April 1^st is the first day of New York’s fiscal year, meaning that it is the day when a new state budget should be in place. Yet April 1, 2025 will come and go, without a new state budget on the books.

While late budgets are nothing new, this year’s faces a huge uncertainty: whether the Congress will approve a federal spending plan that blows a big hole in New York’s budget.

First some background. Under New York State’s Constitution, the executive branch is required to submit a balanced budget to the Legislature, usually in January. In contrast to other states, New York’s fiscal year starts on April 1^st – the earliest in the nation. While that gives lawmakers only three short months to cobble together a state budget, for the vast majority of the decades that the requirement has been in place, budgets were set more or less on time. It wasn’t until the mid-1980s that the fiscal “wheels” started to come off, with one budget being adopted 133 days after the beginning of the fiscal year! New York’s court system changed that with a decision in 2004 that gave the governor far more control over the budget process. Since then, delays in producing a final budget have been much shorter.

Add this year to the list of late budgets.

This year’s budget delay is tied to significant differences – some financial and some not – between the executive and legislative budget plans. For example, the governor and the Legislature have offered their own financial plans that spend different amounts, with the governor proposing a $252 billion budget, the Assembly at $257 billion, and the Senate’s budget at $259 billion. Negotiating those differences is a key step in getting the budget done. Another major spending item to figure out: how to fund the Metropolitan Transportation Authority (MTA); all agree on spending $3 billion, but there is no agreement on how.

It’s not just about the numbers though. Policy differences can derail budget negotiations. Two years ago, it was Governor Hochul’s demands in the area of public safety that jammed up the budget process. Last year, housing policy was a sticking point.

This year, reportedly there are four major policy differences among the three leaders: a restriction on wearing masks in public, a ban on cellphone use in K-12 schools, and two issues dealing with public safety.

None of those proposals have a significant financial impact on the state. But the governor is using budget negotiations to advance her policy initiatives.

Looming in the background is the impact that the Trump Administration and the Congress may have on the state’s finances.

The House of Representatives has advanced a budget plan that contemplates big cuts to federal programs and the extension of a massive tax cut. The U.S. Senate has adopted a budget plan that is significantly at odds with the House. With both houses having advanced their own plans, efforts to reconcile their differences are ramping up.

Given the narrow House majority, the seven New York State Republican Representatives can play a key role in deciding whether New York’s budget suffers devastating cuts at the hands of Congress. Whether they choose to do so, only time will tell, but the difficulties facing the Congressional Republicans make it clear that New York Representatives can play an outsized role in protecting the state.

Which brings us back to Albany. Despite the uncertainties surrounding discussed federal cuts in spending – no one knows for sure how much will be cut – state lawmakers must cobble together a plan of their own. And they need to do so quickly.

State budget makers are well aware of the danger, but they simply cannot predict what Congress will do. So, the game plan has been to pass a state budget and then return to address any shortfalls once the dust settles in Washington.

For Governor Hochul and state lawmakers, they have once again failed to deliver an on-time budget, a job that they were elected to do. Not only is the state’s fiscal plan overdue, but it may get seriously more complicated once Congress finally acts. In this three-dimensional chess match, the first move is Albany’s. But it’s late and the clock is ticking loudly.

While the Capitol continued to buzz about progress on budget deliberations, a state court decision garnered a lot of attention from lawmakers. The decision from a state Supreme Court judge in Suffolk County found a state law limiting the outside income of lawmakers constitutional. The law limits the amount of money that a lawmaker can make outside of his or her legislative salary to no more than $35,000 annually.

The law was to have gone into effect on January 1^st of this year, but had been blocked by a lawsuit brought by Republican lawmakers and their constituents. The lawsuit asserted that the law’s limit on outside income was unconstitutional. The judge’s decision is the latest in a five-year effort to limit the outside income of lawmakers.

First some background on the tortured path to impose such a restriction. In 2018, a state commission reviewing the salaries of top members of the executive branch and the state Legislature issued a report that called for a dramatic increase in lawmakers’ salaries.

From the period 1999 through 2019, lawmakers hadn’t seen a raise in their base legislative pay. The creation of the commission was a way for the governor and legislative leaders to circumvent the way in which pay has historically been raised. Previously pay raises were approved like any other piece of legislation – being introduced, considered in committee, and then voted on the floor before being sent to the governor for final approval.

