(Bloomberg) — New York Governor Kathy Hochul heeded the lessons of a closer-than-expected governor’s race by focusing her first major policy address on the issues that boosted the state’s Republican candidates last year: crime and inflation.
(Bloomberg) — New York Governor Kathy Hochul heeded the lessons of a closer-than-expected governor’s race by focusing her first major policy address on the issues that boosted the state’s Republican candidates last year: crime and inflation.
“We will make New York safer. We will make New York more affordable,” the Democratic governor said in her State of the State address Tuesday. If New Yorkers don’t feel safe — or if they can’t afford a rent or mortgage — “people will leave in pursuit of their dreams elsewhere,” she said, referencing a significant population decline that led to the state losing a congressional seat.
Hochul, 64, the state’s first female governor, enters her first full term with significant political and economic challenges. Among them: rising inflation, a slowing economy, a growing state budget gap and the lingering effects of the pandemic on major issues like crime, housing, health care and transit.
Polls show crime at the top of that list, especially after a bruising election campaign in which her Republican challenger, Lee Zeldin, hammered her on the issue. The flashpoint for his campaign was a 2019 law signed by former Governor Andrew Cuomo that eliminated cash bail for most misdemeanor offenses and some felonies. Hochul took over for Cuomo after he resigned in 2021 over sexual-harassment allegations.
“There has been no aspect of the discussion around public safety more controversial than bail reform,” she said, expressing a willingness to revisit the bail law. She said parts of the law are contradictory or confusing, and proposed changing the standard that judges use to set bail for more serious crimes.
“The size of someone’s bank account should not determine whether they sit in jail or go home,” she said. “But also I would say we can agree that the bail reform law as written leaves room for improvement. And as leaders, we cannot ignore that, when we hear so often from New Yorkers that their top concern is crime.”
A Siena College poll last month found that crime and the cost of living topped the worries of New York voters. Nine in 10 said crime was a “serious issue,” which helped deliver Republicans an unprecedented number of US House seats during the midterm election. The same poll showed that 49% approve of her job performance, while 44% disapprove.
“Crime wasn’t her problem, but the Republicans used that and used fear tactics,” said Louise O’Hanlon, a 60-year-old music teacher from the Long Island town of Huntington. “It’s almost like going back to the ‘80s.”
Budget Crunch
Hochul will have to figure out how to fund ambitious proposals to add 800,000 housing units, invest $1 billion into overhauling the state’s mental health system, deliver additional tax credits for childcare, curb greenhouse gases, expand the state’s health-care services and index the state’s $15-an-hour minimum wage to inflation.
And she’ll have to do that without increasing income taxes, a promise she made at the top of her speech. “We will not be raising income taxes this year,” she said.
The upcoming legislative term will also test the moderate Democrat’s ability to hash out the state’s more than $200 billion budget with an increasingly progressive arm of the Legislature and a veto-proof Democratic super-majority.
This year, Hochul won’t have billions of dollars in federal stimulus funding and surplus tax revenue that helped smooth negotiations last year. The extra funding gave her leeway to pass the state’s largest-ever spending plan, stuffed with tax breaks, sweetheart economic deals for businesses like Micron Technology Inc. and the Buffalo Bills football team.
Now, she’ll have to grapple with a budget deficit of at least $148 million next fiscal year, which could balloon to $6.2 billion by the 2027 fiscal, according to a July financial plan that warned of “unmistakable signs of economic distress” including declining Wall Street bonuses and rising interest rates.
“The economy remains uneven, and inflation is still too high. To prepare for future risks and uncertainties, rainy day reserve targets should be met, spending plans should be cautious, and prudent debt practices should be restored,” state Comptroller Thomas DiNapoli said in a statement following the speech.
How the state will pay for Hochul’s policy plans won’t be disclosed until she gives her executive budget proposal, due on or before Feb. 1.
Read More: New York Wants to Link Minimum Wage to Inflation, Hochul Says
Affordable Housing
In one of her signature issues, Hochul called for building 800,000 units of new housing over the next 10 years.
“New York is at a distinct disadvantage due to our housing crunch, in danger of losing its talent, and failing to attract vibrant newcomers,” Hochul said.
The state gained 1.2 million new jobs but built just 400,000 housing units in the decade leading up to the pandemic, Hochul said. New York City, where median rent of $3,500 is up 20% from before the pandemic, ranks behind Los Angeles, San Francisco and Boston in housing production.
As part of her “New York Housing Compact,” Hochul announced plans to require municipalities to rezone areas around transit stops to allow for greater density, legalize basement apartments and fast-track certain mixed-income, multifamily projects.
Hochul proposed setting housing growth targets of 3% over three years in New York City and its suburbs, which could draw fire from lawmakers on Long Island and Westchester counties, where Democrats have fared poorly in recent elections.
She also offered local governments a carrot of incentives but also a stick: Municipalities that fail to add new housing within three years could have their zoning laws preempted by the state government, which will fast-track the approval of new units.
In what could be a major boon for New York City Mayor Eric Adams and the city’s real estate industry, she proposed to lift a cap on residential building size, returning to the city the ability to determine the density of residential development.
She promised to work with lawmakers to create a new tax break for developers to replace a controversial $2 billion affordable housing subsidy program known as 421-A, without providing details.
New York City Comptroller Brad Lander, a fellow Democrat, applauded Hochul’s emphasis on housing but said she’s going about it the wrong way.
“Simply incentivizing market-rate development with another inefficient tax giveaway program like 421-A will not solve the crisis of affordability facing so many New Yorkers,” he said.
Climate
Hochul proposed to make New York the first state in the US to ban natural gas heating and appliances in new buildings, the latest salvo in an ongoing nationwide fight over the fuel. She called for the state to ban the use of fossil fuels by 2025 for newly built smaller structures and 2028 for larger ones. New York would also prohibit the sale of any new fossil-fuel heating systems starting in 2030.
She also said the state would establish a cap-and-invest program to curb greenhouse gas emissions and force companies to buy permits for each ton they emit.
“Big emitters will have to purchase permits to sell polluting fuels. The dirtier the fuel – the bigger the price tag,” she said.
Read More: New York’s Hochul Proposes Banning Gas in New Buildings
–With assistance from Skylar Woodhouse, Martin Z. Braun and David Baker.
(Updates with more details throughout.)
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