Still No Budget in Albany

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Brigid Bergin: It's The Brian Lehrer Show on WNYC. I'm Brigid Bergin, senior reporter in the WNYC and Gothamist newsroom, filling in for Brian today. Now, we shift from the state of the national economy to a vital element of New York's economy, the state budget. That spending plan is now a full 12 days late. Lawmakers blew past the April 1st budget deadline once again this year with ongoing fights over housing, education, Medicaid spending, and a lot more.

What is the effect of these protracted negotiations like the latest fashion trends? Are we also making a return to the 1990s when it comes to budget fights? Back then, they stretched deep into the summer months, or does this late budget not really matter as long as the final deal is a good one? Well, joining me now to help explain what is happening in our state capitol and whether we'll see a state budget anytime soon is our own WNYC and Gothamist Albany reporter, Jon Campbell. Hey, Jon, great to chat with you always.

Jon Campbell: Good morning, Brigid. Welcome from rainy, gross Albany, New York.

Brigid Bergin: [laughs] It's pretty rainy and gross here too, to be honest. Listeners, if you have a specific issue that you are watching in the ongoing budget negotiations, I want to hear from you. Maybe you are a renter or a landlord watching for what's happening in the proposed housing deal or maybe you are a parent with concerns about education spending. Give us a call. The number is 212-433-WNYC. That's 212-433-9692. You can also text that number or tweet @BrianLehrer. Jon, let's put this year's late budget in a little bit more context. How much of a trend are we starting to see from the Hochul administration when it comes to a late budget agreement?

Jon Campbell: Well, Governor Hochul took office in late 2021. This is her third budget cycle since then and all three have been late. It was eight days late in 2022. It was 32 days late last year. That was the latest since 2010 when that budget was passed in August. A phrase that sends a shiver down my spine as somebody who has to cover the ins and outs of this thing. It's 12 days late in counting this year.

There's absolutely a trend that the governor, Governor Hochul, has not prioritized on-time budgets. There's some argument that maybe governors can use that leverage to their advantage because lawmakers don't get paid during the time where the budget is late. They get back pay at the end of it. In the process, they don't get paid when the budget is late. Maybe you can use that to your advantage a little bit. Three budgets and they've all been late.

Brigid Bergin: Well, Hochul's predecessor, former Governor Andrew Cuomo, certainly made those on-time budgets a symbol of well-functioning government and a tool to lobby lawmakers or strong arms, I might say. Similarly, we've heard legislative leaders talk derisively about how late budgets are a sign of government dysfunction. You spoke with someone who has been part of negotiating budgets from both vantage points. That's former Governor David Paterson, who also served as a state senator representing Harlem and Upper Manhattan in the state Senate for two decades. Here's his take on a late budget.

David Paterson: Honestly, as long as the agreement is reached by the end of April that by the next year, nobody really talks about it. They're not even really talking that much about the fact that they had a total breakdown in communication and didn't settle it until mid-May last year.

Brigid Bergin: Paterson picking up on the point you made that last year's budget was 32 days late. Setting aside the rhetoric, what are the other real impacts of a later budget here beyond the impact on state lawmakers and their salary? It's not like we're facing a looming state government shutdown, right?

Jon Campbell: No, this isn't like the federal government when they blow a budget deadline. When Congress and the President blows a budget deadline, then things actually shut down, employees are furloughed, et cetera, et cetera. Generally, the big concern on the state side is payroll, paying state workers. There's hundreds of thousands of state workers who rely on their paycheck from New York state agencies, authorities, et cetera. You want to make sure that they get paid.

To do that, you have to pass kind of like-- it's a basically a bare-bones, short-term-- we call them "budget extenders" in Albany parlance. That basically gets you to the next payroll date or whatever date the governor chooses really because she gets to write them up. The Senate passed its fourth budget extender yesterday. The assembly is supposed to do the same thing in the next couple of hours here and it's about $1.3 billion. It'll get us through Tuesday. Then if there's no deal by then, they'd have to pass another one.

Brigid Bergin: Wow. Well, let's get into some of the sticking points and I want to start with housing. Before we get into the details, can you just talk about why such a major policy proposal is part of budget negotiations in the first place?

Jon Campbell: Well, it's Albany tradition, right? It happens every single year and through various governors that governors have jammed a lot of policy that doesn't really have a whole lot to do with the finances of the state into the budget. The budget is this collection of 10 different bills. Five of them are generally financial and five of them are changes to state law to implement the budget. All the time, major policy gets negotiated as part of this budget process.

Part of that is because the state constitution and the courts over the years have given governors just a ton of power in the budget process. They get to author the original budget bills and they really kind of lead the negotiation process. Lawmakers are restricted in the ways that they can change language in these budget bills. Governors try to use that to their advantage and they put in these policy items that don't really have anything to do with finance.

