The big Albany news last week was the unveiling of Governor Hochul’s 2025-2026 Executive Budget. This raises the curtain on the budget process and while hammering out a final budget is rarely easy, the prospects for the governor’s plans are boosted by forecasted surpluses of $3.5 billion in the current fiscal year and another $1.8 billion for the fiscal year starting on April 1.

The themes of her budget address, tracking her State of the State presentation a week earlier, was unmistakable: making New York more “affordable” and combatting crime. “This year’s budget will put money back in New Yorkers’ pockets and make our streets and subways safer.” Her budget address worked around those themes and offered little else that could crowd out her message.

The governor proposed that the bulk of the state’s budget surpluses be used to fund “affordability” measures: $3 billion for refund checks to 8.6 million New Yorkers and $1 billion in middle-class tax cuts for New Yorkers who file jointly and earn up to $323,000 annually.

That surplus is the result of higher-than-expected tax revenues. The governor also laid the groundwork for tougher days ahead — particularly if the new administration in Washington follows through on its plans to cut spending in ways that impact New York. While the spending plans of the new Trump Administration are not yet clear, the governor’s budget does anticipate that New York will receive $90.8 billion in federal funding in the coming fiscal year. Her budget projects state reserve funds of more than $20 billion.

The governor’s $252 billion budget proposal covers a lot of ground, calling for more money for existing programs, as well as offering new policy initiatives. The governor wants increases in education spending by boosting state aid for schools by $1.7 billion. She proposes hikes in the state share of Medicaid spending, which now totals about $100 billion – the largest portion of the state budget.

The governor also proposes to extend the current “millionaires tax,” which was due to expire in 2027. Her plan extends it through 2032.

The governor would use some of the surpluses to fund new measures to offset child care costs, including plans to spend over $800 million to expand the Child Tax Credit over two years. That tax credit would give eligible parents $1,000 for children under 4-years-old and $500 for those aged 4-16. She also proposed $340 million to provide free school breakfast and free school lunch for every student in New York.

However, on the darker side, the state Comptroller warned of “out-year budget gaps of $23.2 billion for the next three fiscal years,” which casts a shadow over the governor’s proposal.

One of the biggest problems facing the state is the eroding finances of the downstate mass transit system, run by the Metropolitan Transportation Authority (MTA). Late last year, the MTA released its capital budget plan for the next five years.

The plan calls for $68.4 billion in spending over the 2025-2029 period. Where will the money come from? Billions will be generated by Manhattan tolls from the congestion pricing. The MTA will generate billions more through debt financing and toll revenue-backed bonds. After that, the MTA was counting on federal grants and from New York State and New York City in direct funding, for a total of $35 billion.

That leaves the MTA trying to fill a $33-billion capital budget hole. In one of the most unusual plans offered in a state budget, the governor “assumes” revenue would materialize, presumably subject to final budget negotiations. The executive budget “assumes” billions in revenue from the state, billions from the City of New York, billions from the MTA and billions more from the federal government. If any of those assumptions fail to become reality, there will be a big hole in the MTA’s capital plan.

In a move that has already generated criticism from environmentalists, her plan does not include implementation of the “cap-and-invest” program that was supposed to be up-and-running this year. “Cap and invest” would establish a tightening cap on greenhouse gas emissions and invest the proceeds from polluter-paid fees. The plan charges a fee to large-scale greenhouse gas emitters and distributors of heating and transportation fuels, requiring they purchase pollution allowances for their activities. Proceeds would support clean energy investments in addition to funding annual rebates to all New Yorkers to offset potential consumer additional costs. The governor is kicking the can on this issue – presumably due to concerns it will increase energy costs for consumers.

Failing to act, of course, will lead to bigger problems with a worsening climate catastrophe. According to state experts, that would be a huge mistake in light of “the cost of inaction in New York State exceeding the cost of action by more than $115 billion.”

More will be learned as the governor’s plans are scrutinized through the legislative hearing process, starting this week. Under New York’s Constitution, the governor has the whip hand in the process and wins a lot more than she loses in Albany’s budget fights. Too often, Albany forgets exactly whose money it is that they’re fighting over. In order for the governor and state lawmakers to get it right, we have to stay engaged. Stay tuned.

