Governor Hochul is hammering an “affordability” theme in the leadup to Tuesday’s 2025 State of the State address. But her campaign, dubbed “Money In Your Pockets,” has so far featured little that would reduce the cost of providing, and therefore buying, goods or services in New York.

Instead, the biggest announced and expected elements reflect Albany’s waning interest in growing the state economy—and a greater appetite to redistribute what it produces.

The Neediest 90 Percent

The governor in early December announced her forthcoming fiscal 2026 budget would call for one-time $500 “rebate” checks for households making up to $300,000, with individuals getting $300 if they make up to $150,000. The total cost: $3 billion.

Among full-time residents who filed tax returns in 2022, that works out to about 87 percent of married couples and upwards of 90 percent of individuals getting an unexpected payment from the state.

As explained previously, the governor’s rationale for the rebate—that inflation had caused the state to collect more sales tax than expected—crumbles on inspection. She appeared to be seeking an excuse to mail checks to the majority of state households and found one.

Hochul’s next big announcement was along the same lines. She proposed an expansion of the Empire State Child Tax Credit, which she would hike to send parents up to $1,000 for each child under age 4 and $500 for kids between 4 and 16. Under current rules, the state child tax credit is valued at a maximum of $330 per child, decreasing as household income rises above $110,000. (The credit, which is tied to the federal child tax credit, also phases in at low incomes).

The state expects to award $676 million in child tax credits on 2024 state income tax returns, a number that would double to about $1.3 billion by tax year 2026. The bulk of this money comes from taxing personal income at highly progressive rates, meaning the state is counting on an extremely volatile revenue source.

Child tax credits deserve consideration as targeted measures meant to help people with children living in or near poverty, especially when such credits are used as a flexible replacement for more rigid government programs such as housing vouchers or Medicaid.

As a practical matter, though, Albany tends to add instead of substitute. And child tax credits attract more attention among both state and federal legislators as a way to ingratiate themselves with voters who have children, as Albany has since 2006 (when Senate Republicans pushed the gimmicky measure as part of their bid to preserve their slim majority).

Hochul’s office estimated the expanded child tax credit would cover about 73 percent of the state’s kids under age 17 (2.75 million), touting “even a family of four with household income of $170,000 would receive over $500 per year.”

Unlike the sales tax “rebate” sent by postal mail, the child tax credit is claimed when New Yorkers file their personal income tax returns. That could change, however: state lawmakers in recent years have pushed to instead send the child tax credit as a quarterly check. And so could the amount: while Hochul is pushing for a child tax credit up to $1,000 for kids under 4, a state task force in December called for boosting it to $1,500.

But wait, there’s more

Hochul’s FY26 budget is also expected to include details about an even larger redistribution program: the state Department of Environmental Conservation’s year-late “Cap and Invest” program, which would require certain companies selling natural gas, oil, gasoline or other fossil fuels into New York to buy state allowances commensurate to how much greenhouse gas they generate.

The number of allowances and the maximum price have not yet been published, but in scenarios mapped out by DEC in early 2024, the cost to consumers would range from $3 to $5 billion in the early years after the system (NYCI, or “nicky”) came online, rising to between $5 and $12 billion by 2030.

Much remains to be seen about how the program would be structured, but state officials in 2023 indicated NYCI could boost the price of a gallon of gasoline by 62 cents and nearly double the cost of natural gas.

Some funds collected through NYCI would pay for state climate programs, potentially ranging from renewable energy projects to home electrification to electric vehicle subsidies. But a portion of the billions raised from allowance auctions would be redistributed in some fashion, which could include credits on customer utility bills—or more rebate checks from state government.