Brigid Bergin: Let's talk about housing. It's been a key issue for Hochul and the legislature, but there have been some powerful forces pushing back on the current proposals. What's the latest version of plans you've heard talked about? I understand there's both incentives just for development as well as some protections for tenants.

Jon Campbell: Yes. First, if our listeners here are thinking that they've heard this conversation over and over again for the last two years, they would be correct because this is the second straight budget cycle that Governor Hochul and lawmakers have tried to reach consensus on a broad plan to create housing. Last year, they failed. They were not able to get it done in the budget. They took it out of the budget.

They tried again at the end of the legislative session. They weren't able to do that. Here we are for round two or three, depending on how you look at it. Really, what's starting to coalesce, what has been coalescing really for the last several weeks and months is this deal where Governor Hochul is pushing for a renewed tax credit for New York City developers who include affordable units. It used to be known as 421-a.

Brigid Bergin: Sure.

Jon Campbell: It expired a couple of years ago. She wants to re-up that credit and revamp it while legislators are pushing for some sort of protections for existing renters, additional eviction protections. It's known as good-cause eviction generally and basically would say that you can't be evicted from your home without good cause. Maybe you trashed the place. Maybe you didn't pay your rent. There's negotiations going on about pairing those two items together and then what would consider the details of good cause, right?

There would be a measure in there that would say, "Well, you can't hike rent by an unreasonable amount. If you do, then a tenant would be able to challenge that in housing court," but what is an unreasonable amount? Under the original bill, it was a 3% annual increase or one and a half times the rate of inflation. Now, we've heard they're looking at maybe 10% or 5% more than the rate of inflation, whatever's higher there. There's a lot of negotiation going on. Nobody really seems to be very happy with anything that's happening here, but they're moving in that direction.

Brigid Bergin: Well, Jon, not surprisingly, we have some callers who are interested in these housing negotiations. Let's go to Simon in Brooklyn. Simon, you're on WNYC.

Simon: Hey, good morning. I'm a small landlord. I guess the good-cause eviction law, I never raise my rent on anyone unless my prices go up dramatically. The good-cause eviction law if written would incentivize me to raise the rent on people where I otherwise wouldn't because it's a "use it or lose it" increase. If I don't use it this year, I can't use it next year. I realize that it's a very delicate situation.

There are probably some very bad actors who are landlords. When it comes down to it on Christmas Day when the boiler breaks, I'm in the basement fixing it. When the roof leaks, I'm on the roof fixing it. It's a hard job. I know that there are more tenants than landlords, so something like this will get passed eventually. Then maybe the real estate will fall apart, so sell it to somebody else who doesn't care. That's it.

Brigid Bergin: Simon, thanks for your call. Thanks for the perspective from a small landlord. I want to take the flip side slightly. Roberta in Manhattan, you're on WNYC.

Roberta: Good morning.

Brigid Bergin: Good morning.

Roberta: Good morning. I just wanted to bring up the rent-stabilized situation in Manhattan. Large buildings, small buildings, they are not being publicized on what is available in rent-stabilized apartments. In buildings, they have things on websites, but there's no indication of rent-stabilized apartments. The hoarding of apartments, you can't call 311. Nobody knows how to deal with it. People that live in the building for years can't seem to move into a larger apartment.

Either the resident super has to move into these or the owners have family members move in for a year. They're just waiting for this whole rent-stabilized law to go away. In the meantime, we have Airbnbs. We have short-term rentals from corporate companies that move people in and out. Residential buildings no longer are residential. It's just a real business. I understand that you need to maintain buildings, but the buildings that are stabilized and not stabilized, that brand that is not stabilized, they make a lot of money. It makes up for the rent-stabilized, which is becoming fewer and fewer because--

Brigid Bergin: Roberta, just to clarify, you're a rent-stabilized tenant? Is that the perspective you're calling from?

Roberta: Yes, and I have many friends that-- We were city dwellers, born and raised here. This is our home, and yet we don't have the opportunity to be a part of getting into a larger apartment or moving from building to building because, God forbid, you say you moving and then they think you're out.

Brigid Bergin: Roberta, thank you.

Roberta: There's no city official office that can even help us with this.

Brigid Bergin: Roberta, thanks for that call and that perspective. I'm sorry to cut you off because what I want to get is some reaction also from Jon. I'm not going to ask you to go deep with us, Jon, into all the variations of the housing market here in New York since you are up in Albany. Certainly, I'm sure you're hearing some of these issues being discussed by lawmakers as they try to nail down this deal.

Specifically, the concerns of some of the small landlords and some of the large landlords and how they feel about the potential for a good-cause protection being instituted and, on the flip side of that, how to ensure that the housing stock is available for renters who are looking for it. How much are you hearing and who are some of the players that are helping to negotiate this deal that may not be just the lawmakers?

