Governor Hochul and the State Legislature are finalizing this year’s state budget. Hochul and legislative leaders reached a deal that is expected to be passed late tonight.

In total, the budget will spend $229 billion – a record amount and a 33% increase in spending since 2019.

This budget contained many policy changes of monumental economic importance. These include:

Minimum Wage increases. In upstate New York, the minimum will increase to $15 in 2024; $15.50 in 2025; and $16 in 2026. For 2027 and beyond, the wage will be indexed to the rate of inflation. This change will result in annual wage increases, except in years when the state experiences high unemployment and job losses.
Natural gas ban. Starting in 2026, the state will ban “fossil fuel equipment and building systems” in new construction. In 2026, the ban will apply to all buildings seven stories or less, with exceptions for commercial or industrial buildings with at least 100,000 sqft. In 2029, the ban will extend to those larger buildings. The ban will not apply to backup power systems nor buildings classified as a: manufacturing facility, commercial food establishment, laboratory, car wash, laundromat, hospital, other medical facility,  critical infrastructure, including but not limited to emergency management facilities, wastewater treatment  facilities, and water treatment and pumping facilities, agricultural building, fuel cell system, or crematorium. The Governor’s original proposal would have extended this ban to appliances and systems in existing buildings, but the BNP successfully advocated against that provision. Still, this measure will add significant construction costs onto New York projects and will create reliability concerns in the power grid.
Cap-and-Invest. The budget will move forward with a cap-and-invest plan, which caps statewide emissions and requires employers to bid on emissions allowances. Lawmakers did not set that cap, but the budget will include a plan for how to invest the program’s proceeds. Most of the key details of cap-and-invest will be determined through regulation. To help members learn more about this important change, the BNP has organized a Capital Conversation with the NYS Department of Environmental Conservation on cap-and-invest. Register here.

A significant focus of negotiations was bail reform. Governor Hochul pushed for increased judicial discretion in setting bail, to the chagrin of many in her party.

Absent from the final budget: anything on housing. The hallmark of Hochul’s State of the State address and Executive Budget proposal was the New York Housing Compact, her ambitious plan to build 800,000 new homes across New York. However, legislative leaders were unable to reach an agreement. Rent control measures like Good Cause Eviction were discussed, but not agreed upon. Albany will continue to debate this issue throughout 2023.

For another year, state leaders also failed to make any allocation toward the state’s UI Trust Fund debt.

The BNP will provide more detailed budget briefings in the coming days to members of our Industry Leaders Forums.