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Gov. Kathy Hochul to propose $252 billion state budget

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Gov. Kathy Hochul to propose 2 billion state budget

New York – Gov. Kathy Hochul is scheduled to announce Tuesday a budget that increases state spending by about $10 billion, offers tax savings and backs a program of affordability initiatives.

The fiscal year 2026-2027 state budget proposal is estimated to climb to $252 billion in combined state and federal funding if approved by Hochul and the state Legislature.

It’s an increase from last year’s approved budget of $239 billion, which then grew to $243 billion in New York’s mid-year report, according to New York State budget Director Blake Washington.

The budget’s growth is mostly due to the amount currently spent on education aid and Medicaid.
He stated that these pledges likely account for 60% of the increase on their own.

However, Washington acknowledged that the governor is still unsure of how to close an estimated $33 billion gap in the MTA’s capital plan.

“The size of the plan will need to be determined by the governor, the MTA, and the legislature,” he stated.

According to him, new taxes must be considered. A settlement between Hochul and parliamentarians must be reached before the budget deadline on April 1.

Washington stated, “[Hochul and the legislature will discuss] fees and taxes once we know exactly what we are gaming for because it’s to support the lifeblood of the city economy.”

After Hochul stopped the congestion pricing toll in June, lawmakers rejected an eleventh-hour agreement she made to pass another payroll mobility tax on employers, which she claimed would assist close a gap in the MTA’s current capital plan.

Fiscal watchdogs have warned Hochul and previous governors that excessive expenditure could imperil future program spending rather than preserving tax income in the state’s rainy-day fund.

Hochul intends to raise the current tax rate for individuals earning one million dollars or more, even if no new income taxes are being considered. Since the “millionaire’s tax” is currently the highest combined state and municipal tax rate in the nation, some lawmakers support raising it.
Washington stated that he is keeping an eye on how the next White House may alter expenditure plans.

“Much more needs to be done by the federal government for transit,” he stated.

He added that if federal funding is curtailed, New York won’t be able to continue several social welfare programs, such as the Supplemental Nutrition Assistance Program. “We’re watching the real-time executive orders coming out of Washington,” he said.

Hochul is also expected to declare a ban on cell phones in public schools on Tuesday.
All of the state’s schools will have to present a plan outlining their compliance. According to Washington, the state has set aside $13.5 million to cover implementation-related expenses for schools.

Mayor Eric Adams has asked for more money for New York City’s migrant budget, but the state has refused to provide it. City Hall has only spent a small portion of the $4.3 billion the state has already set aside for housing, food, and other initiatives.

Hochul’s strategy also consists of:

• Middle class tax cut for joint filers making $323,000 or less

• Childcare tax credit capped at $1,000

• A one-time “inflation refund” check: $300 for New Yorkers making $150,000 annually and $500 for joint filers making up to $300,000

• Free breakfast and lunch for public schoolers

Five billion dollars are being given back to the people. He explained the plan by asking, “How can we get resources back to the people feeling inflationary pressures?”

In addition, Hochul and New York City will share the cost of NYPD overtime under a new program that calls for two police officers on each of the 150 trains that run through the city between 9 p.m. and 5 a.m.

The program began on Monday and is scheduled to conclude in June, though the governor may decide to extend it. The estimated cost of the scheme is $154 million.

Hochul’s $1 billion will be spread out over the following few years as part of the overall budget package, which also includes funding for City Hall’s signature “City of Yes” housing plan.

Despite proposing to reduce Medicaid and schools last year, the state will now raise its overall spending on both programs.

Washington predicts that total education aid will rise to $37.4 billion, an increase of $1.5 billion.
State spending will rise to $35.4 billion, with one in three New Yorkers dependent on the state’s Medicaid program.

“No one wants Medicaid or school aid to be reduced. However, you still need to make an effort to live within your means,” Washington stated.

“Medicaid enrollment and utilization are high. Enrollment in managed long-term care is expanding at a fairly rapid pace, and post-pandemic enrollment is strong,” he noted.

Hochul will deliver her budget speech Tuesday at 1 p.m. in Albany’s State Capitol Building.

 

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