Video, Audio, Photos & Rush Transcript: Budget Director Blake Washington Holds Technical Briefing on Governor Hochul’s Fiscal Year 2026 Budget Proposal

Video, Audio, Photos & Rush Transcript: Budget Director Blake Washington Holds Technical Briefing on Governor Hochul's Fiscal Year 2026 Budget Proposal

Earlier today, Budget Director Blake Washington held a technical briefing on Governor Hochul's Fiscal Year 2026 Budget proposal.

VIDEO: The event is available to stream on YouTube here and TV quality video is available here (h.264, mp4).

AUDIO: Budget Director Blake Washington's remarks are available in audio form here.

PHOTOS: Photos from the event are available on The Governor's Flickr page here.

A rush transcript of Budget Director Washington's remarks is available below:

Good afternoon, everybody. Thanks for your patience and thanks for so many of the members of the press being here today. And you had an opportunity earlier to advance some questions to the Governor and myself. Certainly this is another forum to do so. Some of these slides may be duplicative from the presentation we provided earlier, so bear with that as well.

Well, let's just jump in. I'm Blake Washington, Director of the Division of Budget, and this is a technical briefing. Today I am joined by Matt Howard and Mark Massaroni, our Deputy Budget Directors for the Division. We also have many people in the audience from the Division itself; some of our unit chiefs and topical experts. So, to the extent that we can't field a question - I'm sure we can - but we still have backup plans from the talented and wonderful staff of the Division.

So, let's just jump right into the fiscal overview. Long story short, the State of New York's economy is strong. The S&P was up over 23 percent last year. NASDAQ was up 29 percent. Unemployment remains low at 4.3 percent. Personal income is projected to grow over the planned period - or up to the, throughout - the current fiscal year. Inflation rates have been falling, but as we know and as we said earlier, prices have not fallen tremendously early. CPI is projected at 2.8 percent in the upcoming year.

The economy in the State of New York was acutely impacted by the pandemic, but the good news is that as of the spring of 2024, employment has returned to pre-pandemic levels. We have about 400,000 jobs to fill in the State of New York, so persons around the 50 states should come to New York because we are open for business.

Our revenues are strong. We're in a much different place today in our projections than we were one year ago. Since a year ago, our tax receipts have increased by $6.5 billion over original projections. And then moving forward with PIT, personal income tax, leading the way, we have our tax receipts in 2026 up significantly as well - $4.7 billion. And those are positive variants from prior plans you've seen from the Division of Budget.

Onto the Budget itself, The Governor's Budget is coming in at $252 billion - a 3.6 percent increase. The Budget is comprised of state operating funds. Those are general funds and a variety of fees that we collect on the state side. Federal funds and capital funding as well. And as just a more narrow target, a subset of the all fund, state operating fund spending is up 7.9 percent under the Governor's proposal to $144 billion. This budget does not include any income tax increases, but it does include a series of affordability proposals to return $5 billion to taxpayers in the State of New York. First and foremost, we have an inflation refund proposal of $3 billion, impacting 8.6 million taxpayers throughout the State. This budget also provides for a $1 billion middle class tax cut. This is the second time the Governor has proposed a tax cut. The first one was in her first year, and was enacted into law. This one, if enacted, would be her second to provide a cumulative benefit of $2.7 billion to middle class families throughout the State. And of course, this budget also enhances the child tax credit - something the Governor has spoken a lot about - with children under the age of four, tripling the credit for those families, for each of those children.

We do all this because we're able to accomplish a lot of these spending initiatives because the State's fiscal health is sound. It's based on several factors. You know, leading the pack is $21.1 billion in reserves. Also coming into this year, we have a $5.3 billion surplus, largely related to personal income tax collections. We have a AA+ credit rating. We have, over the last handful of years under the Governor's leadership, we've put forward $14 billion in pay to the Capital Plan to keep down issuance of more costly debt with prepaid debt. Good news: All this to say that we have the lowest debt to personal income ratio that the State's seen since the 1960s. Out-year gaps are manageable. The Governor's plan changes out-year gaps by a cumulative $4 billion over the plan period. Things that we see as a very manageable impact long term.

