Budget Blast

Good morning from Antarctica or the frozen tundra of Upstate New York. I hope you are staying warm and safe. In preparation for today’s weather, the New York State Legislature took the rare step of postponing today’s legislative session.

Now that the dust has settled on the governor’s budget release, OD&A Policy Director Jim Moore has broken down the spending plan, offering a clear, concise overview of the key takeaways from the FY 2027 Executive Budget Proposal.

Our Executive Budget Overview focuses on what matters most—New York’s economic outlook for SFY 2027 and beyond, and how that trajectory is shaping decisions on the issues below:

Find out where New York’s biggest priorities are headed. Check out Jim Moore’s budget overview here.

Assembly Speaker Carl Heastie was pleased that this year’s budget proposal is light on non-fiscal policy, a practice he has derided for years, telling reporters, “There’s less policy than normal, so maybe I’m getting into the governor's ear a little bit.” Still, there will be areas of friction between Hochul, Senate, and Assembly leadership, and rank-and-file members as they begin crafting their own budget proposals.

For a complete legislative roadmap, the team at OD&A has prepared a very thorough and engaging policy preview for 2026:

Hochul’s plan to bring down the cost of auto insurance is supported in theory by many in the legislature, but Heastie was hesitant to give the proposal his full endorsement, saying, “We have to figure this out because I do think victims of accidents need to have their settlements and their day in court, so maybe we’ll find something that works for everybody. The governor is trying to deal with a problem, but I also know that we don’t want to leave victims of accidents without being compensated.” 

Hochul’s proposal to create a path to universal childcare was a welcome development for the legislature, but many members want to see more investment (and a quicker path to implementation) outside of the five boroughs, with Orange County Senator James Skoufis declaring, “There is going to be a push for parity. No one wants to take away child care from families in New York City. I support expanding access in New York City, but we should be increasing that access everywhere in the state.”

Hochul will also face intense pressure from lawmakers and advocates to actively fight back against the Trump administration’s immigration enforcement. Her budget included legislation to protect places of worship, schools, and healthcare facilities from immigration raids, as well as a measure permitting New Yorkers to sue ICE for civil liberties violations; however, many legislators are demanding that New York go further. Brooklyn Senator Andrew Gounardes told reporters, “The governor is proposing to protect sensitive locations, many of us are pushing for a lot more, we have to do a lot more in the face of what’s happening across the country, and many of us are going to be pushing for New York for All.” The legislation referenced by Gounardes, the New York for All Act, would codify immigrant protections and limit state and local law enforcement from collaborating with ICE, but has yet to be supported by Hochul. Noteworthy that Senate Majority Leader Andrea Stewart-Cousins also name-checked the New York for All Act in her opening remarks, saying it was a top priority of the Democratic majority.

Of course, there will also be lively debate around raising the corporate and personal income tax, a policy that has had support from both houses of the legislature and is a vocal priority for many progressive legislators and New York City Mayor Zohran Mamdani. Hochul has long resisted increased taxes, saying again last week, “You can make historic investments without raising income taxes, without mortgaging the next generation.” Leadership in both chambers was non-committal about whether their one-house budgets will propose a tax hike, with Heastie offering, “You all keep asking me, you’ve been asking me since before she even presented her budget if we wanted to raise taxes. I always believe in having enough revenue to deliver whatever the members want, and we will begin that process on Tuesday. Ask me this question in a month.” Striking a similar tune, Deputy Senate Majority Leader Mike Gianaris said, “The important thing is to make child care more affordable, make healthcare more affordable, make mass transit more affordable because that’s what the people want. If we find a way to do that outside of raising taxes, great. If the money comes up short, then we’ll have to have that hard conversation.” Stay tuned here.

The next steps in the budget process are the Joint Legislative Budget Hearings, which are scheduled to kick off tomorrow with the Agriculture/Parks and Recreation hearing. You can find the full hearing schedule here. 

New York Republicans were quick to criticize Hochul’s spending plan for being too costly and focusing on the wrong issues, with Senate Minority Leader Rob Ortt insisting, “At a time when she should be tightening the belt on state finances, the Governor’s election year budget increases state operating funds by $8.5 billion and includes no substantive tax relief—and this is before her radical allies in the Legislature unveil their proposals to bloat this budget even more.” While Republicans in Albany are largely powerless to influence the state budget, Republicans in power in Washington, D.C., could cause real problems for New York. Hochul’s budget includes a proposal to tap into a $9.6 billion state trust fund to cover the roughly 1.8 million non-citizens on the Medicaid Essential Plan, who are now barred from receiving funding under last year’s “Big Beautiful Bill,” formally known as H.R.1. However, the plan requires the approval of Dr. Mehmet Oz, Trump’s administrator for the Centers for Medicare & Medicaid Services (CMS). If Oz does not approve the plan, New York would be forced to shift those individuals to basic Medicaid, at an estimated cost of $3 billion. Hochul has called out New York’s GOP Members of Congress for allowing the state to be put in this position via their vote for H.R.1. Expect to hear more about this during budget negotiations and on the campaign trail.

The exact details of the campaign trail and, more specifically, New York’s Congressional maps are back in flux following last week’s ruling from Supreme Court Justice Jeffrey Pearlman that NY-11, New York City’s only Republican-held Congressional seat, is unconstitutional and must be redrawn ahead of the midterm elections. A Democratic-led lawsuit argued that the district, currently represented by Nicole Malliotakis, should include Staten Island and southern Manhattan rather than southern Brooklyn so as not to dilute Black and Latino voting power. In a statement, Malliotakis opined, “We are reviewing the judge’s decision and our options to protect the voices of the people of Staten Island and Brooklyn. Nothing changes the fact that this is a frivolous attempt by Washington Democrats to steal this congressional seat from the people, and we are very confident that we will prevail at the end of the day.” Pearlman’s order does not lay out a remedy if the state’s 10-member Independent Redistricting Commission is deadlocked, and it is unclear if the appeals process will play out before election season begins. A result here could also scramble some other races, with observers expecting that the potentially redrawn NY-11 might affect embattled incumbent Dan Goldman, who is facing a difficult primary challenge from former New York City Comptroller Brad Lander, as well as potentially former Congressman Max Rose.

In other redistricting news, Maryland Governor Wes Moore is taking aim at that state’s only GOP representative as the national redistricting tit-for-tat continues. Last week, a commission convened by Moore recommended a new Congressional map that would add heavily Democratic areas in and around Annapolis to Republican Rep. Andy Harris’ district. Maryland Senator Angela Alsobrooks, a Democrat who chaired the commission, said in a statement, “At a moment when other states are moving aggressively to redraw maps, and when fundamental voting rights protections face renewed threats, Maryland has a responsibility to lead with urgency.” One notable opponent of the redistricting plan was Maryland Senate President Bill Ferguson, a Democrat. Ferguson argued the map was likely to lose if challenged in court and Democrats could end up losing seats in the end, offering, “Ultimately, a flawed process has delivered a flawed product.” Of course, Ferguson has a lot of say over whether the new plan will receive a vote on the Senate floor. More to come.

I suspect everyone, no matter their party affiliation, would agree these are not normal times.

And finally, it may be dead, but nonetheless, here is your slang word of the year. 

 -Jack O’Donnell

Governor Kathy Hochul visited Rochester last week to highlight the programs of OD&A client, the YMCA of Greater Rochester, as part of her commitment to ensuring every family in New York has access to high-quality childcare. The Governor announced a $20 million childcare pilot program for Monroe County, alongside her broader $300 million investment in Rochester and Monroe County. Read more!