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State Budget Paradox: Flush with Money, Spending Plans, and a Large Dose of Caution; Is There Room for One More Big Program?


(photo: Mike Groll/Office of Governor Kathy Hochul)

Gov. Hochul presenting her budget (photo: Mike Groll/Office of Governor Kathy Hochul)


Pandemic Dollars + Improved Tax Receipts = Plenty to Spend
Governor Kathy Hochul released the New York State Executive Budget on January 18, 2022, setting the framework for an adopted budget before April 1 of this year by the Legislature and governor. The state is astonishingly flush with money, both federal pandemic relief funds and dramatically-improved tax receipts.

The Division of the Budget is predicting healthy surpluses in state funds alone, with over $5 billion in the current fiscal year, 2022, over $6 billion in the coming budget year, FY 2023, and surpluses for the entire planning horizon through FY 2027, even after all the federal pandemic relief funds are finally spent in FY 2025.

There’s plenty to spend. The governor’s budget includes an undesignated $2 billion “Pandemic Assistance Fund” from the current fiscal year state surplus to be negotiated with the Legislature. There is a $2.2 billion property tax rebate proposed to be distributed to homeowners this fall, and $1.2 billion for bonuses for health care workers to reward their work during the covid pandemic and retain their employment.

All of these items are funded from the state surpluses and don’t lock in any new spending commitments!

There is also $12.75 billion in federal pandemic assistance from the 2021 Biden Rescue Plan that the state is permitted to spend pursuant to federal approval of a New York plan. The Hochul administration has not yet specified that plan.

Budget Takeaways and a Paradox
Two major factors are driving the budget that seem a paradox, while there’s an opportunity for Governor Hochul and the new Mayor of New York City, Eric Adams, to collaborate in a way that political enemies Andrew Cuomo and Bill de Blasio did not. 

While it’s an extraordinarily liberal spending plan, the paradox is that it’s a plan to avoid spending too much in case New York’s problems take a turn for the worse. Meanwhile, Hochul and Adams can collaborate to operationalize the subsidies needed for ambitious affordable housing programs that are not conceptualized in the current budget.

A Liberal Spending Plan
Below are planned expenses over the next four years for education and health care, the two largest parts of the budget, from state operating funds (see p. 84, NYS DOB 5-Year Financial Plan); the numbers are in 1000s:

  FISCAL YEAR                                    ’22         ’23          ’24          ’25            ’26        ‘27

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Starting in FY 2023, school aid increases from $31.178 billion to $38.357 billion, about $7.2 billion, over four years, nearly 6% a year. There is also $13 billion in federal pandemic relief funds available for schools to be spent over several years.

State Medicaid spending, growing from over $25 billion in FY 2023 to $31.6 billion in FY 2027, is covering health care expenses for 7.7 million New York residents, more than one-third of the state’s population. The State Medicaid spending is only showing the state government’s share of the program. Total Medicaid expenses including federal and local government shares currently exceed $90 billion a year and are anticipated to reach $100 billion in 2027.

But Caution Over New York’s Uncertain Future: Weak Economic and Employment Recovery
The second takeaway is the deep caution in the plan, based on the risks of New York’s uncertain future. New York’s “pot of gold” is occurring despite the fact that the state’s employment recovery is the second lowest across the country since the pandemic low in April 2020 (only Hawaii, also a heavily tourism-dependent state, has a weaker recovery). Spending like the property tax rebate referred to above, from the state’s surpluses, are one-time expenses intended not to recur. In fact, the plan for the surpluses over the next few years is to save most of the money and put it into reserves.

State budget director Robert Mujica, who also held the position under former Governor Cuomo, argues that New York State was badly prepared for the three 21st Century calamities that forced big cutbacks for government in New York. First, 9/11, then the 2008-9 Great Recession, and, of course, the COVID-19 Pandemic.

The plan is to bring the state’s reserves to 15% of state operating funds spending (p. 18, DOB 5-Year Plan):

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Reserves at the end of the current year, FY 2022, are expected to be $8.9 billion and the plan is for them to grow to over $10 billion by FY 2025, and later reach over $19 billion. New York could then cope with a recession or another pandemic. Mr. Mujica makes no mention in the rationale for major increases in reserves of a dangerous out-migration of residents or the subset of wealthy taxpayers fleeing the state.

Large out-migration from the state was a fact in 2021, however. The U.S. Census reported that the state lost 319,000 residents between July 1,2020, and July 1, 2021, the most in the nation, although Washington, DC had a higher percentage decrease.

New York lost 352,000 to domestic out-migration, while international migration, a major source of population gain of over 100,000 a year to New York for decades, slowed to a minimal increase, 18,000. Trump-era immigration policies and the temporary closure of U.S. borders due to covid slowed international migration dramatically to the whole country, not just New York.

New York raised income taxes last year on the state’s wealthiest taxpayers (those earning more than $2.2 million married filing jointly). Budget director Mujica was asked last month if the increase was driving departures from New York, and said, “We haven’t seen any evidence of that.” He said the federal cap on deductions for state and local taxes could be a larger factor.

