High Stakes

Back to today, a strong move from Governor Kathy Hochul to address rising electricity demands, as she announced a statewide Energy Infrastructure Development Plan (EIDP). The EIDP will complement New York's existing energy planning process, with the goal of better coordinating how and when new clean energy sources come online. Sean Ewart, Hochul’s Deputy Secretary for Energy, offered, “We’re going to have to build out just a tremendous amount of all of these resources, and we want to make sure that we do it in the most cost-effective way, and we think that’s going to require, effectively, integrated resource planning.” The new initiative comes as the state’s independent grid operator, the New York Independent System Operator (NYISO), announced they are expecting a reliability shortfall in the next decade without state intervention.

Kevin Lanahan, a spokesman for NYISO, said, “Preserving an independent planning process and strong market signals remains essential to ensuring those resources are developed efficiently while maintaining reliability and affordability for New Yorkers….This is sort of a recognition that the governor and the state really need to sort of take charge of this clean energy transition.” The reliability shortfall has been largely attributed to the state retiring existing fossil fuel energy plants faster than new renewable energy sources can be brought online (and bad decisions like closing Indian Point without a replacement). Rising costs and interference from the Trump administration have left New York further short of its clean energy goals; nonetheless, environmental advocates hope that the new, coordinated EIDP approach will change that. Katherine Nadeau, the Deputy Director of Environmental Advocates, said the effort “holds the promise of modernizing our grid, bringing renewables online quicker, and decreasing energy costs for everyday New Yorkers, a win-win-win.” Nice to see the Hochul administration pushing ahead.

The more things change, the more they stay the same: according to a report released last week by State Comptroller Tom DiNapoli, New York has officially returned to its long-time status as a donor state to the federal government, that is, sending more money to Washington than it receives back in federal spending. In a press release, DiNapoli offered, “With the impact of the federal pandemic aid largely gone, New York returns to the familiar position of being in the red. With damaging policies being implemented by the federal government, New York could have a disproportionate reduction in federal funding, which will only worsen the state’s balance of payments in future years.” In fiscal year 2024, New York received $341.1 billion in federal spending compared to the $353.5 billion that the state generated in federal taxes. Other key findings include:  

• New York generated $17,674 per capita for the federal treasury, ranking it third among states in FFY 2024. The state received $17,056 per capita, ranking it 25th in per capita federal spending.

• Federal income taxes made up the largest portion of taxes New Yorkers paid, $9,527 per capita—34.7% higher than the national average of $7,075.

• New York ranked second in per capita corporate income taxes, at $2,098, which was 35.4% higher than the national per capita amount of $1,549.

• New Mexico continued to rank first in per capita balance of payments (+$18,111), followed by Virginia, Alaska, Hawaii, and West Virginia. New York ranked 45th, and New Jersey ranked lowest (50th). 

One area where New York received an outsized share of federal money was Medicaid funding. The state received $60.8 billion in Medicaid funding, $3,040 per capita, which is 68.5% higher than the national average of $1,804 per capita. More to come on New York and Medicaid funding, as the state has formally requested an extension of a $7.5 billion Medicaid pilot that pays for social services, specifically requesting to roll over unused federal funding for groceries and rent, amid efforts by the Trump administration to limit Medicaid spending. Hmm.

In campaign news, Republican gubernatorial candidate Bruce Blakeman announced a plan to ease New Yorkers’ tax burden should he be elected in November. Blakeman’s proposal would end state taxes on the first $100,000 of income, eliminating state income taxes for single filers earning less than $50,000 and for married couples below $100,000, while also lowering the tax rate for those making between $100,000 and $500,000 from between 6% and 6.85% to a flat 4%.

On social media, Blakeman said, “Kathy Hochul has made New York completely unaffordable, driving up electric bills by 50%. We now pay 70% more than the rest of the country. In Nassau County, I cut property taxes by $150 million to ensure more money in your pocket. As Governor, I will eliminate income taxes on your first $100,000 of income, slash utility bills in half, and deliver real property tax relief to make New York affordable.” Sounds great; however, the tax cut would cost roughly $35 billion at a time when New York is already facing significant out-year budget gaps. Blakeman had few details to share when pressed on how he would pay for the plan, but offered, “My plan pays for itself by stopping the ‘Hochul Exodus’ of businesses and families to other states, keeping our tax base right here in New York.”

The Hochul campaign pushed back on Blakeman’s characterization of her tax record, saying in a statement, “While Governor Hochul fights tooth and nail for New Yorkers, cutting middle-class taxes to their lowest rate in 70 years, Bruce Blakeman did the opposite: he jacked up property taxes twice. New York families can’t afford a record like his and are ready to reject his ‘MAGA all the way’ agenda in November.” 

Voters will decide soon enough, and the Hochul campaign will have plenty of firepower to spread that message in the final stretch of the race. The most recent campaign finance filings show Hochul has raised an additional $8.5 million over the summer months, bringing her total up to roughly $33 million on hand between her campaign and the state Democratic Party’s account.

