Governor Kathy Hochul’s 2023 - 2024 Proposed State Budget

Governor Kathy Hochul delivered her second State Budget address this afternoon.  The Governor began the address by noting that the general economic outlook is far less rosy than it was last year.  Nonetheless, the Governor presented an optimistic vison of the State’s finances and progress for the upcoming year, as New York expects to end its current fiscal year with an $8.7 billion surplus as the result of increased tax collections throughout the prior fiscal year.  For Fiscal Year 2024, the Governor is proposing a $227 billion budget, which represents a 2.4% increase over the prior year budget.

Her proposed budget will include a 10% school aid hike, which is a record one-year dollar amount increase in education funding.  It will also include a funding increase of $2.7 billion to the Foundation Aid, which means the State will be fully funding the school aid formula for the first time.  The Governor is also proposing to remove the cap on the number of charter schools in New York City. In the higher education space, the Governor’s proposed budget is calling for a 3% increase in public college tuitions.

The budget also proposes increasing funding for the Metropolitan Transportation Authority over several years by raising the payroll tax paid by all companies in the 12 county MTA region. The payroll tax increase will exempt schools and small employers. Additionally, the Governor is proposing that a share of the revenue of future downstate casinos be directed to the MTA, which may require a constitutional amendment because casino revenue is usually dedicated to education aid.

In other revenue raising areas, the Governor is proposing a three-year extension on the corporate tax hike that was imposed at the start of the pandemic.  Further, there is a proposal to increase the cigarette tax from $4.35 per pack to $5.35 per pack.  Notably, the State Budget does not contain any proposed income tax increases.

The Governor’s budget also calls for spending increases in healthcare including an increase of $1 billion in health care capital funding, as well as $100 million to expand Medicaid coverage for 7.8 million New Yorkers.

The Governor also outlined her budget proposal to make changes to the bail reform law. These changes would include no longer requiring judges to impose the “least restrictive” standard in determining whether a criminal defendant should be released or held on bail in cases that are bail eligible. Her budget proposal also includes $143.4 million to give court appointed attorneys their first pay increase in 30 years and to fund the expanded criminal discovery mandate in the State.

While the Governor has delivered her budget proposal and released her briefing book, which provides a general overview of her proposals, the true details of her budget will be in the budget bills themselves. We anticipate that these bills will be released this evening. We will be reviewing them as soon as they are available and will send you proposals of interest by tomorrow.

Now that the Governor has presented her proposed budget, the Assembly and Senate will begin budget hearings on Monday and spend the next few weeks holding budget hearings to get feedback and testimony on the Governor’s proposed budget. After the conclusion of the budget hearings, the Assembly and Senate will begin the process of putting together their one-house budget proposals, which outline each respective houses budget priorities.  These one-house budget bills will be released in mid-March.  Once those are released, the joint budget committees will convene, and negotiations will begin between the Assembly, Senate and Governor with the goal of completing the negotiations by April 1.

As we begin to review the language and proposals, we will send you information of interest to you.  Please let us know if you have any questions.