New York’s FY 2026 One-House Budgets Are a Consensual Delusion

March 12, 2025
Despite Dire Warnings of Historically Damaging Federal Cuts, Legislature Keeps Billions Worth of the Governor’s Worst Ideas, Leaves Huge Gap in MTA’s 2025-2029 Capital Plan
 

Big Picture 

As we write, the Trump administration is impounding billions in National Institutes of Health (NIH) and National Science Foundation (NSF) and grants to New York research, medical and academic institutions, and people are being laid off. This is just a taster; the White House and GOP Congress have repeatedly warned of big cuts in the next federal budget. Despite this, the budgets of the Governor and Legislature assume federal aid will stay roughly constant at about $90 billion a year for the next four years. 

The gubernatorial and legislative budgets do some good things, which we note below. Unfortunately, New York’s elected leaders are not dealing with the massive problems caused by the highly likely cuts to federal funding and their failure to pay for the the $35 billion* gap in the 2025/2029 MTA capital plan. Vexingly, our top elected representatives are instead squandering billions on an irrational inflation rebate and new corporate subsidies. 

FY 2025 Budget Specifics: Things We Like and Don’t Like

Reinvent Albany has a position on more than three dozen revenue, expenditure, and policy issues that are – or we believe should be – included in the Executive budget and Senate and Assembly one-house budget bills. Broadly, the Senate and Assembly left the Governor’s FY 2026 budget mainly unchanged. Here are the Governor’s proposals with the Senate and Assembly response. 

*The MTA 2025 capital plan assumes $14 billion in federal transit aid from the Trump administration.

Thumbs Up

  • $114.5 million for public campaign finance program ($100 million for matching, $14.5 million for administration). SAME in Senate and Assembly.
  • $142.4 million funding for State Board of Elections. SAME in Senate and Assembly, with some additions.
  • $7.3 million more for the Attorney General’s office for 105 more staff (up from $488 million, inclusive of settlement funds).
  • Increased funding for the Comptroller’s office; Senate and Assembly accepted $620k more for the Deputy Comptroller for NYC; Senate increased budget to $603.7 million (Assembly funds at $598 million).
  • $400 million for Downtown Albany and State Museum. SAME in Senate and Assembly (Assembly moves Museum funding to State Education Dept.)
  • $9.3 million for the Commission on Judicial Conduct, as requested by the Commission. SAME in Senate and Assembly.
  • Transparency proposals from the Senate for the MTA, like data on contract numbers, vendors and sources of funding for its capital dashboard, and an improved benchmarking report that compares capital costs of national and internal peers, and unit costs.
  • Expanded MTA bus camera enforcement for blocking the box, SAME in Senate.
  • Cameras in courtrooms included by Senate (S462-A), along with legislation to expand the power and independence of the State Commission on Judicial Conduct (S4859).
  • Legislation to end NY’s Opportunity Zone tax break (S3340) in the Senate budget, as well as the Stop Climate Polluter Handouts Act (S3606-A).
  • Increase in child tax credit. This is smart – parents with young children are among the groups most likely to leave the state because they cannot afford living here. Both houses include a modified version of this proposal.
  • $3.8 million for the Authorities Budget Office, up from $3.7 million. SAME in Senate and Assembly. 

Insufficient

  • $8.3 million for the Commission on Ethics and Lobbying in Government (COELIG), up from $8.1 million. Unfortunately, the $250k increase is to pay for liabilities of JCOPE from the Hogan Lovells report reviewing the approval process for former Gov. Cuomo’s book deal. COELIG has requested $8.9 million and with its constitutionality now verified, it needs greater resources to fulfill its mission. SAME in Senate and Assembly. 

Fails

  • Governor Hochul failed to propose the roughly $2 billion in recurring taxes and fees needed to finance at least $35 billion* in additional funding for the MTA’s 2025-2029 capital plan. The Legislature similarly has failed to propose needed funding. This is an abdication of the state government’s responsibility to millions of downstate transit riders and puts the engine of the state economy at risk. The Governor and Legislature are playing a dangerous game of political chicken with MTA capital funding. With only weeks left before the April 1st deadline, the likelihood of backdoor shenanigans that fail to address the full needs of the MTA and its riders increases. 
    *The MTA 2025 capital plan assumes $14 billion in federal transit aid from the Trump administration.
  • Assembly rejection of MTA bus camera enforcement for blocking the box.
  • The Governor and both houses agree to spend an additional $1.8 billion on the state’s mind-bogglingly wasteful film and TV subsidy, with small, insufficient changes. This is an awful, completely politically-motivated expansion of one of the most wasteful of New York’s menagerie of billions of corporate handouts and cost taxpayers at least $75,000 per job. Their consensus: 
    • Extend the $700 million a year credit by two years to 2036
    • Create a new $100 million/year x 4 years Empire State Independent Film Production Credit (Eligibility, productions $1 million to $60 million, not publicly traded companies.) 
    • Pay full reimbursement in year requested instead of across three years
    • 10% bonus for all producers submitting three applications totaling $20 million plus.
  • $800 million in direct cash payments to big Broadway productions. The Governor has proposed expanding this tax credit to $400 million annually and extending it for two years through 2027. SAME in Assembly, Senate prohibits companies that are not publicly owned from receiving credit.
  • $3 billion in irrational “inflation reduction” payments to households making up to $300,000. This pre-election year stunt is like throwing bales of hundred dollar bills out of a jet plane and claiming it makes New York a better, more affordable place to live. SAME in Assembly, Senate limits tax credit to seniors and phases in over three years.
  • 10-year, $2 billion extension of the Excelsior program, which gives tax credits to businesses that create jobs in New York. Labor economist and national subsidy expert Tim Bartik has shown these tax credits only affect job creation 2 to 25% of the time. Assembly and Senate both limit to five years instead of ten.
  • An Excelsior sweetener for companies that are part of the semiconductor supply chain (7% jobs tax credit, 3% investment tax credit), R&D reimbursable tax credit for research investments exceeding $100 million. Senate and Assembly add different sets of conditions that must be met to receive benefits.
  • Allowing Capital OTB to use one million in capital acquisition funds for operating expenses. SAME in Senate and Assembly.
  • Extending lowered casino slot tax rates to 2028. Assembly extends to 2031, Senate adds job reporting requirements.
  • $234 million raid from the Indigent Legal Services fund to the state general fund. SAME in Assembly, Senate rejects.

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 SUNY, MTA, Thruway, Dormitory Authority, etc.)
  • Revenue projections do not show the cost of billions in state tax expenditures. For instance, the expanded film/TV tax credit alone will cost the state at least $800 million in FY 2026, which, because of accounting gimmickry, is subtracted from revenue before revenue estimates are published. 
  • No tables showing the total costs of a proposed expenditure. For example, a two-year extension of the $700 million a year film/TV subsidy is a $1.4 billion spending proposal. 

Budget Transparency and Process

The Governor and Legislature have made great progress over the last decade and it is far easier to find information on the Division of Budget website. We specifically commend the Assembly for its very helpful one-house budget summary and urge the Senate to follow the Assembly’s format.

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 (see also joint letter from watchdogs regarding emergency budget powers). Unfortunately, the Governor’s budget continues to grant universal transfer and interchange authority between agencies, and includes large “special emergency appropriation” slush funds. These measures were modified by the Assembly and Senate.

Click here or below to view the full list of budget items Reinvent Albany supports and opposes.