Budget Jam

Good morning from Albany, New York, where there is no budget and no Legislative Session. The Legislature will return tomorrow to approve a fourth budget extender.

Amongst signs of hope or at least incremental progress, the same issues continue to be obstacles to any final resolution.

Speaker Carl Heastie indicated the three sides were “close” to an agreement on an expansion of the state’s involuntary commitment laws, with Budget Director Blake Washington offering, “Nothing specific is holding it up. I think it's just there's a couple of key concepts, mostly language.” The legislature has pushed for a pilot program that would see behavioral health professionals accompany law enforcement officers when responding to suspected mental health calls, as well as more comprehensive advanced planning before an individual is released from an involuntary hold.

Governor Kathy Hochul and lawmakers are also still working on a deal to fully fund the Metropolitan Transportation Authority’s (MTA) $68 billion 2025-2029 capital plan. The legislature vetoed the plan in late December over a lack of funding and are now tasked with finding a revenue stream to address the current $38 billion shortfall. Discussions are centered on a payroll mobility tax increase on businesses in New York City, though it is unclear if the plan would raise enough money to make the MTA whole. The current proposal would apply to businesses across the MTA service area; those with payrolls over $10 million would see increases, those between $5 million and $10 million would be held harmless, while those under $5 million would see a decrease.

Hochul’s proposal to create the crime of “masked harassment” continues to be met with stiff opposition, especially in the Senate, where members have expressed a desire to protect anti-Israel protesters on college campuses in the face of deportations by the Trump Administration. Heastie indicated last week that the proposal was “50-50" in the Assembly.

The stickiest wicket remains discovery reform. The Capitol featured dueling press conferences last week, with six different district attorneys holding three separate press conferences to advocate for Hochul’s proposed changes to the 2019 discovery law. Meanwhile, the 80-member Black, Puerto Rican, Hispanic & Asian Legislative Caucus held a press conference of their own, declaring their strong opposition to Hochul’s proposal. Heastie has said his conference has made good-faith efforts to address concerns raised by prosecutors, but that the onus was now on the district attorneys—and presumably Governor Hochul—to meet them halfway.

The tension between the legislature and the Executive Chamber continues to escalate as budget negotiations linger on. Senate Majority Leader Michael Gianaris offered, “The later the budget is, the more the governor gets blamed. If she wants to go through that route that other governors have gone through, she can figure it out herself.” Lawmakers had been scheduled for a two-week recess beginning today, and there is hope on the Second Floor that the desire to return home (or go on planned and paid-for vacations) will force members to drop their opposition and get behind Hochul’s proposals (or at least soften some of that opposition). Hochul’s other source of leverage is that members of the legislature will not be paid until a final budget is enacted.

Assembly Speaker Carl Heastie, seeking leverage of his own, introduced a bill that would permit lawmakers to keep receiving a paycheck during a late budget if the hold-up is related to non-budgetary policy items proposed by the governor. Heastie offered, “This is why, year after year after year, budgets are late. It’s never late because of the numbers—never late.” Gianaris conceded that the legislation is largely symbolic, but agreed with Heastie’s assessment, offering, “It’s born out of frustration we all share about the continued insistence on non-budgetary policy into this budget conversation. We’re now a week and a half late, and we’re still getting new things dropped on the table that have nothing to do with funding the government and keeping it operating.”

Do you support Speaker Heastie’s bill that would allow NY legislators to get paid if the budget is late because of policy-related issues? Take our poll here!

Hochul did not take the bait and instead dared lawmakers to authorize their own pay while the state faces a potential shutdown. Through a spokesman, Hochul’s office retorted, “If the highest-paid state legislators in America are worried about their paychecks, there's a much easier solution: come to the table and pass a budget that includes Governor Hochul's common-sense agenda.” Susan Arbetter, the respected long-time host of Capital Tonight, scored an exclusive interview with Heastie last week where he shed more light on his proposed legislation. Heastie insisted, “We are not trying to go to war with Gov. Hochul,” but maintained, “This is not about complaining about paychecks. The members are used to this. We go through this every year. I just don’t want governors to have this, to ever have an expectation that withholding a paycheck can be something that (would prompt) people to walk away from their principles.”

