Brigid Bergin: It's The Brian Lehrer Show. I'm Brigid Bergin, senior politics reporter in the WNYC and Gothamist newsroom filling in for Brian who's off today. Now we turn to the start of state budget negotiations in Albany. Governor Hochul laid out her proposals in a speech yesterday that added some fiscal details to her state of the state ideas. She said her plan was about achieving the New York dream. Now she and the legislature will negotiate up until and possibly past the April 1st deadline over revenue, expenses, and even some policy items that might seem out of place in a budget like bail reform and charter school caps.

To talk more about her proposals in the next two months of negotiations, I'm joined by my colleague at WNYC and Gothamist, Albany reporter Jon Campbell and to shed more light on how the city will feel about the effects of the state budget, we're joined by Katie Honan, reporter at the news site The City and co-host of the FAQ NYC podcast. Katie, Jon, welcome to The Brian Lehrer Show.

Katie Honan: Thanks for having me, Brigid.

Jon Campbell: Hi, Brigid.

Brigid Bergin: If you listened to the governor's speech or have heard about her proposals and want to share your reactions, ask your questions, give us a call at 212-433-WNYC. That's 212-433-9692. Here's a little bit of how Governor Hochul set up her own presentation.

Governor Hochul: Our $227 billion budget will include unprecedented investments in areas that will make a positive impact in people's lives, that'll make the New York dream real and as I said, make it safer, more affordable, more livable. Let's dive into the specifics.

Brigid Bergin: All right, Jon, let's dive into the specifics. You picked five key points in your write-up of the budget presentation, so we're going to start with those. First up, the governor did propose money for the city in dealing with the influx of migrants from the southern border, something we were just talking to Congressman Goldman about. How much of that burden is the state willing to take on?

Jon Campbell: Well, basically, the state says it's willing to take on about a third of those costs, and much of that is in the form of taking on a 29% share of shelter costs and emergency services costs. The city has opened up all these shelters to deal with these tens of thousands of asylum seekers that have come into New York City since the springtime, according to the mayor's office, and the state is saying, "Yes, we'll pick up 29% of that, similar to what we pick up for other "regular" shelter costs."

That is a big deal. It's about $1.1 billion that the state is committing to spend on the asylum-seeking crisis in New York City. The bulk of that is for shelter costs. There's also things for say, having the National Guard assist. That is already been happening, but they would continue that, and they're counting that in the $1.1 billion. There's also $6 million for that Brooklyn cruise terminal facility that you did just talk to Congressman Goldman about. That's a big deal for the mayor who has been pushing for the funding for a long time now, but there's other stuff in this budget that he's certainly not going to like such as the MTA funding.

Brigid Bergin: Well, we're going to get to that in a little bit, but Katie, let's talk for a minute about city hall's reaction to that funding to deal with the migrant crisis. This was a big priority for the mayor. He's been talking about it all week. Obviously, a lot happening even overnight with an encampment being cleared outside one of the hotels being used for sheltering some of these migrants. What kind of reaction was there from city hall about this number from Albany?

Katie Honan: That was one aspect of the governor's budget proposal that the mayor enjoyed, and Jon alluded to it that there was some issue with the MTA funding. That has been the biggest issue in the last few weeks for Mayor Adams as the number of migrants has increased. As we saw last night, the people who were in the encampment, they were staying at the Watson Hotel in Midtown. They did not want to go to the cruise terminal in Red Hook. The encampment was cleared yesterday, but the mayor has said for months we need more support from the state, we need more support from the feds and that comes in the form of money. In order to pay for whatever kind of housing, whether it is in a hotel or it is in this tent facility that has been criticized, they need the money for it.

Brigid Bergin: As you have both mentioned, the MTA funding was another big takeaway from her speech yesterday, Jon. She called it the lifeblood and did propose additional funding to help with the fact that ridership has plummeted during the lockdown and is still below pre-pandemic levels. She's offering some dedicated funding sources.

