Gov. Kathy Hochul formally announced a series of politically popular proposals Tuesday in her State of the State address that are likely to be well received in the legislature, while reiterating her support for some measures to increase housing production.
But she also said she was opposed to tax increases, including those on the wealthy, which could set up a confrontation with progressive Democrats.
In the speech, she formally introduced measures she had previously disclosed in announcements in the last week. They include:
- Initiatives to protect New Yorkers from medical debt, limit hospitals’ ability to sue low-income patients and eliminate insurance copays for insulin, among other things.
- A push for schools to reemphasize phonics in literacy education, a potential overhaul that comes as many states revamp curriculums amid low reading scores. (New York City has already committed to that approach.)
- A six-point plan to combat maternal and infant mortality by expanding access to prenatal care, reduce costs for mothers and families, fight postpartum depression and support infants.
- Establishing a program called NY SWIMS to build municipal pools in high-need areas, connect New Yorkers to the state’s rivers and lakes, deploy pools in urban environments, and invest in state parks and pools.
- Moving to curtail the rise in retail theft with shoplifting soaring in New York City even as it ebbs elsewhere by creating a state police task force to target gang activity against stores.
- Allocating $275 million in state funds and commitments from universities and philanthropists to fund an artificial intelligence center upstate and to spur the state as a center for AI companies.
In a surprise, the governor revived many proposals she had made last year to increase housing construction, which the legislature refused to act on. While dropping a plan to force communities to approve new housing, she did ask the legislature to replace the lapsed 421-a tax incentive for constructing new rental housing as well as to extend a deadline for competition of buildings that had qualified for the tax break before its expiration.
The Real Estate Board of New York issued a report Tuesday showing that developers filed plans for only 10,000 new housing units last year, less than 20% of the annual amount needed to meet Mayor Eric Adams’ goal of building half a million housing units in the next decade.
Hochul also revived her proposals to make it easier to convert office buildings to residential use, and increase the allowed density for some residential buildings.
She conspicuously did not mention a priority proposal for tenant advocates: “good cause” eviction protections, which are vehemently opposed by real estate groups.
Senate housing committee chair Brian Kavanagh (D-Manhattan) and Assembly housing chair Linda Rosenthal (D-Manhattan) have both said they think a housing deal is possible. Industry leaders like James Whelan, president of REBNY, say a compromise that would include both the tax relief developers seek and the good cause protections tenants demand is highly unlikely.
The governor reiterated in the speech that she opposes any new taxes to either deal with the state’s projected $4.5 billion deficit in the budget due for adoption by April 1 or to fund new spending — even as progressive groups call for an increase in the state’s 10.9% income tax rate on those making more than $2 million a year.
New York’s tax rate is the second highest rate in the country, behind the 13% rate in California. New York City millionaires pay 14.45% in state and city income taxes.
This week legislative leaders declined to rule out seeking a tax increase, with Senate Majority Leader Andrea Stewart-Cousins (D-Westchester) saying “everything is on the table.”
More details are expected Tuesday, when the governor releases her budget proposals. In unusual timing, Mayor Eric Adams will on the same day reveal his preliminary budget proposal for the city’s next fiscal year.
The governor said she would not allow “the state to spend money it doesn’t have,” possibly setting up another face-off with the legislature. Assembly Speaker Carl Heastie (D-The Bronx) this week said he wanted to start with a list of what the state should be spending before deciding whether to seek new revenue.
While the expected deficit in next year’s budget has been reduced to $4.5 billion from $9 billion, the Citizens Budget Commission said the state faces deficits that total $19 billion over the next three years.