First Take on Governor Hochul’s $233 Billion FY 2025 Budget

January 16, 2024

Reinvent Albany Priorities in Gov. Hochul’s FY 2025 Executive Budget
(Our first take based on the Governor’s Budget Briefing Book, not informed by detailed budget legislation.)

Thumbs Up

  • $100 million for public campaign finance small donor matching funds.
  • $158.4 million funding for State Board of Elections.
  • Increased toll enforcement and fraud deterrence (particularly important as congestion pricing is turned on in 2024).

OK

  • Limited expansions of NYC home rule:
    • 4-year extension of mayoral control of schools (better NYC decides, not state).
    • NYC can lower some speed limits (“Sammy’s Law” – better NYC determines, not state).
  • NYS needs a much bigger effort to improve digital services and technology – the state should eliminate all but a few paper forms, and the public should be able to use smartphones to access all services. 
  • NYS needs to vastly boost support for local government efficiency and reorganization.

No Way 

  • $1 billion ($500 million new) taxpayer subsidies for computer chip makers (EUV Lithography).
  • $400 million New York Works slush fund.
  • Historically, we have been extremely skeptical of 421-a tax abatements of NYC property taxes for affordable housing and will need to see the budget bills to know how cost-effective/“efficient” the Governor’s proposal is. We are generally opposed to the state government abating NYC property taxes, which we see as an intrusion on home rule. 

Irksome and Misleading

  • The executive budget vastly understates the total size of state borrowing and spending because it does not include state authorities. NYS authorities spend about $50 billion a year and borrow 95% of all debt by state government entities (think MTA, Thruway, Dormitory Authority, et cetera).
  • Revenue projections do not show the cost of billions in state tax expenditures. For instance, the film/TV tax credit alone will cost the state at least $700 million in FY 2025, which because of accounting gimmickry, is subtracted from revenue but not listed as an appropriation.

The Numbers in Brief

This is a conservative budget that increases overall state spending by 0.5%, less than the 2.4% average rate of inflation, while increasing spending by state taxpayers by about 4.5%. State sources will pay more because the budget assumes federal operating support will decline by about $4.7 billion (-5.3%). The Governor says her budget goals are to fund Medicaid and K-12 education, help NYC with the migrant crisis, all while not raising taxes, keeping borrowing low, and establishing a large cash reserve pegged at around $20 billion or 15% of state operating funds. 

Budget Transparency and Process

The Governor and Legislature should also take steps to increase transparency and follow a regular, accountable budget process, like holding the quick-start meetings last November. This should include publishing basic financial plan tables with one-house and enacted budgets, drastically limiting the use of lump sum appropriations, avoiding use of messages of necessity, and ensuring that appropriations do not exempt pre-audit review by the Comptroller.