Jon Campbell: Yes, mixed with some one-shot infusions of cash from the state. There's a lot here. Basically, she's proposing a fundamental shift in how the MTA is funded. Janno Lieber, the CEO of the MTA, he said this is a shift away from the farebox. The state would put in $300 million in a one-shot investment, but they would also raise what's known as the MTA payroll tax.

That is a tax on businesses in the MTA region, not just New York City, but Long Island, and all the way up to Dutchess County in the Hudson Valley there. They pay a certain amount of their payroll. For the top revenue businesses, it's about 0.34%. The governor wants to increase that 0.5% and that would create another $800 million for the MTA. That is going to be very controversial, particularly in the suburbs who have hated that MTA payroll tax ever since it was first put in in the late aughts.

The controversial part here is the state under Hochul's plan would essentially require New York City to put up $500 million a year to the MTA and that is something that Mayor Adams doesn't like. Particularly, he's getting some money for, say, asylum seekers, but then he'd have to pay $500 million for the MTA. He put out a statement yesterday making clear that he has some pretty serious concerns about that.

Brigid Bergin: Katie, that's a big bill for the city for MTA funding, $500 million plus a potential fare hike. You were reporting on this thread as far back as November. Can you talk a little bit about how you saw this coming?

Katie Honan: Yes, thank you, Brigid. That was with my colleague Jose Martinez, who's much smarter about transit issues than I am. He's our transit reporter. He had been reporting that, obviously, the MTA is in a fiscal crisis. Pre-COVID about half of its revenue came from fares, and that has declined during COVID, obviously, and then as we've continued to work our way out of it.

I was down in the Somos conference in Puerto Rico and Janno Lieber was there for the first time, really, to make this push to state and city legislators that the MTA needed help. They'd like to be funded the way to be seen as a more central service where they're actually getting more money, whether it's from the state or the city. Some of that would come from the payroll tax, even the casino revenue. Whenever we see additional casinos built and where there'll be, some of that will go towards that.

In Mayor Adams' criticism of this proposal, he pointed out in his statement that the city annually contributes approximately 2 billion to the MTA in direct and in-kind contributions. That was in a quote from the statement they released. The reality too is the city is not doing as well financially as it also climbs out of the COVID pandemic. These are a lot of issues as to who's going to pay for this continued problem.

Look, you could say that even before COVID, the MTA had financial challenges that needed to be met as well, but the issue is you need to get more people back on trains and commuter rails and buses, and cutting service and even increasing fares, I don't know if that will do it.

Brigid Bergin: Jon, we're going to go back to your items. The third item on your list was her proposal to extend a corporate tax that was due to expire, a compromise with the progressives in the legislature who want to make it permanent. Is that a fair read of it?

Jon Campbell: Yes. There was a lot of questioning here about whether Governor Hochul would extend that tax. Basically, that was at the height of the COVID pandemic under then Governor Cuomo and the state legislature. They put in a higher tax on corporations that essentially have more than $5 million a year in revenue, so wealthy corporations. The idea was it would create more revenue for the state that they could then plug this budget hole or spend on this or that, and that was set to expire at the end of this year.

It is set to expire at the end of this year. Hochul, as part of her budget, she wants to extend that for another three years. That's something that could bring in somewhere between $800 million and about $1.1 billion a year. That's what her budget office estimates. That's a pretty big chunk of change. It also signals to the-- It is essentially on some level a concession to the progressives. You're starting to hear conservatives though. They say, "Well, listen, we're ending this year with a projected almost $9 billion surplus, so why do we have to extend this tax?" They're also complaining about that MTA payroll tax increase that we just said as well. The governor said she doesn't intend to increase taxes, no new taxes in this budget, but there is some of that in this budget, quite frankly.

Brigid Bergin: Jon, next on your list, of course, is increasing school funding by 10%. That's a big increase and in such a way that underserved schools will see the most of it.

Jon Campbell: That's what's known as the Foundation Aid program. It goes back to-- There have been lawsuits about inequities in school funding and sound basic education in New York. Governor Hochul agreed to settle the most recent iteration of that.

