The Ins and Outs of the Legislation Side of the New York State Budget Process

By Liz Fine

The new year. A time for celebrations, for resolutions – and in Albany, for the launch of the State budget process. Far more than in most states, a year’s worth of policy making will get crammed into several weeks of work and thousands of dense legislative and budget pages. 

I have had a long career in government. I worked in the White House, Congress, and as General Counsel to the New York City Council. I thought I knew a lot about how government and budgets work. Then a decade ago I joined New York State government — first as General Counsel to Empire State Development, then as Counsel to the Governor — and came face to face with the State budget process. It was mystifying, opaque, confusing, and challenging. I heard talk about “three-ways,”  “Article VIIs” and the implications of Silver v. Pataki. It was all gibberish to me. It should not be this complicated.  

To demystify the State budget for others, what follows is the who, what, where, when, and why of the process, how the budget comes together each year, especially when it comes to the policy that is included in the deal, and how to get involved.

WHO
There are three key players in the budget process: The Governor, the State Senate Majority Leader, and the Speaker of the New York State Assembly. There are also the legislators as well as advocates for every conceivable interest in the State – and they play more than a bit part in the budget sprint. 

For many years, we heard about the “three men in a room” who made all the final decisions on State finances and legislation. The good news is that two of the three players are now women: Kathy Hochul is Governor and Andrea Stewart-Cousins is Senate Majority Leader (Carl Heastie, the Speaker of the Assembly, seems fine with this recent development). What has not changed is that many key negotiations still take place among these three leaders and a small number of high-level staff members. And, while some disagreements may spill into the public, most of these discussions stay in ‘the room’ – usually the Red Room of the State Capitol, an ornate space many people became acquainted with during Governor Andrew Cuomo’s daily covid press conferences.

That said, these leaders are not solo operators. At present, the Majority Leader and the Speaker are representing their respective Democratic conferences. (The reality in Albany is that, with Democrats controlling both houses of the Legislature with sizable majorities and a Democratic governor, Democrats can pass the budget without any Republican votes and hence Republicans do not have an audible voice at the negotiating table.) 

WHAT
New York State has a budget of over $230 billion and it is likely to grow to more than $250 billion this year. That puts New York State’s budget behind only the federal government and the State of California in size. The sources and uses that make up New York State’s budget are important, but really only part of the story.  

What we call the “budget process” in New York is more akin to a condensed budget and legislative process. In New York State, the Governor wields significant power in the budget – and comparably more so than in the non-budget legislative session. As a result, governors have advanced and often achieve major policy initiatives in the budget process. These include initiatives across health, environment, housing, public safety, economic development, labor, and other policy areas, as well as major infrastructure projects. Key proposals unable to garner support on their own can advance when included in the larger package of bills and funding commitments that make up the State budget.

And, because of the Governor’s constitutional budget powers, there are limits, recognized by the Court of Appeals in a series of cases known as Silver v. Pataki, to what changes the Legislature can make to the Governor’s budget bills. The first case, Silver v. Pataki, was brought in 1998 by the then-Speaker of the State Assembly Sheldon Silver and the second case, Pataki v. New York State Assembly, was brought by Governor George Pataki in 2001 and was decided in 2004. In both cases, the Court of Appeals (the state’s highest court) affirmed the Governor’s extensive powers in the budget process.

The legislative policies that are part of the budget are called Article IIVs. The name comes directly from the New York State Constitution, where Article VII states:

At the time of submitting the budget to the legislature the governor shall submit a bill or bills containing all the proposed appropriations and reappropriations included in the budget and the proposed legislation, if any, recommended therein.

While the State Constitution contemplates that Article VII bills have a nexus to the State’s finances, governors have used the Article VII authority to their advantage. For example, in the past three years, Governor Hochul secured important policies in her budgets, including:

• Affordable housing tax incentives and other measures to encourage the development of housing in New York City and State;
• A new State ethics commission, the Commission on Ethics and Lobbying in Government;
• Increases in the minimum wage and an indexing of the wage to inflation;
• Changes to the State’s bail and discovery laws to moderate certain reforms previously adopted by the Legislature;
• Paid time off for prenatal appointments and paid lactation breaks;
• Authorization for bars and restaurants to sell ‘drinks to go’; and
• New enforcement tools to close illegal cannabis dispensaries across the State.

Last year, the budget included over 130 Article VII bills. While the Legislature passed over 800 bills outside of the budget process, the Governor achieved her main policy objectives either in the budget itself or based on an agreement reached in budget negotiations. These agreements included legislation passed in the regular session to protect children from addictive social media feeds and to protect their online privacy.

