to address it before the end of the session. I'm not holding my breath based on the past few years, but we'll see.

Yancey, what are you watching over these next couple of weeks?

YR: You know, the thing about clean slate and some of these other controversial things why they get wrapped into the budget is because the budget has thousands of issues that it can provide a little cover for your vote in the budget. I voted for school aid, I don't really support clean slate, but it was in there, and really some legislators don't want this as a stand-alone issue because they are sometimes afraid of how it might play out politically and because of that, I think kind of like Anna said, we're going to look at a lot of little local issues that are really important to counties and municipalities, and big overarching policies, probably not too much down the stretch here.

DC: Yeah, that's what I was thinking. If they bring up housing again next year, as you said earlier, I still don't know if it will happen and especially with a plan like the Governor was trying to put forward, it's such a big plan. 800,000 new homes over a decade, trying to figure out a way for housing to grow in each locality without making them mad because that's what tainted it this time, I think that's the challenge, trying to figure out how to either incentivize or mandate them to do it.

Anna Gronewold from Politico, Yancey Roy from Newsday, thank you both.

Dan Clark: Turning now to a new edition of On the Bill where we tell you about a bill out of Albany that you might not hear about otherwise. This week, we're talking about A-3226, also called the Birds and Bees Protection Act. 

It's a bill that would ban the use of corn, soybean and wheat seeds coated with neonicotinoids, a class of pesticides, also called neonics. It's based on a report from Cornell university from three years ago where they looked at a bunch of research on neonics and compiled it all in a report. That report found that using neonics had mixed results. They're generally effective at keeping pests away, particularly for field crops like corn and soybeans, but the report also said that neonics can sometimes have a devastating effect on pollinators, bees in particular. 

Researchers looked at 96 sets of data on neonic exposure in field crop settings and based on that data, they found that more than half the time, exposure to neonics is likely to impact the physiology and behavior of the bees and about a third of the time, they're likely time impact bee reproduction. That's why some lawmakers want to ban the pesticides In New York.

Assembly environmental conservation chair, Deborah Glick said this.

Deborah Glick: The bill is limited to coated seeds and there are invasive species, there are targeted reasons to use certain chemicals in certain instances, but this casual, routine, prophylactic use of these chemicals on seeds for wheat, corn, and soybean has created damage.

DC: Farmers who use those seeds say they don't have an alternative because using neonics has become the norm. They say finding enough untreated seeds would be really difficult. Remember, we're talking about seeds for those huge cornfields you see on farms all across upstate. 

Jay Swede owns one of those farms.

Jay Swede: If I could get untreated seed for what I need to do, then my question is, how do I manage these pests, and I don't have an answer for that either. So, I’m kind of stuck in a position where I really don't know. I don't know what my options might be. Especially on pests that we don't know are there until it's already done its damage.

DC: We'll let you know if that bill is passed this session.

Dan Clark: Circling back to the budget now with a closer look at the numbers. Patrick Orecki is an expert on the state budget from the Citizens Budget Commission.

Patrick Orecki: Thank you for having me here.

DC: So, we see this increase in financials in all funds and when we say all funds we're talking about state funding, federal funding, all the money that's in the pot, increasing from $220 billion in last year's budget to $229 billion in this year's budget. $9 billion is a lot of money, but out of $229 billion kind of a small fraction of that pie.

Is that an average increase, the $9 billion that we've seen?

PO: Yeah, I think that's a little bit bigger than average. Usually, the all-funds growth will be 4 or 5% and that's pretty much right in that exact range. There's a lot going on in the financial plan with puts and takes with a lot of federal money that's been around since COVID, response money, and new spending coming in. So, there are a lot of puts and takes.

DC: That's interesting because I remember in last year's state budget, the big thing was we have all this federal money, it's going to run out, we have got to use it, but we're still increasing spending this year. Do we still have a lot of federal money to use, or that could be coming in in the future?

PO: Yeah, there's probably not more coming in the future, but there is still money, especially from the American Rescue Plan, the state and local fiscal relief. The state got about $13 billion of that to use over a four-year period. So, we're actually still using that. There's still a little bit, in fact, in fiscal year 2025 for this as well.

DC: I remember when we were talking last year and in last year's budget too, that when they passed last year's budget, the Governor made a big deal about it being a neutral budget, it wouldn't have a deficit in 4 or 5 years out, I think. Is that the case still in this year's budget? I don't know if they even look that far, I guess?

PO: Yeah, it is not the case and the short answer is no. 

So last year when the budget passed, it was kind of incredible that we had five years worth of budge balance over the life of the state's financial plan. I don't think that ever happened since financial plana started, so, it's kind of incredible. That was really short-lived. 

It was over the summer that the state said, you know what, the tax receipts don't look as good as we originally thought over the coming years so gaps opened up in July last year.

DC: So that’s a situation that was created since the last budget?

PO: Yes.

DC: That's tax receipts in like they're thinking less income taxes. So, what's the shortage of revenue that they're expecting, I guess?

