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New York Senate and Assembly budgets reveal divides with Hochul on spending priorities

New York Senate Leader Andrea Stewart-Cousins speaks to the media on March 12, 2024. At left is Senate Finance Committee Chair Liz Krueger, and at right is Senate Deputy Leader Michael Gianaris.
Karen DeWitt
/
New York Public News Network
New York Senate Leader Andrea Stewart-Cousins speaks to the media on March 12, 2024. At left is Senate Finance Committee Chair Liz Krueger, and at right is Senate Deputy Leader Michael Gianaris.

Democrats in the New York State Legislature released counterproposals to Governor Kathy Hochul’s budget that include restoring reductions to school aid, an ambitious affordable housing program, and raising taxes on the rich.

The Assembly and Senate budgets would add $1.2 billion to schools and end Hochul’s plan to make changes in the way school aid is distributed.

Hochul wants to eliminate what’s known as “hold harmless,” a provision that says no school district can receive less money than it did the previous year. That would result in around half of the state’s school districts receiving less money than they did last year.

Senate Leader Andrea Stewart-Cousins said at a news conference Tuesday that she agrees with Hochul that the method for distributing school funds, known as foundation aid, needs to be updated. But she said simply changing one part of the formula, like ending “hold harmless,” doesn’t make sense and is unfair to the schools. 

“Things need to be updated,” Stewart-Cousins said. “And when you just take one piece of an outdated formula, and not the whole piece, you don't always get the results that you want.”

The Senate and the Assembly want to fund a $1 million study that the state Education Department would conduct. The goal would be to identify ways to update the formula, which partly relies on data from the year 2000, and was last revised in 2007.

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Both houses are also proposing an affordable housing plan. Part of it would model a new initiative on the mid-20th-century Mitchell-Lama program, which gave developers long-term tax breaks and low mortgage rates to build affordable housing on abandoned properties. 

The plan also would renew a tax break for developers who include affordable housing in their projects and include a goal of stronger tenant protections.

The Senate and Assembly also want to raise taxes on individual New Yorkers and businesses whose annual income is more than $5 million. An additional tax surcharge would be levied on those earning more than $25 million a year.

Senate Finance Committee Chair Liz Krueger said the increases would give New York an additional $1.1 billion in tax revenue.

“It's a very small number of New Yorkers,” Krueger said. “And frankly, the amount of tax difference for them, when they hold it up on their overall income, and their tax base, will not be significant for any of them, either. Because we are talking about the 1% of the 1%.”

Gov. Kathy Hochul speaks to reporters at the State Capitol on March 12, 2024.
Karen DeWitt
/
New York Public News Network
Gov. Kathy Hochul speaks to reporters at the State Capitol on March 12, 2024.

Overall, the two budgets increase spending over the governor’s original proposal. But Hochul’s budget director agrees with lawmakers that a higher-than-anticipated rise in tax collections will bring an additional $1.3 billion into the state this year.

Hochul pushed back on some of the Legislature’s plans. She defended her cuts to schools, saying they follow two years of record spending on districts, and that enrollment is dropping. She also panned the Legislature’s idea for a commission to re-examine how school aid is distributed.

“That is how you would define kicking the can down the road,” Hochul said.

She said she’s open to the ideas on housing. But Hochul said she hadn’t heard of the initiative that lawmakers are calling Mitchell-Lama 2.0 until Monday evening. She said she’s willing to study it, noting that the state “desperately” needs more housing.

“Walking away from this session without doing something on building more housing would not be acceptable to me,” Hochul said.

The governor called the proposal to raise taxes on the wealthy a “nonstarter.”

Hochul said she believes the budget can be finished — mostly — before the Easter holidays begin on March 29. She said she’s open to agreeing on an outline of the budget and then coming back after the holiday to approve the bills.

“If we can get to agreements, get this settled, even if it's a handshake before and then come back later and pass it the following week,” she said. “That's all on the table.”

But Hochul said there are no guarantees that will happen.

The budget is due April 1.

Karen DeWitt is Capitol Bureau chief for the New York Public News Network, composed of a dozen newsrooms across the state. She has covered state government and politics for the network since 1990.