New York residents have been moving to the south and the west for decades; the question is whether the out-migration is a step-up from normal and poses a risk to the economy, and whether immigration trends will reverse so that New York can depend on that usual boon to its population and fortunes. Despite Mr. Mujica’s seeming lack of concern, I am sure the Division of the Budget will be intensely monitoring how many wealthy taxpayers are filing returns this year and years after, and how many residents are leaving.

Despite long-standing outmigration from New York, we just experienced an 800,000 population gain in the state, three-quarters of which was in New York City, from 2010 to 2020, according to the U.S. Census. And some of the recent drop could be temporary due to covid. Taxpayers who have moved out of state, to New Jersey or Connecticut, or even other states whose employment remains linked to New York, can still be paying income taxes here because their employer’s base is here.

A Massive Unemployment Tax Liability
A dilemma for the state and its employers is a $9.3 billion outstanding liability to the federal government for a loan taken by New York to help pay unemployment claims during the pandemic, when the need was massive.

Under normal Unemployment Insurance Law, when layoffs occur, employers have their unemployment insurance rates and taxes rise to replenish the state’s Unemployment Trust Funds. Since so many employees were laid off during the pandemic, that means steep rises in unemployment taxes for thousands of New York businesses to help make the Trust Funds whole.

According to a report by State Comptroller Tom DiNapoli, tax increases of $1 billion in 2022 are set and will increase over several years. The report discusses several ways the federal government has authorized states to repay the loaned funds, including one-time options involving the use of general state funds, the use of federal covid relief funds, and even issuing state bonds to help provide relief for businesses. The Empire Center for Public Policy has urged Governor Hochul to use some of the $12.75 billion in federal covid relief funds available to the state to help businesses repay this extraordinary obligation.

For the moment, the dichotomy between the largesse in the state’s treasury and the relatively weak employment gains is explained by the fact that the incomes of the state’s wealthiest and most affluent taxpayers, boosted by gains in the stock market, have held up during the pandemic, along with extra money from the income tax increase in 2021.

A Bonus: Proposed Budget Creates an Opportunity for NYS & NYC to Collaborate on Affordable Housing
There is a real opportunity for Governor Hochul and Mayor Adams to collaborate around housing. The governor’s budget plan includes a new $4.5 billion housing capital plan with intentions to produce or preserve 100,000 affordable units, including 10,000 new supportive housing units, over five years. Although Mayor Adams has not put together his own housing plan, Mayor de Blasio’s Housing 2.0 plan is ongoing, with thousands of low- and moderate-income housing units still anticipated.

While in many cases affordable units can be cross-subsidized with market-rate units in development projects, cash subsidies are essential for poor, needy, and working class New Yorkers and both the governor’s and the city’s housing development plans, including whatever ambition is expressed by the new mayor, will need operational subsidies as the units come on line.

The New York Housing Conference has endorsed the state government creating a Universal Rental Assistance program similar to the federal government’s Section 8 Housing Voucher Program.

New York City’s Section 8 waiting list has 30,000 households, and the city received 8,000 emergency Section 8 vouchers in the federal American Rescue Plan. If the city’s Section 8 waiting list is 30,000, I estimate the rest of the state could have 20,000 households on Section 8 waiting lists in various municipal housing authorities. In December, Governor Hochul signed legislation to supplement the city’s emergency rental subsidy for those experiencing homelessness to bring it to the federal Section 8 level, and there is $100 million in the budget for this program, named Transitional Rental Assistance.

It could cost $1 billion a year to fund 50,000 rental assistance vouchers and set-aside housing units for homeless New Yorkers. The governor could request (and even compel) the city to share costs for the vouchers in the city. With joint funding and integrated planning, new low- and moderate-income units and vouchers can bring major relief. The state and city could start down this path, always hoping for the federal government to come through with additional vouchers of its own.

The state is planning to add over $10 billion to its reserves to reach $19 billion in the next three years. The goal is great, but does the state really need to put all of that money aside? Clearly it could partially fund a state housing voucher plan with some of the money it intends to put into reserves. The surpluses are anticipated to continue past 2025, and it will take time to implement 50,000 new vouchers. If migration out of state clearly begins to impair the economy, or if another recession occurs, the state and city can put on the brakes on this or other spending. 

Overall, the governor’s executive budget is sensible, but with the state in such great fiscal shape right now, it is not too risky to add this one major new program -- a state housing voucher to reduce homelessness -- and keep its ultimate cost under control.

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Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.

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An Opportunity to Boost the Environment, Economy, and Workers


(photo: Michael Appleton/Mayoral Photography Office)

Street construction (photo: Michael Appleton/Mayoral Photography Office)


We have at times been led to believe that legislation can typically only fall in one of the following categories: environmental improvement, economic boost, or labor-friendly. In fact, we have actually seen instances where this is true and the goals outlined within a bill are at odds with others.

