Hochul’s proposed $227 billion NY state budget gets mixed reviews from advocates, observers and allies

ALBANY — Gov. Hochul laid out her policy and spending priorities in a $227 billion executive budget this week, raising some eyebrows and kicking off two months of negotiations with the Democrat-led Legislature.

The Democratic governor, elected to a full term in November, hopes to steer the state through economic uncertainty in the wake of the COVID pandemic with plans to boost housing, tackle mental illness and increase spending on education and healthcare. Her plans have drawn both praise and criticism from watchdog groups and advocates.

Hochul entered the budget season with the state enjoying a comfortable $8.7 billion surplus this year and $19.5 billion in reserves built up over the past three years.

The governor’s balanced budget proposal projectS gaps in future years, leading to a potential $22 billion hole thanks to decreased tax revenue.

“Yet, instead of reining in spending, the governor calls for more of the same, led by record increases in school aid and state-funded Medicaid spending,” said Tim Hoefer, president and CEO of the Empire Center for Public Policy. “The net result will be to push New York further down the road to even higher taxes.”

Overall, Hochul’s plan would see an increase of $5.4 billion, or 2.4%, over last year’s budget.

The largest costs for the state, and the largest increases in spending over last year, would be education and Medicaid.

In total, Hochul is proposing $34.5 billion in state money for pre-K to grade 12 schools. She also wants to fully fund Foundation Aid for the first time, with a 12.8%, or $2.7 billion, increase.

The governor’s plan increases the overall Medicaid budget to $94.4 billion, a 2% increase, to be split between federal, state and local governments.

New York’s share of spending on the health program would increase 7.7%.

Many supporters applauded Hochul’s commitment to indexing the minimum wage to inflation, investing in child care, increasing access to mental health service and tackling the climate crisis.

Some critics, however, contend that the governor’s budget proposals fail to address underlying needs of New Yorkers and the affordability crisis when it comes to housing and want to see taxes increased on the state’s wealthiest residents.

“While Gov. Hochul’s budget recognizes the importance of making New York affordable and livable for working families, the budget as a whole does not propose the depth of public investment needed to bring down rents for tenants, achieve universal childcare, or raise wages to cover the cost of living,” Fiscal Policy Institute executive director Nathan Gusdorf said.

Aside from changes to the state’s controversial bail system, one area where Hochul may struggle to win over lawmakers will likely be her proposed tuition increases for SUNY and CUNY schools. The governor wants to allow public universities to hike tuition rates annually by either 3% or an amount tied to the Higher Education Price Index, whichever is less.

Assembly Speaker Carl Heastie (D-Bronx) said the plan could meet resistance among Democrats in his chamber.

“We don’t want tuition to be raised on the students. We’re going to have to figure out a way to pay for it,” Heastie said.

Hochul’s proposal is also chock full of tax credits and business subsidies that critics say deprive the state of revenue and often don’t have a great return on investment.

The governor is proposing raising the limit on the state’s film production tax credit to $700 million annually and raising the credit from 25 to 30 percent while extending the program through 2034.

“There is no defensible reason for continuing, let alone expanding, the state’s subsidies for film and television producers,” said Ken Girardin, a fellow with the Empire Center for Public Policy. “The state’s own auditors have shown that taxpayers lose money on the deal.

“The Legislature needs to stop this horror film for taxpayers instead of ordering up a sequel,” he added.

Hochul’s plan also calls for extending pandemic-era tax credits for musical and theatrical productions in the city for two more years, through 2025.

The governor’s proposed $5.5 billion in state funds to promote energy affordability, reduce emissions and invest in clean air and water, as well as her plans to introduce a cap-and-invest program and a phase out of fossil fuel hook ups in new construction earned praise from environmental groups.

The New York League of Conservation Voters described Hochul’s overall climate plan as “a forward-thinking approach to addressing the pressing environmental challenges we face.”