Governor Kathy Hochul Announces 2024 Budget Proposal

Governor Kathy Hochul delivered her third State Budget address on January 16, 2024.  She began her address by announcing that the State is no longer predicting a budget deficit for this fiscal year. The Division of Budget announced that tax revenue forecasts increased by $5.9 billion, leading the State to have a $2.2 billion surplus leading into this year’s budget. As we had noted in previous LEGALcurrents, the Division of Budget was predicting a budget deficit of around $4.5 billion. Despite this news, the Governor urged fiscal caution throughout her address, noting that future economic outlooks for the State look far less rosy.

For Fiscal Year 2025, the Governor is proposing a $233 billion budget, which represents a 1.7% increase over the prior year final budget.  Notably, the Governor began the address stating that her proposed budget contained no increases in income taxes. From there, she highlighted several key areas of spending, including $2.4 billion to be allocated to tackling the costs associated with the migrant crisis. The bulk of this funding would be intended for New York City, which has been averaging 13,000 new migrant arrivals per month. These funds are expected to cover housing, legal assistance, job placement, and other human services.

The Governor also outlined her housing plan for this year, which is a significant change from the proposal she presented last year. She is proposing a successor to the 421-a property tax incentive, which was a tax credit intended to stimulate the production of new rental housing in New York City. The budget is also proposing legislation specific to New York City to reverse a State law that restricts maximum density of residential floor area and legislation that would authorize the City to legalize basement apartments.

In the education space, the proposed budget includes a 2.4% increase in school aid, which is much smaller than the increases contained in the past two budgets. However, the Governor noted in her address that the past school aid increases were, in part, funded by an influx of federal funds that are no longer available. As such, the Governor is proposing $35 billion to school aid, which is a $825 million increase from last year. The Governor is also proposing $10 million to train 20,000 elementary school teachers and aides on a “Back to Basics” plan to improve reading proficiency in schools.

In the healthcare space, the proposed budget will seek to implement New York’s recently approved Medicaid Section 1115 Waiver Amendment. Under the 1115 Waiver Amendment, the State will receive $6 billion in federal funds, which will be used in part to establish “Social Care Networks” that will seek to integrate health, behavioral, and social care services that connect high-need members to nutritional and housing support services. Additionally, 1115 Waiver Amendment will address the health care worker shortage in New York by offering loan repayment programs and career pathways training programs for front-line health and social care professionals.

The Governor’s budget proposal also highlighted several priorities in the transportation space. The proposed budget will include $7.9 billion in funding for the Metropolitan Transit Authority, as well as $45 million to advance the design and engineering of the Interborough Express. This proposed railway would follow a 14-mile existing freight line from Bay Ridge, Brooklyn, to Jackson Heights, Queens. Additionally, the proposed budget will include $16 million to advance a feasibility study to expand the Second Avenue subway westward.

While the Governor has delivered her budget proposal and released her briefing book, which provides a general overview of her proposals, the true details of her budget will be in the budget bills themselves.

Now that the Governor has presented her proposed budget, the Assembly and Senate will begin budget hearings on Tuesday, January 23 and spend the next few weeks holding budget hearings to get feedback and testimony on the Governor’s proposed budget.  After the conclusion of the budget hearings, the Assembly and Senate will begin the process of putting together their one-house budget proposals, which outline each respective houses budget priorities.  These one-house budget bills will be released in mid-March.  Once those are released, the joint budget committees will convene, and negotiations will begin between the Assembly, Senate and Governor with the goal of completing the negotiations by April 1.

As noted in a previous LEGALcurrents, the legislative calendar this year will likely make the April 1 deadline difficult to reach. Easter and Passover are at different times, meaning that the usually two-week legislative break that occurs once a budget agreement has been reached won’t occur until the end of April in alignment with Passover. However, Easter is Sunday, March 31 meaning that a break will be taken for at least a few days around the April 1 budget deadline. 

Please contact a member of the HSE Government Affairs group if you have any questions.

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