New York State leaders have agreed on the outline of a $237 billion state budget that includes a sweeping package aimed at stemming one of the worst housing shortages in the nation.
The deal, which was announced by Gov. Kathy Hochul on Monday, arrives two weeks past the April 1 budget deadline, following intense debates among Democratic lawmakers in Albany on proposed changes to Medicaid funding, education and criminal justice initiatives.
But the most divisive issue was the housing package, a top priority for Gov. Kathy Hochul after her failure last year to persuade the Legislature to pass a comprehensive plan meant to increase the supply of housing across the state.
This year, the governor, a centrist Democrat from Buffalo, once again found herself at odds with the Legislature as she — like many governors before her — sought to use the budget as a catchall device to usher in nonfiscal policy priorities like establishing a comprehensive housing strategy.
Another priority was to grant Mayor Eric Adams of New York City continued control over city schools. Legislative leaders had wanted to keep that debate separate from the budget and address it later in the session.
But the governor seemed on track to use the budget to give Mr. Adams two more years of control. The measure, which would be contingent upon the city meeting class size standards, is still being negotiated.
The budget represented an $8 billion increase from last year’s spending plan, with higher than expected tax revenues allaying initial fears of austerity measures.
Ms. Hochul credited her counterparts in the Legislature, the Senate majority leader, Andrea Stewart-Cousins, and the Assembly speaker, Carl E. Heastie, with working hard to find consensus.
“Each of us came to the table with really strongly held beliefs, but in the interest of our state, we pulled it together to deliver in a really collaborative way,” she said, throwing shade on past leaders with an aside: “And I will say you don’t always see that here.”
Even so, for another year in a row she made the announcement on a three-way deal without Ms. Stewart-Cousins and Mr. Heastie; their absence may reflect negotiations on issues still unresolved.
Even as Ms. Hochul announced the framework of a deal to reporters, spokesmen for the Assembly and Senate expressed skepticism that all details had been fully ironed out.
For a second year, Ms. Hochul beat back the Legislature’s push to raise taxes on the wealthy. But she was also stymied on several key fronts — from a proposal to reconfigure the state’s school aid formula to a push to regulate social media companies, which she said would help protect young people from addictive content.
The governor and Legislature did agree to send $2.4 billion to help New York City address its migrant crisis — $500,000 of which is drawn from state reserves. Even so, this year’s budget will call for the state to boost its reserves by more than 10 percent from when Ms. Hochul took office, earning her praise from budget watchdogs.
The budget also includes an expansion of the number of offenses that can be charged as hate crimes, which Ms. Hochul has pushed since the war erupted between Israel and Hamas. It will enhance enforcement of retail theft, adding a new unit in the State Police and increasing penalties for those who are found to have assaulted shop workers — a priority of the governor’s that met stiff opposition in the Legislature.
The budget also includes some key changes to the way that cannabis is taxed and regulated. For the first time, localities will have the authority to crack down on illegal cannabis vendors, which have proliferated since the state legalized recreational marijuana in 2019.
And where cannabis was once taxed based on its potency — a headache for industry and regulators alike — New York will now shift to a flat percentage tax.
But by far this year’s crowning achievement is the housing package — a hard-fought plan to increase housing supply and extend protections to New York’s existing tenants. And while it is not yet clear just how durable or wide-ranging those protections might be, lawmakers nonetheless are hopeful the plan will stem the tide of middle-income New Yorkers fleeing the state for places like New Jersey and Connecticut.
These trends have only been exacerbated by rising rents and an immigration crisis that has seen tens of thousands of migrants seeking refuge in New York City’s shelter system. In 2023, the number of available affordable apartments was close to zero, according to a city survey.
This new package aims to remove some of that pressure by increasing the supply with a substantial new tax break, with strong labor standards baked in, to incentivize the construction of housing with an affordability component.
The development piece would not have been possible without a deal to strengthen tenant protections statewide. Under the agreement, landlords of many market-rate units will be forced to justify rent increases beyond certain thresholds, and required to offer lease renewals in most cases — protections inspired by, but weaker than, the proposed legislation known as good cause eviction.
The deal has already drawn broad criticism from both sides of the housing debate: Tenants say the protections are not strong enough; landlords say the terms are inadequate to allow them to adequately fix crumbling housing.
Ms. Hochul failed to bring lawmakers along on a proposal to repeal a provision called “hold harmless” that ensures all schools receive as much in funding each year as they did the year before. The governor has argued that this is one of a series of provisions that leads the state to spend too much in districts with falling enrollment, even as other districts are growing.
Even so, she did win a change to the school formula that will minimize funding growth over time, and a promise from lawmakers to study the issue more broadly.
“Now’s the right time to take this on and to begin to fix the way we fund schools to make sure they’re equitable, fair, and doing the right thing,” Ms. Hochul said, adding: “We can’t continue to fund our schools based on politics.”
Reporting was contributed by Ashley Southall, Erin Nolan, Jay Root and Mihir Zaveri.