Hochul will also have the help of well-funded super PACs, including Greater Empire State, a committee run by the Democratic Governors Association. The group received $1.5 million from the Greater New York Hospital Association, $500,000 from John Hess, former CEO of the global energy company Hess Corporation, and multiple high-dollar donations from doctors and executives connected to the physician network, Somos Community Care. Another pro-Hochul super PAC, Leadership for New York, received a $3 million donation from the New York Apartment Association. Blakeman’s latest fundraising totals have not yet been made public by the campaign, though he will not receive the level of public matching funds he originally anticipated. The Blakeman campaign requested over $860,000 for 2,600 individual donations that do not qualify for the state’s matching funds program.

Launched in 2022 to give upstart candidates a better chance against well-funded, entrenched incumbents, the program provides $6 in public money for every $1 from New Yorkers who give between $5 and $1,050, though only the first $250 is eligible for the match. The paperwork Blakeman submitted for matching funds included hundreds of contributions from donors in Florida and Texas, as well as hundreds of contributions below the $5 threshold. All told, the ineligible submissions make up roughly 10 percent of the contributions the campaign submitted for matching funds. Hochul has declined to participate in public financing. Expect to see a lot more campaign commercials over the next few weeks.

While Hochul’s campaign appears to be going well, the same cannot be said for the state’s largest Democratic County Committee in Brooklyn. The Kings County Democratic Party remains in disarray as a group of progressive reformers tries to wrest control from party boss and Assembly Member Rodneyse Bichotte Hermelyn and her allies. After an appellate court upheld a state Supreme Court decision ruling that Bichotte Hermelyn’s attempt to stack the Executive Committee with loyalists was invalid, she unexpectedly announced she would not run for another term and would throw her weight behind Assemblymember Nikki Lucas. The reformers were also granted a temporary restraining order to block the Executive Committee meeting that was scheduled for last week, buying additional time to convince the rank-and-file members to coalesce around their preferred candidate, Julio Peña III. The Courts also found that Congresswoman Nydia Velázquez is now the chair because the Bichotte Hermelyn faction simply neglected to list a chair candidate in the middle of a raucous (and long) reorganization meeting. Velázquez has wasted no time asserting control, including firing the party lawyers who were defending the competing slate. Wow.

All eyes were on the Hudson Valley last week as one of the nation’s most heavily contested (and competitive) Congressional races featured a debate between Republican incumbent Mike Lawler and Democratic challenger Cait Conley. Lawler, keenly aware that Trump’s abysmal approval ratings are an albatross in his reelection effort, sought to portray himself as a bipartisan dealmaker who works with Democrats on issues that improve the lives of his constituents. Lawler repeatedly pointed to his public feud with the White House and GOP Congressional leadership over the $10,000 cap on the amount of state and local taxes (SALT) that can be deducted on federal tax returns. Conley, a combat veteran and a national security expert in the Biden administration, portrayed Lawler as a Trump lackey and hammered him on data center development, Washington’s assault on clean energy projects in New York, and immigration enforcement. While there has been little public polling since the June primary, one new survey gives Conley a small lead at 48% to 46%, with 7% undecided, and an internal Lawler survey has him up 3%, while prediction market sites give Lawler somewhere between a 35-40% chance to win reelection.

We are seeing the same things nationally with less than a month until midterm elections; the broader political environment continues to favor Democrats as bipartisan rating agencies project the GOP will lose the House, could lose the Senate, and find themselves in competitive gubernatorial races in states that are usually an afterthought. However, the Republican National Committee and its associated super PACs have a massive cash advantage over their Democratic counterparts, and where they are spending it helps us know what races the GOP thinks they can salvage, and which races Democrats think they can steal.

One race where both dynamics are in play is in Texas, where Democratic state Rep. James Talarico and Republican state Attorney General Ken Paxton are vying for the state’s open Senate seat. A super PAC aligned with Senate Minority Leader Chuck Schumer, which has so far resisted spending in Texas, announced it would begin airing anti-Paxton ads on YouTube and other digital platforms. Another pro-Talarico super PAC, Lone Star Rising, said it has $10 million in ads reserved for the final four weeks of the election, while Talarico’s campaign has $35 million reserved in ad buys. Still, those totals dwarf in comparison to the $167 million in ads reserved by GOP-aligned groups for the final two months of the race. Nationally, Republicans and their allies have about $888 million in ads planned through Election Day, versus roughly $666 million for Democrats, though Democrats retain stronger cash positions in some individual battleground states. Long way to go in this volatile environment, but we are nearing a point of no return.

Some really tough times facing New York City.

And finally, new penguins!

-Jack O’Donnell

We were so proud to see Marc Cohen, OD&A’s VP of Government Affairs, recognized as a Game Changer by Special Olympics New York at the Rochester Night of Champions.