The State Budget Outlook
Fiscal Policy Institute, 11/26
Executive Summary
New York State’s Division of the Budget (DOB) recently published its mid-year budget update, which forecasts considerable budget gaps in the years ahead: an apparently staggering $26.8 billion gap over the next four years before even accounting for the impending losses of federal funding under the so-called “One Big Beautiful Bill Act” (OBBBA).
At first glance, this seems like an insurmountable challenge. If the State is facing dramatic deficits before it loses federal funding, then a statewide fiscal crisis must be around the corner. As our report shows, however, the DOB’s forecasted budget gaps are products of excessively conservative revenue forecasting, rather than an underlying imbalance between revenue and spending. In fact, barring a recession, the State’s budget—before accounting for the OBBBA impacts—is likely to generate surpluses over the next four years.
The DOB forecasts overestimate the risk of revenue shortfalls but also underestimate the OBBBA impacts, thereby minimizing their impact on the state budget. The Fiscal Policy Institute estimates that cumulative funding cuts under the OBBBA will be $5.6 billion in the next fiscal year, FY 2027, and $14.3 billion by 2030. These cuts broadly reflect the decision of the current Congress and President to eliminate health care coverage for many low- and middle-income families in order to fund tax cuts for the well off. The bill is especially generous to those earning more than $1 million each year. In New York, these taxpayers stand to save a collective $12 billion annually on their federal taxes.
Our report explains why the State’s fiscal position is considerably stronger than the DOB forecasts indicate and, at the same time, why the OBBBA’s impacts are more severe than the State is accounting for. It also demonstrates the continuing strength of the State’s tax base and fiscal reserves, and that the fiscal challenges ahead can be managed through raising new revenue to the extent necessary.
Barclay Damon Webinar Announcement
Mental Hygiene Law Update
Topics to Be Reviewed:
Amendments to the Statutes Governing Involuntary Removal From the Community and Hospitalization
Amendments to Kendra’s Law, Including New Reporting Requirements Pertaining to Involuntary Hospitalization
Recent Regulatory Changes and Other Proposed Changes Currently in Progress
Cooper v. Wright: A Recent Kendra’s Law Decision With Significant Implications for All Providers Touching Involuntarily Removed or Retained Patients
Wednesday, December 17, 2025
Noon–1:00 p.m. ET
Presented by
Keith Brennan
Of Counsel
Register Here
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HUD CONTINUUM OF CARE EMERGENCY
(Becker’s, 11/26)
A coalition of 19 state attorneys general and two state governors filed a lawsuit Nov. 13, seeking to block changes to the U.S. Department of Housing and Urban Development’s $3.9 billion Continuum of Care grant program, according to a Nov. 25 report from Politico.
The lawsuit challenges new conditions that cap funding for permanent supportive housing at 30%, down from 90%, and require grantees to implement transitional housing programs with services requirements. The complaint also alleges the news rules allow HUD to deny funding to organizations that recognize transgender or nonbinary individuals, according to the report.
The department said it stands by the changes, and in a statement from a spokesperson said, “HUD is dismayed that the plaintiffs have chosen to misuse the courts and pursue this delaying tactic to serve their own personal political agenda at the expense of the homeless individuals, youth and families now living on our nation’s streets. Their use of the courts for political means seeks to prevent nearly $4 billion of aid to flow nationwide to assist those in need.”
According to internal HUD documents cited in the lawsuit, the funding changes could put 170,000 people at risk for homelessness, according to the report.
The complaint, filed in Rhode Island federal court, argues the new conditions violate federal law and congressional spending authority. The plaintiffs are led by New York Attorney General Letitia James.
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CALL TO ACTION: SUPPORT ENACTMENT OF JAIL & PRISON OVERSIGHT OMNIBUS BILL
The NYS Council strongly supports the immediate signing of the Jail and Prison Oversight Omnibus Bill, (S. 8415 – Salazar /A.8871 – Dilan) – a long overdue reform that will bring real accountability and transparency to New York’s correctional system. Given the ongoing and profound harm caused by unchecked violence, abuse, and neglect in jails and prisons, strengthening oversight is not only a matter of justice but of basic human rights.
Background from Dan Clark at Capitol Confidential: It’s almost been a year since Robert L. Brooks died at Marcy Correctional Facility after being severely beaten by correction officers.
After his death, lawmakers pledged to pass a package of prison reform bills in this year’s legislative session. They ended up combining several bills into a larger omnibus-style bill that both chambers passed in June.
One provision would expand the state’s prison oversight entity, the Commission of Correction, from three to nine members and require that some come from certain backgrounds. One member would have to be formerly incarcerated, for example.
Another provision would require that surveillance cameras be installed in all areas of each prison except for individual cells, showers and toilets.
A few of the bill’s other provisions would address what happens after someone dies in prison, like what would be required in the autopsy report and how quickly that death is made public.
