Alliance Alert: New York Governor Kathy Hochul is set to announce her state budget proposal this afternoon. Reports suggest the budget will be close to $252 Billion dollars, with most of the funding increases due to additional spending on schools and healthcare services. While details of the budget are still emerging, we expect to see a little over $35 billion for the state Medicaid program which pays for healthcare services for nearly 7 million New Yorkers.
The Alliance will be watching for funding proposals addressing the mental health system and will keep you informed as we learn more about the budget proposal. Keep an eye out for breaking news on the budget later today and throughout the week as more details emerge. Stay connected to learn ways you can join our advocacy, including by attending our upcoming legislative day on March 4th! See below for more information.
Gov. Kathy Hochul to Propose $252 Billion State Budget
By Bernadette Hogan | Spectrum News 1 | January 21, 2025
Gov. Kathy Hochul is expected to announce Tuesday a budget that increases state spending by nearly $10 billion, offers tax cuts and backs a slate of affordability measures.
The fiscal year 2026-2027 state budget proposal is projected to grow 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 $239 billion enacted budget, which then increased to $243 billion in New York’s mid-year report, according to New York State budget Director Blake Washington.
“The budget is increasing largely based on current spending in Medicaid and in school aid. These commitments comprise probably 60% of the increase alone,” he said.
What You Need To Know
- Gov. Kathy Hochul wants to increase state spending by nearly $10 billion next year
- Her proposal includes tax cuts, childcare credit, an “inflation refund” check and free meals for public schoolers
- One expert notes new taxes will have to be on the table to help fund the MTA
- Hochul and lawmakers will need to negotiate a before deal before the annual April 1 budget deadline
But Washington admitted the governor still doesn’t know how she’ll fill an estimated $33 billion hole in the MTA’s capital plan.
“The governor, the MTA and the legislature will have to figure out the size of the plan,” he said.
He said new taxes will have to be on the table. Hochul and lawmakers will need to negotiate a deal before the April 1 budget deadline.
“Once we know exactly what we are gaming for, [Hochul and the legislature will discuss] fees and taxes because it’s to support the lifeblood of the city economy,” Washington said.
Last June, lawmakers rejected an eleventh-hour deal presented by Hochul to approve another payroll mobility tax on businesses she said would help plug a hole in the MTA’s current capital plan after she paused the congestion pricing toll.
Fiscal watchdogs have cautioned Hochul and past governors about overspending instead of saving tax revenue in the state’s rainy-day fund, arguing future spending on programs could be jeopardized.
Although no new income taxes are on the table, Hochul plans on extending the current tax rate for those making a million dollars or more. Some in the legislature back an increase in the so-called “millionaire’s tax” — already the highest combined state and local tax rate in the country.
Washington said he has an eye on the new White House and how it could change spending projects.
“The federal government has to do a lot more for transit,” he said.
“We’re watching the real time executive orders coming out of Washington,” he said, adding that New York cannot sustain certain social services programs like the Supplemental Nutrition Assistance Program if federal aid is decreased.
Hochul is also slated to announce Tuesday a cell phone ban in public schools.
Schools statewide will be required to submit a plan detailing how they’ll comply. Washington said the state is budgeting $13.5 million to reimburse schools for costs associated with implementation.
The state won’t add any new funding to New York City’s migrant budget, despite Mayor Eric Adams’ request for additional dollars. The state already allocated $4.3 billion for housing, food and other programs, but City Hall has only spent a fraction of the amount.
Hochul’s plan also includes:
- 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
“We have $5 billion being returned back to the people. How can we get resources back to the people feeling inflationary pressures?” he said, describing the proposal.
Hochul will also split the cost of NYPD overtime with New York City as part of a new program requiring two cops on each of the 150 trains that traverse the city between of 9 p.m. and 5 a.m.
That program started Monday and is on track to end in June, with the possibility of an extension at the governor’s discretion. The plan is slated to cost $154 million.
The overall budget package also includes money for City Hall’s signature “City of Yes” housing plan, spreading out Hochul’s $1 billion over the next several years.
Meanwhile, the state will increase its overall spending on schools and Medicaid, despite threatening to cut both programs last year.
Total school aid is projected to increase to $37.4 billion, representing a $1.5 billion boost, according to Washington.
With one in three New Yorkers relying on the state’s Medicaid program, total state spending will increase to $35.4 billion.
“Nobody wants to cut school aid, nobody wants to cut Medicaid. But you still have to try and live between your means,” Washington said.
“Medicaid has high utilization and high enrollment. Post-pandemic enrollment is high and managed long-term care enrollment is growing at a pretty fast clip as well,” he said.
Hochul is slated to give her budget address at 1 p.m. Tuesday in the State Capitol Building in Albany.
Gov. Kathy Hochul to propose $252 billion state budget
Hochul to propose new investments in hospitals and nursing homes with billions from new tax
By Katelyn Cordero and Maya Kaufman | Politico | January 21, 2025
ALBANY, New York — Medicaid spending is expected to increase by 7 percent in the upcoming fiscal year, propelled by a multi-billion-dollar windfall from a recently approved tax on managed care organizations, according to state budget officials.
Gov. Kathy Hochul’s administration expects the new MCO tax will generate $3.7 billion over the next two fiscal years but plans to spend the money over the course of three years.
The Democratic governor wants to use the initial proceeds for higher Medicaid rates for hospitals that meet new maternal health quality metrics and for across-the-board increases for outpatient services, building on a set of broad but one-time hikes in last year’s budget.
The executive budget pairs those investments with $300 million in new funding for the Safety Net Transformation Program. Gov. Hochul launched the program last year to support partnerships between struggling safety-net hospitals and other health care organizations.
“These are the smart investments that will help us to not have to invest so heavily in some of these one-shots into these hospitals,” Hochul’s Budget Director Blake Washington told POLITICO. “These are paths to sustainability.”
Nursing homes, meanwhile, could see $200 million more from Medicaid.
Across all agencies and funding sources, the Hochul administration plans to spend $123.8 billion on Medicaid in the 2025-2026 fiscal year, budget officials said. Washington attributed the spending growth to the program’s enrollment of nearly 7 million New Yorkers, about 900,000 more than the state had before Covid hit.
“We have high enrollment, and we have a lot of need in the state of New York,” Washington said.
Two of SUNY’s teaching hospitals, SUNY Upstate and SUNY Downstate, would get dedicated funding streams under Hochul’s proposal as well.
This year’s executive budget includes $450 million in capital for SUNY Downstate to implement yet-to-be-released recommendations by an advisory board, which was established in last year’s budget. In the meantime, the medical center will be kept afloat with an additional $100 million in operating aid under a compromise struck last year between Hochul and the Legislature.
SUNY Upstate, which is in Syracuse, is slated to receive $200 million in new funding.
The executive budget also proposes two pots of funding to bolster abortion access across the state: a $20 million fund to cover the costs of abortion medication outside the Medicaid program and a $5 million capital fund for abortion clinics’ infrastructure needs. In her State of the State, Hochul proposed several policy changes to protect abortion providers and patients, such as a requirement that providers’ names not be included on prescription labels, as POLITICO previously reported. She also plans to codify abortion as “protected emergency medical care” under New York state law, which would require hospitals to provide abortions when medically necessary.
The governor is not expected to make any further changes to Medicaid’s popular Consumer-Directed Personal Assistance Program, or CDPAP, which is undergoing a contentious consolidation by the private financial services company, PPL.
Washington said the contract with PPL has been finalized, and the program is expected to meet its legally required transition deadline of April 1.