With both the state Assembly and Senate voting to pass their one house budgets Thursday afternoon, things head into the next stage of the process: negotiations with Gov. Kathy Hochul.
Last year, disagreements over housing and changes to bail reform held up the process for over a month with an agreement not coming until May.
Despite significant common ground, in both one-house budgets, you’ll find areas where lawmakers are looking to restore cuts in areas where the governor hopes to reign in spending, or the Legislature even breaking new ground that the governor didn’t cover.
Key differences include how to address the housing crisis, how to handle retail theft, and how to address an outdated school foundation aid formula.
That extra money has to come from somewhere, and Blair Horner, executive director of Good Government Group NYPIRG, says that just might be where things start to get heated.
“I think the big stumbling block right out of the box is can they agree on revenue,” he said. “It’s going to be the available revenues because a lot of the changes both houses make in their one-house budgets are significant revenue raisers that they include that the governor doesn’t have.”
Those revenue raisers include $2.2 billion in new taxes on the state’s corporations as well as the state’s very highest earners.
The governor has called raising income taxes a “non starter” while the Assembly and Senate have emphasized that they feel the hikes are relatively minor and targeted at the Empire State’s top most earners.
“We’re talking about 1% of the 1%,” state Senate Finance Committee Chair Liz Krueger told reporters earlier this week.
That is in addition to a clash over reigning in Medicaid spending, or changing the program to net $4 billion more in revenue from the federal government, and from taxing insurers.
Shontell Smith is a partner and head of New York Practice at Tusk Strategies.
She was in the room for multiple rounds of budget negotiations as former chief of staff to state Senate Majority Leader Andrea Stewart-Cousins.
She told Spectrum News 1 that despite the state facing a very real affordability crisis, that tax increase making it through negotiations is unlikely to happen without a significant turn of events.
“The state financially is not in a dire situation where they need to raise taxes,” she said. “There is additional spending that was found last week so therefore they don’t have to raise taxes, so I don’t believe they are going to.”
As for how the two leaders and the governor would arrive at that point, Smith said there will be multiple tiers of discussions over the next few weeks ranging from those three individuals hashing out their top priorities down to staffers discussing the finer details.
“Your head counsel and your head finance person saying ‘look, we can’t do this unless we get that.’ Then the governor’s staff saying ‘yes we can do that.’ or 'no we can’t,' and really trying to come to some type of agreement if you can,” she said. “Sometimes you can’t. If you can’t it gets kicked back up to leadership and leadership fights it out.”
Horner emphasizes that even though there is no glaring factor that is widely expected to hold up the budget as late as last year, that doesn’t mean we’ll see a deal when the calendar flips to April 1.
Without the governor budging on those revenue raisers, he stresses that something will have to give in terms of what the Legislature is hoping to accomplish.
“Agreements still have to be made and because the budget is so big the horse trading is what slows down the parade,” he said. “No one wants to give up on their pet project or issue area until they find out what the final deal is going to look like.”
An election year is a factor that is widely expected to make the process speedier than 2023, while Easter falling just a day before the budget deadline and lawmakers unlikely to stick around Albany could drag things out.
If the budget is sufficiently late, the Legislature could be forced to pursue stop-gap measures to ensure state employees and contractors can be paid.