The New York state budget battle is joined.
The state Assembly and Senate on Thursday each passed “one-house” budget resolutions that serve as their formal counterproposal to Gov. Kathy Hochul’s $263 billion spending plan. The governor will spend the next two weeks talking to Democratic leaders of each chamber, hoping to reach a compromise before the fiscal year ends on March 31.
“Today is the end of the beginning,” Senate Majority Leader Andrea Stewart-Cousins said Thursday as the budget resolution passed. “And Monday is the beginning of the middle.”
Hochul’s spokesperson, Kara Cumoletti, said the governor “looks forward to working with the Legislature to pass a budget that makes New York safer and more affordable for working families.”
Here are several areas where the governor and lawmakers are apart:
Taxes
Hochul, a moderate from Buffalo, has insisted that the state has enough money to invest in social programs — including child care subsidies — without raising taxes because 2025 was a good year on Wall Street.
“What I want to make sure we are smart about is having a system in place where it's not just taxing for the sake of taxing,” Hochul said Wednesday. “I need people who are high net worth to support the generous social programs that we want to have in our state right now.”
But state lawmakers view things differently. The Senate and Assembly each proposed raising taxes on people reporting $5 million of income or more. They also seek to raise the corporate tax from 7.25% to 9%.
Both houses also included various changes to New York City’s tax code sought by Mayor Zohran Mamdani, including versions of his proposed corporate, business and “mansion” tax hikes. It helps the city address a projected $5.4 billion deficit.
“The ends justify the means,” said Assembly Speaker Carl Heastie, a Bronx Democrat. “It's not so much about taxes or which taxes. It’s, ‘Do we have enough money or will we have enough money to take care of all of the priorities that we have across the state?’”
Additional spending
Both one-house budgets include areas that increase spending from the governor’s proposal. One such area is aid to New York City and other municipalities in the state.
In the Assembly’s resolution, an additional $500 million would be allocated for cities outside of New York City. Buffalo would get $16.8 million more each year over the next two years compared to the governor’s proposal. Both one-house budgets would also give $40 million to Rochester and the Senate one-house includes $35 million in aid to Albany.
Both chambers also put forward budgets that contain more funding for schools than the governor’s budget and more money for SUNY and CUNY.
The one-house budgets also provide a 4% inflationary increase for direct care providers and workers. The governor had proposed a 1.7% increase.
“We originally asked the governor and the Legislature for 2.7%. So to see the 4% come out of the one-house, very encouraging to us,” said Erik Geizer with The ARC New York, a nonprofit that serves individuals with disabilities. “Obviously, we need 2.7% because that's the inflationary rate right now. We want to keep pace. We don't want to go backwards.”
Helping immigrants
Each house included $175 million to fund legal services for immigrants facing deportation — an increase of about $100 million from last year. The proposed funding bump comes as lawmakers are separately debating legislation that would restrict local cooperation with federal immigration authorities — talks that are sputtering along and could be resolved outside of the budget process.
Hochul has proposed a bill that would end formal cooperation agreements with U.S. Immigration and Customs Enforcement. Lawmakers and advocates want further restrictions. Both the Senate and Assembly excised those provisions from their one-house budget proposals, with the Senate explicitly saying it hopes to reach an agreement before the budget deadline.
Assemblymember Catalina Cruz, a Queens Democrat, said the funding was an important first step.
“To have that commitment in our one-house is extremely meaningful,” she said at a Tuesday rally. “ I've had conversations with the governor. I know that she cares about immigrants. I know that she wants to make sure that immigrants have their rights protected.”
Energy rebates and mandates
Assembly Democrats proposed a utility rebate of $500 for people making $150,000 or below and $300 for those with incomes between $150,000 and $300,000. They also propose a moratorium on rate increase for two years and establishing a blue-ribbon commission to study the issue of utility rates.
The cost of the Assembly’s proposals would be $2.6 billion. Meanwhile, the Senate proposed $200 million for the Energy Affordability Program.
Hochul has called for a delay in the implementation of the state’s 2019 climate law and is pushing for it to be part of the budget negotiations. Heastie told reporters that no specific proposal has been put forward.
The governor’s proposed changes to the State Environmental Quality Review Act to encourage the construction of more housing are also points of contention. The Assembly resolution didn’t mention those changes, and the Senate said it would adjust Hochul’s plan.
The law, commonly known as SEQRA, is meant to protect sensitive land and waters, but has faced criticism for developers who say it drives up costs and extends construction timelines. Senators would limit the proposed exemptions to multifamily housing projects that increase density, particularly in urban areas.
Changing auto insurance law
Hochul has called for changes to the state’s auto insurance law, aiming to reduce fraud and costs for customers. Leaders in the Legislature sidestepped commitments to the measure: The Assembly left the insurance proposal out of its one-house proposal and the Senate addressed it only obliquely.
“It's not that we're, you know, we weren't ready to have that discussion, or to say that we accepted her proposal, which is why we omitted it,” Stewart-Cousins said. “However, I think the language in the resolution was very, very clear that we intend to have a broader discussion.”
Republican state Sen. Pam Helming, a Republican from upstate Canandaigua, said during a floor debate that the issue shouldn’t fall by the wayside.
“I’m deeply concerned. The Senate one-house budget proposal intentionally omits just about every single proposal that would help reduce auto insurance fraud. This is a missed opportunity to deliver reform and savings for New York drivers.”
A host of other policies
Hochul has followed her predecessor, Andrew Cuomo, in attempting to use the sweeping budget process to enact non-fiscal policies. While immigration and auto insurance are getting the most attention this year, less-controversial policies are also in the mix.
The Assembly’s one-house omitted these things due to Assembly Speaker Carl Heastie’s desire to deal with such matters outside of the budget process — where Hochul has more leverage.
“We don’t put policy in our budget,” Heastie said.
Hochul proposed language that would bar protests within 25 feet of houses of worship and abortion clinics. She also advanced restrictions on how young people interact with AI chatbots. Both items roughly mirror freestanding legislation, and lawmakers say they can move forward if the policies are jettisoned at the budget negotiating table. The question is whether or not they do.
“We'll work towards the goal of getting it done in the budget, but if not, I think we're close enough that we can get this done this year,” said state Sen. Andrew Gounardes, a Brooklyn Democrat who sponsors legislation that would require parental approval for financial transactions on platforms like Roblox.
Steps toward free buses
Both houses of the Legislature included plans to revive a pilot project for free bus service. Mamdani, as a lawmaker, won such a program and included it as a top plank in his successful mayoral campaign last year.
Hochul and the leaders of the state-controlled MTA have poured cold water on the cost and side effects of Mamdani’s proposal to make all buses free. But transit advocates said reviving and extending the pilot would be another step toward a broader program.
“Riders want fast and free buses and want the city and state to work together to get the complementary policies right,” said Danny Pearlstein of the Riders Alliance. “We have data from the 2023 pilot and the Senate's proposal for an expansion would yield additional insights to inform the ultimate policy.”
