Hochul faces massive budget shortfall as she aims to spend billions more on migrants, schools, and healthcare

Governor Kathy Hochul, who started her first full term with ambitious housing and healthcare plans, now confronts a tighter budget. As she prepares to present her budget proposal, the state faces a $4.3 billion deficit due to the end of $12.5 billion in federal pandemic relief. This shortfall may necessitate cuts in public school and healthcare spending, a departure from last year’s expansive budget.

With all state senators and Assembly members facing re-election in November, controversial policies are unlikely this year. Hochul’s previous focus on housing, particularly her failed attempt to mandate housing growth targets and dense housing zoning near commuter stations, is expected to shift. Her new approach, outlined in the State of the State address, involves reviving parts of last year’s plan and leveraging state grants to encourage municipal compliance with housing targets.

The Governor’s fiscal strategy in tackling New York’s budget deficit remains vague. Hochul emphasized the need for “belt tightening” and responsible use of taxpayer dollars, acknowledging the impact of inflation and the cessation of federal pandemic funds. Budget experts suggest spending restraint and caution against tax hikes. Meanwhile, debates continue over the appropriate level of spending on Medicaid, school funding, housing, and support for asylum seekers, reflecting differing views on New York’s fiscal priorities and responsibilities.