But even under those rules pay raises for lawmakers were a difficult vote to cast, one that challengers could use as a political weapon to great effect in future campaigns. Pay raises for lawmakers is a political loser in many parts of the state. That’s why two decades had passed since the last one.

Establishing a commission to determine the appropriate level of compensation for lawmakers and top members of the executive branch was a way to get around taking a tough vote — or at least allow them to point to the compensation determination having been made by an outside entity.

The commission decided, among other compensation-related issues, to approve pay raises in three phases. The first was to go into effect on January 1, 2019 with an increase in lawmakers’ base salaries from $79,500 to $110,000. The following year, the salary would go up to $120,000. Finally, one year later there was a jump to $130,000. That salary would have put New York not only far above the national average, but the highest in the nation.

That earlier limit on outside income was challenged in court, with the final ruling that the salary boosts could go into effect, but the outside income restriction could not. As a result, lawmakers in December 2022 passed a new law, one in which they took the tough vote to place a limit of $35,000 on outside income; but they threw in a sweetener: Legislative salaries would be increased to $142,000, far-and-away the highest in the nation.

New York’s new law raised salaries immediately, but delayed the new outside limit restriction until January 1, 2025 since lawmakers who ran for the 2023-24 legislative session did not know of the new restriction. Thus, waiting until January 2025 for the outside income restriction to go into effect would give lawmakers and challengers a better understanding of the compensation structure when deciding whether to stand for election for the 2025-2026 term.

In mid-2024, some lawmakers sued again and got a preliminary court action to stop the restriction on outside income. The final decision came down earlier this month and opponents of a limit on outside income lost. The restriction is going into effect. Warning of “chaos,” opponents now are asking for a postponement of the decision and have said that they will appeal it – which they are, of course, entitled to do.

The legal back-and-forth ignores the rationale for the restriction in the first place. The 2018 commission report joined with reformers when it clearly stated that it “determined to limit outside earned income to ensure that Legislators devote the appropriate time and energy to fulfilling their Constitutional obligations and to also minimize the possibility and perception of conflicts.” The concern is not theoretical: New York has seen its share of scandals in which lawmakers have used their public positions to enrich themselves personally.

The five-year-long foot-dragging needs to come to an end. When lawmakers first accepted those gigantic pay increases starting five years ago, they knew that it came with some strings attached. One of those strings was that if you wanted the highest legislative pay in the nation, you must forgo significant outside income.

For most lawmakers, this is no big deal. The vast majority of lawmakers have no significant outside income. Media reports state that perhaps as many as 38 of the 213 legislators would be impacted by the law.

Those who ran in 2022 and then in 2024 knew that there was a distinct possibility that if they won, they would face a limit on outside income. Five years of delays are long enough. New Yorkers deserve state lawmakers who serve only one “master”: the public that they are sworn to serve.

The nation’s annual “Sunshine Week” started this past weekend. “Sunshine Week” is the annual recognition of the need for government openness. The idea of drawing attention to public interest in transparency in government was first celebrated nationally in 2005. That focus on openness is based on the notion that governments are more effective when they allow public oversight and access to documents and proceedings; openness also helps curb waste and increases government efficiency and effectiveness.

The rationale for celebrating the need for government openness this week – as compared to any other – is that March 16^th is the anniversary of the birth of James Madison, the nation’s fourth President, and one of the principal figures in the Constitutional Convention.

It was Madison who observed that “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both. Knowledge will forever govern ignorance: And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives.”

Unfortunately, “knowledge will forever govern ignorance” has never been under greater attack since the nation’s founding.

The nation’s leadership too often misleads, gaslights, or outright lies to the public it is supposed to serve – a chronic problem to be sure, but it is now much worse.

In bygone days, much of the effort to hold elected officials accountable – and to set the record straight – fell to the traditional media. That too was contemplated by the founders of the nation when they enshrined constitutional protections for freedom of the press.

Yet that role has been diminished by the collapse of local media outlets. The number of local newspapers that closed in 2022 totaled 130, leaving nearly 55 million Americans with limited to no access to local news.

The problem has become so bad that areas without local media outlets are now considered “news deserts.”  A “news desert” is a community, whether rural, suburban or urban, with limited access to the sort of credible and comprehensive news and information that feeds democracy at the grassroots level.

Exacerbating the problem is that the platforms from which many get their news, social media platforms, are increasingly curtailing “fact checking” measures that were instituted to curb hate speech and propaganda. Following the lead of “X” (formerly known as Twitter), META recently announced that it will no longer fact-check content.

