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Expect Gov. Kathy Hochul in her State of the State Address on Tuesday to talk on and on about “affordability” — without much explanation of how she’s going to pay for all the “affordable” spending.
It’s both an effort to appease Mayor Zohran Mamdani and his socialist cadres, and to rework the language that produced his stunning win in last year’s Democratic primary into a sales pitch that will see her safely re-elected this year.
Hochul’s first problem is that, as an incumbent, she can’t just make inspiring promises the way he did: She’s stuck passing her spending plan before campaign season really even begins.
She’ll address that in part by pushing non-“affordable” issues that also poll well, in part by offering only a first taste of coming goodies this year.
Even then, though, it’s hard to see how her numbers can really add up, not when the state has to grapple with the feds’ crackdown on existing Empire State financial games.
Start with her first marquee move: offering free universal day care, for infants on up, all across New York.
The bill for that would run at least $15 billion a year; even the lefties at the Fiscal Policy Institute say that would require new taxes on the middle class, not just the rich.
So last week the gov and mayor announced a plan to offer free care for all 2-year-olds and up in New York City only, with some slight expansions of care for older kids in the rest of the state.
Hochul says existing revenues can fund that much, at least this year — figuring out how to pay for the full ride will have to wait until she’s won another four years.
Then again, she didn’t cite an exact cost or what “existing revenues” have suddenly come free, other than to wave at higher-than-expected tax revenue from Wall Street bonuses.
To help fund Mamdani’s other pricey promises (free buses, huge investments in housing, etc.), the gov has hinted she’ll push to bump up corporate tax rates.
She knows that current taxes on companies are already poisonous to the state’s business climate, but she’s plainly hoping just a little bit more won’t be a straw that breaks any camels’ backs.
Never mind that the financial industry — Wall Street — has basically stopped expanding in New York; all its new jobs are in low- or no-income-tax states like Texas and Florida.
The tax take from Wall Street is always volatile (it has its bad years!), and the golden geese could fly away en masse someday soon, with the bonus-tax-bonanza going boom.
As it happens, Dallas Mayor Eric Johnson just predicted that a flood of Wall Street businesses will flee the Big Apple as Mamdani gets moving.
Hochul is offering only one notable tax cut, and it’s not for fat cats: ending New York taxes on tips to match the new federal deduction created by President Donald Trump.
She hasn’t put a pricetag on that yet; early guesstimates are that it might cost the state “only” $1 billion a year.
But those billions add up, which is why the other ideas Hochul has unveiled in advance of Tuesday aren’t tax-or-spend ones, such as a crackdown on 3D-printed firearms and other “ghost guns” and enhanced online-safety protections for kids against predators both AI and human.
Very popular goals, in other words — even if practical success on either front is far from guaranteed.
The gov hasn’t leaked everything in advance; she’s expected to push for some kind of tweaks to the Raise the Age law, which has (unintentionally) fostered significantly higher rates of crime among under-19 kids (including tweens, thanks to companion “raise the lower age” changes).
And she’s going to need legislation to help her climb out of her climate-law trap: The statute passed under Gov. Andrew Cuomo leaves insufficient flexibility in its economically-suicidal goals for eliminating carbon emissions.
Soaring energy costs are slamming the state on top of its high taxes and heavy regulation; that creates a huge affordability problem for businesses — slamming job creation — even as multibillion-dollar subsidies for solar, wind and battery “farms” burn taxpayers when Albany funds them and consumers when the costs are buried in utility bills.
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Hochul’s been dodging the legal requirements to keep the pain from exploding, but she’s defying the clear letter (and spirit) of the law; she needs the Legislature to revise the targets before the courts force her hand.
Will the progressives who dominate Albany go along? What might she have to give them to win any slack at all?
Lurking behind everything else is the state’s ever-growing Medicaid budget.
Hochul’s efforts to rein in home-health-aid fraud have been a billion-dollar failure; the feds are now cracking down on the multibillion-dollar cheats the state’s been using to fund its coverage of health care for immigrants (especially illegal ones) who don’t qualify for federal funding.
That, by the way, is part of what New York pols are referring to when they complain about “savage Medicaid cuts” passed by Congress last year; the rest of the “pain” involves modest work requirements and other anti-fraud controls that challenge the Empire State’s generous-even-to-thieves approach to welfare programs.
Bottom line: Either the gov finds tens of billions in state funds to make up for the federal “cuts,” or she’ll have to face down the health-care unions, the hospital industry and a pack of other special interests that are used to ever-increasing floods of cash.
Hochul, as we’ve often noted, is the epitome of a split-the-difference politician: She’s going to try to balance the needs of business with the demands of the socialists; the impossible dreams of the greens with grim reality; the reforming fervor of Republicans in Washington with the venal feeding of the state’s health-care special interests.
Then again, the gov only needs to keep juggling for another year: 2026 will be her last election ever.
It’s New York’s citizens who’ll have to face the disaster when it all the balls come crashing down at once.