Hochul to get expanded authority to make midyear budget cuts

Assembly Speaker Carl Heastie confirmed that legislators will give Gov. Kathy Hochul broad authority to make mid-year budget cuts in order to respond to a potential recession and fiscal turbulence caused by federal action. Lawmakers previously granted then-Gov. Andrew Cuomo similar power during the COVID-19 pandemic, but the new language has some more rules in place. 

Reports emerged last week, as budget negotiations dragged on, that Hochul sought the ability to address an economic downturn by making cuts to the state’s spending plan during the year. Talking to reporters in the state Capitol on Monday, Heastie said that the Legislature had agreed to grant her that authority – with some caveats. “If the governor wants to be able to recommend a series of cuts, the Legislature would have the ability to say ‘no’ or ‘go ahead,’” he said. Heastie made clear that lawmakers would not grant Hochul unilateral power. “This idea, which is giving the governor unmitigated powers to make cups, is not true.”

According to Heastie, the language set to be included in the final budget would allow state budget director Blake Washington to recommend a series of cuts, and lawmakers would have 10 days to respond. They can either accept the cuts, or come up with equivalent cuts elsewhere. But Heastie referenced “another provision” legislators are trying to work through before mentioning state reserves. “That would be part of any conversation before we do any cuts,” he said. 

The speaker didn’t offer more specifics on what the provision would look like, but a source familiar with talks said that the governor would only be allowed to recommend cuts if the state has lost at least $2 billion in tax revenue. Anything less than that would not trigger the governor’s authority. The source also provided more details on how the Legislature could object the budget director’s proposed cuts by recommending their own cuts to find an equivalent amount of savings. In that case, the Legislature would pass a resolution saying that the governor would not have veto power over the Legislature’s counter-proposal.

If the budget includes the measure as described, the governor would have less authority to make mid-year cuts than Cuomo did during the pandemic. The measure approved in the 2020 budget included much vaguer language. Whereas the current proposal would set the floor at $2 billion in lost tax revenue, the COVID provision allowed the state budget director to make quarterly cuts if revenues fell below projections by any amount or if spending exceeded expectations. Spending in the enacted budget is almost always higher than original projections. The 2020 measure also similarly gave the Legislature 10 days to accept the cuts, or propose their own.

In addition to discussing the emergency powers the Legislature will grant the governor, Heastie told reporters that the budget is “99.9% done,” essentially confirming what the governor had said earlier on Monday. “We’re done,” Hochul told reporters on Long Island. “They’ll be voting any moment.” That assessment was perhaps a little too optimistic, though, as Heastie said that bills will be printed at the earliest on Tuesday and at the latest on Wednesday.