Done Deal!

Good morning and Chag Pesach Sameach from Washington D.C.

New York has a State Budget! Lawmakers worked late Friday night and ultimately passed the last budget bill early Saturday evening. The budget top line is $237 billion and, notably, does not include any tax increases.

Here is how it turned out: 

Education

While Governor Hochul backed off of her push to end “hold harmless,” the final budget did include a change to the inflationary factor used to calculate the Foundation Aid formula, resulting in a 2.8% increase for districts rather than the originally projected 5% increase. Total school aid will increase by $1.3 billion and lawmakers agreed to a study that will recommend long term changes to the Foundation Aid formula. 

In a significant win for Hochul and New York City Mayor Eric Adams, the final budget extended mayoral control over NYC schools through 2026, but they had to compromise to get there. The deal allows the State to withhold certain aid if class size requirements are not met and New York City’s Panel for Education Policy will add an additional voting member and an independent chairperson (to be chosen by the Mayor, but only from a pool of three candidates nominated by the state Senate Majority Leader, Assembly Speaker and Chancellor of the Board of Regents). This issue had been off the table early in talks before Hochul brought it back and got a deal.

Housing

Hochul achieved her housing goal and is rightfully taking a victory lap.  That said, if a good compromise means that everyone is unhappy, there are signs this was a good compromise. Cea Weaver, Coalition Director of Housing Justice for All said in a statement, “Governor Hochul did not solve the housing crisis – instead she pushed through a housing deal written by the real estate industry to ensure they keep getting richer off the backs of hardworking tenants. Now, millions of renters across the State will struggle to keep a roof over their heads as rents and evictions continue to rise.” At the same time, landlords had plenty of criticisms as well, including Aaron Sirulnick, board chair of the Rent Stabilization Association, who said, "Already burdened with escalating maintenance and compliance costs, rent-stabilized buildings… have nothing to applaud in Albany’s economics-denying attempt to placate everyone while actually accomplishing nothing.”

The deal includes a version of “good cause eviction,” setting caps on annual rent increases and enacts other tenant protections while also including significant exemptions, including landlords who own 10 units or less, some smaller owner occupied buildings, and buildings built after January of 2009 will be exempt for 30 years.  Significantly, municipalities outside of New York City will have to proactively opt-in to the policy.

The budget also lifted the cap of Individual Apartment Improvements (IAI), a policy that limits how much landlords can increase rent to compensate for repairs and renovations.  This caused significant distress for many of the housing activists. In a classic case of Albany finally recognizing the problem, but learning the wrong lesson, this will do little or nothing to improve affordable housing or make more units available. Jay Martin, the Executive Director of the Community Housing Improvement Program (CHIP), said it well: “That amount won’t be enough to actually improve the units of housing.” 

Another part of the deal is an agreement on 485-x, a local property tax abatement to incentivize affordable housing development. The Real Estate Board of New York (REBNY) struck a wage deal with the state building trades, ensuring that projects that utilize the tax incentive will use union construction workers. 

Medicaid

The budget allocates $37 billion for the State’s share of Medicaid costs, up from $31.2 billion last year. To help offset that increase, the budget permitted the State Health Director to apply for a federal waiver to levy a tax on managed care organizations—the MCO tax—who would then be reimbursed by the federal government. The plan still requires approval by the federal government, but estimates are that the tax could generate as much as $4 billion in new revenue.  Details remain a little light here at press time.

Hospitals will receive a $525 million increase in Medicaid funding while nursing homes will see a $285 million increase. The final budget also included Hochul’s proposal to dramatically shift the way the State provides home health aids, having a single company oversee home healthcare administration rather than the current system of hundreds of different companies serving as middlemen. Hochul has said the change will “save us $500 million every single year and allow us to start putting controls and guardrails in place.” 

Public Safety

The proposals from the Executive Budget aimed at combatting retail theft were ultimately included in the final budget despite some pushback from the Legislature. Assaulting a retail worker will now be a Class E felony and the budget establishes a new category of crime, “fostering the sale of stolen goods.” The final language also aggregates organized retail theft, allowing law enforcement to seek harsher penalties. Over 40 new crimes are now also eligible to be charged as hate crimes, including gang assault, violent sexual assault, and falsely reporting an incident, but not certain graffiti crimes that Hochul proposed in her budget. 

Environment

The most prominent environmental proposal this budget season— the NY Heat Act— was ultimately omitted from the final budget. The legislation would have repealed a policy that requires utility companies to provide free natural gas hookups within 100 feet of an existing line, subsidized by existing rate payers. Both the Governor and the Senate included the bill in their respective proposals, but the Assembly carried the day on this issue. 

Funding for drinking water and wastewater infrastructure was restored to $500 million annually after Hochul had proposed spreading out the $500 million over two years. 

