As with most of the budgets that emanate from Albany, the 2026 document contains both good and bad elements.
On a positive note, let’s start with the following:
THE GOOD
No New Taxes (yet)
At the moment, at least, the governor who is running for reelection this November has submitted a budget with no major tax increases.
She had earlier ruled out a request by New York City Mayor Zohran Mamdani and other progressives to raise income taxes once again. Earlier this year, she hinted she might be open to increasing the corporate tax, but no such increase was submitted in the budget. This doesn’t mean it won’t come about in a compromise with the state Legislature when the budget is finalized in April.
Billions will be needed to meet the wish list laid out by the newly elected mayor. His goal of creating free daycare alone will cost several billion dollars. A scaled-down version still required Hochul to come up with an additional $1.7 billion in her proposed budget.
The state’s finances have been on a roller coaster as of late. There was a massive infusion of federal funds during the Covid era. Some of that was hoarded in reserve funds, but a good chunk of it was spent on new recurring projects.
State spending skyrocketed since 2019 an astounding 67%. New York State’s proposed budget of nearly $260 million is now two-and-a-half times the size of Florida’s, which has 3 million more people than New York.
But the $11 billion lost in federal funds seems to have been made up by a massive increase in additional revenues that came from additional revenues resulting from the white-hot stock market.
Since the finance industry is such a large component of the New York economy, major increases in the market translate into higher Wall Street salaries, and more taxable income flowing into the state government.
The Comptroller warns, however, that the spending levels coming from Albany are unsustainable. A downturn in the economy could cause huge deficits. It’s already been estimated by the state comptroller in August that the state is running a structural three-year deficit of $34 billion.
Changes to SEQRA
The governor has wisely proposed a modification of the State Environmental Quality Review Act (SEQRA) for affordable housing projects that are sought to be fast-tracked. This, according to the development community, will save a huge amount of time (which is money) and increase the stock of needed next-generation housing.
Car Insurance Reform
Hochul also seems to have picked up on the successes of Florida governor Ron DeSantis, who, along with his Republican-led legislature, implemented car insurance overhauls that broke up the fraudulent accident rings and are bringing down premiums. These fraudulent doctor/patient/lawyer conglomerates are estimated to cost New York state countless dollars every year.
THE BAD
Huge Medicaid Hikes
The biggest red flag evident in this budget is, once again, a massive increase in Medicaid spending.
New York already spends more on Medicaid and healthcare than the states of Florida and Texas combined, even though they have two-and-a-half times the population.
One out of every three New Yorkers is now on Medicaid and that figure is over 50% in New York City. This is simply unsustainable.
And despite President Trump‘s efforts to stop the flow of public funds for health insurance for those who are here illegally, the state continues to add people onto the rolls, regardless of their documented status.
No Education Reform
Governor Hochul, like the governors preceding her, loves to boast about extra money going to our schools. But if there’s one thing that is evident to the common observer, it is that the state’s doubling and tripling of state aid to local education has had little to no impact on improving student performance.
That’s because the state continues to limit competition through charter schools, which are proven to provide better educational outcomes at a lower cost. The state has also allowed the Board of Regents to water down standards by lowering passing grades and even eliminating the need for Regents exams in some cases. New York spends more per student than any state in the nation, yet continues to fall in the middle of the pack within the 50 states when it comes to student performance.
If there is one thing we’ve learned, it’s that throwing more money at the problem is not solving it. So why not give taxpayers a break and redirect that money for tax relief or other needed services?
Instead, the governor grants another $2 million to teachers unions to “train“ teachers. Why would this be given to the unions and not the administrations? Seems like politics to us.