Kathy Clown's budget plan for the MTA is based on payroll taxes and funding speculations

THE CITY 

Gov. Kathy Hochul presents her fiscal year 2024 executive budget proposal in the Red Room at the state Capitol.

Mike Groll/Office of Gov. Kathy Hochul

Gov. Kathy Hochul unveiled a $227 billion budget Wednesday that has something for everyone, and something almost everyone will dislike — especially the progressives who dominate the Democratic majorities in Albany.

The plan increases spending across the board but puts much of the $8 billion in unexpected tax revenue from the current year into reserves and tries to convince legislators that economic headwinds are likely to bring revenue growth to a halt.

Hochul proposes to bail out the Metropolitan Transportation Authority with an increase in payroll taxes paid by employers in the New York City commuter region (the city and suburbs that Metro-North and LIRR cover) and licensing fees to be paid by new gambling casinos in the city. She’s also demanding $500 million more per year from the city, while offering $300 million in new state aid.

She also urges raising the state’s minimum wage, currently $15 an hour in most of New York, by indexing it to inflation, and seeks to extend an expiring increase in corporate taxes for three years — but ignored proposals from progressive and tenant groups for big increases in state spending.

Acting Budget Director Sandra L. Beattie said caution is needed to deal with the grim forecast for the coming fiscal year, which begins April 1.

“Tax collections are expected to peak in the current year and fall in fiscal 2024, and we are harvesting the gains to prepare for the uncertainties ahead,” Beattie warned.

The entire budget includes both state revenues and federal aid, with state-funded programs increasing by 2.4%, or $327 million, from this year’s budget, and would be balanced.

It puts half the unexpected revenue increase into the state’s major reserve funds, and another $1 billion into a debt reserve fund. The rainy-day funds will reach 15% of spending in the next fiscal year — two years earlier than the governor had previously proposed.

At the same time, the budget reduces expected revenues for fiscal 2025-2027 by almost $20 billion, opening gaps in those future budgets to $22 billion. Leading fiscal experts warn of the risks of increased spending, as Hochul’s proposal goes to state lawmakers angling to increase spending.

“The governor’s proposal usually sets the floor in negotiations with the legislature,” said Andrew Rein, president of the nonprofit Citizens Budget Commission. “All New York State leaders should focus not just on today, but on protecting generations of New Yorkers from a future downturn and self-made fiscal crises arising from unaffordable spending or counter-productive taxes.”

The MTA bailout plan, designed to close an expected $3 billion budget deficit in 2025, illustrates the governor’s on-the-one-hand, on-the-other-hand-strategy.

Both the Riders Alliance and the Permanent Citizens Advisory Committee to the MTA hailed the governor’s proposals to boost transit funding. But while city Comptroller Brad Lander praised the tax increase and diversion of casino revenues, he also strongly objected to the request for an additional $500 million in city aid to the agency. 

Mayor Eric Adams said he intended to study the implications of the budget.

In an emailed statement, Adams said, “While we are reviewing the details of Governor Hochul’s budget proposal, it is clear that there are many victories worth celebrating, particularly in the areas of [addressing] serious mental illnesses, addressing our housing crisis, and strengthening the entire ecosystem of public safety.

“There are also areas of uncertainty that will require deeper review,” he said.