New York Gov. Kathy Hochul, left, greets Assembly Speaker Carl...

New York Gov. Kathy Hochul, left, greets Assembly Speaker Carl Heastie, D-Bronx, before her executive state budget in the Red Room at the state Capitol Wednesday, Feb. 1, 2023, in Albany, N.Y. (AP Photo/Hans Pennink) Credit: ASSOCIATED PRESS/Hans Pennink

ALBANY — Legislative leaders have blamed Gov. Kathy Hochul for stuffing too much policy into her spending proposal as they enter their fourth and, they hope, final week of negotiations over a late budget.

Hochul, however, has insisted her important but politically controversial legislation can only be adopted as part of a budget that ties together major initiatives, and that “the right budget is more important than an on-time budget.”

“This has been the most policy-laden budget that we really ever have had,” Senate Majority Leader Andrea Stewart-Cousins said last week.

“This is the price of putting policy in a budget,” a frustrated Assembly Speaker Carl Heastie said a week before.

Legislators have said they are optimistic that a budget deal could be struck this week. They said, for example, that Hochul has relented on her affordable housing proposal, which removed a major issue that was delaying talks on the many other issues in the budget.

But the stalemate has raised some fundamental questions about the inclusion of policy in state budgets.

What policies are part of Hochul’s budget?

Many of the issues would directly impact New Yorkers. They include providing judges with more discretion to set bail for suspects accused of serious crimes, tying minimum wage increases to inflation, increasing housing affordability statewide, creating 85 new charter schools and approving the Clean Slate Act, which would eventually seal many criminal records of formerly incarcerated people.

Why do governors put policy into budgets?

Under the state constitution and related court decisions, governors have a negotiating advantage to enact policy in their spending plan, which can avoid protracted fights over issues in the normal legislative session. Once the State Legislature and governor fail to agree on a budget by the April 1 start of the fiscal year, a governor could choose to impose his or her budget, including policy issues.

The Legislature would then be in a position of either accepting the whole budget with policies, or rejecting it and risking a shutdown of state government.

Former Citizens Budget Commission researcher David Friedfel said this “outsized executive power” provides the best chance for a governor to achieve his or her key priorities. Supporters defend the practice as a way to make sure major issues can overcome political stalemates.

“Governors put policy in the budget because it's when they have the most leverage over the Legislature,” said John Kaehny of the Reinvent Albany good-government group. “New York's constitution clearly intends the budget to be for approving expenses and revenues, but in the early 1990s the high court ruled for the governor over the Legislature. Since then the budget is where governors push their top policy priorities.”

Spending plans that include policy also can provide political cover. Legislators, for example, can say they had little choice but to approve a budget even though it may contain policies that might not play well back in their districts.

But there can be a downside

Hochul and the Democratic majorities of the Senate and Assembly have some different policy priorities for the budget that aren't easily compromised as, say, simple funding proposals. They can represent different constituencies with competing interests. And that can lead to stalemate.

For example, Hochul had proposed a big housing affordability plan that sought to create 800,000 more apartments and homes in the next decade with the state having the power to override local zoning if necessary. Senate and Assembly Democrats had housing priorities centered on tenant protection and protecting local control of zoning.

Hochul's plan was supported by real estate interests and the Legislature's by tenant advocacy groups and unions. Real estate and labor are two of the strongest lobbies and campaign donors to campaigns in Albany.

“Governors shouldn't put unrelated policy in the budget, and the Legislature should be insisting as much by simply refusing to vote on that unrelated policy,” said Ken Girardin of the fiscally conservative Empire Center think tank.

“Legislative leaders have played along because a policy-laden budget opens the door to getting some of their own priorities enacted outside normal scrutiny, and lets them add spending that would otherwise be subject to the governor's veto,” he said.

“Governor Hochul is doing what's politically logical and legal, but it's inevitable the budget will be late when a governor pushes for big things the Legislature doesn't like,” Kaehny said.

Can policy be removed from the budget process?

It would be difficult because almost all policies can be argued to have at least some fiscal impact and the practice has become ingrained in Albany. The Empire Center noted that former Gov. Andrew M. Cuomo put almost his entire agenda into the budget talks by the time he left office in 2021.

“It’s fairly easy to make a case that most things do have some fiscal impact, and therefore that they deserve inclusion in the budget, even if 99.9% of its substance is nonfiscal,” said Patrick Orecki of the independent Citizens Budget Commission.

"It's absolutely important that anything with a fiscal impact be accounted for in the budget process and enacted financial plan,Orecki said “It presents a major fiscal risk to the state to pass new costs outside of the budget process.”

Are there other ways to adopt budgets on time?

Albany's political history is littered with attempts to change budgeting. One reform promised to move the budget process into the 21st century by giving rank-and-file legislators more power "with a strong emphasis on mutual respect" to create a "more transparent, more easily understood budget process." Little of that 2007 agreement survived the first budget fight.

Other proposals remain shelved, including moving the fiscal year to July 1, like most states, to give more time to craft a budget after the state can better see its income tax revenues for the year. 

Despite the pledges of candidates, no major changes have stuck in how a budget is crafted or negotiated by the governor, said Blair Horner of the New York Public Interest Research Group. 

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