PO: The biggest piece of the pie is personal income taxes for New York state. That is the single largest source of state-generated revenue in the budget of the it can be very, very volatile. Especially because New York state has a progressive personal income tax code and movements at the top income brackets and capital gains can cause pretty big shifts in the overall kind of receipts forecast.

DC: Assume that's probably the hesitancy in the Hochul administration of raising taxes on high income earners this year.  I know that is part of it and you probably have the number, I think it's like the top 1% of earners generates 50% of revenue income tax. Am I making these numbers? 

PO: No, that's basically it. Yes, essentially the top 1% of personal income tax filers funds about 1 in $5 that the state spends from state operating funds overall. So, it's a huge amount of money that comes from a relatively small number of taxpayers, which means that you can get, again big swings in those numbers year to year.

DC: Something, and I know you are still looking through the budget, so it's okay if you don't know this, but I think it's something that a lot of people will be wondering is, are there any new costs for me in this budget? You know, we're not raising income taxes on anybody this budget, but there are sometimes hidden fees in places of the budget.

Do we know if we should expect any new costs for New Yorkers with this?

PO: Yeah, I think there are two sort of big things that we would call attention to. One is an increase in the payroll mobility tax specifically within New York City. So that's a tax that already exists. The state is just increasing rates in New York City on employers based on their payrolls to generate new recurring revenue for the MTA specifically. 

The other thing is not a tax policy action by the state, but sort of a cost shift from the state onto local governments. So local governments pitch in several billion dollars for the Medicaid program every year. It’s a pretty complicated mechanism, but the state is shifting about $700 million in costs from the state onto counties and New York City.

DC: Do we know why? In terms of the shift, does the state have a reason to be doing this, or is it kind of just, we want the money?

PO: I think that's really the primary reason is that it shows up on the state's books as about $700 million in savings. State doesn't have a big savings plan in this budget or most budgets so this is a big area where they're decreasing their own spending and it opens up opportunities to spend elsewhere. But it does mean that cost has to be picked up at the local level.

DC: Let's talk about the spending, the expense side of this budget. You know when we talk about the budget, I think looking at it in a big picture kind of way is really important because some people may think $229 billion. It's going toward a lot of things, as I mentioned at the start of the show, it's really in two big buckets, I think education and health care. Is that still the case in this budget? I would assume it is, but it  is schools and Medicaid primarily.

PO: Yes, with Medicaid being the single largest thing. So that is over the next few years getting upwards of $100 billion total between the state and federal funds. So that's the single biggest program and school aid is number two right behind it. Between those two things that's more than half the budget alone.

DC: The Medicaid growth, is that kind of average this year compared to previous years? That's obviously a big part of the budget. I think when it grows people pay a lot of attention to it becuase if the legislature, the Governor, Department of Health is doing something that would increase the cost, I think that's something to pay attention to.

PO: Yeah, there is significant growth there for a couple of reasons. First of all is policy actions taken, the state increasing reimbursement rates especially for hospitals. We also have significant costs in the long-term care space. That's always been growing pretty quickly.

One thing that's happening, though in Medicaid programs specifically is that there is over a million people that enrolled in Medicaid during COVID because of federal rule changes that allowed people to stay in the program longer. Over the next year or so, those people are going to start to shift out because those COVID provisions ended. Again, there are kinds of puts and takes, but there is still significant growth in Medicaid.

DC: So, as those people come off, the costs I don't think significantly but would go down a little bit for the state?

PO: Yeah, it’s fairly significant. We're talking about a million people moving out of the program and the average costs of these individuals is probably $10,000 to $12,000 a year. Everyone who moves out of the program, the state is reducing Medicaid spending by that much. They're moving into other programs, some of them into public programs, some of them into private coverage.

DC: Just beyond those health care and education buckets, are there any other spending actions here that seem out of the norm, or is there something that the public might be interested in knowing about?

This is ten pieces of legislation, there's a lot to go through.

PO: Yeah, the biggest fiscal question mark outside of those big buckets is what the state would do about the MTA. The MTA is in a really difficult fiscal position right now, and it has been for years, but really exacerbated by COVID driving ridership down significantly. So, we knew there was going to be some state support for the MTA. It turns out the package that they came to is about $1 billion dollars in recurring revenue from the payroll mobility tax that I mentioned earlier and a few other sources of funding, too, to try to get the MTA back to long-term balance.

DC: It's a huge issue especially for people in New York City and the metro area, but we're out of time. Patrick Orecki from the Citizens Budget Commission, thank you so much.

Catch this week's show on your local PBS member station, or watch on YouTube, Facebook, or using the free PBS app anytime after Friday.

On This Week's Edition of New York NOW:

• After more than a month of delays, a new state budget was approved this week by lawmakers and Gov. Kathy Hochul. We'll have details.
• Anna Gronewold from Politico New York and Yancey Roy from Newsday join us with analysis and more news from the week.
• Patrick Orecki from the Citizens Budget Commission joins us to go over the financial side of the budget.
• A new edition of On The Bill looks at legislation that would ban certain pesticides that environmentalists oppose, but that many farmers depend on.