Jon Campbell: Well, there's one thing that's being negotiated right now that touches on issues that both callers brought up there, and that is what's known as IAIs. That is Individual Apartment Improvements. That is an issue that applies to rent-stabilized units. Since 2019, there's been a cap. Basically, you can increase rent if you are a landlord, if you make improvements to an individual apartment. Maybe you renovate the whole thing. Maybe you renovate the kitchen. Maybe you install new equipment or replace equipment, et cetera, et cetera.

You can raise rents by a marginal amount to help you pay for that, but it's capped at $15,000. The way that it works out, it works out to about $80 a month, $90 a month, somewhere around there. There are negotiations happening now to try to increase that cap maybe to $20,000, $25,000, $35,000, $50,000, something around there, $50,000, which then the small landlords could pass this off to their tenants in general. Tenant groups, they are raising enormous red flags about this.

Actually, some of the small landlord groups are too because they say it's not really getting into the issue that they're looking for. Anyway, all of these things are under negotiation still. Some of the main players, generally, it's the governor, the Senate leader Andrea Stewart-Cousins, and the assembly speaker Carl Heastie, but then the housing chairs in the two legislative houses are involved in this too. Brian Kavanagh is the Senate housing chair and Linda Rosenthal is the Assembly housing chair. They're both Manhattan Democrats. Those are really the key players involved here.

Brigid Bergin: I want to hear a little bit from what Brian Kavanagh said to you about the likelihood of them figuring out all of these details sooner rather than later. Jon, you spoke with the chair of the State Housing Committee, Brian Kavanagh of Manhattan, as you mentioned, about whether some of these housing elements would stay in the budget deal once they reach it. This is what he said to you.

Brian Kavanagh: What is necessary to do a budget is to authorize the spending, but we know it's a long-standing practice in New York to do big policy initiatives in the budget. There's been a strong sentiment expressed by the governor and the Senate and the Assembly to do a housing package in the budget. That's the operating assumption now, but I've been here for a budget passed in nine increments concluded on August 4th.

Jon Campbell: Don't do that.

Brian Kavanagh: [laughs] If you don't encourage that, I won't encourage it.

Brigid Bergin: Okay. Yikes, Jon. I'm hoping for all of our sakes, you're not still covering this in August, but what did you make of Kavanagh's answer on the future of the housing plan?

Jon Campbell: Well, I try my best to be an impartial, non-biased journalist, but I am very partial against having to be in the state capitol in July and August to cover budget negotiations. I'll wear that one on my sleeve. The question that I had posed to him was, is there a chance that housing negotiations fall out of state budget negotiations? That would be, like we said earlier, the second year in a row that's happened.

That would be a major blow to the governor and lawmakers who do all seem to agree that housing needs to be-- We're in a housing crisis. It needs to be dealt with. He said anything is possible, but you heard him there. He said there's a strong sentiment to continue with these budget negotiations. It does seem like they are nearing an agreement, but tenant groups are pushing against the IAI stuff I said there and what they see is watered-down good-cause evictions.

Landlords want to broach the idea of vacancy decontrol or at least being able to hike the rent of vacant apartments to put them back on the market in the rent-stabilized program. Developers aren't happy about the good-cause eviction protections either. There are some rumblings from advocates that maybe we'd be better off if we take it out of budget negotiations and try again in June before lawmakers go home. That's why I asked him that. So far, it seems like it's remaining in budget talks.

Brigid Bergin: I'll tell you, Jon, and I'm sure it won't surprise you, we have still a lot of callers and texts coming in with questions related to housing. I just want to apologize in advance. I know we're going to talk more about this in the week ahead, but we've got some other issues I want to talk about before we run out of time with Jon. Education spending. It makes up an enormous share of the state budget in recent years. Advocates have been relatively pleased, I think, with state funding levels. This year, things seem a little bit more complicated. Some districts say they're facing cuts. Hochul says they're not. What's going on here, Jon?

Jon Campbell: Yes, this is a couple of different proposals that the governor has put out regarding education. Schools across the state rely on state funding to put together their budgets. They get a big chunk of their funding from the state. Governor Hochul proposed spending $35 billion in education funding this year. That's an increase, but it is not as high of an increase as it would have been if she didn't make two key changes. One is she wants to get rid of the hold-harmless provision. That's a provision that prevents school districts from getting less than they did the year before.

Even if their enrollment is down, even if the formula as the state uses to calculate how much districts get say that they should get less, they get at least as much as the year before. If she were to get rid of that as she wants to, more than half of school districts would see a decrease in their foundation. That's the main source of funding from the state. There was a huge pushback against that. Lawmakers in particular don't want to see that happen because they want to go back to their school districts and say, "Hey, I delivered for you. I got you more money."

