LEGALcurrents®

The deadline for an on-time budget was April 1, 2021. In the end, a final budget was six days late with the Assembly taking the final votes to pass the budget on Wednesday, April 7, 2021. The delay in enacting a final budget was the result of negotiations taking longer than usual as the Governor and legislative leaders grappled with how to allocate federal money that was received and on what revenue raisers to include in the final budget. Ultimately, the final state budget included a multi-tier millionaires’ tax, increased corporate taxes, and included a provision to allow mobile sports betting in New York. These revenue raisers created an additional $5 billion in revenue. This increase means that the total budget for fiscal year 2021-2022 will top $200 billion for the first time.

The actual final total spending level is $212 billion, which is an 8.1% increase over the 2019-2020 budget and is also higher than the Governor’s proposed budget in January. However, that budget was a contingency budget that factored in federal relief funding of only $6 billion. In the final stimulus bill, there was $12.6 billion in direct aid to New York, which was used to restore proposed across-the-board cuts and cover the current year budget deficit that resulted from the impacts of COVID-19.

The new revenue from tax increases will be allocated for a new historic increase in education aid, restoration of a planned phase-in for middle class tax relief, and a new property tax credit for households earning less than $250,000. The final budget also includes a freeze on increasing SUNY tuition as well as an increase in the Tuition Assistance Program for eligible students and an expansion of full-day prekindergarten to make more school districts eligible for funding. A $2.4 billion fund was created for tenant and landlord financial assistance for those impacted by the pandemic and $100 million was allocated for converting hotel and vacant buildings into affordable housing. 

The delay in the final budget negotiations came down to two main issues, which included mobile sports betting and an Excluded Workers Fund. In the end, sports betting was included and is modeled closely to what the Governor had in his initial budget proposal. The state is anticipating generating over $500 million in revenue when sports betting is fully up and running. The Excluded Workers Fund proved to be one of the more contentious budget issues, with disagreements over size and scope spilling into public view, which is not something we usually see. The final Excluded Workers Fund totals $2 billion and will provide unemployment type benefits to workers who were not eligible to receive unemployment, and other benefits, under the federal guidelines because of their immigration status. The final budget also included another $150 million for the next round of the Regional Economic Development Council grants.

A proposal for an Environmental Bond Act was also included in the final budget. The Act would authorize borrowing up to $3 billion for environmental projects. The original version of the Environmental Bond Act was passed in the 2019 budget and was slated to appear on the ballot in 2020 for voter approval. However, it was pulled from the ballot because of the COVID-19 pandemic. This new version will be very similar to the original proposal and it will appear on the ballot for a vote in 2022, when there will be a full slate of state and federal elections.

Of note, in the Governor’s original proposed budget, there was a provision to legalize recreational marijuana in New York. This provision was not included in the final budget agreement because the Governor, Senate, and Assembly reached an agreement on standalone legislation that passed both houses, and was signed by the Governor, last week.

We are in the process of digging into the details of the budget proposals, and we will provide more information on any specific proposals of interest. Now that the budget is completed, there will be a short break and then both houses will be in session through June 10. The remainder of the session will remain remote, which will be challenging to navigate for everyone.

If you have additional questions about this update, please reach out to a member of our Government Affairs practice group for assistance.


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