Things to know about New York State Legislature's budget plans: more aid to schools, hospitals

ALBANY — The State Legislature on Tuesday called for a larger increase in education funding, help for fiscally ailing hospitals, a bigger tax credit for families and a greater tax on wealthy New Yorkers to help pay for it.

The proposals by the Senate and Assembly would add what an independent analyst calculated is more than $8 billion to Gov. Kathy Hochul’s proposed budget for the 2024-25 fiscal year.

Now negotiations begin between the Democratic governor and Democratic leaders of the Senate and Assembly. The state budget is due April 1.

The Senate said its budget proposal is 5.8% more than what Hochul proposed in January and 6.3% over the current budget. The Assembly didn’t immediately provide its analysis of growth under its proposal.

In January, Hochul proposed a $233 billion budget, including all state and federal funds, which increased spending 4.5% over the current state budget with no tax increases. Earlier this month, state officials said tax collections are $1.35 billion more than predicted in January, which will be included in the budget talks.

Major elements of the Senate and Assembly budget proposals are:

Schools

Both chambers called for an increase of about $1.3 billion in school aid over the current funding. The Senate and Assembly said their proposal would mean an increase in aid of at least 3% for every school district. In January, Hochul proposed adding $825 million, to $35.3 billion, after two years of record increases.

As expected, the legislature rejected Hochul’s idea of ending the “hold harmless” practice, which for years guaranteed that no school district would get less state aid than the previous year. Ending hold harmless would mean less state assistance for 337 of the state’s more than 700 school districts — including 44 on Long Island.

“In education, we’re taking bold steps to reverse cuts and boost support,” Senate Majority Leader Andrea Stewart-Cousins told reporters Tuesday. “We want to make sure that we are giving the school districts, the teachers, the administrators, the resources they need.”

The legislative proposals also would allocate $1 million to fund a study on updating the aid formula. The two-decade-old formula contains some outdated measures that critics say leads to unfair funding of schools. Hochul said Tuesday she’s open to changing the formula.

Taxes

The Senate and Assembly would increase the income tax rate for the top two income brackets. The proposals would increase the tax rate to 10.8%, from 10.3%, for filers making $5 million to $25 million. The proposals also would increase the tax rate for filers making more than $25 million to 11.4%, from 10.9%.

The Assembly said this would provide another $930 million in revenue.

Hochul on Tuesday called that proposal a "non-starter." She has warned against making the state less affordable, including for the richest New Yorkers, who account for a large amount of tax revenue.

The Senate also would end the sales tax and use tax exemption for boats sold at $230,000 or more and for private aircraft.

The Senate would create a more generous tax credit for working families. It would provide an additional $550 credit on state income taxes per child to single taxpayers making less than $75,000 and married taxpayers filing jointly making up to $130,000. For filers making more, the credit would decline by $20 for each $1,000 of additional income.

Similarly, the Assembly would expand the Earned Income Tax credit to families with household incomes up to $56,000 and $79,000, based on their income tax filing status.

Hospitals

The Senate and Assembly propose adding millions more to Hochul’s $1.3 billion proposal to help hospitals in financial peril, including the Nassau University Medical Center.

The Assembly proposes to add $1.1 billion more for public health and $1 billion for health care facility capital needs.

The Senate would add $1.6 billion for hospitals, nursing homes, assisted living facilities, and hospice services and for inpatient and outpatient support that could also help distressed hospitals. That would create a 10% total rate increase for hospitals.

Housing

The Senate and Assembly would fund several measures to encourage local governments to accept more housing projects to combat a statewide affordability crisis.

The Senate also supports, but modifies Hochul’s proposal to use land owned by the State University of New York and the Department of Transportation for sites to build housing, including state properties in Suffolk County. But the Senate requires the housing to be affordable for lower-income residents.

The Senate also would add $3 million to help tenants avoid foreclosures and improve properties, and offer $40 million in grants to repair vacant and rent-stabilized apartments in Nassau County, New York City and Westchester and Rockland counties.

The Assembly proposes $250 million to help New Yorkers afford homes, including a $250 million housing access voucher program and $25 million for first-time homeowner assistance. In all, the Assembly would provide $1.5 billion more to help tenants afford rent and assist lower-income homeowners.

An independent fiscal analysis said balance wasn’t struck by the Senate and Assembly proposals.

“The legislature's one-house proposals shift the budget discussion in the wrong direction,” said Andrew Rein, president of the independent Citizens Budget Commission. He said the legislature’s proposals would add $8 billion above Hochul’s budget. Rein said that would be an 8.9% increase over the current budget, after successive years of 7.9% growth.