Some winners and losers of Hochul’s state budget proposal

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Thanks to higher-than-expected mid-year revenues and a federal windfall of pandemic relief, Gov. Kathy Hochul’s freshman executive budget proposal is a boon to a variety of budget sectors, including the two largest — education and health care.

Schools will see $31.2 billion in state aid, which reflects an increase of 7.1%, or $2.1 billion. Of that, $1.6 billion will be distributed via the Foundation Aid formula, which was created to fund low wealth schools.

“That brings us to the highest number the state has ever invested in education,” Hochul said during her speech. “It should be used to expand Pre-K all across the state and after-school programs because working parents can use all the support they can get.”

There is $1 billion for health care “transformation” and $1.2 billion to pay for bonuses for health care and frontline workers. Possibly more significant is the hike in the global Medicaid cap which hasn’t seen an increase in years.

Other winners in the budget include gambling enthusiasts. The budget permits the state to begin seeking requests for applications for the final three available casino licenses, which will likely be sited near New York City, a population center than gaming companies have been aching to tap into.

Senate Gaming Committee Chairman Joe Addabbo issued a statement saying that he looks forward to working with the governor to expand gaming.

“I believe the inclusion of expediting the three full casino licenses for our downstate region has the potential to bring in $1.5 billion in revenue for the state, additional educational funding and improvements to problem gambling programs,” Addabbo said.

Local governments view the spending plan as a sea change in how business gets done in Albany.

“After a decade of state versus local, this budget appears to be more inclusive of local governments’ needs and requests,” Stephen Acquario, of the New York State Association of Counties, told Capital Tonight. “It’s more of a partnership type budget. This is also a reflection of a realignment in government in terms of who is paying for what and who should pay for what.”

Acquario is referring to Hochul’s decision to return to a former revenue-sharing agreement, rather than continue a scheme created three years ago under the Cuomo administration in which the state had intercepted county sales tax revenue, and, as Acquario put it, “forced us to pay towns and villages.”

It’s a $50 million return of sales tax back to counties.

“This is a significant move to restore the balance of power and responsibility,” Acquario explained. “We are pleased to see that.”

Senate Finance Committee Chair Liz Krueger underscored Acquario’s comment about the difference in tone. She said that there is a stark difference between the Hochul’s administration’s attitude toward the Legislature and that of the Cuomo administration. Specifically, Krueger said there is room for a “rational conversation” rather than an outright refusal to have one.

Other wins for local governments include making sales taxes permanent, establishing a platform by which taxes may be collected from Airbnb and VRBO rentals, and significant investment in veterans’ programs. One example? The highly acclaimed Joseph P. Dwyer Program will receive $7.7 million to expand peer-to-peer support.

Environmentalists are lauding the governor’s decision to propose a $4 billion Environmental Bond Act.

Julie Tighe, president of the New York League of Conservation Voters said, “This is critical to invest in proven solutions that support communities across the State and prioritize the health of every New Yorker and our environment, support disadvantaged communities, create tens of thousands of jobs, and jumpstart the transition to a green economy.”

Other goodies in the budget include:

$2.2 billion in property tax rebate checks to 2 million taxpayers who earn less than $250K per year
$224 million on anti-violence initiatives
$1 billion 5-year Capital Plan to pay for infrastructure

Losers

By any objective standard, Hochul’s spending plan is generous, but there will always be some disappointment in a document that serves a state as large as New York.

While lauding the historic investment in public education, Jasmine Gripper of the Alliance for Quality Education, issued a statement saying advocates were unhappy with the governor’s decision to increase charter school tuition.

“Gov. Hochul’s proposal to significantly increase charter school tuition could in effect redirect the lion’s share of the state’s school aid increase away from students at New York City’s public schools, who are the majority of students, to privately run charter schools that educate a fraction of all students,” Gripper said.

While for the most part pleased with the budget, counties are unhappy that the state is moving to make permanent an intercept of $250 million in county sales taxes to pay for what’s called a distressed hospital funding pool.

“We don’t believe there are any distressed hospitals out there right now since the federal government has shored up a lot of their unmet need during COVID,” NYSAC’s Acquario explained.

Some progressive advocates are calling for another tax hike on the wealthy to fund a universal child care bill sponsored by Sen. Jabari Brisport and Assemblyman Andrew Hevesi (S. 7595/A. 8623).

Sen. Liz Krueger told Capital Tonight that child care funding is a “no brainer” and that she will include the topic in discussions with her conference, the Assembly and the governor’s office.

When asked directly by Capital Tonight if she is looking to raise taxes, the Senate Finance Committee chair said she wasn’t sure yet. Krueger added that she doesn’t make tax “decisions in a vacuum” and that there are “days and days” of public budget hearings scheduled starting on Tuesday.

Other progressive advocates are disappointed with the tone of the budget as a whole.

“Gov. Hochul’s budget is, unfortunately, more of the same in a state hungry for change. Her budget does little in addressing massive income inequality in New York, which leads the nation in that sobering statistic. There are no new tax increases on the wealthy proposed or a financial transactions tax on Wall Street. Instead, Hochul proposes a tax cut,” said Gloria Mattera, co-chair of the state Green Party.

On the other side of the political firmament, many Republicans were unhappy with the size of the spending plan. This comment by state Conservative Party Chairman Gerard Kassar expresses those sentiments.

“New York is narrowly competing only with California, a state with twice our population, for the most expensive state government in America. The Hochul budget is almost half the size of Russia’s — Russia’s!”

Kassar continued, “Meanwhile, the moving trucks keep arriving. Boy, do we need a change of direction in Albany.”