ESEA
Last week, Governor Kathy Hochul released her proposed 2026-2027 budget legislation and delivered her budget address. The Governor is proposing a $260 billion budget, which is a $6 billion, or 2.4%, increase over the fiscal year 2025 – 2026 budget. This year’s budget proposal includes $10.3 billion less in federal funding to New York following the passage of H.R. 1 in July of 2025 and the expiration of pandemic-era healthcare funding to the State. However, the State received higher-than-anticipated tax returns thanks to Wall Street’s performance in the past year, which has to helped create some breathing room in the drafting of the proposed budget. As a result, the proposed spending plan does not include any increases in personal or business income taxes.
Issues of Importance to ESEA Members
Many speculated that Governor Hochul would take on some aspects of the CLCPA and/or other climate initiatives in her budget proposal. However, the proposal did not address those policies. Moreover, the budget was relatively quiet on policies that would directly impact our members. The Governor did include an extension of the Alternative Fuels exemption (fuel types E-85, CNG and hydrogen, and the partial exemption for B-20) through September 1, 2031. There were several provisions generally related to businesses in New York, including the modification of the sales tax vendor registration program, an extension of the existing corporate tax rate for three more years through 2029, establishing a sales tax exemption for EV charging stations, language around prohibiting misleading discounts in sales, and a new tax on tobacco-free nicotine pouches. We would be glad to provide you additional information about any of those proposals, or any other policies that could impact your business.
Big Picture
The Governor’s highest-profile proposal was the creation of a statewide universal childcare program. The Governor previously announced this proposal with New York City Mayor Zohran Mamdani. She also addressed several priorities related to her goal to address affordability for New Yorkers. She included several provisions aimed at utility companies, policy related to bringing down the soaring cost of auto insurance, and the proposal also includes attempts to easing restrictions to make it easier to build houses more quickly.
Conclusion
The Governor releases 30-day amendments to her initial budget proposals in mid-February. We expect to see some additional proposals, perhaps related to climate policy, and we will keep you apprised once the amendments are released. In the meantime, the legislature is holding joint budget hearings as they prepare their one-house budget proposals. Those should be released by mid-March, as the legislature and the governor work to reach an agreement on a final budget proposal by April 1.
