New York budget: Solid financial footing
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Topics: NEW YORK
As tax revenues rebound the budget is balanced for the entirety of the financial plan leading up to FY 2027, has no budget gaps, and holds spending growth in FY 2023 below inflation.
Governor Kathy Hochul, with Division of the Budget Director Robert F. Mujica Jr., outlined her Fiscal Year (FY) 2023 Executive Budget.
The FY 2023 Executive Budget maintains the Governor's commitment to passing a bold agenda that by rebuilds New York's healthcare and teacher workforces; provides tax relief to those who need it most; speeds up economic growth and creates good-paying middle-class jobs; strengthens the state's infrastructure and confronts climate change; secures public safety and protects communities; makes housing more affordable to ensure every New Yorker has a roof over their head; and enacts bold reforms to restore trust in State government.
To restore our depleted healthcare workforce and build the healthcare system of tomorrow, Governor Hochul will make a more-than-$10 billion, multi-year investment in healthcare, including more than $4 billion to support wages and bonuses for healthcare workers. Key components of this multi-year investment include:
$1.2 billion of state support for healthcare and mental hygiene worker retention bonuses, with up to $3,000 bonuses going to full-time workers who remain in their positions for one year, and pro-rated bonuses for those working fewer hours;
$500 million for Cost-of-Living Adjustments (COLAs) to help raise wages for human services workers;
$2.4 billion for healthcare capital infrastructure and improved lab capacity; and
Other investments in workforce and healthcare access and delivery.
School Aid: The FY 2023 Executive Budget provides $31.3 billion in total School Aid for SY 2023, the highest level of State aid ever. This investment represents a year-to-year increase of $2.1 billion (7.1 percent) compared to School Year (SY) 2022, including a $1.6 billion Foundation Aid increase and a $466 million increase in all other School Aid programs.
Foundation Aid: Foundation Aid is the State's main education operating aid formula. It is focused on allocating State funds equitably to all school districts, especially high-need districts, based on student need, community wealth, and regional cost differences.
The Executive Budget provides a $1.6 billion (8.1 percent) increase in Foundation Aid, supporting the second year of the three-year phase-in of full funding of the current Foundation Aid formula and ensuring each school district receives a minimum year-to-year increase of 3 percent.
The Executive Budget provides SUNY and CUNY with $106 million - $53 million each - to hire additional full-time faculty at both four-year colleges and community colleges. This investment will fund an estimated 880 additional full-time faculty - 340 at SUNY and 540 at CUNY, including support for CUNY's plan to convert adjuncts to full-time faculty.
To continue the State's support for our small businesses, the Executive Budget includes a new capped refundable tax relief program targeting COVID-19-related expenses for small businesses. The program provides:
Up to $250 million in additional relief to small businesses.
Eligible COVID-19-related capital investments include, but are not limited to, costs associated with expanding space to accommodate social distancing, HVAC equipment, expenses related to outdoor space expansions, as well as machinery and equipment to facilitate contactless sales.
Small businesses were hit particularly hard by the pandemic downturn. The Executive Budget provides much needed tax relief to these businesses by:
Increasing the small business subtraction modification from 5 percent to 15 percent of net business income or farm income, and
Expanding the benefit to include pass-through entities with less than $1.5 million NY-source gross income.
This proposal will aid 195,000 small businesses through one of the most challenging business climates in modern history.
The Executive Budget creates a new property tax relief credit, the Homeowner Tax Rebate Credit, to eligible low- and middle-income households, as well as eligible senior households:
Basic STAR exemption and credit beneficiaries with incomes below $250,000 and Enhanced STAR recipients are eligible for the property tax rebate where the benefit is a percentage of the homeowners' existing STAR benefit.
This one-year program is, in general, an extension of the real Property Tax Relief Credit Program that expired after 2019, with benefits calculated as a percentage of a homeowner's STAR benefit. Additionally, homeowners in New York City will also be eligible for this credit.
Outside of New York City, the average benefit will be nearly $970, providing relief to more than 2 million property tax-paying households. The New York City average benefit will be about $425, with benefits reaching another 479,000 property tax-paying households.
For homeowners with income below $75,000 the statewide average credit is estimated at nearly $1,050, benefiting an estimated 837,800 recipients.
The benefit will be in the form of an advanced credit, instead of being claimed when tax returns are filed, thus getting benefits in the hands of New York homeowners more quickly. Credits will be an advance on Tax Year 2022 income tax returns, to be directly sent to eligible homeowners beginning in Fall 2022.
The new five-year, $32.8 billion DOT capital plan will leverage Federal funding commitments made in the Infrastructure Investment and Jobs Act to support final phases of major infrastructure projects, including Hunts Point Interstate Access Improvement and the replacement of I-81 in Syracuse.
The new plan also supports new large-scale projects, including: modernizing the Livingston Avenue Bridge in Albany; reconnecting neighborhoods across the Kensington Expressway in Buffalo; converting Route 17 to I-86 in Orange and Sullivan Counties; and assessing ways to improve road capacity at the Oakdale Merge in Suffolk County.
The Five-Year DOT Capital Plan also increases the existing BRIDGE-NY program by $1 billion, adds a new $1 billion Operation Pave Our Potholes program, and continues record commitments to funding local highway and bridge programs through the Consolidated Highway Improvement Program (CHIPS).
Building on $832 million in existing subsidies and $2.3 billion in Federal child care resources, the Budget includes new investments to support children, parents, and the child care industry.
Increase Eligibility for Subsidies — child care subsidy eligibility will be increased from up to 200 percent of the Federal poverty level to up to 300 percent of the Federal poverty level over three years. Fully phased in, more than $535 million annually will allow an additional 400,000 children to become newly eligible.
Maintain Access to Child Care Providers— $125 million in funding annually is included to maintain child care subsidies when rates increase in
022. Support Child Care Workers—$75 million is invested in child care worker wages, an endorsement of the importance of their work.
Governor Hochul is proposing a nearly billion-dollar plan focused on the State's small businesses, including targeted programs to address small business needs and ensure all types of small businesses prosper throughout the State. Key components of this plan include:
Funding for Small Businesses of the Future - Capital and venture debt awards to emerging small businesses in the innovation sector, including minority-and-women-owned companies often overlooked by venture investments.
Seed Funding for Small Business - A $200 million flexible grant program for early-stage businesses recently opened despite the COVID-19 pandemic.
Small Business Lending Initiative - Provide reduced interest rate and accessible loans to expanding small businesses. ■