Budget Crawl

Good morning from Albany, New York, where the state budget is now one week late. Lawmakers passed a pair of budget extensions last week and will pass another one today. Legislative session is scheduled for today, tomorrow, and Wednesday, but there is hope in the Capitol that progress over the weekend will allow for agreements early this week and votes on a final budget to go into the weekend, allowing legislators to head home on Saturday to observe Passover.

The issues remain the same: proposed changes to pretrial discovery laws, expanding the standard for involuntary commitment, a mask ban, and funding the Metropolitan Transportation Authority’s Five Year Capital Plan. After that, the parties will need to work through actual spending decisions, but most folks—including us—expect that could proceed very quickly.

Late budgets are nothing new in Albany, but letting them drag on too long also causes downstream effects and pain. School districts have a budget deadline of May 20th and are already facing some uncertainty with the proposed changes to how the state calculates aid to school districts. New York’s shortened construction season also means that any delay in getting state aid to municipal governments could impede their ability to undertake local construction projects. Still, Hochul appears to be willing to hold out to advance her policy priorities. Speaking to reporters last week, she offered, “I’m not in any rush. I’m truly not in any rush. You won’t have to wait forever, but summers are nice here, too.” Assembly Speaker Carl Heastie used his usual astrological analogy to sum up the current state of play, saying, “We’re probably on planet Neptune. But I believe if we can resolve discovery… we can be on Mars. Discovery is probably the biggest logjam.”

After a “Leaders” meeting Friday afternoon, the governor doubled down on pressuring the legislature with a spokesperson declaring, “If we don't come to an agreement next week, the governor is prepared to do two to three emergency extenders per week until the budget is done, and I think you know what that means.”  That means the end of the scheduled Passover/Easter break.

You might think that the events happening in the rest of the world—especially tariffs, federal budget cuts, the slash and burn of DOGE—would impact New York’s BUDGET and you would be right . . . and wrong. 

New York’s leaders have made a decision to carry on under the premise that while cuts may well likely come, it is impossible, or at least irresponsible, to guess what may be cut and budget around it. Good enough, though good government groups suggest that the plan be built with more flexibility, increased reserves, and perhaps some self-imposed cuts and discipline, rather than simply waiting and seeing. While Governor Hochul has been diligent in increasing reserves during her tenure, under her latest budget proposal, the state's reserves would actually shrink by $5 billion over the next fiscal year.

That said, the New York State budget is wildly reliant on revenue from Wall Street (which recent developments have put in doubt), and so much of the state’s economic activity, especially Upstate, coexists with our friends and neighbors to the north in Canada. Those existential threats are before any federal cuts to the $91 billion in federal money this budget expects. Some legislators—led by Senator Brad Hoylman-Seigel and Assembly Member Micah Lasher—have noted that New York is and always has been a donor state, paying more into Washington than we get back and proposing to do something about it (which is difficult in our federal system), while others are saying the quiet part out loud: the legislature is likely to be back in Albany this Fall making cuts to programs that are essential across the state, midyear cuts in fact, that will have to be higher than any cuts made now.

In New York City, Mayor Eric Adams’s federal corruption case was permanently dismissed. The United States Department of Justice moved to dismiss the charges earlier this year on the basis that the case would impede Adams’ ability to enforce federal immigration policies, leading to a slew of resignations from the Department of Justice and the U.S. Attorney's Office over allegations of a quid pro quo. U.S. District Judge Dale Ho ultimately granted the government’s motion, but dismissed the charges permanently rather than allowing them to hang over Adams’ head. In his order, Ho wrote, “To the extent that the Government may be seeking to extract policy concessions from the Mayor, dismissal with prejudice rather than continuation of the prosecution best addresses that concern. It ensures that going forward, the charges in the Indictment cannot be used as leverage over Mayor Adams or the City of New York.” Adams, holding a copy of FBI Director Kash Patel’s book, said, “I want you to know that I never stopped working for you. Not for one day, not for one hour, not for one minute, because you are who I think about every morning. You are my North Star.” 