Hochul has not signaled publicly if she intends to sign the bill as written or will ask lawmakers to agree to an amendment in exchange for her approval. That’s called a chapter amendment.
Spectrum News reported last week that Hochul’s office is seeking “significant amendments” to the legislation.
PLEASE use the link below provided by our colleagues at The Katal Center for Equity, Health, and Justice to tell the Governor to sign the bill today! Share widely so we can get this bill over the finish line before the end of the year!
Take Action Today!
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ACA SUBSIDIES EXTENSION
H.R. 6074 (119): House Democratic effort at 3-year ACA subsidies extension underscores whether Washington can renew them at all
BY: ALEC SNYDER
| 11/26/2025 05:00 AM EST
The Senate has left for the Thanksgiving recess without an agreement on expiring Obamacare subsidies — and still appear to be miles away from a consensus on health care after lawmakers hashed out plans to avoid stark cost increases for millions of Americans when those subsidies run out at the end of the year.
Subsidies were at the center of the record-long government shutdown that ended earlier this month, with Democrats refusing to come to the table unless Republicans were willing to discuss an extension. But as the shutdown stretched into a second month, lawmakers opted to move forward with a stopgap that punted the government funding deadline to the new year and fully funded several government departments — but ultimately excluded any language extending ACA subsidies.
Rep. Lauren Underwood (D-Ill.) introduced her proposed clean three-year extension on the ACA subsidies as a standalone bill less than a week later, and House Minority Leader Hakeem Jeffries has since circulated a discharge petition to force a floor vote on her plan.
Some Republicans have said they’d support a partial extension of the subsidies, while others — like Sen. Bill Cassidy (R-La.) — are proposing alternativescentered on health savings accounts. However, several moderate House Republicans are skeptical that lawmakers will be able to reach a deal before the subsidies expire in roughly one month. And Democrats are so far continuing to dig their heels in on a “clean” extension of the subsidies, although many moderate Democrats are willing to negotiate modifications as part of an extension.
Nevertheless, without an extension, premiums are set to go through the roofafter the Dec. 31 deadline: People with group coverage are expected to see an average 6 to 7 percent premium increase this month as they re-enroll in coverage that will start in January, and employers are expecting the largest jump in health costs in 15 years in 2026, at 6.7 percent — more than double the rate of inflation and the typical pay raise workers are getting.
WHAT’S IN THE BILL?
This Bill Analysis is based on the text of the bill as introduced on Nov. 18.
The measure would extend authorization for the premium assistance credit for marketplace health insurance plans — which are authorized by the Affordable Care Act — by three years, through Dec. 31, 2028.
The extension would apply to all taxpayers with a household income at or above the poverty line — with no upper limit — for taxable years beginning after Dec. 31, 2025 and ending before Jan. 1, 2029 (Sec. 1).
WHO ARE THE POWER PLAYERS?
Rep. Lauren Underwood (D-Ill.) is the lead — and so far, only — sponsor of H.R. 6074, which she previously introduced as an amendment to the Jan. 30 stopgap funding and three-bill minibus. The House Rules Committee rejected her previous attempt during the panel’s markup to ready the CR for the House floor.
“Health care is a human right, and House Democrats will not give up this fight,” Underwood said in a statement on the standalone measure. “A three-year extension of these tax credits will give families peace of mind and certainty that their coverage will remain affordable and within reach. We are out of time, and Congress must pass this legislation immediately.”
House Minority Leader Hakeem Jeffries and Minority Whip Katherine Clark have led the publicity campaign for the legislation, both leading up tothe House’s vote on the CR and in the weeks since. Jeffries announced on CNNon Nov. 14 that House Democrats had introduced a three-year extension of the ACA premium subsidies.
Jeffries first unveiled a discharge petition on Nov. 12 that would require the House to vote on passing a resolution to provide for the consideration of legislation from Rep. Jim McGovern (D-Mass.). His bill is intended to advance various “policy priorities that will break the gridlock” and according to Jeffries’ office, will ultimately include a subsidies extension. The petition has amassed 212 signatures so far, all of which come from House Democratic lawmakers.
Throughout talks to reopen the government, Speaker Mike Johnson refused to commit to a floor vote to extend the tax credits before the Dec. 31 deadline. His posture stands in contrast with his counterparts across the Capitol, where Senate Majority Leader John Thune promised Democrats a mid-December vote on extension legislation in exchange for Democrats shoring up the necessary support to reopen the government.
President Donald Trump originally struck a conciliatory tone on the ACA subsidies — that is, until he said in a Nov. 18 post on Truth Social that he would only support a solution “sending the money back directly to the people, with nothing going to the big, fat, rich insurance companies.”
