The New York State budget is negotiated, and final voting is happening now, 56 days after the April 1 budget deadline. This is the latest State budget since 2010. Although the Governor announced there was a general budget agreement on May 7, significant negotiations still needed to be completed to arrive at a final budget deal.

As you know from our previous budget updates, fifteen budget extenders were passed to keep government running while the final budget bills were negotiated. The final enacted budget totals

$268.5 billion, which is an $8.5 billion increase from the Governor’s initial budget proposal, and a $14.5 billion increase over last year’s final enacted budget. Much of this increase is due to the increasing costs of Medicaid, especially following the enactment of federal legislation last July which scaled back federal funding for Medicaid.

The proposed spending plan does not include any income tax increases, but it does include a three-year extension on the current New York corporate tax rate, which was set to expire at the end of this year and applies to businesses that net over $5 million in profits. The plan also includes a 75% tax on tobacco-free nicotine pouches, like ZYN. This tax is estimated to bring in around $54 million annually to the State. The final budget also includes the Governor’s proposal to create a statewide universal childcare program.

In addition to these items, the final budget also includes several high-profile policy proposals, including automobile insurance liability changes, immigration protections, changes to the 2019 Climate Leadership and Community Protection Act (CLCPA), and changes to the Tier 6 public employee pension plan, which were a large part of the delay for the final enacted budget. Of these issues, only a few of them were included in the Governor’s original proposed budget. The Governor added the other policy issues into the mix in March, adding more issues to be negotiated later in the process than is usual, which also led to the significant delay towards achieving a final budget deal.

Here is a quick summary of a few of the policy proposals included in the final budget:

• Automobile Insurance Changes - One of the Governor’s top priorities was changing New York’s automobile insurance laws, as New Yorkers pay some of the highest premiums in the nation. The final budget includes provisions to crack down on fraudulent claims, including staged accidents. The final budget also includes new language which will prevent auto insurance companies from using a person’s employment, education, home ownership and zip code in determining auto insurance rates and included language to require insurance companies to seek approval from the Department of Financial Services before raising rates.
• Climate Law Changes – In March, the Governor announced that she wanted to amend New York’s groundbreaking climate change law (known as CLCPA) to help address rising energy costs. The final budget makes changes to this law by extending the regulation implementation of this law from early 2024 to December 31, 2028, and the final budget pushes the 2030 statutory goal of reducing greenhouse gas emissions by 40% from 1990 levels to 2040. The budget also changes how the State accounts for  greenhouse gas emissions now using a 100-year timeframe for accounting emissions, which is used in most other laws rather than a state specific 20-year timeframe  accounting.
• Tier 6 Public Pension Plan Changes – A top priority of public sector unions during this budget was changing the 2012 Tier VI retirement law to improve public pension benefits. These changes will impact more than 500,000 public sector employees across the State, including teachers, bus operators, firefighters, police officers, and office workers. Many public employees will now have a lower contribution rate into their pensions while others will see changes to overtime rules and their statutory retirement age.
• Protecting Our Wallets Energy Rebate Program – The final budget will include the Protecting Our Wallets Energy Rebate program, which will allow for a tax credit to New York taxpayers under certain income thresholds to help offset rising energy prices in  New York. This is part of the affordability agenda that both the Governor and Legislature were focused on this year.

Next Steps

This is a high-level overview of some of the issues included in the final budget. We are still in the process of reviewing the final budget provisions and language, and we will be sending along specific provisions of interest to you.

Now that the budget process has concluded, we will turn to non-budgetary legislative issues through the remainder of the session, which is scheduled to end next Thursday, June 4. This means that there are only six scheduled days of session left in the year. Given how late the State budget process concluded, there is a possibility that the legislative session will spill beyond June 4 though, for now, both houses are saying that will not happen. However, there is a lot of legislation to be done still, so we will see if the calendar holds or if more session days will be necessary. Regardless, with only a handful of days left of session, we will pivot to non-budget issues and be in touch regarding your legislative priorities.

Please let us know if you have any questions.