Taxes on the rich, school funding, housing: New York’s budget battle begins
What do free bus rides, new taxes for the rich and a stiff drink at the cinema have in common? All three have the support of lawmakers in the New York State Legislature.
These ideas and thousands of others were buried in the Senate Edit budget proposals released this week that offer a glimpse of lawmakers’ positions as Albany’s annual budget battle royale gets underway. Gov. Kathy Hochul must reach an agreement with leaders in the Senate and Congress on how the state can spend more than $230 billion before the April 1 budget deadline.
The fact that all three leaders are Democrats does not mean there is less to negotiate: taxing the wealthy, tenant protections and school funding are all up for debate again as Ms. Hochul, a centrist from Buffalo, will be forced to find common ground with an increasingly left-leaning legislature.
And while those debates have sometimes become intractable — last year’s budget came a full month late, after Ms. Hochul pushed to tighten the state’s bail laws — Democrats in both houses are eager to see a protracted ordeal with the avoid any consequential general elections in the offing.
In January, Ms. Hochul unveiled her $233 billion spending plan, which called for significant investments in mental health care, public safety and artificial intelligence research, as well as $2.4 billion to address New York City’s migrant crisis. But she also proposed cuts to education funding and health care, which have drawn criticism.
In their proposals, Democrats in the Senate and Assembly have opposed Ms. Hochul’s desired changes in education funding. while with their own proposals on how to solve the state’s housing crisis, make transportation more effective and accessible, and more.
Here’s what you need to know as budget talks begin.
A battle for financing education
Both the Senate and Assembly rejected key changes to school aid that Ms. Hochul proposed in an effort to reduce education spending, instead maintaining the formula the state uses to determine how much aid is distributed to individual districts. They have allocated $1 million for a study on this topic.
Ms. Hochul’s proposals have been a point of contention on both sides of the aisle. Although the governor’s budget would increase total education aid by about 2.4 percent compared to last year, about half of the state’s school districts would receive less state aid, and no district would receive as much as they expected under the current formula.
Ms Hochul’s budget would base funding partly on the average cost of living over the past ten years, as opposed to the year before. It would also end a decades-old practice that ensures districts never receive less state funding in a school year than the year before, even if enrollment declines.
The governor said these changes would help distribute aid in a way that more accurately reflects the needs of counties. But district leaders and lawmakers have said the changes will negatively impact many schools across the state, including in many low-income rural areas.
The General Assembly and Senate also rejected the governor’s proposal to grant Eric Adams four more years of control of New York City schools. New York City’s mayor has had control of the city’s schools since 2002, subject to renewal by the Legislature — an arrangement that has frustrated some lawmakers and parents who would like to see a new model.
Raising taxes on the wealthiest New Yorkers
Both the Senate and Assembly proposed raising personal income taxes by half a percent through 2027 for people earning more than $5 million. Such an increase could generate nearly a billion in new revenue each year, they estimate.
When Ms. Hochul was asked about the proposal on Tuesday, she was clear: “Increasing income taxes is a non-starter for me,” she said.
The governor is strongly opposed to raising taxes, as she sees the measure as counterproductive to her goal of combating New York’s economic crisis. largest population loss in the country.
However, there has been much debate about whether tax increases on the wealthy actually drive New Yorkers out of the state: This is evident from an analysis by the Fiscal Policy Institute that it was in fact the working and middle classes who led the exodus, trends they linked to affordability issues more broadly.
Both houses also proposed an increase in corporate taxes and new tax credits for working families. The General Assembly would expand two existing credits, the earned income tax credit and the child tax credit. The Senate proposed a new credit, known as the Working Families Tax Credit, that would provide $550 to married couples making less than $130,000.
Will this be the year of housing construction?
Last year, Ms. Hochul proposed an ambitious plan to boost housing construction across the state. But that proposal and all others fell apart last year because all parties could not agree.
Senate Democrats introduced a package that aims to keep people in their homes while building new, affordable housing. The proposal includes initiatives to accelerate residential conversions, legalize basement apartments and free up money to help renters in the state avoid eviction.
Parts of the package — including proposals to replace an expired tax credit for developers, and raising the cap on what landlords who own rent-stabilized buildings can charge after improving a unit — are sure to be celebrated by landlords and developers .
But the package comes with one key condition: Senate Democrats say they won’t make any deal that doesn’t provide protections similar to those in the Good Cause Eviction legislation — a controversial bill that would limit landlords’ ability to to evict tenants or increase their rent above that. 3 percent in times of low inflation.
The General Assembly’s proposal also includes incentives for office conversions and for the construction of new housing on state land. And while it refers to protecting tenants from “erratic rent increases and unreasonable evictions,” it makes no mention of the tenant protection legislation that the Senate prioritized in a blow to progressives.
Tackling climate change
Both chambers proposed allocating millions for climate projects, including infrastructure for electric vehicles, heat pumps and solar panels.
But the Senate went further, eliminating a slew of tax breaks for the fossil fuel industry and backing a piece of legislation favored by environmentalists that would also require companies that have dumped significant amounts of fossil fuels into the atmosphere contribute to a fund to help the state adapt to climate change.
The Senate has also proposed legislation to eliminate subsidies for gas companies and limit energy bills. Ms. Hochul had included part of the proposal in her budget, but jettisoned some measures that the bill’s proponents said would keep costs down for taxpayers.
A high-speed train, free bus lines and cinema cocktails
While most of the budget language focuses on changes to New York’s existing programs, there are some newer ideas as well.
The Assembly and Senate proposed expanding New York City’s free bus pilot program to include three lines in each borough. The Senate also allocated $10 million for a “higher-speed rail” project, though few details were given on what that might be.
The Senate also rejected Ms Hochul’s proposal to make to-go drinks permanent. But instead, lawmakers proposed a change that would allow moviegoers to enjoy cocktails in theaters regardless of whether those theaters serve food.