Hochul: Budget 'framework' has $1.3B more for schools, retains 'hold harmless' policy

ALBANY — New York will not reduce education aid immediately for school districts that have lost enrollment, but will overhaul its school-aid formula to account for changes in the near future, Gov. Kathy Hochul said while announcing the “framework” of a budget deal Monday.

The final budget should come in at $237 billion, an increase of more than $3 billion over last year. School aid will be $35.9 billion, a $1.3 billion increase.

The governor said the “conceptual” agreement also will include New York’s first comprehensive housing expansion plans in decades. It will include no income-tax increase, a priority for the governor, a moderate Democrat.

At a news conference, Hochul affirmed many of the broad strokes of the potential deal Newsday and others reported in recent days. Those include crackdowns on illegal cannabis shops and retail theft rings, a ban on co-payments for insulin and a significant boost in tuition assistance for college students.

The State Legislature had not signed off on all the details late Monday afternoon, multiple sources said. In fact, some lawmakers called the governor’s announcement “premature.”

“There are lots of open issues that need closing,” one Democrat said.

The budget was due April 1, but was hung up on the thorny issues of education and housing.

Hochul drew fire in January by proposing that the state end a policy in which no school district receives less aid than the year before despite enrollment changes — a so-called hold harmless policy.

Hochul's proposal would have meant reduced state assistance for 337 of the more than 700 school districts in New York — sparking opposition from Republican and Democratic state legislators, all of whom are up for reelection this year.

The governor said she had a “handshake” agreement with lawmakers to settle the education issue by agreeing to spend $35.9 billion overall, a $1.3 billion increase, while taking the first step toward overhauling the formula that drives aid to individual districts. Further, the agreement will limit growth of “foundation aid,” the primary aid category for schools, to 2.8% this year instead of an expected 5%.

The governor said the school-aid formula hadn’t been adjusted in years because her predecessors didn’t want to touch it politically. But she said it needed a fresh look because the state shouldn’t be “paying for empty seats” in classrooms. Now, lawmakers have agreed to a study, led by the Albany-based Rockefeller Institute, to eventually recalibrate school aid.

“Now’s the right time to take this on and begin to fix the way we fund schools to make sure they’re equitable, fair and doing the right thing,” the governor said. She thanked legislative leaders for agreeing to “improve the school aid formula and to adjust the unsustainable built-in rate of growth.”

The governor had worked this year to reach a consensus with a more liberal legislature on how to expand New York’s housing stock and boost tenant protections. Hochul said the budget will do both — though lawmakers pointed out it required some “give” on all sides.

“This is the most comprehensive new housing policy our state has seen in three generations,” Hochul said.

In a series of measures aimed at New York City, the deal is expected to renew a tax incentive for developers known as 421-a and create a new one dubbed 485-x. Broadly, developers get incentives for creating certain quantities of affordable housing units.

There also would be tax incentives for converting commercial space into residential.

Outside the city, the state would create incentives to expand “accessory dwelling units,” sometimes called “granny apartments.”

The deal also will include beefed-up renter protections, but won’t include a “Good Cause Evictions” proposal, which would have made it harder to force tenants from their homes. Sources said the new protections also will be tied to an income cap for renters.

Among other provisions, the budget deal will include plans to raise the minimum award under the state’s Tuition Assistance Program for college students and raise the family-income eligibility cap from $80,000 to $125,000.

Another initiative would delegate power to close illegal cannabis shops to local government authorities.

Hochul and legislators have gotten behind the idea because the state — either through the Office of Cannabis Management, the tax department or other vehicles — doesn’t have the staff power to enforce closures around the state.

Lawmakers have said “thousands” of illegal shops have been operating in part because the Office of Cannabis Management has been so slow to approve state-licensed dispensaries.

The package of retail theft initiatives includes tougher criminal penalties for assaulting retail staff, tax credits for business owners to invest in capital or hire more staff, and state money to help local police focus on the problem.

Rank-and-file legislators were being briefed on the budget framework Monday, and Assembly Speaker Carl Heastie (D-Bronx) and Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) didn’t comment immediately.

“Each of us came to the table with strongly held beliefs,” Hochul said. “In the interest of our state, we pulled it together.”

With Keshia Clukey and Michael Gormley

By Yancey Roy

yancey.roy@newsday.com@yanceyroy