On reserves, this is one that the Governor touted earlier, and something she's very proud about. Upon taking office, about $5.6 billion was available for rainy days, for labor settlements, and any number of other purposes. Since that time, we've more than tripled that value, almost quadrupled that, over four years. But more importantly, what we plan to do in this budget and what we've messaged in our documents, is making sure that we shift a portion of the proceeds that are not in the rainy day fund proper. That's a statutory construct. Making sure that other reserves that are not in the statutory reserves are pledged to that in a tune of about $1 billion per year for the next four years. Conditions permitting. And once it's in the statutory reserves, they're harder to remove and they must be replenished. That's sort of the good housekeeping seal of approval to put it into the rainy day specifically, as opposed to the more flexible, other reserves that we have at our disposal.

As I mentioned earlier, out-year gaps, we believe are manageable. I've been in this building for 25 years. We've seen gaps that are much more substantial than this.

Obviously we always, in the Division of Budget, watch these numbers tightly. We make sure that these do not get out of hand. We view these as manageable. We will work throughout the upcoming year to make sure that when we do arrive at fiscal year 2027, that's next year, you know, we'll try to push down that gap as much as we can just through sound fiscal management, and then taking gaps into the future down a bit as well.

Our state operating funds growth, as mentioned earlier, there are some major cost drivers. Number one is the Medicaid program. Our growth is largely driven by sustained, high levels of enrollment. We have prior year expansions of benefits and increased reimbursement rates. We also in this 14 percent have receipts attributable to an MCO tax that was enacted in last year's budget. Leveraging federal share spending to reinvest in the health sector to make necessary investments there. The MCO tax itself is - we will ultimately pledge, and we'll talk a bit later for among other things - an offset to general fund spending. School aid itself is up 4.7 percent, fully funding the foundation aid formula.

So, many of you saw the slide earlier today, when you look at Medicaid, the essential plan and the Child Health Plus program, nearly half of the State's population takes advantage of a publicly supported health plan, which is something we're very happy to have. We want to have a healthy citizenry, but also when people are insured when they present to hospitals or to clinics, that care does not go uncompensated. So it's important to have a robust level of insurance penetration in the State of New York between this and commercial. These are numbers we're very proud of, but when you look at it, approximately 9 million people have some form of publicly supported health insurance plan in the State of New York.

Our plan is $35.4 billion - $4.3 billion increase year over year, largely driven by high enrollment. I mentioned this earlier that, you know, post-pandemic, we have approximately 900,000 persons on the Medicaid program that were not on the program prior to the pandemic. They've remained. We've encouraged people to remain on Medicaid. Many other states, you know, did not do outreach to encourage people to fall off the rolls. This governor said, "Let's keep people on," because she believes that providing health care is essential in all parts of the State.

Some of the bigger cost drivers under the hood here would be, in addition to enrollment, sort of mainstream enrollment. We also have elevated enrollment in the managed long term care program. Increased spending in pharmacy. And if you were to take out of this number, the $4.3 billion, you would have basically an 11.5 percent growth year over year, if you remove the impact of the MCO tax.

The MCO tax or MCO assessment will generate $3.7 billion over two years. And what we're going to do on the state side is we're going to reinvest most of those dollars. As I said earlier, foremost we're going to take an offset to state spending and to the amount of $500 million in the upcoming fiscal year and the following. Again, going back to the previous slide where we're spending over $4 billion year over year, we're going to use MCO tax revenues to support - to use federal aid essentially to support the growth in the program.

But we're also going to put dollars toward resources towards hospitals and nursing homes. We're providing necessary rate adjustments for those sectors because it's not enough just to fuel the Medicaid growth. These institutions have cost pressures. They have inflationary pressures. So providing some level of state assistance to help them to meet those challenges of increased spending is exactly what this targeted investment would do.