Elsewhere on the Hill, Senate HELP Chair Bill Cassidy (R-La.) has laid out a proposal to put money directly in Americans’ health savings accounts, which is Trump’s favored approach. The framework would directly fund individual’s tax-advantaged health savings accounts, as opposed to spending billions on extending expiring enhanced premium tax credits for ACA insurance. According to Cassidy, the proposal hinges on encouraging people enrolled in Obamacare plans to switch to bronze-level plans, which offer lower premiums and higher deductibles than other plans on the marketplace.
Senate Democrats, however, continue to rally around an extension of the subsidies that go away after 2025. They maintain, along with some policy experts, that Cassidy’s approach would do very little to help consumers with skyrocketing premiums — assuming it could even be implemented in time.
“We insist that the ACA tax credits have to be renewed and extended, period,” said Senate Minority Leader Chuck Schumer. “Cassidy’s proposal, as I understand it, replaces them. Looks like it’s privatizing health insurance, and it looks like it’s really problematic.”
WHAT’S HAPPENED SO FAR?
Lawmakers have spent months squaring off over an extension of the enhanced subsidies, which were created in 2021 through the American Rescue Plan Actunder former President Joe Biden and extended through 2025 in the Inflation Reduction Act of 2022. The tax credits fueled a major boom in Obamacare enrollment signups, which surpassed 23 million this year. The nonpartisan Congressional Budget Office estimates 2.2 million people would lose coverage next year if the subsidies lapse.
The vast majority of individuals on the exchanges receive some form of subsidy. The enhanced subsidies ensured that people who previously did not qualify for help under the ACA because they earned too much got some form of subsidy.
The ACA’s original subsidies, which will remain in place if Congress lets the enhanced version expire, had an income limit of 400 percent above the poverty level — approximately $62,000 for an individual and $128,000 for a family of four — to get some form of subsidy. Under the enhanced credits, ACA premiums for people above that threshold have been capped at no more than 8.5 percent of annual income. If those subsidies expire, they will get no help.
The subsidies eventually became a nonnegotiable for Democratic lawmakers as Congress worked to end the federal government shutdown. Lawmakers appeared to be stuck in a stalemate until a faction of Democratic senators banded together with most GOP senators to agree on a deal to reopen the government. However, their agreement didn’t include any extension of the subsidies — only a promise of a Senate floor vote in December on legislation to extend expiring Obamacare tax credits.
Many progressives in the Senate — along with many House Democrats, including Jeffries — believe that any deal that failed to extend the ACA tax credits was insufficient. And the agreement earned quick pushback within corners of the House and Senate Democratic Caucuses, with members questioning why their party would fold days after winning key off-year elections and without an agreement yet on their key demand.
In releasing her bill, Underwood pointed the blame at Republicans for failing to act on the subsidies prior to open enrollment for next year’s health plans, which is already underway and ends on Dec. 15.
“Republicans cannot continue to ignore the health care crisis that they’ve created,” said Underwood. “These popular tax credits will expire in just 42 days, and the cost increases that millions of Americans have been getting notices of will become reality.”
By their own admission, House Republicans are only in the very nascent stagesof negotiations, while Senate Republicans are already outlining detailed proposals to align with Trump’s vision for lowering the cost of health care by sending health funds “directly to the people.”
It’s causing anxiety in the House GOP ranks among members who don’t want to be forced to swallow whatever plan the Senate comes up with to extend the premium tax credits or some other alternative proposal. The chairs of the critical House committees have plans to hold listening sessions soon to hear members out on their wide-ranging views on health policy. But it’s promising to be a long, deliberative process — and the clock is ticking.
WHAT’S NEXT?
The outlook on Jeffries’ discharge petition is murky, at best. Without knowing how passionately rank-and-file House Republicans feel about extending the subsidies as-is — let alone for three years, as opposed to a shorter-term extension — there’s no certainty that the petition will succeed, given that it would require at least a handful of GOP lawmakers to break ranks and side with Democrats to force a vote on Underwood’s bill.
Among the possible solutions, health experts say Cassidy’s plan, which aligns with the proposal Trump floated, won’t necessarily do much to offset looming premium spikes — a talking point that could bolster Democrats’ opposition as they argue for a clean extension of the subsidies.
More Republicans are also acknowledging it may be too late to enact major new health care policy before Dec. 31 “It’s a welcome discussion,” Rep. Don Bacon(R-Neb.) told POLITICO. “But we’re not gonna get that done by Dec. 31.”
When asked about the timeline last week, Sen. Lisa Murkowski (R-Alaska) said there’s not enough time to make “major changes.”
That could give a boost to Democrats who were promised a standalone vote on an ACA extension bill next month in exchange for reopening the government. But it could also embolden conservatives who are eager to ditch bipartisan talks and go their own way on a health care-focused, party-line reconciliation package, as White House deputy chief of staff James Blair teased on Nov. 18.
For now, lawmakers in both chambers have left town for Thanksgiving, meaning any further negotiations on the subsidies will need to wait until December.