Part of that is fully funding this Foundation Aid program, which is a formula that essentially favors lower-funded schools or the less wealthy schools, schools in less wealthy areas. That will be fully funded. It's about 35 billion total in education aid. That is something that education advocates have been pushing for a long, long time. That said, she also wants to change the cap on the regional cap on charter schools.

The effect of that would be New York City would be able to add somewhere between 85 and 100 new charter schools. In theory, that is something that public school advocates can't stand. The teacher's union isn't going to like, and a lot of progressives in the legislature are not going to like, so that is going to be a battle.

Brigid Bergin: Katie, any reaction at city hall on this conversation about raising the charter school cap? Katie? Okay, we're going to move on there. Actually, we were just coming up onto a short break. We're going to have more on Governor Hochul's budget proposal in just a moment. Stay tuned.

[music]

Brigid Bergin: It's the Brian Lehrer Show on WNYC. I'm Brigid Bergin from the WNYC in Gothamist Newsroom. We have a few more minutes with my colleague, Albany reporter, Jon Campbell, and hopefully Katie Honan from the city. We had a little technical difficulty, so we're trying to reconnect her. I want to talk to her about charter schools caps if we get her back. Jon, let's pivot for a moment to your final point, which was on the housing development plan. Governor Hochul announced a plan in her state of the state to increase the number of housing units by 800,000 units. In this budget, did she give us any indication about how she would get there?

Jon Campbell: Yes, she put more meat on the bone, essentially. Really the heart of her plan is setting housing targets for each municipality in New York state. If you're "downstate", you've got to add 3% of housing units over a three-year span. If you're upstate, it's 1% where the need for housing is less. Essentially, if these cities, towns, villages don't meet that mark. Under Hochul's plan, the state would be able to step in and approve multi-family housing units on its own over local objection. That is going to be a huge deal in the New York City suburbs.

You're already starting to see a lot of criticism, particularly from Republican officials in those areas, but some democrats are wary in those areas too as my colleague David Brandon and I had reported last week. It's one of two areas where really she's going to face a lot of suburban pushback. The other is that MTA payroll tax that we addressed earlier, and it's an area of the state where she did not, particularly on Long Island.

She did not perform particularly well in the 2022 election. She was asked about that yesterday and she said, "Well, I'm trying to do what's best out of the state. I'm not driven by politics," but it's really a situation to watch. It's one that suburban officials have proved their might in the past and they're going to try to do it again.

Brigid Bergin: John, in terms of how she would actually get developers to build some of this new housing, she isn't offering any new tax breaks necessarily, but there's a gaming of the existing 421-a tax break that it seems extended. Can you talk a little bit about that?

Jon Campbell: Yes, so basically, she wants to extend the deadline for projects that would qualify under 421-a. 421-a is a controversial tax break that provides tax incentives to builders who build housing in New York City with a certain amount of affordable units, below market rate units, and it expired last year. It is something that democrats in the legislature, particularly those who lean more to the left, they view it as just a giveaway to builders.

While builders say, "Well, we need some incentive to create affordable housing below market rate housing." It's this kind of stalemate. She wants to come up with a replacement for 421-a. There has not been much of an appetite. She's got this end around that you mentioned here that would extend the deadline for projects to qualify. It's going to be a tough sell on the legislature, I think, but in the budget, there's a lot of give and take.

There's a lot of, "I'll trade you this for that". She holds the ultimate cards here because she can force the budget to go late if she wants, and which she did last year. I wouldn't be surprised to see her do it again this year.

Brigid Bergin: I want to play another short clip of Governor Hochul talking about her plan. This was from her speech yesterday related to how she views her plan.

Governor Hochul: It's a thoughtful plan that furthers our progressive values and our priorities as New Yorkers, but also ensures fiscal responsibility.

Brigid Bergin: Jon, the Democrats have super majorities in both chambers. She's not necessarily going to be doing on negotiating with Republicans. It's really moderates versus progressives. How did this proposal land with the legislators you've heard from so far?