We also have an expansion of the Safety Net Transformation Program, something that we started last year through what we call Part S in the Enacted Budget in the Health and Mental Hygiene budget. And this allows - it really just encourages strong systems to work with ones that are less so to grow their ways out of the challenges that we're seeing so dramatically throughout the Safety Net Program in the State of New York and in all corners.

We have issues certainly in the City that are well documented, in the City of New York, but then you see a lot in our rural settings and in Upstate cities for sure. So, these funds help to incentivize better collaboration and ultimately drive down state costs for providing subsidies to keep the doors open when the costs are not aligned.

The headwinds here, of course, we have an aging population in the State of New York. We watch - through the next 10 years, we're going to just continue to watch the baby boomer generation graduate into eligibility. Not every baby boomer is going to avail themselves of the Medicaid program, but you can kind of see the trends that don't go away anytime soon.

Nevertheless, managed care, long-term care enrollment is projected to increase this year, our hospitals are financially distressed, referring to that earlier. And certainly $2.5 trillion in spending actions from Congress, a list that's been floating around the internet, all of those are very, very troubling for the State's Medicaid program, for all states' Medicaid programs, but also for a variety of human services programs as well. Think SNAP and the like, public assistance.

Moving on to education, the Executive Budget provides $37.4 in total school aid funding. It's a $1.7 billion increase over last year. That's, of course, the highest level in state history. In just four years, we've, under the direction and leadership of this governor, of Governor Hochul, we've provided over $8 billion in increases to the school districts, 28 percent over just four years' time.

Last year, many of you in the room know that we commissioned a study with the Rockefeller Institute to provide for a comprehensive assessment of the Foundation Aid formula. That formula helps to drive our school aid sort of writ large. We have 673 districts in the State of New York, and that one formula helps to parse it out among all of them. One of the primary measures of how the formula is driven - is directed, I should say - is based on poverty measures. We make sure that the State's dollars first are invested in high need school districts.

So as such, the Rockefeller Institute did a wonderful job. They provided a pretty substantial list of interventions to modify the Foundation Aid formula. There are many, sort of choose your own adventure with their report, the two options that we selected in the Governor's Budget would be to replace a couple of outdated formula elements. One being, census poverty under the formula is benchmarked to the year 2000. We're moving that instead to the SAIPE measure, S-A-I-P-E measure, which is more current, up to date. And then similarly, we're making sure that we're changing some outdated formula for free and reduced price lunch, shifting over to an economically disadvantaged metric instead.

We drive additional aid to low wealth school districts on the run that you'll see, and then we also ensure that each district in the State of New York gets at least a 2 percent annual increase. We did this because many of our districts otherwise, the formula itself would drive zero aid to them. Approximately 311 districts - that's not approximate, I think that's precisely 311 districts would get zero but for this intervention. So, we've reinvested dollars into the Foundation Aid formula just to make sure that every district is getting an annual increase.

We have other education initiatives. We have $120 million for free school meals. The Governor first enacted this I think two years ago, was the first step in this process, this bridges the gap so now every single child in the State of New York that attends a public school will be able to have the benefit of a free meal. But more importantly, parents that have to send their child - parents and caregivers that have to send their child to school in the morning with a meal, this takes a lot of burden off of them as well, both in time and money.

The Governor talked earlier today about distraction free learning and I think that her remarks were sufficient on that side. We do have $13.5 million in the Budget for some state resources to help to defray the costs of whatever the interventions are on the local level.

On higher education, we've done a lot in the Governor's Budget. I mean, we've done a lot in the last handful of years. Our SUNY and CUNY sector for the previous decade prior to the Governor, there was a long history of, perhaps, underinvestment for the relative to their need. This budget and certainly the two or three before this, have really built back that relationship of investing the State's relationship of investing in community colleges - or excuse me, in SUNY and CUNY.

One of the big items that we have in SUNY and CUNY is we have the Governor's initiative to provide for free community college in high demand occupations. It's $47 million split among SUNY and CUNY, and that's to cover the cost of tuition, books, fees and things of that nature for persons that are aged 25 to 55 that are pursuing associates degrees in high-demand occupations. Think nursing, teaching, technology, engineering. Under those hoods, you think about engineering and technology - engineering, what I think about is certainly in Upstate New York, having somebody going to the community college sector for trades and things of that nature.