WHERE
One of the challenges for New York State is that Albany, the state capital and home to the State Capitol building, is far from where most New Yorkers live – three hours from New York City, two from Syracuse and Plattsburg, over four from Buffalo, even further from Long Island. It is not a major media market, but there is a core group of reporters, the legislative correspondents, who cover the budget and other news in the Capitol. The New York Times, New York Post, Albany Times Union, Politico, City & State, New York Focus, WNYC/Gothamist, along with other broadcast media, among still others, do cover the budget, from the State of the State to enactment. Also, the Assembly and Senate committees live-stream all the budget hearings on the Assembly and Senate websites.  

WHEN
The budget process begins in January and is generally expected to conclude by the start of the new State fiscal year, April 1. That is not always how it happens, however, and for many years the budget process ran well into the summer, while recently it has run several weeks beyond the start of the fiscal year.

The budget process really kicks off with the Governor’s submission of her Executive Budget. This year, the Governor submits her budget on January 21. The State Constitution sets out a complicated count of various dates to arrive at the budget due date. (If New York State ever holds a constitutional convention, it would be great to simplify the calculation of due dates, election dates, and other deadlines.) The Governor then has 30 days to make changes. Typically, changes are technical in nature – though the Governor can add new proposals or even drop  proposals that turn out to be unexpectedly controversial. Also in January, the Governor lays out her budget and policy vision in the State of the State Address, which was held on January 14.

In February and March, the State Assembly and Senate review the Executive Budget proposal and hold joint budget and oversight hearings. These hearings are streamed online. Legislative committees invite witnesses to testify on specific budget and policy issue areas, hearing from state agency commissioners, local elected officials, and others. There is a mechanism for members of the public to ask to be invited to testify – and maybe one day the Legislature will expand the opportunity for public testimony.

In mid-March, the Senate and Assembly vote on their respective one-house budget bills, often referred to as “budget resolutions” given that they do not hold the weight of law like most other bills passed by the Legislature. In their respective resolutions, the houses incorporate those Executive Budget Article VII bills that they agree with along with their own Article VIIs and their spending priorities.

The negotiators start with the three separate budget proposals — from the Executive, the Senate, and the Assembly. Their goal is to agree on a budget in time for the April 1 deadline. Depending on the extent of the policy differences, this reconciliation can be daunting. The Governor, the Speaker, the Majority Leader, and top staff meet in three-way “leaders’ meetings” to identify areas of agreement and disagreement. The Division of the Budget also sets up three-way (Executive-Senate-Assembly) staff-level meetings on each substantive area of discussion. The meetings go on for hours morning, noon, and night – and sometimes all night.

As compromises develop, the leaders of the Senate and Assembly take proposals back to their conferences. Notably, contrary to popular belief, there are opportunities for interested constituencies to weigh in – but much of this happens behind the scenes, in private meetings and not in public. Still, virtually every day during budget season, the Capitol is alive with rallies and protests, advocates and lobbyists walking the halls, and legislators and staff moving about. It is boisterous and energetic.

In the last few years, the April 1 deadline came and went. But, the Governor does have some additional leverage after April 1, in part because legislators do not get paid until there is a budget – even when other government staff are paid. The most challenging issues are typically the first to be resolved and hold up agreements on smaller issues. A late budget usually means that there still is no agreement on the Governor’s key priorities. The whole process ideally is completed before New York City and other local governments must finalize their own budgets.

WHY
The State budget process is a creation of the State Constitution, the Governor’s powers and priorities, the rules of the legislative houses, time constraints, and other factors. But why does New York do its budget this way – and is there a better way? An open and participatory process is always the ideal. It would be great to identify ways to achieve a timely budget with more public information and participation. For example, creating a more clear way to provide timely information to the public on the status of proposals to allow the public to play a meaningful role throughout the budget process.

HOW
While New York is one of just a handful of states that do not afford the public the opportunity to testify at public hearings, there are other ways for the public to get involved in the budget process. 

First, there is showing up. While Albany is far for many, there is nothing that creates the same powerful impression as having a big group presence in Albany. Sometimes that is because advocates’ voices literally fill the halls and offices of the Capitol. And other times it’s because legislators have ample time to meet and socialize with advocates – including lobbyists, labor union leaders, representatives of groups advocating on housing, education, and many other issues, and even individuals sharing their passion about an issue. The advocates often come with matching t-shirts. They carry signs and pose for photos inside the Capitol at the grand staircases. Some hang out at Dunkin, where many legislators and staff come for a caffeine fix. Others circulate among the many receptions and fundraisers where legislators and advocates have an opportunity for casual conversations. 

For those who cannot travel to Albany, there are other ways to participate in the process. Constituents can always meet with their representatives and staff in their local district or attend district events that legislators may host. Throughout the budget process, members of the public can and do send letters and emails, make phone calls, or have zoom meetings with legislative staff and staff of the Executive Chamber. The public is often well advised to keep the pressure on until the State Budget is enacted. There are always changes right up until the last minute. While the process sometimes seems impenetrable, the voices of the public do really matter.

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Elizabeth Fine is former Counsel to Governor Kathy Hochul and now Principal, Liz Fine Advisory LLC.