Jon Campbell: There's a lot of, well, we got to see the details. Well, wait and see. There's a lot of that going on and some of that is legitimate because the budget is really a series of 10 different really lengthy bills of thousands of pages. We're going to be going through these bills for weeks. There's some of that that is legit. I think that in general, Democrats liked her commitment to housing.

In general, they know they have to do something about the MTA so maybe they would quibble with how she's doing it, but they do like that she showed some commitment to making sure that that can be, she called it the lifeblood of the region. This comes at a time where her relationship with the legislature, particularly the Senate, is something of a low point. Just two weeks ago, the Senate Judiciary Committee rejected her pick for Chief Judge of the Court of Appeals, Hector LaSalle. That's something that's never happened before since the current system for picking judges was put into place., That was a blow with the Kathy Hochul delivered by her fellow Democrats in the Senate. Now they have to negotiate the budget. If you talk to legislative leaders, if you talk to Kathy Hochul, they all say, "Well, we're fine, we're fine." That stalemate over the judge is still going on now. Kathy Hochul wants the full senate to vote on it. Obviously, it's going to play some role here in how state government works, but how much that of a distraction that becomes, remains to be seen.

Brigid Bergin: I want to rewind our conversation a little bit. Katie Honan, you there?

Katie Honan: I'm back. Yes. Can you hear me?

Brigid Bergin: Woohoo. You're great. All right. The question I did ask for you right when we lost your line, we're finishing up our conversation about education aid and then specifically this issue of lifting the charter cap within the city. Do we have any initial reaction of City Hall, how people responded to that idea?

Katie Honan: Not from City Hall just yet. I know there's a city meeting of the city council today, and I know for sure it will come up to ask speaker Adrienne Adams. There was a reaction from New York City-based state lawmakers, particularly senators John Liu and Robert Jackson. John Liu from Queens, and Robert Jackson from Manhattan. They're opposed to this. They said it could add up to 100 new charter schools, which would financially strain the Department of Education. Obviously, the UFT is opposed to this lifting this charter cap that's always been that tension for decades now of why should the UFT and other city lawmakers and people who support the UFT, they say, "Why should we have to provide space in public school buildings for private charter schools." I'm sorry, not private schools, but for charter schools in that way that they are, so that is the issue John Lu himself said it was a non-starter. We'll see what happens and obviously, these are the people that Governor Hochul will have to negotiate the budget with, and we'll see what Mayor Adams and especially the city council members today will have to say about it.

Brigid Bergin: It's February 2nd, so we're going to be talking about the 30th anniversary of the movie Groundhog Day--

Katie Honan: [laughs]

Brigid Bergin: at the end of the show, and the governor's proposal to revisit bail reform feels like a good fit for that conversation. Didn't they reform the reforms last year, Jon?

Jon Campbell: Well, first of all, shout out to my mother, Diane, a proud Punxsutawney native.

Brigid Bergin: Wow.

Jon Campbell: Groundhog Day is a big deal in the Campbell household, so I'll say that first, but yes-

Brigid Bergin: Happy Groundhog Day.

Jon Campbell: -Since these bail reforms were put in 2019 by Governor Cuomo and the democratic legislature, essentially it removed the possibility of cash bail for most misdemeanor and non-violent felonies. They've made two rounds of changes since then. One under Governor Cuomo, one under Governor Hochul, and now Governor Hochul wants to make a third round of changes.

This one is going to be controversial. She essentially wants to give judges more discretion to set bell in violent felony cases and in violent crime cases essentially. It's going to be a tough sell in the legislature because they do not want any aspect of judicial bias to be in the process. They say that in historically bias affects people of color, Black and brown people who come before the court system in disproportionate numbers.

What the governor wants to do is remove what's known as the "least restrictive standard," which essentially says that the judges have to impose the least restrictive means to ensure somebody comes back to court. Because that's what the purpose of bail is, to ensure that people come back to court. She wants to make very, very clear in the law that judges can consider gun crimes, that they consider a history of, say, juvenile crimes, things like that. When they are choosing whether to assign bail, that's going to be a very tough sell with the progressive left in the legislature.

