Hochul's budget proposal is unaffordable
Gov. Kathy Hochul presents her proposed 2026 executive budget at the State Capitol in Albany on Tuesday. Credit: Office of Governor Kathy Hochul/Mike Groll
When New York families talk about affordability, they do so within the framework of their own household budgets. It means not spending more than you have, living within your means, and being prepared when uncertainty looms.
State leaders need to brush up on the same basic lessons.
Gov. Kathy Hochul’s $252 billion executive budget is stuffed with something for everyone — inflation rebate checks, a middle-class tax cut and child tax credits, universal school meals, clean energy subsidies, and enormous and expanding pots of money for school aid and Medicaid.
Many of the governor’s broad priorities and some of her specific proposals could provide enormous benefits to some Long Island families. But at what cost to sustainable state finances?
The opening position Hochul and her budget team have adopted calls for a spending increase of 3.6% year over year, with state operating funds rising 7.9% and school funding up 4.7%. It involves spending more than $35 billion on Medicaid and more than $37 billion on school aid. Then there are additional items Hochul touts as critical to her affordability agenda: $3 billion in “inflation refund” checks, $1 billion in middle-class tax cuts, $825 million for a two-year expansion of the child tax credit, and $340 million for free breakfast and lunch for schoolchildren.
There also are hundreds of millions of dollars for such critical areas as public safety and mental health care and more for key Long Island needs, including transportation, housing infrastructure and economic development.
UNCERTAINTY AHEAD
Now add the enormous weight of uncertainty about what federal spending for New York will be under President Donald Trump, who threatens to withhold funding from states that don’t comply with his initiatives, and a Republican-controlled Congress that wants to eviscerate many programs New Yorkers rely on.
When the tower topples, it shouldn’t come as a surprise.
The numbers appear even more worrisome in a historical context. In the last decade, the state budget has grown by nearly $100 billion. And over the next three years, the state’s projected budget gaps total $23.2 billion — a troubling trend.
This budget lacks long-term planning, but even this year’s expectations are frighteningly fragile.
Right now, there appears to be no contingency plan if the federal government doesn’t come through with an anticipated $91 billion — or if other complications arise. There should be.
Perhaps, Hochul’s strategy is purposeful — a cover. If federal funding doesn’t come through, she could scapegoat Washington for the state’s shortcomings.
State officials need to look past the risks and political machinations and build a budget with structural integrity. That starts with a tighter grip on spending. The year-after-year combination of added spending, tax cuts and a host of revenue one-shots is untenable.
Yes, there are important initiatives in this budget that should be funded. Hochul rightly prioritizes incentives for housing construction and funding for infrastructure needs. And Long Island requires attention to its schools and roads.
But the state should focus more on sustainable investments and real solutions, rather than one-off Band-Aids that do little for taxpayers in the long run. Investing in child care or universal school meals might be among the good ideas that can make a difference. A $500 rebate check is not.
How many Nassau County residents remember the relief checks former County Executive Laura Curran rolled out four years ago, just before she lost reelection to current County Executive Bruce Blakeman?
PUZZLING CHOICES
Hochul’s choices this year are especially puzzling considering that the proposed state spending increases come as she calls for affordability. The first step of anyone’s affordability agenda should be spending restraint.
As always, the governor must work with the legislature, which doesn’t often put fiscal responsibility at the top of its list, especially amid one-party rule.
Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie also have to finalize the Metropolitan Transportation Authority’s capital plan. Any compromise must address the needs of the entire system, including the Long Island Rail Road.
These tasks must be the focus of attention during the next few months of budget negotiations. The upcoming debate over cellphone use in schools should not be used as a distraction. The $13.5 million allocated for that purpose is a relatively modest ask that may be needed at some point, but this is primarily a policy issue that should be dealt with later in the session. The issue is too important to be properly addressed in budget negotiations.
Now is the time for following the money.
As they negotiate, state leaders would be wise to listen to the wide variety of government observers who have expressed concerns about the size and scope of the proposed executive budget. Among them: State Comptroller Tom DiNapoli, the independent Citizens Budget Commission, the watchdog group Reinvent Albany, and the left-leaning Fiscal Policy Institute.
There is one piece of genuinely good news: Hochul wisely has built up the state’s reserves, which now amount to more than $21 billion. Those rightly are put aside for a “rainy day” — a downturn, economic crisis, or something we can’t yet foresee.
But when it comes to reining in state spending, Hochul shouldn’t wait for the rain to fall.
MEMBERS OF THE EDITORIAL BOARD are experienced journalists who offer reasoned opinions, based on facts, to encourage informed debate about the issues facing our community.