Deal Sealed!

Budget's Final Cut, Legislature Blowback, SALT Snag

Author

Jack O’Donnell
May 12, 2025

Good morning from Albany, New York, where the sprint towards adjournment sine die is on after the latest budget process in fifteen years. As of today, there are eighteen scheduled legislative days remaining, though Assembly Speaker Carl Heastie has told his members to expect three additional bonus days.

The All Governmental Funds number for Fiscal Year 2026 is projected to be $254 billion, a roughly six percent increase from 2025, though New York will also dip into nearly $7 billion of reserves to pay off debt owed to the feds for a pandemic-era loan to help cover unemployment insurance benefits. The decision to pay off the debt brought together labor and business and is a big win for business groups across the state, including The Business Council and the Buffalo Niagara Partnership, as well as the AFL-CIO and Assembly Labor Chair Harry Bronson, who, along with Speaker Heastie, led this charge. 

Governor Kathy Hochul offered, “I can see down the road—and it’s not that far—where we’re going to have layoffs in businesses. We’re going to have businesses that are struggling to make payroll themselves. And I found that this was an opportunity for me to really lift a major burden off these businesses. They’ve been asking for this for a while. Call this my counter to the tariffs.”

Here is what else made the final cut:

Public Safety

The budget will include a version of Hochul’s proposed changes to the state’s discovery laws, a priority of Hochul’s and a major factor in driving the late budget. The final language gives judges more discretion in deciding if prosecutors exercised proper due diligence in turning over evidence, changes that Hochul believes will lead to fewer cases being thrown out for minor technical violations. However, the legislature held firm on ensuring that the changes do not decouple the discovery process from speedy trial requirements, meaning that a case must still be dismissed if a judge finds a prosecutor did not exercise due diligence and has exceeded the time frame set out in the speedy trial requirements. Still, Hochul believes the final agreement is a win, saying, “Over the last few months, I have been laser-focused on passing a State Budget that prioritizes the safety and well-being of all New Yorkers. By making essential changes to our discovery laws, we’re doing exactly that: standing up for victims, protecting the rights of survivors, and revoking get-out-of-jail-free cards because of minor technicalities.” More details here.

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To address public safety concerns further, New York’s involuntary commitment laws have been changed in order to codify legal guidance previously released by the state that expands the category of medical professionals able to determine that a person is “at a substantial risk of physical harm” because of their inability to meet basic needs. The deal also includes roughly $180 million in funding for psychiatric services, staffing, and beds in New York City.

The legislature also successfully watered down Hochul’s plan to create a crime of masked harassment, landing instead on a secondary charge that can be added only in connection with a second, more serious crime. Speaking on the proposal, Assembly Speaker Carl Heastie said, “It’s really trying to concentrate on people who wear a mask in regards to hiding their identity while they commit a crime.”

Affordability

As we mentioned last week, Hochul’s “inflation rebate” proposal will result in over 8 million New Yorkers receiving a check at some point this year. Individuals earning up to $150,000 are eligible for up to $200, and families making $300,000 or less are eligible for up to $400. You can calculate what you are set to receive here. To address the rising costs of homeownership, the budget provides over $500 million in capital funding to invest in housing development, including $100 million for eligible “Pro-Housing Communities,” $50 million to promote mixed-income developments, and $50 million for the first year of a Housing Access Voucher Program. Speaking last week in Syracuse, Hochul said, “Having a stable home, no matter how big or small, to call your own means everything to families... Tackling the housing crisis remains a key central priority of my administration, and we had to make up for a lot of lost years, so that requires boldness.” A bill to regulate dynamic pricing was also included in the final budget and will require businesses to disclose when they use algorithms to change pricing based on an individual’s personal data.

New York Finally Settles Foundation Aid Debate (For Now)

The final budget includes tweaks to Foundation Aid, the byzantine formula that the state uses to allocate education funding to school districts.

Education

The long-awaited tweaks to the state’s Foundation Aid formula were included in the budget, leaving school districts with a short turnaround time to pass budgets of their own by May 20th. The changes allow for additional funding for districts with a higher percentage of students learning English and will include updated census data to more accurately reflect poverty statistics. Assembly Education Chair Michael Benedetto said, “We’ve made a good budget for education. No budget is ever perfect, but this comes pretty close. … The school districts all received payments that were equal to or above last year.” The budget invests a total of $37 billion in education funding and will also enact a bell-to-bell ban on smartphones and other internet-enabled devices in public schools.

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Health

Lawmakers had to tread lightly with the health section of the budget in the face of looming federal cuts from Washington (more on that below). Overall Medicaid spending for hospital outpatient treatment is set to increase by $425 million, and Medicaid payments for nursing homes will increase by $445 million. However, major public hospitals will see a $113 million reduction in overall spending. Hochul’s original budget proposal contained language that would have made it a misdemeanor for a hospital or physician to refuse to treat a patient, though that language was ultimately omitted from the final proposal.

