Momentum grows for state budget deal, likely without Hochul housing plan

ALBANY — After weeks of stalemate and a fight over judicial nominations, there’s new momentum to close out a state budget package, lawmakers and officials said Thursday.

Some envision Gov. Kathy Hochul and legislative leaders reaching a deal in the next few days — possibly Sunday or at least before legislators return to the state Capitol on Monday. Legislators then could begin voting on budget bills later in the week.

And while the details haven’t been finalized, it appears suburban Democrats are poised to knock down two Hochul initiatives they opposed: a housing mandate that would allow a state override of local zoning restrictions and a hike in a payroll tax to fund mass transit.

Multiple sources said the final budget deal likely will contain no major housing initiatives — Hochul wanted a 3% growth in housing stock downstate every three years with a mechanism to override local zoning regulations if communities failed to meet the goals. It ran into strong opposition from suburban legislators across party lines.

Her administration also floated the idea of jump-starting “421-a,” a controversial program that provides incentives for building developers. But it hit a wall when some progressive lawmakers wanted to tie it to “good cause eviction,” a pro-tenant measure that makes evictions harder, multiple sources said.

Also, the governor, looking for a way to help the financially troubled Metropolitan Transportation Authority, had proposed raising the “MTA mobility tax,” for the companies in the highest payroll bracket in the downstate region. Under the most recent discussion, the tax hike would apply just to companies in New York City, not suburban counties, multiple sources said.

In addition, legislators won’t agree to raise tuition for state residents who attend State University of New York campuses, but could hike it for out-of-state students, sources said.

“Things are narrowing down. Issues are either being closed down or falling off the table,” said one lawmaker after a closed-door briefing session for rank-and-file legislators.

“They’re closing down lower-level stuff and things are moving — with the caveat that there’s still things to do,” another source said.

At issue is a state budget that’s expected to come in north of $230 billion and is going to be at least three weeks late.

Hochul, a Democrat, has been negotiating with the Democratic-dominated State Legislature on a wide range of funding priorities, but nonmonetary issues — bail and trial discovery laws, affordable housing and eviction laws — have taken up most of the energy.

Also impacting Albany matters, Hochul suffered an unprecedented defeat for a governor when the Senate voted down her original nominee to become New York’s new chief judge for, in its view, being too conservative. Hochul rebounded to nominate Rowan D. Wilson, a leading liberal jurist, who was speedily approved on Tuesday.

With that fight settled, momentum has picked up to close a budget deal, officials said — although some long bottled-up frustration is now bubbling out.

Earlier Thursday, the Senate and Assembly took care of necessary business — approving an emergency spending measure to keep state operations going through Monday.

While passing the stopgap bill, Democrats began expressing frustration that hadn’t been out in the open previously.

“I think we’re all getting tired of this,” Senate Finance Committee chairwoman Liz Krueger (D-Manhattan) said during debate over the spending bill.

When Republicans pressed Krueger about the wisdom of a such a short budget-extension bill, the senator pointed at Hochul, saying: “I would urge my colleagues to point to the only person in the state who controls that, the governor.”

It was just a glancing blow, but the kind lawmakers have been avoiding for most of the year.

Hochul is poised to get part of what she wanted on bail: Legislators will agree to essentially give judges a freer hand to impose bail on some defendants. But they will limit it to cases involving violent felonies, not going as far as the governor wanted. Lawmakers had reached a general agreement on the issue about a week ago, allowing talks to move on to housing.

On another high-profile issue, the governor, Senate and Assembly all have been pushing for a minimum-wage increase. Hochul wanted to tie an increase to inflation; the houses wanted a significant bump in the rate first, then hook it to an index. Sources said talks now center on a smaller increase, then indexing.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy