January 16, 2024
Albany, NY

Video, Audio, Photos & Rush Transcript: Budget Director Washington Holds FY 2025 Executive Budget Technical Briefing

Video, Audio, Photos & Rush Transcript: Budget Director Washington Holds FY 2025 Executive Budget Technical Briefing

Director Washington: “The Governor's Budget includes extraordinary commitments: certainly $347 million on anti-gun violence initiatives, lots of resources – new resources – to prosecute DV cases, domestic violence cases; interdicting and interrupting organized retail theft; an increase for securing communities against hate crimes, grant program; strengthening a bunch of different initiatives in homeland security; and then providing $5 million to support reentry and reduce recidivism.”

Earlier today, Budget Director Blake Washington held a FY 2025 Executive Budget technical briefing.

VIDEO of the event is available on YouTube here and in TV quality (h.264, mp4) format here.

AUDIO of the Director’s remarks is available here.

PHOTOS of the event will be available on the Governor's Flickr page.

A rush transcript of the Director’s remarks is available below:

Welcome, everybody. My name is Blake Washington. I'm the State Budget Director here to provide a technical briefing on the Governor's budget. With me today, I'm joined by Mark Massaroni and Matt Howard, both Deputies to the Division of Budget helped me greatly throughout this process – my maiden voyage working on behalf of the Governor and doing our budget for fiscal year 2025.

Matt and Mark certainly were a tremendous help to me, but as a point of personal privilege, we have dozens and dozens and dozens of people that work with us at the State Division of Budget. My staff that are so wonderful at what they do. I think that New York taxpayers generally should be happy that we have, everyone should be so lucky to have people like we do to help pull this product together, to have a level of engagement and expertise that I was just so floored by. So, thank you to my own division for all the work you do.

So, we'll jump right in. So, we'll start with a brief overview of the economy. Of course, recession fears have receded over time. As we've seen, inflation is declining, interest rates are still high, and they're going to take a little bit of time, but they're going to come back to pre-pandemic levels, if at all.

That's because the Federal Reserve has remained vigilant. They're watching our post-pandemic recovery, watching inflation, ensuring that the United States economy does not fall into recession. But in doing so, that vigilance is a tradeoff, that comes at the expense of a slowed economy and slowed job growth.

So, we're not projecting an outright recession, the Division of Budget is not but geopolitical shocks, things that are beyond our control could turn some of the slow growth that we're seeing most recently into negative growth. We certainly don't hope for that, but that's something that we're always mindful of coming into any fiscal year.

This chart tries to put a little bit of context of what we're seeing in New York, when we go out into our home communities as a pressure test to see what people are doing, are people working? You can see here in the United States, jobs have recovered to pre-pandemic levels.

You can also see that in the City of New York, fairly recently, those jobs have rebounded as well. That's unfortunately not true as the state as a whole. The state at large lags behind the nation in job gains post-pandemic. And this is really what some of, to get at this is really where the Governor's mind is. This chart is one in particular when she sees it is, you know, “What can I do? What can the state do to make sure that every able-bodied adult that wants work has a job? How can we link them to it? How do we build capacity to access the jobs of tomorrow?” This is an employment, this is a chart that we watch with regularity.

Coming into – for folks that have been in the Capitol building for a while, in last year's budget, the executive took a significant amount of receipts out of our forecast, almost $10 billion of receipts. Post-pandemic there were extraordinarily high, PIT, personal income tax collections, business tax collections, post-pandemic they're all sort of coming back down to orbit.

Although we took $10 billion out of our forecast last year, it's improved a little bit coming into the upcoming year – coming off those record high receipts, we've had improvements in our forecast of approximately $2.2 billion, which will be to the good of paying off our gap and meeting some other financial plan needs.

There's been calls already to increase taxes to cover spending for items that are putting pressure on our budget. But the Governor and I certainly believe that we should be living within our means and remain competitive with other states. The Governor is concerned about the cost of living in New York State.

In the State of New York, if you live in the City of New York, you pay the top PIT rate in the entire nation and we want to make sure that wherever you reside in the State of New York and whatever your income, we want you to stay here. Particularly the high-income earners, we want you to stay here because our budget is heavily dependent upon you. But even working-class families, we want you to stay here because you matter to us. And so, we're committed to closing our budget gaps this year without raising taxes and without relying on one-time reserves to fund reoccurring obligations

So, on this chart, what we try to reveal, this is a chart that tries to demonstrate the differences in our governmental funds tax receipts from 2023. That's two fiscal years ago coming into the current year and what we see coming into the out years, 2028. You can see as I spoke about before, our ‘24 tax receipts came down significantly, taking a good chunk out of our budget, roughly $10 billion.