Campaign Finance and Elections 

The budget contains Hochul’s plan to change how primary elections are conducted for lieutenant governor. Candidates for lieutenant governor will now run on the same ticket as a gubernatorial candidate in the primary election, as opposed to the current system where candidates run in independent primaries. Hochul insisted the change was years in the making and was not a result of her very public split with current Lt. Governor Antonio Delgado, saying, “The lieutenant governor bill is simply something that makes sense. This is something we’ve talked about for years—setting up a system that is more analogous to what you have with the president and vice president.” Lawmakers also agreed to small but incumbent-friendly changes to New York’s nascent public campaign finance system. Under the current law, only contributions of $250 or less are eligible for public matching funds. The changes contained in the budget will allow the first $250 of contributions up to $1,050 to be matched with public dollars. In welcome news for over a dozen GOP lawmakers (as well as a few Democrats, too), the budget will delay the implementation of a law limiting outside income for members of the Assembly and Senate, which was originally slated to take effect at the beginning of 2025.

State Lawmakers Criticize Gov. Hochul's Policy-Laden Budget Strategy

Lawmakers say they are frustrated by how Gov. Kathy Hochul flexed her executive muscle to hold up the spending plan five weeks past its deadline.

While Hochul and leadership in the legislature are touting this budget as a win, not all of their Democratic colleagues are happy with how the process played out. Senator James Skoufis, a Democrat from the Hudson Valley, used a floor speech to vocalize his displeasure with the budget process and Hochul more broadly, saying, “This governor seems to think she is a monarch of sorts. She seems very empowered with a budget that is 37 days late.” Skoufis then went on to suggest ways his colleagues could claw back some of their power from the Executive Chamber, including overriding vetoes, delaying or rejecting her appointments, and even a constitutional amendment to reinforce the power of the legislature. Skoufis’ tough talk was met with intense pushback from Hochul’s spokesman, Avi Small, who wrote on Twitter, “Embarrassing, juvenile stunt from a camera-hungry clown. Senator Skoufis will just have to explain to his district why he opposes lower taxes and safer streets. (And why he’s against record school aid. And against millions for parks & highways in his district) Good luck!” A burgeoning fight with the legislature is the last thing Hochul needs, especially as she begins a reelection campaign next year. Stay tuned! 

Mike Lawler Will Go His Own Way—Or So He Says

Trump endorsed the battleground House Republican for reelection. Lawler doesn’t think it warns him off a bid for governor.

President Donald Trump hinted at who he thinks the GOP should nominate to run against Hochul when he endorsed Rep. Mike Lawler (R-NY) . . . for reelection to Congress. In a Truth Social post, Trump offered, “A true America First Patriot, Mike is fighting hard to Secure our Border, Grow our Economy, Create Jobs, Lower Taxes, Promote American Energy DOMINANCE, Support our Brave Military/Veterans and Law Enforcement, Defend our always under siege Second Amendment.” Trump also endorsed Nassau County Executive Bruce Blakeman, another potential gubernatorial hopeful, for reelection. That would seemingly clear the field for Rep. Elise Stefanik (R-NY) to coast to the GOP nomination should she decide to run next year. Some, however, have argued that the endorsement was the result of Trump’s desire to hold the House in the midterms, and he believes Lawler is the best chance for Republicans to hold onto NY-17. It will be impossible for a Republican to win a primary without Trump’s support.

In Washington, D.C., Lawler and his fellow New York Republicans rejected a deal from House Leadership that would have increased the cap on state and local tax (SALT) deductions to $30,000. Repealing the SALT cap has been a major priority for Lawler and other GOP House members from blue states, but many Republicans see the cap as a key offset for their proposed expansion and extension of tax cuts. In a joint statement, a group of Congressional Republicans from New York declared, “We’ve negotiated in good faith on SALT from the start—fighting for taxpayers we represent in New York. Yet with no notice or agreement, the Speaker and the House Ways and Means Committee unilaterally proposed a flat $30,000 SALT cap—an amount they already knew would fall short of earning our support. It’s not just insulting—it risks derailing President Trump’s One Big, Beautiful Bill.” If the “SALT Republicans” stick together, they have more than enough votes to sink the “big, beautiful bill” and are threatening to do just that. Democrats are quick to point out that doing and voting for nothing would allow the SALT cap to expire (along with the rest of the Trump tax cuts).

Many of those same Republicans will be under pressure from their constituents (and their governors) to reject the GOP’s proposed cuts to the committee overseeing Medicaid. Recognizing the unpopularity of slashing a program that covers nearly 82 million Americans, House Republicans have begun looking at workarounds, including pushing costs onto the states, to achieve the $880 billion in savings that were prescribed in the House budget blueprint. One plan that has emerged is a per capita cap on individuals who receive coverage through Medicaid expansion programs, as well as expanded work requirements for able-bodied adults. State health departments and governors have begun sounding the alarm over the proposed changes, arguing their states will not be able to make up the difference if per capita caps are enacted. Hochul called on Republicans in New York’s congressional delegation to fight the plan, saying, “They’re in the majority; they have the power. You have the power, and if you don’t use that power, then you are complicit in this attack on the American people.” New York State Health Commissioner James McDonald offered, “This is not the type of money that the state of New York can just materialize. We are not in the position to offset cuts to spending.”

