Boiling Point

Good morning from Albany, New York, where things are a mess . . . even by Albany’s unique standards. We are clearly past the beginning of the end, but we seem to be nowhere near the end of the end or, you know, a passed and enacted budget.

The story so far: Thursday, in the Capitol’s Red Room, flanked by her senior team, Governor Kathy Hochul declared: “I’m very proud to announce that we’ve reached a general agreement for the fiscal year 2027 state budget!” Hochul outlined her budget wins and accomplishments in what could only be described as a victory lap (more on those details to come). Notably, the announcement of a budget agreement featured only one of the three parties necessary for it to become law, and it is a maxim of Albany that who is in on the announcement matters as much as what is announced.

The wisdom of that maxim became clear an hour or so later when a visibly perturbed Assembly Speaker Carl Heastie offered a very different take on Hochul’s announcement and the entire budget process: “This is what I’m telling you all is wrong with this process, and I’m saying this to you all very clearly: I’m never doing this again. Budgets are supposed to be about money, not policy.” Heastie later added that there is still a lot of work to do to iron out the outstanding fiscal issues, saying, “There’s so many open issues on money. We signed off on nothing major.” Senate Deputy Leader Mike Gianaris agreed there was no budget.

That is broadly where things stand this morning. As the Memo went to print, it was unclear if the Leaders had met over the weekend, but the tenth extender will expire today, and we expect legislators to vote on an additional extender before the end of the day.

Heastie went out of his way on Friday to make clear his frustration was with the process and not with Hochul, offering “The governor and I had a really good conversation. My issue was never with her. I feel like I have an amazing relationship with the governor. My concern was more of the process. I do think we’re very close on the budget and expect we’ll get it done in short order.”

Even if the deal is not yet done, it is worth taking a look at Hochul’s announcement because much of this, if not all, will be in the final budget.

According to Hochul, the final budget will clock in at $268 billion and will not include any income or corporate tax increases. Every school district in the state will see at least a 2% increase in state aid, while funding for universal childcare programs will increase by $1.7 billion. Hochul indicated that many of her proposals regarding auto insurance will be included in the final budget, including a narrower definition of “serious injury” and caps on payouts to drivers found to have been engaging in criminal activity at the time of a crash. Insurance companies will also be prohibited from using an individual’s education level, zip code, occupation, or homeownership status to set individual insurance rates. To spur housing development across the state, the final budget will include changes to modernize the State Environmental Quality Review Act (SEQRA). The result will exempt housing developments on previously disturbed land with up to 500 units in high-density areas of New York City, up to 250 units elsewhere in New York City, up to 300 units in urban areas outside of New York City, and up to 100 units in rural areas. The package will also include exemptions for public works projects such as parkland development, clean water infrastructure, and public schools within New York City. 

On immigration, the final budget will prohibit local law enforcement from being deputized by ICE under formal 287(g) agreements and establish a state law allowing individual New Yorkers to sue federal immigration authorities for alleged violations of their constitutional rights. In addition, the immigration package will ban law enforcement from wearing masks while on duty and prohibit ICE from carrying out immigration enforcement in sensitive locations, including schools, libraries, healthcare facilities, polling locations, and private residences. Other public protection initiatives in the budget will likely also include a requirement that 3D printers in New York include software that prevents them from being used to manufacture 3D-printed firearms. The budget will also enact a new “super speeders” law in New York City that will require repeat offenders to install speed-limiting devices in their vehicles; Hochul offered, “You will not flout our laws, and you will not endanger children, pedestrians, and other drivers who deserve to feel safe on our highways.” 

On climate, Hochul appears to have succeeded in scaling back the 2019 Climate Leadership and Community Protection Act (CLCPA), which calls for a 40% reduction in emissions by 2030—a goal that the state was well on its way to missing. Throughout negotiations, Hochul insisted the changes were necessary to prevent untenable utility cost increases, and she reiterated that message at her press conference last week, saying, “New York has led and will continue to lead on clean energy and climate. But reality is harsh. We can not meet the current timelines without driving energy costs higher. The facts bear that out, and I cannot let that happen.” Under the revised, compromise plan, the state will have to promulgate regulations for a cap-and-invest program to reduce carbon emissions by 2028, and will have until 2040 to achieve a 60% reduction in emissions. The deal will also include a change to the formula used to calculate carbon emissions from a 20-year to a 100-year time frame. Hochul also adopted a proposal from the Assembly to provide $1 billion in energy rebates to offset rising utility costs, as well as to implement a “Ratepayer Protection Plan.” That proposal includes measures to reform how the Public Service Commission (PSC) evaluates requests from utility companies for rate increases, such as tying executive pay to customer affordability and requiring utility companies to present a ‘budget contained’ option to the PSC that keeps operating and capital costs below the rate of inflation. 