Adams also announced he will forgo the Democratic Primary and will instead seek reelection as an independent, telling reporters, “I’m in the race to the end. I’m not running on the Democratic line. It’s just not realistic to turn around my numbers and to run a good campaign (from) where we are right now. It hurts like hell.” The move gives Adams more time to try and repair his reputation before facing the voters, but his campaign still faces an uphill battle. His approval rating is hovering around 20 percent and the New York City Campaign Finance Board ruled Adams is ineligible from receiving $4 million in public matching funds. A recent poll from the Honan Strategy Group found Adams in fourth place behind former Governor Andrew Cuomo, Assemblyman Zohran Mamdani, and Comptroller Brad Lander. Still, Adams will have the benefits of incumbency and will likely avoid the mudslinging of a Democratic primary. 

In Washington, D.C., the Senate voted early Saturday to advance their budget resolution after a vote-a-rama, a key procedural step on the path towards “one big, beautiful bill” that addresses the expiring tax code, defense, immigration enforcement, and energy policy. The Senate plan allows for up to $5.3 trillion in tax cuts, which Republicans hope to exclude from the total cost of their bill by using a “current policy baseline” accounting approach. The Senate Parliamentarian, the chamber’s nonpartisan rule-keeper, has yet to decide whether that approach is permissible under the rules of reconciliation, although a joint meeting where both sides argue their case is likely to be held this week.

Any decisions from the Parliamentarian will be important. Republican Sens. Susan Collins, Lisa Murkowski, John Curtis, and John Cornyn met Thursday night with Senate Majority Leader John Thune. Those senators are warning that any run around the parliamentarian’s input could cause them problems in the coming months if the final bill doesn’t meet strict budget rules. “I think the recognition is, number one, we're not going to overrule the parliamentarian,” Cornyn said after the meeting. “And number two, if we tried, there wouldn't be the votes to do it.”

House Republicans have just one week to adopt the Senate’s version yet some members have concerns that the upper Chamber’s plan does not prescribe enough cuts to offset the costs of the bill. Given the time constraint, some GOP Senators are looking to the White House for reinforcements. Senator Thom Tillis (R-N.C.) offered, “At the end of the day, President Trump’s going to have to be involved, particularly in the House. If we’re getting hung up on the priorities of one or two House members, we need to get President Trump to get them to recognize what’s at stake if we fail.” 

More broadly, however, Trump may not be inclined to do Senate Republicans, and Tillis in particular, any favors. The North Carolina Senator signaled last week that he would support, and possibly co-sponsor, legislation introduced by Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) that would reassert congressional authority over tariffs. Under the plan, Congress would be required to approve any new tariffs within 60 days and would reserve the right to cancel a tariff at any time.

On Wednesday, four GOP Senators—Rand Paul, Susan Collins, Mitch McConnell, and Lisa Murkowski—voted with Democrats to reject the national emergency declaration Trump has used as legal justification for the 25% tariff on Canadian imports. Former Republican Senate Leader Mitch McConnell said in a statement, “Make no mistake: Goods made in America will be more expensive to manufacture and, ultimately, for consumers to purchase, with higher broad-based tariffs. At a time when Americans are tightening their belts, we would do well to avoid policies that heap on the pain. We ought to strengthen our friendships abroad and reinforce our allies as pillars of American prosperity and security.” The vote in the Senate is likely to remain largely symbolic as House Speaker Mike Johnson (R-La.) has made clear his conference has no appetite for departing from Trump. 

Johnson suffered an embarrassing defeat last week after failing to pass a rule that would have blocked Rep. Anna Paulina Luna’s (R-Fl.) bipartisan discharge petition to allow voting by proxy for new parents. Nine Republicans, including New York Reps. Mike Lawler and Nick LaLota, voted with Democrats against Johnson’s effort to block Luna’s petition. Johnson, who canceled votes for the rest of the week after his defeat, said, “Look, I’m a father, I’m pro-family. But I believe it violates more than two centuries of tradition and institution. And I think that it opens a Pandora’s box, where ultimately, maybe no one is here.” Trump seemingly endorsed Luna’s plan last week, telling reporters aboard Air Force One, “I don’t know why it’s controversial. I’m going to let the Speaker make the decision, but I like the idea.” Luna has said she has been in contact with Johnson regarding the path forward, including a potential compromise “limiting the vote to just new moms who cannot physically travel in event of emergency.”

Finally, technology has not quite caught up yet to one New York City store, the last of its kind in the state. It's a beloved spot for many, especially when Hollywood or Broadway comes knocking! 

-Jack O’Donnell