New York's massive budget surplus gives Hochul money to spend

ALBANY, N.Y. — Gov. Kathy Hochul kicked off her first term with a $227 billion budget proposal that she says will prep New York for an economic revival, thanks to a budget surplus and an aim of building more affordable housing in the New York City suburbs.

There will be no “whimpering and complaining” about the way things are, the newly elected Democrat said during an address Wednesday at the state Capitol, in which she acknowledged that barriers to housing, health care and public safety are causing New Yorkers to question the viability of living in the state — which leads the nation in population loss.

“We make progress by implementing ideas,” she said, in reference to a quote from the first Black woman elected to U.S. Congress, Shirley Chisholm.

“This is a pivotal moment for our state,” Hochul said. “We can’t just sit on the sidelines and wish things were different. If we want to make real progress for our people, we can.”

She described the nuts and bolts of a series of proposals aimed at achieving the New York Dream that were broadly outlined in her State of the State address last month. And she's benefiting from an $8.7 billion surplus thanks to higher-than-expected tax revenue to fund projects and programs to appease a wide variety of constituencies.

Hochul wants record increases in education and Medicaid spending — to $34.4 billion and $27.8 billion respectively. Hochul’s plan would set aside more than $1 billion to help New York City pay some costs of providing social services to new asylum seekers.

She proposed new funding streams for the beleaguered Metropolitan Transportation Authority, including raising payroll taxes on downstate businesses, using revenue from planned casinos and setting aside $300 million in one-time aid. She also rejected any income tax increases.

She laid out various provisions of her plan for 800,000 new homes over the next decade, which would require municipalities around the state to meet housing production targets or make zoning changes.

And she announced a four-year extension for completing projects covered by the expired 421-a tax break, but did not suggest a specific replacement for the incentive program that builders say will be necessary for the kind of housing growth she is seeking.

Many of Hochul’s ideas carry broad conceptual support among Democrats looking to expand opportunities for communities that have historically been passed over, and Hochul will spend the next two months attempting to build consensus among members of the state Legislature for the fiscal year that starts April 1.

But she begins that process on rocky terms, at least in the Senate, where she’s threatened legal action after a Senate panel rejected her pick for chief judge last month. Leaders are downplaying any potential stalemates amid the acrimony. Hochul made a point to greet just two people — both Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie — before taking the podium Wednesday.

She also cracked open the door to some historically contentious debates in the Legislature, including permitting more charter schools across the state by lifting a regional cap in state law and expanding the amount of discretion that judges would have to set bail for more serious offenses.

She characterized both bail and charter school expansion as measures to provide clarity in otherwise odd implementations of the current status quo, rather than the political grenades they’ve become. Much of her election battle last year centered on rising crime and criticism of the state's bail laws.

“Let’s just simply provide clarity,” she said of her bail law proposal. “Let's ensure judges consider factors for serious offenders. And let's leave the law where it is for low level offense and move forward to focus on two other public safety challenges.”

Assembly Speaker Carl Heastie, during an availability with reporters following Hochul’s address, said he was briefed the previous evening but was still, “wrapping his arms around” Hochul’s proposals.

He did note that charter school expansion has typically been “tough” for his conference; the powerful teachers unions oppose an expansion. And he’s skeptical of any suggestion that the state’s bail laws are the solution to increases in crime, instead suggesting that the Legislature should take a more holistic approach.

“We’ve got to get off that focus on those four letters [B.A.I.L] and start looking at the entire totality of public safety,” he said.

The state is on sound financial footing this year, and officials project the $8.7 billion surplus can be used to help the state build its reserves to 15 percent of state operating funds by 2025.

Progressive groups analyzing Hochul's proposal were quick to point out what they saw as missed opportunities when the state has the cash to take aggressive action, including affordable housing advocates who say tenants rights should take precedence in trying to make New York more affordable.

“Governor Hochul’s plan prioritizes deregulation and luxury housing production. It is for real estate moguls, not working families,” tenants rights activist Cea Weaver said in a response from the Housing Justice for All coalition she represents.

Hochul said that political dynamics surrounding her election and legislative relationships did not play into how she chose to craft the budget proposal when asked about a proposed expansion of an MTA payroll tax that would affect suburban counties. She did not largely do well in the suburbs last November.

“Nothing I do in the budget is driven by politics, elections, outcomes," she said. “I'm guided by what is best for New Yorkers.”