Gov. Kathy Hochul will unveil her most costly budget proposal ever Tuesday, with the $252 billion plan set to continue jacking up spending in order to fund new handouts.
Hochul’s executive proposal is $19 billion, or 8.3%, larger than last year’s proposal and $36 billion, or 16% higher, than her first plan in 2022. The 2024-25 state budget is expected to cost $240 billion as of the end of the third quarter of last year.
New handouts and tax cuts paired with continued boosts in school aid and Medicaid are driving the ballooning budget.
“The big two would be Medicaid and school aid, as ever,” said Blake Washington, Hochul’s budget director.
“Across the programs we have modest increases in a lot of other state agencies,” Washington told The Post. “Higher education has a good increase this year.”
As expected, Hochul did not include a proposal to fill the $33 billion revenue gap in the MTA’s proposed $68 billion five-year capital plan. While Washington and legislative leaders have admitted those talks will almost certainly involve new taxes or fees, Hochul’s budget does not include any proposals to fill the gap.
While the state’s budget must be balanced before it’s enacted, governors have regularly presided over structural deficits pushed off to future fiscal years. Hochul is carrying a $27.3 billion out-year gap through the three upcoming fiscal years — up from the combined $14.3 billion combined out-year deficit she had coming into this fiscal cycle.
Hochul’s widely- touted “affordability” measures such as a middle class tax cut and child tax credit will be phased in over two years, according to the proposal.
Families with kids under four would receive a $1,000 credit per child for 2025 and a $500 credit for kids ages 4-16 in 2026. The expanded credits are expected to cost $800 million over two fiscal years.
Hochul’s middle class tax cut would go into effect for single filers making under $215,400 and married filers making under $323,200. The tax rate will be cut .1% for 2025 and grow to a .2% cut in 2026.
The budget includes a $3 billion proposal to send $300 checks to single New Yorkers making under $150,000 and $500 to families making under $300,000.
The spending plan also includes new details on a policy to restrict kids’ phone usage in schools.
Each school district in the state would have to adopt a “bell-to-bell no-phone-use policy” to keep kids off their devices during the school day. This would include exemptions for students with medical needs like insulin monitoring.
Washington said the state is setting aside $13 million to help schools implement the bans, but the proposal is designed to defer the details onto individual districts.
“Whatever it is, we want to make sure that districts are engaging their parents, engaging the students and coming up with something that everybody can live with,” Washington said.
New York’s powerful teachers unions are on Hochul’s side pushing for the cell phone ban after a clash over the governor’s plan to overhaul the state’s school-funding formula to end a provision called “save harmless,” which keeps shrinking schools from losing state funds.
Axing “save harmless” would’ve meant funding reductions for almost half of the state’s schools, but Hochul gave up on the overhaul in last year’s budget negotiations, instead contracting a $1 million study by the Rockefeller Institute on suggested changes to the formula. The governor reversed her position on “save harmless” a day after the report was released.
The governor is still calling for less dramatic changes to the school-aid formula, including using updated census figures to estimate poverty levels as well as economically disadvantaged community data instead of numbers of students who qualified for free and reduced-price lunch.
Those changes however will not lead to savings on the school aid budget, one of the largest portions of the spending plan. School aid will increase $1.7 billion to $37.4 billion under the plan.
The governor also wants to ween New York City off of spending to support migrant arrivals, with no additional spending proposed on top of the $4.3 billion the state has already put towards the crisis.
Only about a third of the state cash allocated toward migrants – $1.4 billion – has been spent as of December, according to the state comptroller’s office. New York City is lagging months behind in submitting reimbursements to the state. Migrant arrivals have slowed to around 700 per week with 108,600 total under city supervision, according to its latest figures.
Last year, Hochul budgeted for $500 million in spending on the migrant situation using reserve funds, but Tuesday’s proposal also includes a $1 billion transfer into the state’s Rainy Day “lockbox” for reserve funds.
The budget is not expected to include funding to support a “surge” of NYPD cops into the subway system like Hochul had said last week. Her office quickly walked back public comments she had made announcing the plan to make clear that the $154 million in NYPD overtime is going to come from this year’s budget and be split 50/50 between the state and the city.
Hochul’s proposal will be followed up by counter proposals from each house of the state legislature later this spring. The statutory deadline for the governor and legislature to come up with a final plan is April 1, though Albany regularly blows past that date.