Among the non-fiscal policy items Hochul has inserted into budget negotiations is a common-sense proposal to end primary elections for lieutenant governor that are separate from the primary election of the gubernatorial candidate who picked them. This issue has bedeviled governors for half a century, but has been particularly acute for Hochul between Brian Benjamin’s indictment and now Lt. Gov. Delgado’s public split from Hochul. The proposal would ensure future governors could pick their second-in-command rather than leaving it up to primary voters to decide. Former governor and lieutenant governor David Paterson offered his support, “This will make it clear that she can bring him in and she can take him out. That person who’s been selected gets that they work for the governor; they’re not a co-governor.” That said, not everyone agrees, including New York City Public Advocate Jumaane Williams, who prefers a more independent voice in the lieutenant governor’s office. Williams, who lost to Hochul in the 2018 lieutenant governor’s primary, said, “It’s probably easier for her and governors in general, but I don’t think it’s best for the folks who live in New York.” Senate Majority Leader Andrea Stewart-Cousins indicated her conference was considering the proposal, but that many members had “mixed feelings.”

In welcome budget news, the federal government and the MTA came to an agreement that will keep the congestion pricing tolling program in place in New York City until at least the fall while the legal case makes its way through the courts. The agreement comes after a months-long public back-and-forth between Hochul and Trump’s Transportation Secretary Sean Duffy, who has called on New York to end the program, though it is unclear whether he has the legal authority to do so. The Department of Transportation made clear that the temporary agreement should not be seen as an endorsement of congestion pricing, saying in a statement, “USDOT’s position remains that New York’s elitist cordon pricing scheme is illegal, a form of class warfare that targets working Americans, and unfair to the driving public whose tax dollars have already paid for these roads.” If congestion pricing is ultimately here to stay, the annual revenue is slated to finance billions of dollars in repairs and upgrades to the MTA’s aging subway system.

The congestion pricing saga is, of course, only the beginning of the Trump Administration’s desire to exert influence over state policies that they do not agree with. President Trump signed an executive order last week directing Attorney General Pam Bondi to “stop the enforcement” of state environmental laws that are impeding domestic energy production. Hochul and New Mexico Governor Michelle Lujan-Grisham put out a joint statement in response that reads in part, “The federal government cannot unilaterally strip states’ independent constitutional authority. We will keep advancing solutions to the climate crisis that safeguard Americans’ fundamental right to clean air and water, create good-paying jobs, grow the clean energy economy, and make our future healthier and safer.” Trump’s order mentions New York specifically and directly references the Climate Superfund law, which retroactively charges companies based on their past fossil-fuel emissions in the state. If Trump’s Justice Department finds a judge sympathetic to their arguments, New York’s cap-and-invest program, whereby companies buy carbon credits from the state to offset greenhouse gas emissions, could be in jeopardy as well. Late last month, the state Department of Environmental Conservation released draft guidelines meant to kickstart the implementation of the program.

In Washington, D.C., Rep. Elise Stefanik (R-NY) has landed on her feet after her nomination to serve as Ambassador to the United Nations was pulled earlier this month over concerns of Republican vulnerability in special elections. Stefanik was appointed as Chairwoman of House Republican Leadership, where she will focus on “strategy, communications, and executing on the mandate from the American people to pass President Trump’s agenda.” On paper, the move is a demotion for Stefanik, who was previously the fourth-ranking House Republican as Conference Chair, a position now held by Rep. Lisa McClain (R-Mich.). Stefanik will also return as a senior member of the House Intelligence Committee, as well as have her seats on the Armed Services Committee and Education and Workforce Committee.

The additional GOP seat will make life marginally easier for House Speaker Mike Johnson (R-La.) as his conference begins crafting legislation to advance Trump’s priorities on taxes, energy policy, and the border. Johnson scored another major win last week when he successfully passed the Senate’s budget blueprint through the narrowly divided House, clearing the way for the two chambers to begin crafting “one big, beautiful bill.” The measure passed by a margin of 216-214, with two Republicans—Reps. Thomas Massie of Kentucky and Victoria Spartz of Indiana—voting with all 212 Democrats in opposition. Speaking to reporters after the vote, Johnson said, “It’s a good day in the House. I told you not to doubt us. We’re really grateful to have had the big victory on the floor just now. It was a big one, a very important one.” Johnson had to cancel a vote earlier in the week over concerns that the Senate’s cuts do not go deep enough, but ultimately won over enough holdouts on Thursday to bring the budget blueprint to the floor. Senate Majority Leader John Thune met with some GOP House members to try and assuage their concerns, telling them that the Senate is “aligned with the House in terms of what their budget resolution outlined in terms of savings.” While the vote was another major win for Johnson (and Trump), it only paves the way to the hard part as the two chambers will have to craft a bill that realizes at least $1.5 trillion in savings while balancing protecting social benefit programs and other popular federal spending and programs.

On a week where the dangers of air travel were apparent in New York City, a number of New York and New Jersey lawmakers had their own scare.

Finally, a classic decoration can now feature my pal Waffles or your own furry friend.  Check it out!

-Jack O’Donnell