And the blue line here shows how our forecast for tax receipts have improved relative to our mid-year forecast, which came out at the end of December 2023. And these projections, we don't make up out of thin air. The Division of Budget has a robust economics team, and they have a modeling process that is second to none, and their modeling process is benchmarked to national indicators that we all track on a regular basis.

With these improvements we expect, and some other course corrective actions that we're doing in the Executive Budget, we expect budget gaps to reduce by approximately 50 percent over the upcoming year, but those gaps are going to persist. We'll show you where it goes.

So, when we talk about the budget gap, this is a chart that we try to demonstrate a cascade effect of what the puts and takes are into getting at zero. And we're going to walk you through just how we did that. So, we came into the current fiscal year with a $4.3 billion budget gap. We received $2.2 billion upward from improved tax receipts. And then there's $5 billion dollars that comes from recurring revenue sources that just improved. So miscellaneous taxes that we collect on a regular basis. Think about lottery, think about HCRA taxes, those revenue sources just improved on their own right throughout the last year, as well as they're included when there's a large, a $1.7 billion pension prepayment, which if you pay now, it provides savings in the upcoming year. Now meaning before the end of the current fiscal year.

So, in the middle, in the yellow we're showing you actions that we're taking in the budget to reduce spending growth. So, you sort of, you can see where we're kind of coming up on available resources. The yellow starts to show you where the actions we're reducing, spending in a given year.

So, you can see there are some revisions to spending in education, higher education. All other savings across the budget, there's a whole host of spending revisions. Medicaid actions. Medicaid is growing by 11 percent under the executive proposal, and that's with $1.2 billion dollars in revisions that we're going to need to help close the Medicaid card this year.

Medicaid costs are growing, getting into the red bar there. The Medicaid forecast has been updated since our mid-year report. This is reflecting a couple of different things. First and foremost, the public health unwind is not unwinding as fast as we originally predicted. Persons enrolled on Medicaid in the State of New York are staying on the rolls longer than we forecast.

We think that's a good thing. If people have coverage that they need for themselves and their families, it's a good thing. But it adds a negative impact on our projections, our spending coming into the upcoming year. We're also, included in this $1 billion, there are revisions related to managed long-term care utilization.

We have an aging population in the State of New York. So, it's both in terms of utilization and cost. That's where you get the roughly billion dollar forecast update. We have half a billion dollars in new spending included in this budget for, revisions to the state's 1115 waiver, something that took, the governor spoke about this earlier today, took over a year to land the plane on this.

These are funds that will be leveraged to draw down federal aid to assist our distressed hospitals, to provide better workforce initiatives and to address health related social needs throughout the state.

We have approximately $600 million in new investments across the board, many of which you've heard through the Governor's State of the State Address. And lastly, a new cost that we took on was to help the city manage, the City of New York manage the migrant crisis. That's $2.4 billion.

So, you can see, this chart is intended to sort of show the new revenue sources coming in to influence the plan, offset by the new uses or the new calls upon state revenue. So, as I said, you know, we have closed this year's budget gap, and we'll have some work to do in the out years. The work that we're doing to close this year's budget gap, many of those actions will carry through the planned period. So, we took down $4.3 billion dollars for 2024, and many of those savings actions are recurring.

So that's how we were able over the planned period to reduce budget gaps considerably, roughly 50 percent over the time horizon. One item that the Governor is very proud of is when she became Governor, there were, as you saw earlier today in her address, there were very, very slim reserves on the State of New York. And the reserves were items that were – the amount of reserves in hand would in no way have a material effect on our ability, on the state's ability to weather a financial storm and economic change.

These reserves were largely derived from equity market activity, immediately post COVID, there was a humongous bump in PIT payments. The State of New York, under leadership of our Governor said, you know what, let's put these in a place where we can actually, where we can plan for a day that we hope never arrives, but to the extent there is a recession. We know that the State of New York, I've been in this building 20 years, I know that when there's a recession, I know when there's an economic downturn that we're really get to the point in the financial plan where we're robbing Peter to pay Paul.

This is a wonderful hedge against any of that. It doesn't solve every problem, but preserving these reserves is a foremost priority of the Governor. So at the end of this year, we'll add another $500 million to the reserves, end of 2024, for a total of $20 billion. These reserves are not used to cover budget gaps in any time throughout our planned horizon.