Brigid Bergin: Just really quickly, Jon, this is a policy that we are talking about. This is not necessarily a fiscal question. Why is bail reform being talked about in the budget anyway? Just remind us of why that happens.

Jon Campbell: Essentially, because the constitution and state law allows the governor to do so, and that has been something that's been challenging court over the years, but it is, the governor can shove as much policy as he or she wants into the budget proposal. It gives the governor more strength in their negotiating position with the Senate and Assembly. Really the budget, it is a spending plan. It is $227 billion of spending, but it also serves as one of two major points during the year where the state legislature passes all sorts of policy and the other coming at the end of the legislative session in June. That's New York, baby.

[laughs]

That's policy proposals get jammed into the budget, and it can be tough for some lawmakers to vote no on a particular budget bill because there's say, a hundred different proposals in it, and if they're voting something down that they don't like, they also would be voting down something that they probably do like that's tucked into that bill. That how it happens in Albany.

Brigid Bergin: Katie, we've heard Mayor Adams talk about wanting to see these laws change. This has been a big push of his presumably he was happy to hear this included in her budget address. Katie, are you there?

Katie Honan: I'm here.

Brigid Bergin: Did you hear my question?

Katie Honan: Yes, I heard your question, and I was trying to answer it. This isn't good news for the Mayor, since he was running for mayor in 2021, has been critical of these bail reforms. He's pointed to that as the reason why there are issues with crime in the city and why some categories in the city's crime have gone up. I know obviously, there's a long process in order to reform some of these things, but for him, this has been he certainly has a different view of crime and the approacher crime than the previous mayor. We'll see what happens in the state legislature to actually if some of those changes will actually happen.

Brigid Bergin: Jon, before we let you go tell me what you're going to be watching as we head towards the April 1st deadline. It feels like this is definitely the very beginning of the long negotiation process. Any big surprises that you're looking out for?

Jon Campbell: Well, I'm going to be watching out for a lot of things. We talked about the MTA proposal, in particular, and whether the city actually will end up having to put up 500 million. More than that, I'm just looking to see-- I'm looking at relationships here. I'm looking at if the governor and the Senate can come together and negotiate a budget at a time where they're not particularly happy with each other.

Is this the beginning of a rift or is this something that they can get over? Because if there is a rift that has a big impact on state govern means, I should say. That's really what I'm going to be looking for going forward. Hey, the deadline's April 1st, so we'll know within the next couple of months here.

Brigid Bergin: Katie, of course, the Mayor will have to go head up to Albany soon and press his case to lawmakers there. That can always be sort of a weird day in Albany. What do you expect the dynamics to be? How different do you feel like we've seen the relationship between Mayor Adams and certainly Governor Hochul, but also state legislators as compared to the previous administration?

Katie Honan: Yes, Mayor Adams is a former state legislator himself. He has pointed to that as sort of, I understand these people and I understand this body, but when he went up last year, it did also as well for him as he had hoped. He has at least on the outside a good relationship with Governor Hochul. As for some of the state legislators, especially the more progressive members, they have not been as aligned with the mayor.

These are people based in New York City, and they have been critical of a lot of what he's proposed. We'll see in the next few weeks when he goes up there with his budget team and with his senior team about what he wants and what he expects and looking forward to it. I'm looking to see, especially with the migrants and especially with the MTA, these are two of the major issues in New York City.

What from Governor Hochul's budget will actually happen from what she's proposed and how involved Mayor Adams will be in as well. I think that was another criticism from last year. They said he hadn't even really gone up to Albany or spoken to some of the state lawmakers before going up there, and they were a little miff about that.

Brigid Bergin: A lot to watch between now and April 1st. I am sure we will be talking to both of you again. My thanks to my colleague, Jon Campbell, from the WNYC and Gothamist Newsroom, our Albany Reporter, and Katie Honan, a reporter for the news site this city and co-host of the FAQ NYC podcast. Thanks so much to you both.

Jon Campbell: Thank you.

Katie Honan: Thank you. Sorry for the cut.

Copyright © 2023 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.