The devil is in the details in state budgets, and many details here remain unknown, including the fate of changes to the Tier 6 pension program. Nonetheless, reactions to Hochul’s announcement have already begun to roll in. The Environmental Defense Fund believes the final budget as described by Hochul, leaves a lot to be desired, sharing in a statement, “Governor Hochul and the New York State Legislature appear to be on the precipice of passing a state budget with sweeping rollbacks to New York’s landmark climate law, which will result in more pollution in our communities and delayed investments in clean, affordable energy.” The Citizens Budget Commission, a nonpartisan fiscal watchdog group, raised concerns over the ever-increasing size of New York’s budgets, saying in a statement, “What we do know is that the budget is bigger, but not likely better for fiscal stability compared to the Governor’s proposal. Adding $5 billion above the Executive proposal for fiscal year 2027 likely grows future budget gaps, increasing the chance New York hits a self-inflicted fiscal wall.” The CBC also gave credit where it is due, offering, “SEQR reforms are an incredibly important step forward that will reduce the cost and increase the speed of needed housing production. Kudos to the Governor for her leadership and to the Senate for making it even stronger. Reforms to auto insurance that fix New York’s liability standards and control unjustified outsized payouts will save New Yorkers money. Unfortunately, the final deal didn’t include the Governor’s smart proposal to fix joint and several liability. We applaud the Governor’s leadership to ensure New York balances greenhouse gas emissions reduction with affordability for New Yorkers; modifying the emissions goals is a smart choice.”

Republican Bruce Blakeman, previewing his messaging for the campaign trail, was expectedly critical, saying, “Kathy Hochul's budget is a triple threat to your wallet: more taxes, record spending, and a utility bill crisis with no end in sight. In fact, it should be labeled hazardous for your bank account.” Stay tuned as we await the actual budget bills for more details. 

The late budget has forced lawmakers to begin considering standalone legislation on a parallel track, as the last day of session on June 4th inches closer. New York Attorney General Tish James continues to throw her considerable political weight behind a pair of consumer protection bills to end surveillance pricing, a practice where companies use a customer’s personal data to set individualized prices. The Protecting Consumers and Jobs from Discriminatory Pricing Act, sponsored by Deputy Senate Majority Leader Mike Gianaris and Assemblymember Michaelle Solages, would ban surveillance pricing in grocery stores and pharmacies and prohibit companies from using electronic shelf labels, which are the devices they use to implement individualized pricing. The other bill, the One Fair Price Act, sponsored by Senator Rachel May and Assemblymember Emerita Torres, would apply a blanket ban on surveillance pricing across all industries. At a press conference, James said, “These predatory pricing schemes use algorithms to analyze where you live, your spending habits, and even whether or not you're in a hurry, all to determine the highest price that you will pay. Then, they charge you that price. Not a fair price. Not one price. Your highest price.” Both bills enjoy the support of prominent public and private-sector unions, including the United Food and Commercial Workers (UFCW) and the Retail, Wholesale, and Department Store Union (RWDSU). 

The sponsors of the Packaging Reduction and Recycling Infrastructure Act (PRRIA), Senator Pete Harckham and Assemblymember Deborah Glick, made sweeping amendments to the bill last week in the hopes of finally getting it across the finish line this year. In a statement announcing the revisions in the legislation, Harkham said, “Through long and engaged dialogue with stakeholders, we have forged a middle ground with these amendments to our bill, and now we are working to finally gain the necessary legislative and executive approvals that will save New Yorkers millions of dollars each year while helping to protect our environment.” If enacted, the bill would require packaging producers with more than $5 million in net revenue and responsible for more than 2 tons of annual packaging waste to reduce their packaging by 10% within 3 years and 30% within 12 years.

