October 9, 2025

Apropos of our conversation this morning when I discussed the budget ‘Call Letter’ that usually comes out at this time of year sent by the Director of the Budget to state agency leaders, giving them instructions around the parameters they must follow as they prepare their (draft) state agency budget for review by DoB and the Executive, in anticipation of the January Executive Budget proposal release.

In September, the NYS Council submitted formal recommendations to both O agencies when they asked for recommendations regarding ways they can provide meaningful regulatory relief, while increasing program and operational flexibilities.  The most impactful recommendation we made and will continue to make is for NYS to carve our services out of Medicaid managed care, with a minimal savings of $400M/year while significantly reducing administrative burden and associated costs and increasing access to care.

The Call Letter calls for flat funding and state agency recommendations for how to reduce spending in their area of the budget.

New York’s state agencies are being asked to repeal regulations, keep spending flat

As Gov. Kathy Hochul prepares her executive budget proposal for January, the state Division of Budget issued a new challenge to state agencies Thursday.

We already knew Hochul and Democrats in the Legislature were expecting a difficult budget cycle due to anticipated cuts in federal funding. Those cuts, Hochul has said, will amount to at least $3 billion.

That’s on top of the $7.5 billion gap that was already anticipated ahead of next year’s budget negotiations.

State Budget Director Blake Washington made two requests of state agencies Thursday as a result. One is familiar. The other is not.

“Moving forward, agency budget requests for State Fiscal Year (SFY) 2027 should not exceed the total SFY 2026 Enacted Budget agency funding levels, excluding one-time investments,” Washington wrote.

We’re currently in fiscal year 2026 for the state so he’s saying that agencies should expect to receive any more funding in next year’s state budget above what Hochul and lawmakers approved in May, when the current spending plan was passed.

That doesn’t mean that everything stays the same. Costs go up for agencies. Collective bargaining agreements require raises for workers and other costs fluctuate all the time.

So, if an agency doesn’t expect to receive more funding but is anticipated to have higher costs, it’s going to have to find somewhere to reduce spending. Some agencies have already reached out to industry stakeholders to solicit ideas.

But Washington’s second request is one that we don’t usually see in Albany.