Republicans Fall Further Apart on Trump’s ‘Big, Beautiful Bill’

House Republicans are falling further apart in negotiations on a reconciliation package that represents President Trump’s first-year legislative agenda.

SALT and Medicaid will have enormous implications on reconciliation as well as severe political consequences. Consider this from the Congressional Budget Office: projections that millions of Americans would lose health coverage under options currently being considered by Republicans. The numbers were requested by two Democrats—Sen. Ron Wyden of Oregon and Rep. Frank Pallone of New Jersey, the top Democrats on the Senate Finance Committee and the House Energy and Commerce Committee, respectively—and the options the CBO considered reflect policies Democrats say Republicans would pursue—not necessarily the exact options they might enact but certainly a bad headline for those same Main Street Republicans. Of course, there are both governmental and political consequences on both sides of this as Freedom Caucus Republicans demand more cuts, especially with the announcement that the “X-date” is coming in July. 

Treasury Secretary Calls on Congress to Raise or Suspend the Debt Ceiling by Mid-July

The U.S. is on track to run out of money to pay its bills as early as August without congressional action.

Between SALT and potential Medicaid cuts, the House has its work cut out to get a final package to the Senate by Memorial Day—Johnson’s self-imposed deadline. Appropriators also still have to iron out the specifics of Trump’s tax package. To help make the math work, Trump has reportedly floated the idea of a new tax rate of 39.6% for individuals earning more than $2.5 million a year. Johnson and many House Republicans have opposed any sort of tax hike, but a marginal increase on the ultra-wealthy could help offset the costs of Trump’s other policy priorities. Expect this to carry on well past Memorial Day as both parties keep one eye on the Congressional mid-terms.

The U.S. House has approved a bill to officially rename the 'Gulf of Mexico' as the 'Gulf of America.' Do you support this name change? Cast your vote in our poll below!

Nonetheless, a few Democrats and Republicans are finding a way to build bipartisan relationships. 

Hint, burpees help.

Nate Salzman

Our Alec Lewis goes ‘From the Lobby’ with Brighton Town Councilman Nate Salzman to discuss political campaigns, advancing climate action and green energy projects at the municipal level, and navigating the roles of being an elected official, husband, and father.  

Jack unpacks budget wrangling from NY to DC in his Monday Morning Minute podcast:

🎙️Do Gov. Hochul’s budget wins resonate with voters?

🎙️Preparing for possible mid-year funding cuts in NY

🎙️Will Congresswoman Stefanik run?

🎙️Federal budget frenzy

🎙️Celebrating Monty Python

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Horizon Health Services holds a ribbon-cutting for its new recovery center in Orchard Park.

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OD&A’s Marc Cohen on LinkedIn:

Thank you Mike Della Porta for having us at your table for the Goodwill of the Finger Lakes gala! From providing essential vision services through Goodwill Vision Enterprises to creating meaningful job opportunities for individuals facing barriers to employment, OD&A client, Goodwill of the Finger Lakes, continues to be a beacon of inclusion, innovation, and hope.

New to the NYS Legislature

Assemblymember Paul Bologna, a Republican, represents New York’s 144th Assembly District, which includes parts of Erie and Niagara counties. A lifelong resident of Clarence, Paul brings a strong background in local governance, public service, and community advocacy to the State Assembly.

Before his election in November 2024, Paul served as Chief of Staff to his predecessor, Assemblyman Mike Norris. In that role, he worked closely with constituents, local leaders, and state agencies to address critical issues and improve quality of life across the district. Now, as Assemblymember, he remains focused on serving the people of Western New York with the same dedication and responsiveness.

Paul is a strong advocate for public safety, local control, and affordability. He supports law enforcement and first responders, particularly in rural areas, and backs policies that provide communities with the resources they need to stay safe. He is also addressing challenges like the ongoing migrant crisis and advocating for a more effective and accountable state response.

As a working parent of two young children, Paul understands the pressures facing families today. He is committed to reducing the cost of living—especially childcare expenses—so that parents can better balance work and family responsibilities. His legislative priorities center on building a stronger, safer, and more affordable future for families across the 144th District.

Paul lives in Clarence with his wife, Jessica, a special education teacher at Amherst Middle School, and their two children, Blaire and Graham. He is an active member of the Town of Clarence Rotary and is proud to represent the community that raised him.

The U.S. House has passed a bill to make the 'Gulf of America' name change permanent. The Senate must still weigh in. How would you vote?

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Results of the Last Poll

Do you approve or disapprove of the way Donald Trump is handling his job as president in the first 100 days of his term?

This Day in History

May 12, 1789:

It played a key role in Governor William Sulzer's 1913 impeachment, a pivotal event I explored in my book, “Bitten by the Tiger.”

The original Tammany Hall. Photo: Library of Congress via Wikipedia

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