Hochul's budget: 10% hike in school aid, payroll tax increase to help MTA

ALBANY — Gov. Kathy Hochul proposed a $227 billion state budget Wednesday, calling for a huge school-aid raise, a college tuition hike, more incentives for affordable housing and a multipronged plan to stave off cuts to downstate mass transit.

The Democratic governor called for increasing aid to K-12 school districts by 10% or $3.1 billion. She proposed tax incentives to create more affordable housing units, build up the health care and child care workforce, and help farmers pay wages.

Her spending plan, to help subways and commuter rails systems that have been pummeled by ridership losses, called for raising a payroll tax that’s imposed on a segment of downstate businesses, asking New York City to chip in more money and funneling a share of future casino revenue to the transit system.

It also includes some tax and fee increases big and small: Extending a corporate tax hike that was imposed at the start of the pandemic but was scheduled to expire, bumping up public college tuition by up to 3%, and putting another $1 per pack on cigarette taxes, making them $5.35.

Her economic development initiatives include lending $455 million for an extensive makeover of Belmont Park to improve the clubhouse and horse racing tracks, which would be repaid by the New York Racing Association.

Mixing policy with spending initiatives, Hochul also called for giving judges more discretion in setting bail, increasing charter schools in New York City and tying increases in New York’s minimum wage to an inflation index to provide steady increases.

The governor’s $227 billion proposal comes in at about 2.4% more than the current fiscal year, a modest increase by New York standards.

But she will be pressed by state legislators to go beyond that as they negotiate toward April 1, the start of the state’s 2023-24 fiscal year.

And she will face resistance from more liberal Democrats on issues such as bail reform. Adding to the tension, a Democratic-led Senate committee recently dealt Hochul a significant political blow by rejecting her nominee for chief judge.

Hochul noted the state is in a much stronger position now than it expected to be 12 months ago — enjoying a nearly $9 billion budget surplus. But forecasts of job losses and a weak economy also have New York facing big deficits in a few years. Part of her plan includes moving more money into the state’s reserve funds, keeping it at 15% of state spending.

“The question right now before all of us, is how do we move New York forward, even in an uncertain environment, and get through these challenges?" Hochul said in her budget address. "Once again, we're submitting a balanced budget for fiscal year 2024. It's a thoughtful plan that furthers our progressive values and our priorities as New Yorkers, but also ensures fiscal responsibility."

Securing funding for the MTA is one of the state’s top priorities, the governor said.

“We have to face the harsh reality of the MTA’s fiscal cliff — a problem that was created by almost a complete cessation of ridership during the pandemic,” Hochul said, referring to the authority’s recurring $2 billion operating shortfall. “This is not going to be a short-term problem.”

Her proposed solution: New York City chips in an additional $500 million; the state adds a one-time influx of $300 million; downstate casinos, which haven’t been sited yet, eventually channel some of their tax revenue; and some businesses pay a higher rate of “payroll mobility tax.”

The so-called payroll tax was implemented after the 2008 economic recession — and proved quite damaging politically to Democrats on Long Island. But a 2011 rollback eliminated the tax for about 80% of the businesses that had been paying it — those with $1.25 million or less in annual payroll — while exempting schools and other nonprofits.

Now, Hochul is calling for raising the tax on companies that still pay it from 34 cents on every $100 of payroll to 50 cents. Her office said it would generate an additional $800 million annually, going to the MTA. The administration couldn’t immediately provide information on how many employers currently pay the payroll tax.

Even if fewer employers are subject to the hike, some Island lawmakers said they would oppose the hike.

“It’s a tax on jobs,” Assemb. Edward Ra (R-Franklin Square) told Newsday. “A lot of businesses we know are having difficulty with staffing and I do feel this is counterproductive.”

In contrast, the New York Public Interest Research Group praised the plan, saying it would provide “badly needed revenues to help the MTA limp through its current financial crisis.”

Citing public safety as another top priority, Hochul called for earmarking $40 million to hire more prosecutors around the state, launching two more state trooper recruitment classes and raising salaries of court-appointed defense lawyers.

She also called for increasing spending on after-school and job training programs and multiple anti-gun violence programs, as well as expanding the number of beds for inpatient psychiatric facilities as a way to get homeless people with mental health issues off the streets.

But she also said she wants to take another crack at revising the state’s bail laws — which could trigger a fight with more liberal Democrats who control the Senate and Assembly.

She would remove language that directs judges to impose the “least restrictive” standard in determining whether a criminal defendant should be released or held on bail in cases involving violent felonies and certain misdemeanors.

“Conflicting language in the law leads to confusion and a lack of accountability for the judges to make their determinations. So let's just simply provide clarity,” Hochul said.

But legislative leaders generally have opposed providing more judicial discretion because they say it unfairly impacts poor and minority defendants.

Assembly Speaker Carl Heastie (D-Bronx) said the focus should be more on root causes of crime. Like other Democrats, he noted many states saw increased crime during the pandemic, whether they had changed bail laws or not.

“We’ve got to get off that focus of the four letters and focus on the totality,” Heastie said of the bail issue.

With Alfonso Castillo

, , , , , , , [object Object], .