Notable amendments include updated definitions and adjusted timelines to bring New York in line with other states that have implemented similar programs, namely California and Minnesota. The newest version of the bill also removes enforcement authority from the Inspector General and transfers those responsibilities to the state Department of Environmental Conservation and the Attorney General’s office. Keep an eye out over the next month to see if these changes are enough to convince Assembly leadership to get on board, or if time will run out again.

In political news, a new Siena poll found that Hochul’s approval rating and popularity are down, but her lead over GOP gubernatorial challenger Bruce Blakeman is growing. The poll shows Hochul’s favorability rating at 41-46%, her lowest favorability rating since June 2025, and her job approval rating at 48-44%, her lowest job approval rating since April 2025.

The silver lining for Hochul is her lead over Nassau County Executive Bruce Blakeman edged up three points to 49-33%, from 47-34% in March. According to the poll, voters say, 49-32%, New York’s best days are still ahead, rather than behind us, and 7%, likely all Buffalo Sabres fans, say New York’s best days are taking place now. The poll also found Pope Leo XIV, America’s first Pope, has a favorability rating of 55-19%. 

Rep. Joe Morelle (D-N.Y.) was in Albany last week to begin discussing the constitutional and legal hurdles that Democrats need to overcome to implement mid-decade redistricting. The trip comes as Hochul and other prominent New York Democrats vowed to redraw Congressional maps after the U.S. Supreme Court struck down key provisions of the Voting Rights Act, which empowered GOP-led states across the country to redraw favorable maps without regard for minority representation. Speaking to reporters, Morelle laid out his reasoning for fighting fire with fire, saying, “What’s clear is, in the South in particular, those state legislators have made the decision that they’re going to do the most partisan gerrymandering necessary, so we’re going to respond in kind. I’d love to have a national standard. …But I don’t want New York, and I don't want Democrats to disarm and lead to a permanent majority by the Republicans because they engage in partisan gerrymandering.” Morelle and House Minority Leader Hakeem Jeffries have stopped short of calling for a nakedly partisan gerrymander in New York, but Hochul has expressed support for a Constitution Amendment to disband the Independent Redistricting Commission, the independent body created in 2014. 

Even if Hochul and her allies are successful in passing an amendment to disband the IRC and ultimately implement a new map, it is unclear whether it would survive the inevitable legal challenges. That was the case in Virginia, where the state’s Supreme Court struck down the Congressional redistricting approved by voters in April. Voters in the Commonwealth voted 52 to 48% for a Constitutional Amendment to allow the state to redraw Congressional maps, but the Court ultimately agreed with a lawsuit from Republicans and ruled that the legislature made procedural errors when implementing the ballot question.

The ruling is a major blow to Democrats, who were hoping an additional 4 seats in Virginia would help them keep pace with GOP efforts elsewhere in the country. Republicans in Florida, Louisiana, and Alabama have begun redrawing their maps, and Tennessee, a late entrant in the redistricting wars, approved a new map last week that will likely eliminate that state’s lone remaining Democratic-held seat. 

Any moral reservations in the GOP about the long-term consequences of national gerrymandering were quickly replaced by the political realities on display in Indiana. After several GOP lawmakers blocked redistricting efforts in Indiana earlier this year, Trump-backed groups poured millions into campaigns to unseat the holdouts—with President Donald Trump himself endorsing their challengers. Of the eight Republicans who crossed Trump on redistricting, five of them lost reelection on Tuesday. David McIntosh, president of the Club for Growth, which contributed $2 million targeting GOP incumbents, said, “It’s a signal to Republicans everywhere: we want you to think of yourself as a team, help each other win, and don’t just be lone actors out there beating your chest or proving your ground, and I think that’s an important signal as the party gets ready for the midterms.”

Not everyone in the GOP was happy with the allocation of resources and argued that the the $13.5 million could have been better spent elsewhere, particularly targeting Democrats. Steve Bannon, a former advisor to Trump in his first term, said, “That’s $13.5 million we didn’t have [available] to spend on Virginia. That same cash backing the MAGA grassroots in voter engagement and canvassing saves four seats—stopping Spanberger cold in her tracks.” 

Farewell to John Sterling, the longtime voice of the New York Yankees, who died last week at the age of 87. You can find some of his most iconic calls here. 

 -Jack O’Donnell