This week Governor Hochul will deliver her State of the State address. Like her predecessor Andrew Cuomo, who first broke with tradition, her speech will not be delivered in the state Capitol, but in a performing arts venue contained within the Empire State Plaza, a complex of government buildings and small businesses. And her message will be delivered the first full week of the 2025 legislative session, not on its first day.

The governor’s State of the State is a requirement of the job. The state Constitution demands that “The governor shall communicate by message to the legislature at every session the condition of the state and recommend such matters to it as he or she shall judge expedient.”

In modern times the State of the State speech is delivered with much of the pomp found in the State of the Union address given by the President. The State of the State is delivered before a joint session of the state Senate and the state Assembly and is covered by media outlets across the state. The speech is typically delivered at the beginning of the legislative session and offers the governor’s vision and her plans to make the state better. The speech often runs for an hour or so and is accompanied by a detailed policy book that outlines the governor’s initiatives.

This year’s State of the State will likely touch on a full range of issues. Potential topics include how to fund the Metropolitan Transportation Authority, which runs the downstate mass transit systems; reforming how the state funds K-12 education; and how to do so in the shadow of a new – and more fiscally hostile – Administration in Washington develops its own budget.

That said, State of the State addresses are more poetry than prose. The details of the governor’s plans will come into focus when she releases her budget, not so much in her address. Instead, the governor uses both the State of the State and the days just prior to it to hammer home a theme and build public support for her agenda. This year is “affordability.”

The governor has already unveiled proposals that underpin her “affordability” message. Of course, there are things a state government can do to make life more affordable for its residents. Generally, however, the biggest cost drivers are largely outside the control of state government and more the result of national or global policies or events.

Take for example, the issue of insurance. Insurance is largely regulated at the state level, but costs from one part of the nation can impact companies’ bottom lines and thus impact rates in another.

The costs from the rapidly worsening climate are a good example. We have all been transfixed by the wildfires devastating swaths of Los Angeles. These massive, out-of-control blazes are now burning their way into suburban areas with no sign of letting up.

In California, the mounting losses from communities being burned to the ground and the resulting financial losses to insurers have resulted in the market drying up for homeowners looking for coverage. The insurance market has gotten so bad that California’s insurance companies have dropped hundreds of thousands of policyholders across the state in recent years citing the increasing risk and severity of wind-driven wildfires attributed to climate change.

It is now being reported that those losses will impact New York’s insurance premiums. The reason is the result of the arcane way the insurance industry operates. Insurance companies buy insurance to help cover the costs of unexpected large claims. That coverage – called reinsurance – has been getting more and more expensive as climate disasters have increased across the nation. As disasters mount, the cost of reinsurance goes up too. Thus, driving up premiums in states that are not directly impacted by a specific disaster.

Of course, every state gets plenty of disasters. One does not have to look far for ones that have hit New York. The first half of November was among the 20 driest such periods on record. That dryness increased the likelihood of wildfires occurring – and they did. New York City had brush fires of its own in Manhattan and Brooklyn.

Wildfires have not been the only bizarre environmental events experienced by New Yorkers. The National Weather Service documented that 32 tornadoes touched down in New York this year. That’s the most since tornadoes were first recorded in the state in 1950.

Yet, the fossil fuel industries are advancing their opposition to New York’s moves toward “green” energy. Big Oil and their allies have embarked on their own “affordability” campaign to undermine the state’s science-based climate goals, assailing them as “ignorant,” “radical,” and “unaffordable.” This campaign is just the latest in the decades-long efforts to block climate protection policies.

Climate catastrophes will make the insurance business more costly – costs they’ll look to pass on to policyholders. As a result, New Yorkers have to hunker down, demand that the state move away from burning fossil fuels – which are driving the climate disasters – and prepare for higher costs that have little to do with Governor Hochul’s plans. Remember, when it comes to climate, insurance “unaffordability” is not the result of expensive state government, it is the result of the malignant advocacy of Big Oil and its stooges.

New York should strive to be more affordable, but it shouldn’t do so in a way that sacrifices the costs of generations to come.

Lawmakers return to Albany this week for the start of a new two-year session. In addition to orienting some new members, the Legislature will tackle some of the big issues of the day. And while the legislative session could have a big impact, what will be happening in New York’s courts could be also hugely consequential.

