In Late-Stage Budget Talks, Hochul Wins Concessions From N.Y. Lawmakers

In the days approaching April 1, the corridors and backrooms of the New York State Capitol tend to be filled with tension and chaos, as the governor, lawmakers and staff scramble to meet the deadline to pass a state budget that is as much a policy blueprint as it is a spending plan.

This year was different.

Budget talks dragged out almost three weeks past the April 1 deadline, leading some to wonder whether Gov. Kathy Hochul, a Democrat in her first full term, had lost control of the process.

But by the time the budget was officially passed by the Legislature on Saturday, it was clear that Ms. Hochul had achieved her goal: a final $237 billion budget that included a checklist of her priorities. They included new resources to fight retail crime, a statewide artificial intelligence consortium, and a landmark housing deal aimed at bolstering residential construction — all without raising taxes on the wealthy.

The governor’s long-game approach seemed to reflect lessons she has learned in reaching the three budget agreements since she took office in 2021: that a governor can lead while honoring the spirit of collaboration and that a good deal is better than a fast one.

After Ms. Hochul announced on Monday that leaders had reached agreement on a budget framework, she continued to negotiate over the next few days, most notably persuading state lawmakers to use the budget to extend mayoral control of New York City schools for two more years.

The final budget contains $2.4 billion to support migrant services in New York City, an increase of half a billion dollars over last year’s funding that should cover case management, medical expenses and legal resources. It also includes a substantial new tax break for developers, expanded tenant protections and new enforcement powers for localities to crack down on unlicensed cannabis shops.

The total budget will run $4 billion more than Ms. Hochul’s initial proposal, in part thanks to the Legislature’s rejection of her cost-cutting measures.

One of those measures was school aid: Lawmakers beat back a plan that would have allowed for a broad redistribution in aid from districts with falling enrollment to those where it is growing. Even so, some of that funding formula will change, with some districts seeing smaller increases than they had expected.

Another was health care, where the Legislature won more than $825 million in Medicaid increases for hospitals, nursing homes and assisted living programs, and garnered roughly a billion more in combined funds for distressed hospitals and to help to stave off the closing of SUNY Downstate hospital in Brooklyn.

Even so, lawmakers were forced to forgo most of the raises they had hoped to win for home health aides and had to accept the governor’s plan to save millions by consolidating the administration of health services for chronically ill and disabled patients. The consolidation was an unpopular proposal among Democrats and Republicans alike.

Senator Gustavo Rivera, chairman of the Health Committee, barely mustered a brave face in assessing the health care plan. He called it “the least crappy deal” the Senate majority could get out of the governor.

“This is not where I wanted to end up,” he said on the Senate floor. “I would rather not be here.”

The budget also authorizes the creation of a new tax scheme that Democrats hope could bring in billions of dollars in federal Medicaid money, though they have promised not to spend any of it until federal officials approve the maneuver.

One of the final issues to be settled concerned mayoral control of schools — a political prize that Ms. Hochul has been keen to deliver to her ally in New York City, Mayor Eric Adams.

Democrats in the Legislature have been resistant to grant Mr. Adams, a fellow Democrat, complete authority without state oversight. The issue had been declared dead in talks weeks ago, a reflection of the lawmakers’ desire to give the issue more consideration and debate outside the budget process.

But in the final hours, Ms. Hochul exerted her leverage, injecting the issue back into budget talks just as the Legislature was seeking concessions on another sensitive matter: protections for tenants.

These protections underpinned the grand bargain at the heart of the housing deal: In exchange for a new developer tax credit to increase the supply of housing, lawmakers on the left demanded a measure that would offer tenants in market rate units new protections from evictions.

Ms. Hochul has been largely opposed to the so-called good cause eviction restrictions, siding with landlords who argued the protections would reduce the supply of housing by making real estate an unattractive investment.

Over the course of many months, the governor succeeded in winning a range of carve-outs, exempting so-called “luxury” units and landlords with fewer than 10 units, as well as new construction. Perhaps the most significant change was one that limited the protections to New York City, with localities in the rest of the state able to opt in to their own versions.

Housing advocates and left-leaning lawmakers decried the deal as a weak facsimile of the protections they had campaigned for. Lawmakers representing high-rent areas of New York City were particularly unhappy with the proposed luxury exemption threshold being placed at twice the federal fair market rent, or about $5,000 for a one-bedroom — a not unheard-of rent for parts of Manhattan, Brooklyn and western Queens.

Eager to expand the number of tenants covered by good cause eviction, lawmakers reopened talks on mayoral control alongside a handful of other final issues. Those included a last-minute deal to allow New York City to lower its speed limit, a measure named Sammy’s Law for a young boy killed outside his home in Brooklyn by a van.

In the end, the luxury threshold exemption for good cause eviction was set at 245 percent of the federal fair market rent — about $6,000 a month for a one-bedroom apartment — and Mayor Adams received two more years of school control, albeit with several strings attached.

“There are many issues that are important to the people of New York and therefore my colleagues,” said Senator John Liu, chairman of the Senate’s New York City Schools Committee, adding: “And the governor knew how to push the buttons.”

Claire Fahy contributed reporting.