New York late state budget increases school aid, pares down climate promises 

Mike Groll/Office of Governor Kathy Hochul

New York finally has a state budget. The budget Gov. Kathy Hochul signed Thursday — almost two months into the fiscal year — once again has a bigger price tag than the previous and continues her focus on "affordability."

After months of negotiations, most of the spending package's biggest items were well-known — support for New York City, scaling back the state's climate laws, and changes to car insurance. 

"Every proposal included in this budget was a fight for New Yorkers and their future. Working with my partners in the legislature, we delivered an ambitious agenda that will lower costs for hardworking families, keep New Yorkers safe and create opportunity for all," Hochul said in a statement.

The final budget was $268.5 billion, $14.5 billion more than the fiscal 2026 budget, and an $8.5 billion increase over Hochul's first proposal. The budget was more overdue than any since 2010. 

The budget once again increases education spending, and tweaked the formula for education aid. It increased aid to each school district by at least 2%. 

The state decided how to address the fallout from federal Medicaid cuts. Lawmakers will let Essential Plan coverage lapse for 450,000 people this summer, but added $1.5 billion to the Medicaid budget for reimbursements.

In a continued focus on lowering cost of living, lawmakers decided to spend $1 billion on direct rebates to New Yorkers for their utility costs.

Hochul also used affordability to justify changes to the state's climate policies.

New York passed a law in 2019 to reduce greenhouse gas emissions by 40% by 2030; the budget rolled that back to a 60% reduction by 2040, and changed its method of calculations to make the goal easier to hit. Hochul argued that meeting the first deadline would have been too costly for the state.

The state also delayed other mandates, such as requiring public schools to switch to electric buses. 

The assembly passed changes to car insurance rules, which the governor hopes will lower premiums. The changes are hoped to lower insurance payouts for the New York Metropolitan Transportation Authority. 

The budget gave the final stamp of approval to a package of aid for New York City, to help the city fill its own budget gap. The city will get direct aid, deferred pension payments, and a "pied-à-terre tax" that will apply to high-value – $5 million or more – second homes within New York City.

New York City wasn't the only city to get a payout. The budget includes $150 million of Temporary Municipal Assistance, some of which is earmarked for certain cities. On top of that, six specific fiscally distressed cities received a combined $135 million of aid, including Yonkers, Buffalo, Albany, Rochester, Syracuse and Mount Vernon.