But New York has an opportunity this session to support and pass legislation that clearly encompasses all three: the Roadway Excavation Quality Assurance Act (REQAA). Long bill name, huge potential impact.

The REQAA would require that workers be paid prevailing wage when crews have to cut open a street to do utility work. And attaching prevailing wage to this type of job, which is very common, is far more consequential than you might think. First, prevailing wage means trained, highly-skilled workers are doing the job – workers whose skill-sets ensure timely and efficient repairs, so you’re not without power, heat, cooling, etc. for extended periods of time. If these skilled workers are making repairs to a damaged utility line, they would be able to stop a gas leak more quickly.

Better for the environment, better for everyone paying a utility company for service.

Importantly, paying prevailing wage means the workers doing these dangerous jobs are paid a livable, family-sustaining wage. In short, they can afford to feed their families, live a solid middle-class life, and have the financial resources to patronize their hometown shops and restaurants.

Better for a deserving workforce, a shot in the arm for the economy.

It’s important to recognize that New York’s energy landscape is evolving, and the job market for people who work in this field is, too. Passing the REQAA would be a prime example of making sure that as the energy industry is advancing, it takes the workers with it.

The REQAA is an opportunity for labor, environmentalists, and economists to fight together for a better future for New York State. Don’t you think we owe this to all New Yorkers?

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Patrick Purcell, Jr. is the Executive Director of the New York State Laborers-Employers Cooperation & Education Trust. Assemblymember Karines Reyes proudly represents the 87th District of New York State. On Twitter @KarinesReyes87 & @NYSTriFunds.

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The Other Theodore Roosevelt Statue at the American Museum of Natural History: A More Fitting Tribute to the Conservation President


theodore roosevelt sculpture

Theodore Roosevelt in the AMNH (photo: amnh.org)


The American Museum of Natural History in New York recently arranged for the removal of the controversial equestrian statue of Theodore Roosevelt from the front of the museum, where it had stood since 1940. The decision to remove the statue came about in response to charges that the statue reflects racist and colonial values. Given all the national publicity related to this event, the public could easily conclude that Roosevelt's special connection to the museum is no longer being honored, but such is not the case.

The museum still has a bronze sculpture of Roosevelt on display in its Theodore Roosevelt Memorial Hall. This bronze sculpture depicts Roosevelt as a real person sitting on a bench with room for visitors to sit beside him.

These two statues differ dramatically in how they represent Roosevelt. Designed in 1939 by James Earle Fraser, the equestrian monument depicts Roosevelt as if he were a colonial ruler.  He looks larger than life and a bit aloof as he sits astride his horse, flanked by African- and Native-American men walking a step or two behind him. 

The bronze sculpture of Roosevelt sitting on a bench is a much more approachable depiction of Roosevelt. Created by Studio EIS in Brooklyn and unveiled in November 2012, this life-sized sculpture is based on photographs that were taken of Roosevelt when he and naturalist John Muir went camping together in Yosemite in 1903. Soon after this camping trip, Roosevelt set into motion a plan that resulted in a tremendous expansion of the land set aside for national forests and new national parks. In this sculpture, he looks like a rugged outdoorsman, which is exactly what he was.

Although the equestrian monument stood at the front of the American Museum of Natural History for more than 80 years, it really has very little to do with Roosevelt’s connections to the field of natural history.  In contrast, the sculpture of Roosevelt sitting on a bench in the middle of the American Museum of Natural History speaks directly to his long-standing interest in natural history and his support for the American Museum of Natural History.

Roosevelt’s interest in natural history is reflected in his reading. One of his favorite books from his childhood was John George Wood’s Homes without Hands: Being a Description of the Habitations of Animals, Classed According to Their Principle of Construction, a scientific treatise that originally came out in 1866. He continued to read books about natural history throughout his life. His library at Sagamore Hill, Roosevelt’s home in Oyster Bay, New York, is still extant, and it includes hundreds of books that relate to natural history. 

His interest in natural history extended into the realm of field work. When he entered Harvard in 1876, his dream was to study the natural sciences in the field and become an ornithologist like his role model John James Audubon. The sculpture of Roosevelt sitting on the bench captures this side of Roosevelt. He is depicted holding the pair of binoculars that he often used when observing wildlife.

Roosevelt’s association with the American Museum of Natural History also goes back to his childhood.  In fact, his father co-founded the museum in 1871. Even as a boy, Roosevelt donated specimens from his own taxidermy collection to the museum. As an adult, he remained an ardent supporter of the museum, so it is fitting that this sculpture is located just steps away from the museum’s exhibits of North American mammals and other wildlife.

Roosevelt is sometimes described as the conservation president, and the sculpture of him sitting in the middle of the American Museum of Natural History celebrates this side of President Roosevelt.

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Mark I. West, Ph.D., is the Bonnie E. Cone Professor in Civic Engagement and a Professor of English at the University of North Carolina at Charlotte, and author of the forthcoming book, Theodore Roosevelt and His Library at Sagamore Hill.

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