The other ones are pretty self explanatory, but that's one that I'm excited about that I know there's lots of young people that are eager to join that workforce. Obviously the wages are high and it's compelling and meaningful work.

Obviously, I don't need to speak about what nursing and teaching jobs are. You know what the importance of those are to the State of New York and technology for the long term. But you know, $2 billion for SUNY and CUNY capital projects including $450 million for SUNY Downstate, this is part of an agreement that we entered into with the Legislature just last year helping to build SUNY Downstate into a world class institution; one that serves the community well. And similarly we provide $200 million for SUNY Upstate as they too are starting to figure out what their next act is.

They have lots of - obviously, there's a lot of activity in Central New York now with Micron on the horizon, and SUNY Upstate must be there to provide services to tens of thousands of people that arrive, God willing, to Central New York once Micron is up and running. They need a world class hospital as well. SUNY Upstate is the only sort of trauma center in the region. It's absolutely essential there, so we have an investment as well for capital there. And then $310 million on the slide here, is just general support for SUNY and CUNY. This is providing an amount for each in lieu of tuition increases. This is something, three years ago, that we entered into with the Legislature. Rather than assessing tuition on students, there was a strong sense from the Governor and the legislative leaders two years ago to keep higher education - public higher education - in the State of New York affordable. So a lot of the private sector, higher education schools can't brag about what we've done here in the last three years. So this is the third year of $90 million in increments to SUNY and CUNY combined to defray the cost of what would have otherwise come from a tuition increase. So, tuition is not contemplated in this Governor's Budget. We're using state resources to provide for that instead.

Public safety. This is an area that the Governor has been really focused on since she became the Governor. I won't enumerate each one of these for you, but I think that some of the big things that we have are $8 million for increased State Police presence on the northern border. We have $13 million for Joint Special Operations Command Center, helping law enforcement entities to share information among each other. Hate crime prevention law enforcement technology grants, National Guard mission; all very important. And just making sure that New Yorkers have the confidence in knowing that we have our own cops on the beat. That we have community based interventions to keep young people out of trouble, to stay away from guns and violence. Having those interventions early on are critical, so most people don't have to encounter the criminal justice system in the first place.

On mental health and mental hygiene, we have $20 million for forensic beds in this budget. It will create 100 additional inpatient beds, plus we'll augment some staffing. The Governor's proposal includes two policy proposals related to involuntary commitment and assisted outpatient treatment. For the latter, this budget includes $16.5 million for local governments because they have a role in having staff to attend to the needs of persons in crisis. So we help the local governments to fund their operations as well. The two interventions I talked about a moment ago, involuntary commitment and assisted outpatient treatment, are I think for persons that are in crisis. But how do we - what are we doing otherwise to prevent that circumstance in the first place? We've got a whole host of investments. Obviously there's any number of investments that are already under the hood in current law - budgeting. But $16.5 million on top of that.

For new crisis units right here in Albany, the CDPC, we have peer-led services. We've got maternal mental health investments under that $16.5 million. We have $12.3 million for street outreach, meeting people where they are, guiding them and helping nonprofits to get people appropriate care before they're in crisis. $10 million for clubhouses, a successful model to link people to safe spaces where they can receive treatment and dignity and be respected when they're receiving care, and a whole host of other investments that I talked about in the $16 million.

On transportation, I think that the Governor talked earlier before about how she was able - she's very intent just two years ago to save the MTA from their operating plan challenges. We worked with the Legislature to do just that. We shored up their budget into the long term, and I think with the MTA just coming forward, we now must contend with the 2025 to 2029 Capital Plan.

