Retail theft, migrant crisis: NY budget tests Hochul, Democrats

ALBANY, New York — The $233 billion budget proposal Gov. Kathy Hochul wants to land this week is facing headwinds in a state roiled with division over the migrant crisis, an ideological split inside the Democratic Party over crime and political complexities to expand housing and help tenants.

Hochul and her fellow Democrats who hold supermajorities in the state Legislature are also mindful the spending plan due by April 1 could have lasting ramifications for the party’s House candidates running in swing seats this year. Republicans have successfully capitalized on controversial criminal justice law changes made in recent elections.

But the broad tensions within the Democratic Party between moderate and left-leaning factions have made it significantly harder to reach sweeping deals on consequential issues facing a state that has struggled to retain population since the onset of the Covid-19 pandemic and grappling with growing budget deficits.

And Hochul has had her share of budget defeats, particularly around mandating more housing in the suburbs.

This year, the ongoing concerns over crime have led Hochul to push for tougher penalties for assaulting retail workers — a move that Democrats in the Legislature have not fully embraced. She also wants to reach a compromise to address illegal cannabis shops in New York, a key priority for Mayor Eric Adams, in order to address what has been a widely panned roll out of legal marijuana sales in the state.

“She’s leveraging moving the party a little more to the center,” Albany lobbyist Jack O’Donnell said. “If you left this to the progressive wing of the Democratic Party, you wouldn’t be talking about retail theft or long-term Medicaid spending. I think it’s responsible.”

The governor plans to spend $2.4 billion to provide housing, health care and legal support to thousands of migrants, and lawmakers seem to agree.

But more complicated: She is trying to negotiate new measures to spur housing in a state where the cost of renting or buying a home has sharply increased.

Meeting the budget deadline this year is complicated, and one Hochul will have to navigate in hopes of getting an on-time deal — which would be her first since taking office in 2021.

Lawmakers and Hochul are dealing with the Easter holiday falling this Sunday, which is the end of the current fiscal year. The holiday, along with Good Friday, is making a budget approved by that due date unlikely.

So that will probably mean pushing negotiations over a range of issues — from housing, health care and education spending — into April. There could be some benefit to waiting until after Easter by giving top lawmakers and Hochul more time to negotiate a complex housing agreement, which is one of the key sticking points.

The governor has signaled she wants a significant package in place that includes $500 million in incentives for new housing after she failed last year to win approval of a sweeping plan that mandated communities build 800,000 new units of housing in the next decade.

The plan faltered in large part over opposition by suburban lawmakers who balked at requirements for local governments to build or face a potential override of their zoning laws. This year, Hochul is trying a revised tactic of simply using financial incentives for communities who volunteer to build.

Still, she remains at odds with some of her fellow Democrats, who have pressed for a proposal to make it harder for landlords to evict people or increase rent, called Good Cause Eviction.

Hochul has pointed to past efforts to aid renters, including emergency assistance funding. But she also told reporters recently she is placing an emphasis on increasing housing supply — which likely will mean encouraging developers with tax breaks.

The failure by Hochul and Democrats last year to get an agreement on housing touched what the governor recently acknowledged as a political “third rail” — especially in the suburbs, home to swing districts at the state and federal level.

“I'm working really hard to increase supply because that is the core of all the problems,” she told reporters recently.

But the governor’s focus on spurring development has put her at odds with left-leaning Democratic lawmakers who have pushed for a version of Good Cause Eviction, which remains deeply unpopular among developers and moderate lawmakers.

“There’s concern about congressional races, but I think the issue is people want to see Democrats deliver — and the caution is preventing us from delivering,” Assemblymember Emily Gallagher, a Brooklyn Democrat, said. “If we throw ourselves toward delivering the goods and not worrying about where it looks, I think we’ll see a Democratic majority sail into Congress.”

Democratic Assemblymember Michaelle Solages, a Long Island lawmaker, said housing is “tough conversation” because of the competing interests. Lawmakers want a combination of tenant protections as well as support for developers to build.

“There’s a housing crisis all across this country,” she said. “The president was just talking about the housing crisis just recently. So in New York, we have an opportunity to present a model that not only tackles affordability and tenant protections, but also adheres to diverse communities.”

Hochul, who took office following the resignation of Andrew Cuomo, has had missteps during past budget negotiations. Last year, the lack of an agreement over housing resulted in finger pointing between the governor and the Legislature. Her effort to win changes to the state law limiting cash bail resulted in the budget being approved six weeks late.

Hochul’s proposal to change how schools are funded in the state by reducing aid to districts that have lost enrollment created an uproar among lawmakers, who face all face elections this year. Democrats and Republicans alike have rejected the proposal. About half of the state’s 637 school districts would face state aid reductions if the measure is approved.

Still, some Democratic lawmakers believe they can work with Hochul on the broad-based issues compared to her hard-charging predecessor.

“She understands the legislative process requires compromise,” Assemblymember David Weprin said. “She’s less rigid than the former governor.”

But Hochul, so far, has indicated to top lawmakers she will not budge from the change to overhaul the complex funding formula after years of sharp spending increases for schools. She has also blanched at the opposition.

“You would have thought that I was making them sell their firstborn,” she said this month. “I’m just trying to be rational about this, and asking for people who want to solve this with me to work together and roll up our sleeves.”

Still, there have been some signals that the school aid cuts are likely to be pared back in the final deal in exchange for a study on how to distribute the more than $35 billion to districts each year.

Republicans, who sit in the powerless minority in both chambers of the Legislature, have blasted Hochul’s plans to increase spending for the migrant crisis by $500 million from the current year. GOP campaigns at the House and state levels have signaled they will make the migrant crisis a key issue this election season. Hochul has blasted House Republicans, in turn, for opposing a border security bill negotiated by the Senate.

“I think it shows she’s concerned, particularly with the migrant crisis” in the elections this year, Assembly Minority Leader Will Barclay said. “There’s a political liability for Democrats.”