We will use $500 million that we're putting in this year. We will use it in the out years to support our migrant mission in the City of New York. That's pledged towards the $2.4 billion number that I revealed before. We're using that because we view the migrant crisis as a one-time expenditure, an extraordinary expenditure that should not be recurring.

It should not be recurring because our representatives in the federal government should be resolving this issue once and for all. I think all of our communities are depending upon them to do so, or at a minim to provide resources for the State and the City of New York to pay for this new and burgeoning cost.

There are some other reserves in the State of New York that are not revealed on this slide, or that are provided here that, outside of the 19, it relates to – excuse me. There are other reserves that are not revealed in the slide that are carried in the financial plan. But those relate to PTET liabilities.

Those are the pass through entity tax. It's a SALT workaround for our friends at Bloomberg, are familiar with that – a federal, a taxing policy workaround, ensuring that we keep businesses, particularly high-income businesses, right here in the State of New York. This is a way to reduce their tax liability.

We have reserves for operational and labor costs. We have reserves for gap management, capital, we have reserves for debt management; things like that that are, the sort of, the things that I was more common, that were more common to when I was working in the legislature for so many years. Those are the things that were sitting around year after year, but they by no means would ever close a budget gap post-recession. They're not large enough to do that.

Just looking at coming into the last three years, coming into this fiscal year, through 2022 to 2025, you can see that under the leadership of our Governor, we've done a lot of investments here that are really extraordinary.

Things that have been low, overlooked for quite some time, and righting the ship over the last couple of years, I would say, is sort of the story of these bar charts. Medicaid, we'll get to each one of these in a little bit, but you can see the percentage increases on each of these items. Last item: migrant assistance, we didn't put a percentage, but last year it was 1.9 billion, this year it's 2.4 billion.

Again, keeping with some of our State operating fund spending growth, Medicaid and school aid – no surprise to anyone in this room – are the major cost drivers of spending for the State budget. You can see here that over time, Medicaid, over the last three years, Medicaid has, has grown 15.7 percent, 8.1, 10.9, respectively. And then school aid you can see here on this chart as well.

Medicaid, again, I'll just remind you, 10.9 percent growth in the current year, we'll call it 11. That is even with a reduction of over $1.2 billion that we're seeking to work with the legislature to modify program spending.

Even with a $1.9 billion taken out of the plan, we're still growing by 11 percent. School aid, in the last handful of years, in the last two years alone, school aid's grown by $5 billion. So, this year, we're growing by an additional 2.4 percent, or $825 million.

The budget has some major capital investments that – many of these you've seen in the past. Governor Hochul has really done an outstanding job in the amount of capital that's been put out the door in the last couple of years, the new obligations. Here's a handful of them that you can see on the slide before you.

DOT being one of the larger ones; our five-year housing capital plan, a very large obligation; clean water; economic development; over $6 billion in higher education in the last three years. These are things that are, you know, really big investments. Many of these things are spending, you know, through time, they don't spend overnight.

But these, when you provide capital resources, you provide jobs and economic activity. But also, you provide the social benefit of clearly clean water, clean air, you know, safe roads and smart people. Now it looks like my slides are all messed up, pardon me.

So, there are a series of affordability measures in the budget that we, of course, we intend to work with Legislature to preserve. These are things that you've seen before. These are items that we've taken on in the last handful of years.

This year we have incentives to increase the housing supply: a different approach than, than last year. This year we're also, we continue to bolster child care affordability and access to child care. Really important, it was over $7 billion commitment made just a handful of years ago under Governor Hochul.

Last year, you all recall, we indexed the minim wage to inflation. This budget invests in the economy of tomorrow. And we're doing all this without raising taxes. We didn't have to raise taxes at all in this budget to fuel these investments.

Diving into some of the Governor's actions in public safety – as the Governor articulated before, this is her number one priority. Let's just make sure that people feel safe when they're going home at night, when they're going to their house of worship, when they're going to the supermarket.

The Governor's Budget includes extraordinary commitments: certainly $347 million on anti-gun violence initiatives, lots of resources – new resources – to prosecute DV cases, domestic violence cases; interdicting and interrupting organized retail theft; an increase for securing communities against hate crimes, grant program; strengthening a bunch of different initiatives in homeland security; and then providing $5 million to support reentry and reduce recidivism.

I was telling my staff, this is music to my ears. Little known fact, I was a probation officer before I was a budget wonk. And these are investments that are small, but meaningful, impactful and keep our community safe.

And moving on to mental hygiene. Our Governor has done more in this space than any other Governor. This year, there's a 1.5 percent COLA in the executive proposal, bringing our three-year commitment to $1.3 billion for wages in the human services, among the human services workforce. Mental health spending has grown by 45 percent under the leadership of Governor Hochul.

