April 1st 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 1st – 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.