This week, the Assembly and Senate released their one-house budget proposals. Today, each house passed resolutions, which memorialized their one-house budget proposals. These proposals were compiled after the Assembly and Senate held weeks of joint budget hearings and scores of meetings with a variety of stakeholders, who weighed in on the proposals contained in the Governor’s proposed budget. Each one-house budget accepts, rejects or modifies the Governor’s budget proposals that were released in January and adds priority issues for each respective house.

As you may recall, the Governor’s proposed budget proposed spending $233 billion, a 1.7% increase over last year. The Assembly and Senate’s one-house budget proposals each call for a spending level of around $246 billion, $13 billion more than the Governor’s proposal.
While the spending levels are similar, the spending priorities are not identical though both houses rejected the Governor’s proposed Medicaid cuts, which would have totaled to $1.2 billion, and both houses rejected proposed changes to school aid that were proposed by the Governor. Although the Governor’s proposed budget would increase total education aid by 2.4% as compared to last year’s budget, approximately half of the State’s school districts would receive less state aid, and none would receive as much as they anticipated under the current Foundation Aid formula. Both houses propose to keep the current Foundation Aid funding formula in place.

Further, both the Assembly and the Senate are proposing personal income tax increases of .5% on people earning over $5 million. The Governor held a press conference this week where she stated that increasing the personal income tax is a nonstarter for her. Both houses also included affordable housing packages. The Senate housing package includes a housing development tax proposal, initiatives to speed commercial to residential transitions, and tenant protection provisions, otherwise known as “Good Cause Eviction.” The Assembly’s proposal includes incentives for office conversions, but they did not include the tenant protection legislation like the Senate.

Now that the one-house budget bills have been released, budget negotiations will begin in earnest. The final budget is due by April 1, which is just over two weeks from today. The Senate, Assembly and Governor have already begun meeting to hash out the differences between their budget proposals with the goal of arriving at a final agreed upon budget by the April 1 deadline.

While all parties involved has signaled that they would like to have the budget done by March 28, this could be a challenge given the differences contained in the three budget proposals. Also, as we have noted in our recent updates, Easter is Sunday, March 31 meaning that the Legislature will not be working through the weekend to meet the April 1 budget deadline. Additionally, Easter and Passover are at different times, meaning that the two-week legislative break that occurs once a budget agreement has been reached won’t occur until the end of April in alignment with Passover.

As always, please reach out to us with any questions or concerns.