Governor Kathy Hochul’s 2025 Budget Address

Today, Governor Kathy Hochul delivered her budget address outlining her priorities for her 2025 – 2026 proposed budget. Building on the themes from her State of the State address last week, she continued to focus on making New York a more affordable place to live. She also highlighted a line from her State of the State last week that “Your Family is My Fight.”

With that as the background, she is proposing a $252 billion budget, which is a $10 billion, or 3.6%, increase over the fiscal year 2024 – 2025 budget. The proposed spending plan does not include any income tax increases and includes several initiatives to get money back into the pockets of New Yorkers, including the already announced inflation refund plan, free school meals for all students, and an enhanced child tax credit, as well as a middle-class tax cut and free community college. This increased spending will be covered by an 8% increase in revenue that the State has seen. This proposed budget will also protect the $21.1 billion in the rainy-day fund to help New York prepare for future budget challenges.

As always, the two biggest cost drivers in spending for the proposed budget are education and healthcare. In the education space, the Governor will be proposing some changes to the Foundation Aid formula, which is the formula used to determine the school aid for each school district, to update some metrics that are used to allocate the aid to reflect currently available data. The Governor will also be including a proposal to ban the use of cell phones during school hours. In the healthcare space, the proposed Medicaid spending is $35.4 billion, which is a $4.3 billion year to year increase. The main driver of this increase is that over half of all New Yorkers receive Medicaid in New York.

The Governor also highlighted some of her other priorities in her budget address, which included access to child care, a full repeal of the SALT cap that was put in place by the federal government 6 years ago, investing in housing and public safety, making strides on gun violence prevention and focusing on energy and the environment to ensure New York’s transition to renewable energy. The Governor also highlighted her focus on increasing funding to public transit systems and the Department of Transportation’s capital plan to ensure that New Yorker’s have reliable transportation systems and roads and bridges.

The full detail of all the proposals that will be included in the Governor’s proposed budget will not be known until we see the budget bills themselves. The budget bills will be released at some point today. We will be reading through, and flagging issues of importance, as they become available and will update you on your issues of importance.

As a reminder, now that the Governor has released her 2025 – 2026 proposed budget, the Senate Finance Committee and the Assembly Ways and Means Committee will announce their joint budget hearing schedules later today, where they will hear from interested parties about what was in, and in some cases, what was not in the Governor’s proposed budget. The hearings will last until the end of February, and in mid-March, both houses will release their proposed one-house budget bills, which will accept or reject the Governor’s proposals as well include the priorities for each house. Once all three budgets have been released, negotiations between the Governor, Senate and Assembly will commence with the hope of having a final budget deal in place by the State Constitutionally mandated deadline of April 1.

As always, we will be sending updates as the session advances. Please let us know if you have any questions.

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