January 21, 2025
Today is budget day in Albany. The Governor will introduce a $252B (proposed) spending plan right around 1:00 today. The plan is said to increase spending 3.6% and has a total state operating funds of $143.8 billion, which reflects a 7.9% increase from last year’s enacted budget.
The governor wants New Yorkers who make over $1.1 million annually to continue to pay a higher income tax rate through 2032 — or an extension of five more years to help close out year spending gaps. The higher tax rate for millionaires first imposed in 2021 is set to expire in 2027.
Importantly, the budget does not include any contingency measures if Trump and the Republican-led Congress move to strip funding from state governments., and the budget will not include a proposal to fill the $33 billion revenue gap in the MTA’s proposed $68 billion five-year capital plan.
While the state’s budget must be balanced before it’s enacted, governors have regularly presided over structural deficits pushed off to future fiscal years. Hochul is carrying a $27.3 billion out-year gap through the three upcoming fiscal years — up from the combined $14.3 billion combined out-year deficit she had coming into this fiscal cycle.
MEDICAID, MCO TAX, HOSPITALS, PARTNERSHIPS
Medicaid spending is expected to increase by 7 percent in the upcoming fiscal year, propelled by the recently approved multi-billion-dollar windfall from the tax on managed care organizations.
The administration expects the recently approved NYS MCO tax will generate $3.7 billion over the next two fiscal years but the Executive plans to spend the money over the course of three years. The governor wants to use the initial proceeds from the Tax for higher Medicaid rates for hospitals that meet new maternal health quality metrics and for across-the-board increases for (hospital) outpatient services, building on a set of broad but one-time hikes in last year’s budget. The executive budget pairs those investments with $300 million in new funding for the Safety Net Transformation Program. Gov. Hochul launched the program last year to support partnerships between struggling safety-net hospitals and other health care organizations. We sent you a press release regarding the (proposed) partnerships last week. Here’s a quick look at a few of the (proposed) partnerships from a recent Crain’s HP article:
Gov. Kathy Hochul has greenlit seven hospital partnerships across the state in an attempt to help struggling safety-nets turn around their finances.
The initiative, first announced in last year’s state budget, is designed to incentivize financially stable institutions to help cash-strapped medical institutions to improve the quality of care and their financial sustainability
For example, the state will infuse up to $188 million to Memorial Sloan Kettering and Jamaica Hospital to create a comprehensive cancer center in Queens. The Upper East Side oncology center will help Jamaica Hospital build a radiation and infusion therapy center on its campus, and in exchange the new center will refer patients to Memorial Sloan Kettering for advanced treatment or participation in clinical trials, the governor’s office said.
St. Barnabas Hospital, a safety-net institution in the Bronx, will also team up with Downtown Brooklyn-based startup Cityblock Health and Union Community Health Center in the Bronx to reduce unnecessary hospital admissions and improve access to behavioral health services in the Bronx, the state said. The plan includes an upgrade to St. Barnabas Hospital’s emergency department, which sees 75,000 patients each year, and a new value-based insurance contract to manage behavioral health needs for 35,000 members of the Medicaid plan HealthFirst.
Montefiore’s New Rochelle Hospital will also partner with Westchester Community Health Center, a federally qualified health center, to modernize its neonatal intensive care unit and improve maternal and child health care.
And, for those with a subscription, today’s Albany Times Union includes an Opinion piece criticizing the MCO Tax here:
Nursing homes, meanwhile, could see $200 million more from Medicaid.
The executive budget also proposes two pots of funding to bolster abortion access across the state: a $20 million fund to cover the costs of abortion medication outside the Medicaid program and a $5 million capital fund for abortion clinics’ infrastructure needs.
The governor is not expected to make any further changes to Medicaid’s popular Consumer-Directed Personal Assistance Program, or CDPAP, which is undergoing a contentious consolidation by the private financial services company, PPL.
The Governor is expected to spend $3 billion on a rebate check program to combat inflation. Money from the program is expected to come mostly from a projected $3.5 billion surplus due to an unexpected increase in state tax revenue receipts. And she wants to expand support for low-income people to access child care programs and provide more students with no-cost school meals.
We will keep you apprised of new developments throughout the day. Typically the budget is posted online after the executive budget proposal presentation scheduled for early this afternoon.
Medicaid spending
- Grows Medicaid spending by 13.7% (over two budget years) with 900,000 more New Yorkers on Medicaid rolls post-pandemic
- Retains plan to transition Consumer Directed Personal Assistance Program, or CDPAP, for home care to one fiscal intermediary by April 1.
- N.Y. to get $3.7 billion over two years, spend it over three, from federally approved tax on Managed Care Organizations
Mental health
- Fund half of $154 million in overtime costs for 750 NYPD officers deployed for new overnight subway train patrols
- Funding to create 100 beds for forensic inpatient psychiatric care on Randalls Island and Wards Island
- $16 million for counties to strengthen assisted outpatient treatment programs to direct people in mental crises to be hospitalized for care
- $10 million to build clubhouses, or safe place for people to get support for mental illness
- Additional funding for welcome centers and other peer-led services