We've last year provided a billion dollars in capital investments for mental health service delivery. This year, the Governor's not satisfied with what we've done thus far. 200 additional inpatient beds and a whole host of initiatives that were unveiled in the State of the State to tackle and address mental hygiene issues throughout the State.

So, as I alluded to before on education, Governor Hochul has invested more than $5 billion into the public schools in her first two years as Governor. The budget of last year fully funded the foundation aid formula for the first time in 17 years. The Executive Budget provides $35.3 billion in school aid, which is a $825 million growth year over year – inclusive of a $507 million increase to foundation aid. So, since 2021, if you look at the time horizon, you can see that foundation aid alone has increased by $6.1 billion. But you can see that, all the other items that we pay for in school aid drive the number up even greater. All the other items are reimbursable aids books, textbooks, transportation, things of that nature.

Moving on to higher education, the Governor's, first two budgets included investments to increase state operating support for SUNY and CUNY by just over $1 billion dollars, 1.1, 17 percent. And we also provided $4.7 billion dollars in in new capital for university led projects. Those capital dollars, I think over the last three years we've provided $6 billion in capital for higher education. We’re going up over that by another billion three, billion two, for a total $7.3 billion in capital commitments that have been made to SUNY and CUNY. We're looking forward to get those projects on the ground – underway.

Moving on to Medicaid and public health. First and foremost, after a year of negotiations, we have, $7.5 billion, 1115 waiver coming to the State of New York – attempting to address health equity outcomes, that being one of the primary focuses of it. This waiver also provides funding for distressed hospitals in our healthcare workforce, as I said before.

In the current year's budget, we have to provide $451 million on the State side to help to leverage this, to draw down the federal aid. And we're going to leverage $1.7 billion over the next three years and a half years to pull down the federal aid. This is something we're pretty excited about, to try to provide wraparound services for Medicaid recipients, to get them to stabilize the harder cases – these investments are key.

I think that, you know, certainly our Medicaid budget, I alluded to before, managed long term care growth is something that is influencing – is a big cost pressure on our Medicaid budget. The 65 and overpopulation is growing and by 2030 our population, as you can see on this chart, you know, 23 percent of the State population will be over the age of 65. And that was just nine percent in 2000. So, these are our parents and loved ones, that we refer to as, as baby boomers, all coming sort of into our system at the time that everybody would have expected. So again, managed long term care costs are reflecting these new enrollments. Medicaid in general, setting aside managed care, MLTC, for many for years upon years, you can see the yellow bar part of this chart, you can see the State level investment was very, very flat.

The Governor found this to be unacceptable when she first came into office, and she thus made some pretty significant investments – $8.5 billion increases over the last three years. Those include rate increases that have not been done in ten years. Includes increases to wages and other subsidies to hospitals across. There's a whole host of different items under the hood there, but it's a pretty substantial commitment from the State of New York.

This chart just reveals that the work that the Governor has done since being our Governor – that in 23 and 24, the first rates increase in a decade – one percent and then 7.5 percent, 6.5 percent respectively. These are increases that we were able to manage within the financial plan.

These are increases that are still moving forward into the current year. These are things that we planned for and they’re one component of the drivers of Medicaid spending. But these were things that we actually planned for. Where we're looking at revisions to Medicaid spending are the things that we didn't plan for – the increased enrollment, the doubling up of some of the expenditures on the managed long term care side. So, this chart just shows over 10 years nothing happening. Governor Hochul comes in and tries to right the ship, certainly in our hospital and nursing home sector. Those are two areas that we're flagging for quite some time.

So, the State budget, will include an additional $2.4 billion for migrant costs to assist the City of New York and the State of New York to address the migrant crisis. Since the asylum seekers have come to the State of New York, both the State and City have provided significant resources to promote humanitarian aid, and to promote public safety and public order as well.

New York City has become the epicenter of the migrant crisis, and as the Governor has said before, she would do whatever she could do to help the Mayor, to help to weather this storm. This is not a crisis of the City's making, nor of the State's making but it's something we all have to join hands on to try to rectify.

The City of New York is our State's economic engine and, and we want people to go there, to live there, to work there, to spend tourism dollars there. And so, we know that this $2.4 billion investment, is key to make sure that we're efficiently meeting the new migrants when they come, allowing for the City of New York to manage the crisis to the best of their ability.

