Governor Hochul released her fiscal year 2026 executive budget proposal, with total spending reaching $252 billion. The largest drivers of state spending are education and healthcare, primarily the state’s Medicaid program. New York State tax receipts came in higher than originally projected due to revenue from personal income taxes fueled by Wall Street’s robust performance. However, the state has estimated budget gaps of $6.5 billion in 2027, $9.8 billion in 2028 and $11 billion in 2029 under the Governor’s current spending plan.

The Governor proposes to use the higher tax receipts to fund a one-time $3 billion inflation rebate program of $300 for single filers earning up to $150,000 and $500 for joint filers earning up to $300,000. The budget includes $165 million to pay the interest on New York’s outstanding Unemployment Insurance (UI) debt, which would otherwise be paid by employers through an interest assessment surcharge (IAS) in the summer. Addressing New York’s UI debt and resulting higher taxes and fees has been a top priority for NFIB since 2021. This is a step in the right direction for the state to begin providing relief to small businesses; however, New York needs to pay off the Unemployment Insurance debt, as well.

Additionally, NFIB supports the Governor’s provision limiting liquidated damages in certain “frequency of pay violations.” This provision would amend Labor Law 191 to limit plaintiffs’ recovery of damages for violations of the frequency of payment provisions in the Labor Law where employees were paid regularly on at least a semi-monthly basis.

While the executive budget does contain some of NFIB’s top priorities, it also presents challenges, including funding the MTA. There is a provision within the budget which commits the State of New York and City of New York to each contribute $3 billion to the MTA’s capital plan; however, the provision is silent on how the state will pay for the $3 billion. NFIB is fighting to ensure that any funds allocated to the MTA are not generated through new or increased taxes.

For more information, visit https://www.governor.ny.gov/sites/default/files/2025-01/FY2026-Executive-Budget-Briefing-Book.pdf