That’s because this week also begins the final saga of former Governor Cuomo’s $5 million book deal. The book was written during the early days of the COVID pandemic – a time when Cuomo was lauded for his daily pandemic briefings.

At that time, the former governor negotiated a multi-million-dollar book deal in order to tell his story on New York’s handling of the devastating pandemic. The then-ethics agency’s staff approved the deal on the condition that Cuomo did not use public resources to write the book. Subsequent investigations documented that the former governor did, in fact, use public resources. When the ethics agency began its procedure to possibly force the former governor to give back the book deal payday’s proceeds, Mr. Cuomo sued.

This week, the state’s highest court – the Court of Appeals – will hear oral arguments about the former governor challenge to the constitutionality of New York’s ethics law.

Some background. The former governor was widely praised for his communication of how government and the public should handle the unprecedented threat from the virus. At the peak of his popularity, the former governor pitched a book deal to a publisher.

The reason the former governor needed ethics approval was because he was a full-time public servant. Full-time employees of the executive branch must get approval to “moonlight” in order to ensure that there are no conflicts of interest and that the work is done off hours. The New York Governor has the highest salary of any governor and has free access to the governor’s mansion and other benefits. Thus, any request to obtain outside income must be carefully scrutinized and monitored.

At that time, the ethics staff approved the book deal – without bringing the question to the ethics agency’s commissioners. However, the approval stated that the governor could not use public resources in writing the book.

It was that provision that the then-ethics agency, the Joint Commission on Public Ethics (JCOPE), investigated and found had been violated by the former governor. JCOPE had hired an outside law firm to review the situation and that firm agreed with the agency’s previous conclusion: that Governor Cuomo “misused the power and authority of his office to create, market and promote for enormous personal profit a work that not only was derivative of his official duties but could only have been brought into existence and completed on schedule through the . . . assistance of a group of Executive Chamber and other state officials.”

JCOPE concluded that the former governor had violated the agreement and had to again either request approval or pay the money back to the state. However, soon thereafter the entity was disbanded and replaced under legislation advanced by the current Governor Hochul.

The new ethics agency, the Commission on Ethics and Lobbying in Government (COELIG), decided to investigate the JCOPE conclusion that Cuomo had violated the book deal agreement. It was that renewed investigation that the former governor is trying to block in court. Cuomo is not challenging the investigation directly; instead he is directly attacking the legality of the new ethics agency itself and doing so in order to stymie the ethics agency’s look into the book deal.

The former governor has, so far, been successful. A state Supreme Court judge found that the ethics agency is indeed unconstitutionally constructed and blocked it from further investigating the book deal. That decision said that the ethics agency’s independence from the governor violated the state Constitution’s separation of powers principle. The state appealed and the appellate court also ruled in Mr. Cuomo’s favor. The state is now challenging that decision before the state’s highest court.

The implications for New Yorkers go beyond whether the former governor can keep the $5 million. There is now a bigger question: The courts have ruled that the governor does not have the authority to cede her own power, in this case to an “independent” ethics watchdog.

To date, the courts have ruled that the state Constitution mandates that any agency established within the executive branch must be controlled by the governor’s authority. Thus, since the current ethics commission contains only three of eleven appointees of the governor, it is not fully under her control. As a result, the courts have so far found that the ethics commission is unconstitutional (and cannot investigate the former governor’s book deal).

Moreover, any entity within the executive branch must be controlled by the governor’s authority. Under this legal theory, all gubernatorial appointees must be directly chosen by the governor and there can be no executive entity that is fully independent of the governor’s appointment authority – unless it is explicitly structured that way in the state Constitution.

This logic challenges the independence of agency regulatory bodies. How can decisions be made by independent entities – for example the setting of utility rates – if the governor controls the majority of the commissioners? Most obviously, how can an ethics agency investigate the governor or her staff when they are appointed directly by the governor? How can an ethics agency that is controlled by the governor be an effective watchdog over the chief executive?

If the court rules in favor of the former governor, he has a greater chance of keeping the $5 million. If the former governor wins, it’s back to the drawing board for ethics enforcement and perhaps even the independence of state agency decision-making. And that would be a bad thing for ethics oversight in New York and toss a hot potato to the Legislature. Stay tuned.