It's an election year this year too, so all 213 state lawmakers are on the ballot. The other thing has to do with inflation. The governor wants to smooth out inflation adjustments for school funding over a longer period of time. 10 years rather than one or two years. That's still under negotiation. That one may see it through the hold-harmless provision. Governor Hochul has basically already said that that's not going to happen this year.

Brigid Bergin: Okay. Well, of course, we have to ask the New York City question with a lot of attention being paid to the renewal of mayoral control of schools. Is that something that's expected to be resolved during the state budget negotiations or is that going to get pushed beyond to some point later in the session?

Jon Campbell: No, that's not happening in the budget this year and that's not a huge surprise. The governor did put a multi-year extension of mayoral control of New York City schools in her budget proposal. The legislature has taken it out. We do this dance every time it comes up, right? Albany has to approve the extension of mayoral control. It expires in June. Mayor Adams is looking for a longer-term extension. The legislature tends to go shorter term and maybe they attach different strings to that because they have leverage here.

That's what happened two years ago when Mayor Adams got a two-year extension of mayoral control, but the legislature also passed a bill that limits the size of New York City classrooms. That's something that will be implemented over the coming years. We'll see this play out more in May and June. That's the second wave of big negotiations in Albany right before lawmakers end their legislative session. That will really dominate talks then.

Brigid Bergin: Medicaid costs. Medicaid, of course, the state and federal program provides health insurance to low-income New Yorkers. It costs the state tens of billions of dollars. How has this become a sticking point in budget negotiations?

Jon Campbell: It always is a sticking point in budget negotiations. That's because it takes up such a huge chunk of the state spending side of the state budget. Governor is proposing about $30 billion in school aid. The governor is proposing $35 billion. You add those two things, just those two items together, and you get to half of the state's general fund spending.

Brigid Bergin: Wow.

Jon Campbell: That is a big, big deal. The governor, she is pushing about $1.2 billion in cuts to long-term care and similar programs for the Medicaid program, which is the program for lower-income New Yorkers to get health care. New York spends just a lot on Medicaid compared to other states. Spending would still go up in her proposal, but those $1.2 billion in cuts to long-term care and similar programs, that has really rankled hospitals, nursing homes. Hospitals in particular, through their trade groups, are airing ads that are really knocking Hochul and pushing for an increase in Medicaid rates. Yes, it's a sticking point, but it's always kind of a sticking point. That's one that's still being negotiated.

Brigid Bergin: I want to touch on two more issues quickly since we're running out of time. You reported earlier this week on a potential crackdown on license plate covers, which, of course, allow drivers to avoid paying tolls, speeding tickets, red light camera fines on the state's roads and bridges. I'm curious how this proposal would work, why it's taken so long for someone to come up with something like this, and is this considered a revenue-raiser in terms of the budget?

Jon Campbell: Yes, the governor's proposals, in her original budget proposal, she proposed all sorts of stuff. That would be increasing penalties on people who cover their license plate. It would allow police to more easily confiscate license plate covers. It would ban the sale of what are known as vanish plates, which if you don't know what those are, it's a cover you put on your license plate.

Maybe you got a little button on your key and you hit the button and, boom, your license plate disappears when you are going under those cameras that pick up your license plate when you're going over a bridge or a tunnel or a red light camera. The governor is pushing that. The legislature has long been pushing or some factions of the legislature, I should say. Leroy Comrie in the Senate and Kenny Burgos in the Bronx.

They have been pushing for measures to make it easier for people to challenge a cashless toll if they feel like they've been wrongly charged or make it easier to see how much they owe in tolls or maybe capping late fees because we've heard a lot of situations where people have owed thousands and thousands of dollars in late fees, let alone the fines. This is all under discussion now. It's moving in a direction where it looks like there will be some sort of compromise in the budget, but it's not finalized yet. That's one of these smaller issues that are still out there.

Brigid Bergin: Well, there are several other of these smaller issues that I wish we had more time to talk about, cracking down on unlicensed weed shops, the issue of retail theft. I don't think we're going to have time for it. The one question, Jon, when do you think we're going to have a budget?

Jon Campbell: That's a great question. I wish I had a crystal ball. I don't. The soonest, the absolute soonest, would be this weekend. You see some sort of handshake deal between the governor and the legislative leaders. Maybe they vote on it next week. If that doesn't happen, then we're probably looking at after Passover and because lawmakers won't be in time for that, so late April, early May where we ended up last year.

Brigid Bergin: Wow. Well, we're going to leave it there for now. I know we will be talking to you again soon. My guest has been WNYC and Gothamist Albany reporter Jon Campbell. Jon, good luck up there in the capitol.

Jon Campbell: Thank you, Brigid.

 

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