As a result, we are facing Madison’s fear. So, what should be done? 

To strengthen democracy, public policies should do all they can to combat these growing trends.

Take for example, the New York State law that requires disclosures by lobbyists.

The law requires that those seeking to influence most governmental decisions must report their activities and expenses to a state ethics agency. So, lobbyists must report efforts to get lawmakers to agree on legislation, or an agency to change a regulation, or the governor to issue an executive order.

But there are loopholes. For example, lobbyists’ efforts to get the Legislature to approve membership to New York’s Board of Regents, which oversees education in the state. Earlier this month, the Legislature jointly approved three new members to the Regents. Since those nominations are approved through a joint legislative resolution, lobbying to influence them triggers a disclosure obligation. In contrast, however, nominations advanced by the governor to the Senate that do not require a legislative resolution do not require disclosure of spending to influence those choices.

Leaving the loophole in place deprives the public of information on who is seeking to influence gubernatorial appointments. In the state’s cockamamie lobbying disclosure requirements, lobbying to influence utility rates is considered lobbying, but influencing who sits on the board that decides on whether to approve those utility rates is not.

Last year, legislation was advanced in both houses to close the loophole. State Senator Gianaris’s bill was approved, but Assemblymember McDonald’s bill – while making it to the floor – stalled before it could be approved. This year, Senator Gianaris has reintroduced his legislation, but there has been no legislative action in either house to date.

Lawmakers could take steps to strengthen local media outlets, too. Last year, for example, New York established a tax credit for local news outlets to help cover the costs of hiring reporters. More can be done in that area too.

In our representative democracy, an informed electorate is fundamentally important to ensure that the system works.  Many Americans have unprecedented access to information, but too much is propaganda or the usefulness is limited. Trusted local news sources can help New Yorkers separate the wheat from the chaff – and there’s a lot of chaff these days.

“Sunshine Week” should be not only a recognition of the importance of openness in government, but also a call for action to make it better. The governor and Legislature should do more to “let the sun shine in” in New York.

New York lawmakers continue to move ahead on developing a state budget that is due to be in place by April 1^st. After the governor introduced her budget in January, state lawmakers held hearings on her plan to obtain testimonies from agency heads and stakeholders, and on March 1^st the governor and the Legislature agreed on available revenues. According to their estimates, the state has an additional $550 million to $800 million in expected revenues to allocate in the upcoming 2025-2026 budget.

This week it is expected that both the state Senate and the Assembly will release their counterproposals to the governor’s budget plan. The “normal” process would be that the leadership of both houses then meet with the governor to hammer out a final agreement.

This year’s budget debate, however, is being conducted under the dark shadow cast by the Trump Administration and the new Congress.

The House of Representatives has advanced a budget plan that contemplates big cuts to federal programs and the extension of a massive tax cut. Despite comments that deep programmatic cuts are needed to tackle the federal government’s yawning deficit, the tax reduction makes that gap even larger.

The House’s plan, which will need to be adopted by the Senate in order to move to the President, is vague on key details. For example, the plan calls for cutting $2 trillion in spending over the next decade, without specifying which programs should be cut, although it is widely expected to dramatically impact the nation’s Medicaid program.

That’s troubling for New York as Medicaid, health insurance available to those of modest income, is the biggest expenditure in New York’s state budget. In addition, Governor Hochul’s budget plan includes an expectation that the state will receive over $90 billion in federal assistance.

But the timetable for Congressional action is unclear. At best, the federal budget is approved well after New York’s fiscal year begins. Yet the development of a federal budget plan has been chaotic, to say the least; and with narrow Republican majorities in both the Senate and House, unless a bipartisan agreement develops (at this point seemingly extremely unlikely), it will be difficult to have a final agreement in place before New York lawmakers must act.

Under the circumstances, it will it be hard to fashion a Republican budget consensus, for now leaving the details of what programs will be cut and by how much as anyone’s guess. And to make matters worse, unless some sort of short-term agreement can be finalized by the end of this week, some areas of the federal government will run out of money and have to close down. Faced with this prospect, the House leadership is currently floating a stop-gap plan to keep the government open through the Fall while a more permanent plan can be put in place.

Given those uncertainties, how can the governor and legislative leaders cobble together a final budget?