What's clear is that the City and the State cannot do this alone – can't do it forever either. So, on Friday the, the Governor's going down to Washington, D. C. and she's going to call upon the federal government, and she's done numerous times since I've been the Budget Director, asking for assistance, asking for resources. The last – one of the big ones that the governor was able to secure recently was just allowing for us to engage some of the population to link them with jobs, our Venezuelan population in particular. And that's something that State and City agencies have been working on intently for the last handful of months.

The Budget has a bunch of other investments that – the $25 billion housing plan, of course, that you're all familiar with. The budget will make $650 million in discretionary aid contingent upon becoming a pro housing community. That discretionary aid is items that are routinely rewarded through the consolidated funding application process, where these are your DRI, your downtown revitalization programs, economic development programs. There's probably 10 to 12 different items under the hood that are pledged to municipal governments in any given year. So, in order to access those funds, we want a commitment that you as a municipal government are committed to building housing. Because there's no more time to lose here, so that's why we're trying to incentivize the process.

Our $25 billion capital plan – it's not all state funds, it's not all state capital funds, for the good of the order. It's a mix of capital resources, state and federal tax credits, and all other subsidies. So, this was announced a hand full of years ago, but it's not all like a capital project fund.

Budget continues. It provides another $1.8 billion in state and federal resources for child care, part of our $7 billion four year plan. Last year, we increased eligibility to 85 percent of the state median income, which is $99,000 for a family of four. The Governor feels strongly that when families have flexibility to place their child in a safe center for the day or a responsible center for the day, people can get back to work and earn a living and not have to worry about where their children are throughout the day. I know as a parent that's essential.

Last year we also capped co-pays for families that are receiving subsidies. In the Governor's budget this year, there's a few different initiatives to provide for better quality improvement and the aid that we provide for early childhood and mental health consultants throughout the state.

Under transportation, a couple of big things here. We continue $7.6 billion in aid for the third year of a record $33 billion DOT capital plan. That's an investment in our roadways, our bridges and rail, non-MTA transit, Upstate, Downstate, City of New York, outside of the City of New York. This is a big, broad measure of DOT's role in our communities. Upstate and Downstate transit – Upstate will receive approximately $323 million. Non-MTA transit would receive about $551 million. Both are receiving a 5.4 percent increase. The difference between the two is that the base funding for each are derived from fees and taxes that are leveraged at a local level.

So, the non-MTA systems, those fees and taxes are derived from Downstate New York, whereas Upstate, of course, the base is different and that's why it's a little lower. So, that's the way it's always been, but the Governor made sure that this budget trued up the Upstate system value to the Downstate value on a percentage basis.

A couple of big investments the Governor talked about. She's spoken about it in the public domain for many months now. Interborough Express linking Bay Ridge, Brooklyn to Jackson Heights, Queens. Doing a scoping project, $45 million is included for that in this year's budget. And then scoping out the efficacy of moving Second Avenue Subway west. There's $16 million for a feasibility study in the budget to accomplish that goal.

Under the environment, the budget includes $500 million for clean water infrastructure. We maintain funding for EEPF. We have new funding for New York SWIMS, providing for swimming amenities in disadvantaged communities. We have new funding to plant new trees and to upgrade our state nursery in Saratoga. Some funding to our State Parks to enhance them this year's their centennial anniversary. And $95 million to DEC for dams, campgrounds, and to this fisherman, and music to my ears, hatcheries as well.

Economic development, I think really top level here. When she’s putting state dollars up, the Governor wants to invest in the jobs of tomorrow. So, a hand full of months ago, the Governor, well December, the Governor announced $500 million to secure a advanced lithography machine at New York Creates in Albany. This budget will include a new $500 million on top of that to round out the project. The total project's $1 billion. And that project's essential to lure corporations to the State of New York. This is a machine that's not available to most nations in the world. It's a very boutique machine, and it's one that is transformational to the semiconductor industry and it'll be right here in Albany. So, it's pretty exciting. And it'll link with all of our investments that we've done with Micron and all the other global foundries. All the high-tech manufacturers would have an ability to access that machine, which is really exciting.

Empire AI, the Governor announced in partnership with private industry to fund an entire $400 million initiative, $275 million from the state. And then, last onramp, this is the initiative the Governor announced earlier, where we're going to site four workforce development centers on the I-90 corridor, promoting access to the jobs that are expected with the development of Micron in Central New York.

So, with that, I've done a lot of talking, and I'll stop talking, except to answer your questions. But that's sort of the overall vision of the budget that you'll see today.

Contact the Governor's Press Office

Contact us by phone:

Albany: (518) 474-8418
New York City: (212) 681-4640