Impasse Over Climate Forces Yet Another New York Budget Delay

Disputes over New York’s climate laws and auto insurance are forcing the state’s Democratic governor and legislative leaders to miss yet another deadline to pass a state budget Monday, delaying action on their shared affordability agenda.

Gov. Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, and Assembly Speaker Carl E. Heastie, all moderate Democrats, are the state’s most powerful elected officials. But they have had to extend the April 1 budget deadline four times, underscoring intraparty divisions over Hochul’s policies ahead of the midterm elections and setting the stage for a fifth stopgap funding measure.

Negotiations have stalled regarding Hochul’s proposal to defer ambitious emissions-cutting deadlines and to reduce insurance rates by capping the damages victims are eligible to receive. She also wants to streamline state environmental reviews, slashing regulatory barriers in a bid to speed up housing development.

Democrats have made incremental progress on three of Hochul’s priorities so far, Heastie said last week, signaling a budget agreement may emerge soon. Progressive lawmakers have opposed changes to the climate law and worry victims of auto accidents would suffer if Hochul has her way. Hochul, linking her policies to voters’ cost-of-living concerns, says her efforts would lower insurance premiums for residents and prevent future cost increases as energy prices spike.

New York Democrats face pressure ahead of the midterms to provide taxpayer relief in one of the most expensive states in the country. Hochul contends the Trump administration’s economic policies, including funding cuts to blue states and tariffs, are driving uncertainty. She also acknowledges outdated regulatory barriers in the Empire State have contributed to the higher cost-of-living.

With few Democrat-held seats expected to flip this November, left-leaning lawmakers say Hochul should back tax hikes on high-income residents and corporations to address affordability concerns. Hochul has opposed both. But Democrats are finding some consensus on tax policy that could appease progressive lawmakers’ desire to tax the wealthy.

Hochul, Heastie, and Stewart-Cousins all celebrated an initial agreement last week over a “pied-à-terre” tax on New York City properties owned by non-residents, though the measure falls short of the legislature’s broader set of tax increase proposals.

“We have a responsibility in this budget, with the governor, to do much more and to tax the rich,” said state Sen. Julia Salazar, a democratic socialist and ally of New York City Mayor Zohran Mamdani (D).

New York state Assembly Speaker Carl E. Heastie, shown Dec. 19, 2023, says he isn’t “looking to pick any fights” with fellow Democrat Gov. Kathy Hochul.

Photographer: Michael M. Santiago/Getty Images

New York’s annual state budget process is the primary way governors advance their agendas. Hochul has the advantage: She proposes a full executive budget in January, and lawmakers can only adjust the amount of spending she has proposed.

Frustration is mounting as minor disagreements impede a deal. Hochul counters that the delay is necessary for Democrats to deliver economic relief to voters.

“It’s a tough circumstance” for Heastie and Stewart-Cousins, Hochul told reporters on April 14. “They have very different viewpoints in their conferences. And as leaders, they’re trying to bring them together and find consensus.”

The three have projected a cordial relationship since Hochul took office in 2021, with Heastie and Stewart-Cousins often comparing Hochul favorably in contrast to her predecessor, former Gov. Andrew Cuomo (D).

Heastie told reporters April 16 he wasn’t “looking to pick any fights” with Hochul, though he’s long criticized the executive-power-friendly budget process. “I love the governor, I love the majority leader,” Heastie said. “It’s not been any acrimony, it’s just these tough, tough subjects.”

Stalled Negotiations

Hochul and all 213 seats in the legislature are up for reelection in November. Delaying a state budget to the end of April or through May could pressure lawmakers eager to focus on their own priority bills — and campaigns.

Hochul, meanwhile, faces little-known GOP challenger Bruce Blakeman, a Long Island county official. An allly of President Donald Trump, Blakeman has had difficulty capturing interest in deep-blue New York.

The holdup over auto insurance proposals has caused the most friction between Hochul and lawmakers. Lobbying over the measure has ramped up since January, with ride-share giant Uber Technologies Inc. propping up the governor’s pitch and the New York State Trial Lawyers Association opposed.

Senate Deputy Majority Leader Michael Gianaris said he’s skeptical of Hochul’s plan to tighten the definition of what constitutes a serious injury in an auto accident and to reduce the liability of insurance companies in order to crack down on insurance fraud. Lawmakers are concerned about valid claims from those injured in auto accidents, he said.

He criticized Uber for wading into the policy debate and added the budget holdup was due to “special interests.” Uber and affiliate groups have countered that the trial lawyers group is another special interest and that the changes have worked in other states, including Florida.

Tax Compromise

State lawmakers said last week they broadly support Hochul’s proposed yearly surcharge on secondary residences and investor-owned properties in New York City worth at least $5 million.

But most progressive lawmakers will continue to push for more stringent tax rates on corporations. The pied-à-terre tax is estimated to raise $500 million annually for New York City.

Assembly Minority Leader Ed Ra, a Long Island Republican, called the tax proposal “the eureka moment” that could signal the sluggish budget is finally moving.

But he said the overall delay exemplifies the dysfunction of one-party control. “When you have one party running the state and you can’t do one of the most basic functions, it tells you a lot about how this state is being run by by single party rule,” Ra said.

Lawmakers don’t get paid until after the budget is completed, though each budget stopgap measure continues to fund government services and payroll for legislative staff and state employees. Lawmakers have approved four budget extenders so far and will approve the fifth on Monday.