In an effort to build more power lines to transmit new clean energy across New York, the State is expediting the permitting process through the Office of Renewal Energy Siting (ORES). The change is accompanied by a requirement that all publicly funded energy projects pay union-level wages and use domestically-produced steel and iron. 

Empire AI

Governor Hochul’s plan to establish a world-class AI consortium at the University at Buffalo was included in the final budget. The $250 million State investment, supplemented by funding from private partners including Cornell and NYU, will support cutting edge research throughout the State and will work to develop standards and best practices for AI development. 

Other Items: 

In a major win for organized labor, any SUNY construction project over $10 million will now be required to have a Project Labor Agreement (PLA) in place. 

“Sammy’s Law,” legislation that allows New York City to lower its speed limits on residential streets, made it into the final budget after it had stalled in the Assembly for years. 

The budget granted local governments and municipalities the authority to close unregistered cannabis stores, seize product, and bring civil action against the owners. Previously, only the Office of Cannabis Management and Department of Taxation and Finance had any type of enforcement authority. 

As if the State budget process is not difficult enough, the State’s bill drafting commission— the body tasked with actually writing the thousands of pages of legislation that make up the budget— was hacked on Wednesday. The hack did not appear to lead to significant delays in the budget and Senate Majority Communications Director Mike Murphy said the commission was able to continue processing work for both the Senate and Assembly. 

The ink is barely dry so more to come as we continue to dig through the budget over the coming days.  Here are a few helpful summaries as well:

Your One-Stop Guide to the 2024 New York State Budget

In Late-Stage Budget Talks, Hochul Wins Concessions From N.Y. Lawmakers

Hochul Declares Victory with $237B New York Spending Plan

The Legislature is “in district” this week and returns to Session May 6.  Focus in Albany will now turn to policy and legislation in this abbreviated time as we race to a scheduled June 6 adjournment. 

In exciting news and a direct result of Senate Majority Chuck Schumer’s policy work in Washington, Schumer announced a $6.1 billion investment from the CHIPs and Science Act to support Micron’s construction of one of the country’s largest microchip fabrication plants outside of Syracuse.

In a statement, Schumer said, “With billions in federal investment from my CHIPS & Science law, we are taking the next steps to get shovels in the ground to rebuild industrial regions of the country like Upstate NY with good-paying, middle class jobs and make chips here at home that will power America’s future.” Micron plans to build four new manufacturing plants at an estimated cost of $100 billion over the life of the project and have said they expect the investment will result in 50,000 new jobs, with 9,000 jobs directly at the plants. Currently, only 10% of the world’s semiconductors are made in the U.S and both Senator Schumer and the Biden Administration have prioritized establishing domestic supply chains for semiconductors and other critical technologies. President Biden is expected to travel to Central New York this week to make the formal announcement. 

Nebraska’s Republican Governor, Jim Pillen, is calling for a Special Legislative Session to pass changes to the way the state casts electoral votes. In a unique system, Nebraska awards two electoral votes to the statewide winner and one vote for the winner in each of the state’s three Congressional Districts. In 2020, President Biden picked up one of the state’s five electoral votes by winning the Omaha-based 2nd Congressional District. His final margin with the Electoral College made that one vote irrelevant, but it could be crucial in a tight election, perhaps even in 2024.

Governor Pillen offered, “I am steadfast in my commitment to get winner-take-all over the finish line, thereby honoring our constitutional founding, unifying our state and ending the three-decades-old mistake of allocating Nebraska's electoral votes differently than all but one other state.” The changes would provide a clearer path back to the White House for Trump— if he won all the states he did in 2020 and flipped Georgia, Arizona, and Nevada, he and Biden would both be tied with 269 electoral votes. The House of Representatives would then break the tie, with each state casting one vote as a delegation and the Republicans would almost certainly win that vote. 

In Arizona, lawmakers and reproductive rights advocates are continuing to push back after the State Supreme Court issued a ruling earlier this month that outlawed virtually all abortion. The 1864 law provides no exception for rape or incest and carries a prison sentence of 2-5 years for doctors or nurses who assist in abortions.

This past week, Democratic lawmakers twice tried to advance a bill that repeals the 1864 law, but Republicans blocked the measure. Republican House Speaker Ben Toma said, “The last thing we should be doing today is rushing a bill through the legislative process to repeal a law that has been enacted and affirmed by the legislature several times.” Governor Katie Hobbs, a Democrat, has called the law “draconian” and has vowed to continue working with the Legislature towards a repeal. Kari Lake, the Republican candidate for Senate, has called for a repeal of the law as has Donald Trump, seemingly recognizing the political vulnerability that restrictive abortion policies has been for Republicans. 

Finally, two farewells this week.  First, to Bob Graham, the longtime Senator from Florida.  In 2004, I was offered a job in New Hampshire to help lead the Bobcats!  Ah, what could have been!  

Still, we will close with:

And when it’s time for leavin’

I hope you’ll understand

That I was born a ramblin’ man.

-Jack O’Donnell

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