Hochul and lawmakers on verge of $235B budget deal

Budget deal expected to include a sweeping housing plan.

ALBANY, New York — New York lawmakers and Gov. Kathy Hochul were closing in on a $235 billion budget agreement late Friday that includes a sweeping housing package, provisions to crackdown retail theft and boosts funding to address the ongoing migrant crisis.

The budget deal is coming together nearly two weeks past its April 1 deadline as lawmakers and Hochul faced a contentious negotiation over the housing plan as well as changes to how schools are funded.

The budget is also expected to include provisions meant to tackle illegal cannabis businesses in the state by allowing municipal governments broader latitude to address the problem. Another measure would be a victory for unions: an improved pension for newer government workers.

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Hochul had insisted the negotiations were proceeding well even without a deal in place by the start of the state’s fiscal year. A budget could be voted in the coming days as the sides look to get it finalized before a two week break starting April 22.

State lawmakers were going over the finer points of the budget framework on Friday evening in Albany behind closed doors.

“There’s a lot of agreement on issues for where we need to take the state — including cannabis enforcement and making sure we do what’s right in fighting retail theft,” Hochul told reporters earlier this month. “Public safety is a top priority.”

The plan is not expected to include any broad-based tax increases; Hochul had resisted calls by left-leaning Democrats to raise the state’s personal income tax rate for people who earn more than $5 million.

The final budget agreement is poised to be $2 billion more than what Hochul initially proposed in January.

Still, the agreements contained in the spending plan could be significant for Hochul, who had tried for the last two budget years to win a politically fraught housing deal while also addressing persistent voter concerns over public safety — two issues voters have cited as key concerns in public polling.

The budget is anticipated to also include $2.4 billion to address the migrant crisis in New York, a $500 million increase from the last 12 months. The money would go to funding for housing, legal services and job placement support as New York City has grappled with more than 180,000 new arrivals over the past two years, straining programs and services.

Lawmakers were eyeing a tentative housing plan that would limit rent hikes on market-rate apartments and provide a tax break meant to encourage more affordable home building, three people familiar with the negotiations said on the condition of anonymity ahead of an official announcement.

The governor and lawmakers have also agreed to a framework of policies to combat retail theft, including more money for State Police to tackle the problem, a tax break for retail businesses to boost security features and a provision to curtail assaults against retail workers by increasing penalties.

The sides were also planning to aggregate retail theft crimes in a bid to enhance penalties, two people said.

And New York is also expected to expand the number of violent criminal offenses that could be charged as hate crimes, including gang assault and first-degree rape. As many as 25 hate crimes charges could be added, according to people familiar with the negotiations.

As for school funding, it appears lawmakers may be successful in promises to stave off Hochul’s proposal to eliminate “hold harmless” — a policy that prevents districts from receiving cuts to school aid.

But officials familiar with negotiations said an agreement may include a change to the inflationary factor in the foundation aid formula that would limit districts’ aid increases going forward.

The foundation aid formula, which is used to divvy up school base aid from the state, hasn’t been updated since it was put in place in 2007. While Hochul and lawmakers agree it needs to be revisited, what that process will look like is still to be decided.

The budget deal is expected to leave out a decision on mayoral control for New York City public schools, according to Senate Majority Leader Andrea Stewart-Cousins, pushing it off as an after-budget issue for the remainder of the session, which runs through early June.

Lawmakers have until June 30 to decide whether they will extend mayoral control or create a new governing system for city schools. Hochul included a four-year extension in her executive budget, but that was omitted last month from Senate and Assembly one-house bills.

The sides were also working on an agreement to expand the state’s Tuition Assistance Program for college students, but one person familiar with the discussion said they are still discussing how much will be injected into the budget to cover the cost of the changes.

One of the greatest points of contention in higher education is what the state will do to save SUNY’s Downstate Medical Center, a debt-ridden Brooklyn teaching hospital that SUNY claims will run out of funds by the summer.

Assembly Higher Education chair Pat Fahy says there will be funding set aside for it. The Senate, Assembly and Hochul all proposed a $300 million fund coupled with a $100 million operating aid increase to cover an annual deficit.

What would still need to be decided is how that money would be used.

State Sen. Zellnor Myrie, who represents the district where the hospital is located, said he is “cautiously optimistic” that they might land on an agreement that includes a commission with community and stakeholder input.

Changes sought by public labor unions to a pension retirement plan first approved in 2012 are also in the works for the budget agreement.

Under the plan, a person’s final average salary for retirement would be set at an average of their last three years, essentially mirroring a more generous pension tier, according to a person briefed on the details. The current system averages five years of salary, which can lessen a worker’s pension.