Governor Kathy Hochul delivered her inaugural State Budget address this morning. Presented in a brisk 16 minutes, the $216 billion state budget proposal is starkly different from the 2021-2022 budget. Last year, New York was facing a multi-billion-dollar deficit. Now, the state has a surplus of nearly $13 billion, thanks to federal COVID-19 recovery funds, increased income taxes on high-earners, and better-than-anticipated sales tax collection. 

The budget address included many of the proposals discussed in the Governor’s State of the State briefing book (see our prior LEGALcurrents about the State of the State Address here). The Governor laid out nine main topics of focus in the budget: responding to COVID-19, increasing funding for healthcare, increasing education and childcare funding, middle-class and small-business tax relief, economic growth, investing in infrastructure, addressing climate change, strengthening public safety, and making housing more affordable. 

The following is a high-level summary of some of the proposals discussed:

Tax Relief

The Governor proposed a host of tax incentives for New Yorkers and New York small businesses. Notably, there are no proposed tax or fee increases. The Governor will accelerate the $1.2 billion middle-class tax cut so that it begins in the 2023 tax year, rather than the 2025 tax year. This will impact approximately 6 million New Yorkers. Additionally, Governor Hochul proposed a $250 million COVID-19 capital investment tax credit to help small businesses cover COVID-19-related capital expenses. Finally, the Governor is proposing a $2.2 billion middle-class property tax rebate for 2.5 million New Yorkers.

Healthcare

The Governor is proposing a $10 billion, multi-year investment in healthcare. $2 billion will go to increasing healthcare worker wages, $1.2 billion to support healthcare worker bonuses for those making less than $100,000, and $500 million to increase wages for human services workers. Additionally, $2.4 billion will be invested in healthcare capital infrastructure and improved lab capacity. These measures are meant to accomplish the Governor’s goal of increasing New York’s healthcare workforce by 20% over the next five years. 

Pandemic Recovery Initiatives

The Governor is proposing a $2 billion investment in creating pandemic recovery initiatives. The Governor pledged to collaborate with the Legislature on the best way to spend these funds, which may include replenishing New York’s rental assistance program. 

Education

The budget proposes a record investment of $31.3 billion in education funding, a 7.1% increase from 2021-2022. This includes a $1.6 billion increase in Foundation Aid, a $100 million investment in high-need school districts to address the mental health impacts of the COVID-19 pandemic, and continuing funding for pre-K programs throughout the state. Regarding higher education, the budget proposes expanding part-time student access to the tuition assistance program, including making the program available to incarcerated individuals, in order to promote workforce training for high-demand fields.

Infrastructure

In her State of the State address, the Governor proposed numerous infrastructure improvements throughout New York. The 2022-2023 budget proposes a $32.8 billion Capital Plan, which is the largest-ever investment in New York infrastructure. These funds, coupled with Federal funding, would be used to replace I-81 in Syracuse, reconnect neighborhoods across the Kensington Expressway in Buffalo, and cap the Cross-Bronx Expressway. Further, the Capital Plan includes a proposed $1 billion to pave potholes and $1 billion in combined public and private investments to expand broadband access.

Overall

The 2022-2023 spending plan is comprehensive and does not seem to include significant non-budget policy issues that have traditionally been included in past budgets. Looking to the future, the Governor is hoping to increase the state’s reserves to 15% of the state’s operating budget by FY 2025 so that the state is better prepared for the next crisis. The Assembly and Senate will spend the next few weeks holding budget hearings regarding the Governor’s budget proposals. After the conclusion of the budget hearings, the Assembly and Senate will begin the process of putting together their one-house budget proposals, which outline each respective house’s budget priorities. These one-house budget bills will be released in early March. Once those are released, the joint budget committees will convene, and negotiations will begin between the Assembly, Senate, and Governor with the goal of completing the negotiations by April 1.

We expect that the budget language will be released soon. If you have additional questions about this update, please reach out to a member of our Government Affairs practice group for assistance:

Amy J. Kellogg
John M. Jennings
Caitlin A. Anderson


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