Governor Hochul’s first state budget proposal will be unveiled in its entirety next Tuesday. But the 235-page tome accompanying her State of the State address last week gave the public a lengthy peak behind the curtain.

What it showed wasn’t pretty.

Her “New Era for New York” agenda is a smorgasbord of new spending; its chock-a-block with election-year goodies—most prominently a $10 billion taxpayer-funded windfall for existing and aspiring members of the state’s powerful health care industry.

Wading through the entire “New Era” document, one finds proposed:

  • Creation of a dozen new offices within existing state agencies, and three new state councils;
  • Creation or expansion of at least 100 different state programs or initiatives, sprinkled across the various executive agencies; and
  • Tens of billions of dollars in new spending. This includes items to which a price tag is affixed, like the health care workforce blowout, billions for green energy projects and $300 million for broadband access, as well as items not costed out, like expanded Medicaid eligibility and extension of the state’s Tuition Assistance Program to part-time students.

The State of the State is the prelude to Tuesday’s state budget reveal. It’s a budget that represents a generational opportunity.

The state’s coffers are overflowing. The Governor’s Budget Office last November revealed a $16.4 billion surplus over the four-year budget window, stating dryly that, “This is the first time DOB has published a Financial Plan with no budget gaps in any fiscal year.”

The surpluses are due to surging tax revenues and the tidal wave of pandemic-induced federal emergency relief. Recent rate hikes risk killing the state’s golden goose by chasing more high earners out of the state. And New York’s nascent economic recovery remains tepid and fragile. So, the current surplus projections could be ephemeral.

Still, the budget poses a major choice. Direct the current surpluses to the state’s dangerously depleted reserves? Provide broad-based tax relief to stem outmigration and give the post-pandemic economic recovery a boost? Or hike spending beyond the record $212 billion level of the last budget? That sum already funds the highest per pupil education spending and the highest per-capita Medicaid spending among the states.

Hochul’s budget may kick-off another spending spree, based on her State of the State’s “New Era” agenda.

By comparison, the token tax relief she proposed is Lilliputian. She said in her address she wants to prevent outmigration and make New York the nation’s most business-friendly state. But her “New Era” package is unlikely to alter its ranking as the second-least business friendly of all states, as measured by the Tax Foundation’s annual business climate ranking.

Final judgment must be reserved until Tuesday. Hochul’s budget will put flesh on the bones of the State of the State outline. It’s a time-honored strategy in executive budgeting to publicly announce big, popular spending proposals in advance that turn out to be less generous than advertised —and offset by reductions elsewhere —when the formal documents are released.

But judging from the State of the State, the “New Era” for New York could mean more of the same old, same old — despite a rare chance to chart a new fiscal course.

About the Author

Peter Warren

Peter Warren is the Director of Research at the Empire Center for Public Policy.

Read more by Peter Warren

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