Governor Hochul’s executive budget plan anticipates a “normal” Congressional outcome, one in which the federal government sticks by its financial obligations to New York and muddles along as in years past.

Whether that assumption turns out to be reasonable remains to be seen. In the meantime, what does Albany do?

In the short term, a reasonable approach would be to work with the plans advanced by the governor and each of the houses. Lawmakers have raised their concerns about Washington’s “dark shadow,” but they have little to go on. New York’s budget deadline is the end of this month, so state lawmakers and the governor have a responsibility to put a budget in place by then based on the best information currently available. It is possible that Washington will “kick the can” on a budget agreement until later in the year. If so, state lawmakers could return then and make adjustments to New York’s budget once the dust settles over the Congressional budget agreement.

In the meantime, the state will have to deal with well-known problems that will likely get worse if federal cuts are enacted. Problems like private colleges whose finances are weakening, funding for environmental programs to protect drinking water and address the worsening climate, help for struggling municipalities, the list goes on.

Whether the new Administration and the new Congress will make things worse for New York, only time will tell. Governor Hochul has put aside over $20 billion in reserve for a financial “rainy day.” The way things are looking, that “dark shadow” cast by Washington may mean financial rain clouds. However the nation’s and state’s budgets play out, we should be getting ready for a stormy few years.

The second step in developing a state budget wrapped up last week with the Legislature holding its final hearings on the governor’s proposed fiscal plans (that was the first step). Lawmakers held four hearings with two big ones related to the state’s future economy: higher education and economic development.

New York spends billions on its economic development programs, more than virtually every other state. Nearly two-thirds of those costs are tax incentives given to private businesses, which reduce the amount of revenue that state and local governments otherwise would have collected. 

Those programs have been subject to ongoing criticisms, in particular for the state’s failure to conduct a comprehensive review that evaluates whether these programs actually work. The state support for such programs hinges on the promise that they will generate jobs and stimulate economic activity. There are few mechanisms for real-time evaluation, in particular to answer the “but-for” question: Would companies have hired workers or made investments at the same level they did but-for the tax incentives? In other words, was the tax incentive necessary to induce the companies’ investments or would they have happened anyway?

According to some analyses, the answer to that question is “no.”

In addition, some tax incentives make little sense. For example, New York law allows for tax benefits for the use of fossil fuels, usually to protect consumers from some taxes, like buying home heating products.

In the age of climate catastrophe – and possibly shrinking federal support – tax incentives for oil, gas or coal products should be examined carefully. Advocates urged that the Fossil Fuel Subsidy Elimination Act, which will end $336 million in oil and gas subsidies that benefit corporations, be included in the budget.

Yet, these incentive programs are continued, developed, and often heralded year after year – despite failures.

That debate about tax breaks raged loudly during the hearing on economic development.

The higher education hearing focused, not surprisingly, on the governor’s plans for funding those institutions. But there was a big element of economic development there too.

As some advocates testified, higher education remains one of the smartest investments both the state and individuals can make in creating economic mobility and breaking cycles of poverty. Study after study makes it unequivocally clear that college graduates are better positioned to land higher paying jobs, earn more over the course of their lives, have more in savings, and contribute more in taxes.  Moreover, the state’s colleges generate significant economic activity, with $8 in economic activity for every $1 of state investment.

There was one proposal advanced by the governor that did get a largely positive reaction from lawmakers. The governor advanced a free community college program. However, the governor’s free tuition plan comes with a twist: It would be available to community college students ages 25-55 choosing classes that result in high-demand jobs, particularly in the upstate region. 

While most lawmakers admitted that the proposal was a good first step on which to build, questions were raised. One criticism was that academic disciplines disfavored by particular employers should not be a luxury for those who can afford it. So, instead of tipping the scales in favor of specific fields and further squeezing the humanities, some lawmakers urged that the final budget agreement offer this program to students regardless of which major they choose.

Free tuition to public colleges is of course hardly a new idea. The limitations proposed by the governor are likely the result of trying to minimize the financial cost to the state. If lawmakers choose to add more money, that probably means a more expansive program.

One thing for sure, the final budget will likely spend billions on economic development. Whether higher education – and free community college – gets the funding it needs, only time will tell.

It’s beyond argument that the governor and state lawmakers should focus resources on programs that work. Less ribbon cutting and press releases and more investments in higher education will not only help the state, but concentrate on an important sector that, year in and year out, delivers on its promises.