Potential Federal Aid Cuts Not Factored into NYS Proposed Budget
In response to Governor Hochul’s $252 billion spending plan, the New York State Senate and Assembly released their one-house budgets, reportedly agreeing with several of Hochul’s key proposals. However, according to finance watchdog the Citizens Budget Commission (CBC) none of the proposals take into account potential federal funding cuts should they materialize, and nor do they propose a plan to “fund critical state of good repair investments in the MTA 2025-2029 Capital program.” Both state houses agree with the Governor’s proposal to cut taxes for people earning up to $323,200 but diverge on higher income tax rates for people in the higher income brackets. In contrast to the Senate’s proposal to permanently raise income taxes for people making above $5 million, the Assembly wants a five-year extension, while the governor has similarly called for an extension, her proposal of the 0.08% tax increase would affect filers earning over $2.2 million. House officials also call for expanding various tax credits for working families, including a “one-time $300 ‘inflation refund’ check having a worth of $3 billion, as well as extending both the state’s film tax credit to 2036 and the pandemic-era tax credit for Broadway shows by two years through 2027 – the latter of which would see an expanded outlay to $400 million. Governor Hochul’s proposed budget increases the current year’s budget by $9 billion, while the one-house budgets proposed by the Senate and Assembly clock in even higher at $259 billion and $264 billion respectively. According to CBC President Andrew Rein, Hochul’s plan already has an $18.2 billion structural gap, and the proposed spending plans by the state houses will add “roughly $4 billion in recurring spending on top of the governor’s proposal,” “bringing year-over-year adjusted State Operating Funds growth to a whopping 13.7% — more than 4 times the rate of inflation.” It has been reiterated by the CBC that both the state and the city “should hold the line on spending,” and “rainy day reserves should be saved to weather recession and time-limited emergencies, not depleted to temporarily plug recurring federal reductions.”