Governor Hochul balances spending and savings in $216 billion budget

Governor Kathy Hochul presents the executive budget for fiscal year 2023 in the Red Room at the state capitol in Albany on Tuesday. Photo: Mike Groll/Office of Governor Kathy Hochul

Governor Kathy Hochul is proposing a $216 billion state budget for next year, a relatively modest increase of $4 billion from last year, especially given the multi-billion dollar surplus. state dollars.

Hochul said the spending plan includes “realistic and achievable” policies. They include “historic investments, like record aid for education, the largest infrastructure investment plan our state has ever seen, and a groundbreaking program to rebuild the health care sector,” Hochul said in a statement. his 16-minute budget speech on Tuesday. “But we are also smart and responsible, recognizing that we also need to fund our reserves at historic levels.”

A floating budget on swelling state coffers and federal funding

Hochul says she’s able to come up with ambitious spending plans because the state is awash with cash, due to better-than-expected tax revenues, a “thriving” stock market, heavily taxed by New York, and of a historic influx of federal aid.

“This is a once-in-a-generation opportunity to make thoughtful, targeted investments in our state and in our people that will pay dividends for decades,” Hochul said.

Hochul wants to spend an additional $10 billion over the next five years on health care, with the goal of increasing the health workforce by 20% and helping supplement salaries.

She would like to increase school aid by more than 5%, with a record increase of $2.1 billion for a total of $31.2 billion. His budget for the first time fully complies with a court order that New York must spend billions of dollars more on its poorest schools to provide equitable education.

The governor is increasing his initial plan, announced in the State of the State earlier this month, to help families pay for child care, from 100,000 households to 400,000 families.

The spending plan also includes $4 billion for environmental initiatives, including climate change responses and the State Environmental Obligations Act, and $1.5 billion over five years for the Universities System. ‘State.

Hochul also takes advantage of generous federal grants to spend $32.8 billion on infrastructure projects, ranging from major airport and train station renovations, to solving smaller but aggravating road problems.

“I’ve also declared war on potholes,” Hochul said, saying his goal was to spend $1 billion to go from potholes to “no-holes.”

Tax cuts and a balanced budget (and more casinos)

The governor’s plan would cut taxes, including $2.2 billion in property tax relief, accelerate a planned middle-class tax cut and provide $250 million to small businesses hit hard by the coronavirus pandemic. COVID-19.

She’s not proposing any increases in taxes or fees, but the budget relies on more revenue from the gambling industry. Her plan calls for accelerating the timeline by a year to accept applications for three new gambling casinos, potentially opening up the lucrative arcade market in the New York area.

Budget director Robert Mujica said the newly licensed mobile sportsbook brought in $150 million to more than 650,000 new subscribers in its first weekend alone and he expects $357 million in revenue for that. the new exercise.

“We expect our revenues to meet our targets,” Mujica said. “If not exceed them.”

Mujica, who says half of the revenue generated from mobile sports betting goes to aid education, says the state is now “number one in the country” in terms of the volume of sports bets placed.

Hochul promised to be careful with any spending she proposes. She says there are no built-in recurrent programs that cannot be funded in future years. And she says she would like to put more money into the state’s rainy day reserve fund, to reach 15% of the state budget by 2025.

“For the first time ever, with smart planning, New York won’t have a year-over-year gap,” Hochul said. “All of these commitments are either one-time expenditures or are supported by the expectation of reasonable revenue growth, as projected by our budget division.”

Patrick Orecki of the watchdog group Citizens Budget Commission said that while a 15% reserve fund is better than the historically low rate of 5% in New York, the state should set aside even more. He says New York’s finances are heavily dependent on taxes imposed on the stock market and on high earners, both of which are less predictable sources of income.

“A good national benchmark is 17%,” Orecki said. “Given New York’s tax structure, we believe revenues are more volatile, so the state should save more than 17 percent.”

Other details: ethics and voting reform, and no Bills stadium funding yet

Hochul is increasing the amount of money in an environmental bond bill that would pass voters in November from $3 billion to $4 billion.

She would like to expand the state’s tuition assistance program to part-time students and state prison inmates.

Hochul also adds some items that are unrelated to state spending. This is a practice often employed by governors because, under New York law, they have more power in negotiating spending plans to successfully secure agreement on legislation than during the regular legislative session.

Hochul includes a proposal to revamp the state’s ailing Joint Commission on Public Ethics, or JCOPE. He would be replaced by a rotating committee of 5 commissioners appointed by 15 law school deans. It also includes a proposed constitutional amendment to limit statewide office holders to two four-year terms, and bills to lower the voter registration deadline to 10 days before election day and locate polling stations on college campuses.

One item that’s not in the state budget – funding for a new stadium for Hochul’s beloved Buffalo Bills football team. Budget director Mujica says that’s because the talks are still ongoing.

Reaction from the North Country

Now the legislature will consider the budget. With Democrats in a supermajority, it’s possible that progressives will push for even greater spending on things like education, affordable housing and child care.

North Country’s reaction was conditionally positive. Referring to Hochuls’ pledge to cut taxes and balance the budget, Assemblyman Matt Simpson said, “I look forward to seeing how this statement holds up in the upcoming legislative budget hearings. .” He also called on Albany to use federal stimulus funds to write off $9 billion in unemployment benefit debt incurred during the pandemic, rather than forcing businesses to pay more unemployment taxes.