This is something that we'll have to contend with in this year's budget. The Legislature disapproved of the MTA's Capital Plan, so now we're into the space where that dialogue has to jumpstart again, where the Legislature, the MTA and the executive branch all work together to land upon a plan that is able to be financed and delivered within the planned period. We want to make sure that it's appropriately sized. Many of the things the MTA has mentioned thus far, the Governor is supportive of it. She wants these programs to move forward. State of good repair, a bunch of expansion projects. And so her sort of north star is the first plan. And we'll see where we end up in working with the Legislature, but what we do have in this budget is $3 billion each from the City of New York and the State of New York. The MTA still funded revenues and depending on shares under current law - federal shares would be roughly $14.5 billion. So $33 billion is already solved for and then the rest is subject to negotiations with the Legislature.

And obviously the Governor mentions, when we talk about transportation, we don't stop at the MTA. We also talk about the DOT. We have $1 billion here in the Executive Budget that will be $800 million of it. We pledged to the core program helping to shore up projects, making sure they start timely, they don't get any more costly, and that we deliver the projects accordingly. So we have $1 billion in the plan, $800 million is for the core, $100 million is for the CHIPS program, which is a local highway program, and then $100 million for non MTA transit systems.

And energy-environment, the big noteworthy piece here, is that we have a $1 billion clean energy investment in this year's budget. It's the largest, single year investment that we've ever done on the state side for this purpose. I'm very excited to deliver projects for that investment, but we don't want to lose sight that there's a whole host of other things that we've been doing. $500 million for clean water and the EPF and providing for the Superfund program - capital S Superfund, the original Superfund - for hazardous waste remediation. Of course we also support our state agencies decarbonizing and greening, and we have some additional resources for our state canals, which I had the pleasure of touring in the fall, a lock in those. And there's lots of work that needs to be done to protect that infrastructure.

We're still working on our $25 billion affordable housing program. Our plan was to create 100,000 affordable homes, and I think we're, I know we're halfway there. We also include $1 billion for the "City of Yes" Housing Opportunity Program which we were happy to partner with the City Council and the Mayor to help to bring that across the finish line for the people of the City of New York.

And then we have $230 million in a variety of other initiatives to create affordable supportive housing issues efforts. Under child care - since the Governor has taken office - we've done, for all those of you that have been around for a while, the first three years in particular, we've done so much where we have the most robust child care program that the State of New York has ever seen. We've doubled the child care subsidies, for example, and we've taken meaningful actions to improve affordability for young families.

We've stabilized the industry itself. All told, $7 billion over the last four years are invested in the child care sector in the State of New York. This year's budget includes $110 million to build upon those investments for the construction and renovation of child care centers - ten of it is for the smaller centers, $100 million are for the larger centers, maybe run by municipal governments or larger nonprofits.

Speaking of our kiddos, we have a few investments here that we like. I'll start from the bottom: SWIMS - we started last year, $150 million investment to promote swimming pools and access to swimming throughout the State. Swimming, in certain communities, is a skill that is not shared by many and is a risk to harm for our particularly young people, and so to broaden this program further, this year, adding another $50 million is absolutely - we're very excited about it because we know the transformative impact of this type of recreation on the local level.

We have $68 million for what we call New York PLAYS, which is - our team is wonderful - places for learning, activity, and youth socialization. And that's for community centers. Or, no, excuse me, that's for playgrounds. And then we have New York BRICKS. And again, they're creative people - build recreational infrastructure for communities, kids and seniors. And those community-centered institutions.

Economic development. Lots of acronyms here; I won't pronounce them all - I think you all know them. I won't have to do a description with BRICKS and SWIMS, but starting up, we have, to begin, we have, cause "START-UP" is another acronym, as some of you in the room are painfully aware of. POWER UP is a program that is going to provide power-ready sites for advanced manufacturing and other development.

So, oftentimes when businesses confront the State of New York, they say, "Well, I would love to be there, but I can't get power to my site. Can you help me with that?" $300 million for POWER UP will do just that through ESD; $200 million renewed for downtown revitalization and for New York forward - building up our downtowns; $150 million for the REDCs; $100 million for other shovel ready sites to fast-track development in Upstate New York for advanced manufacturing; and then we have an additional $90 million for the Empire AI program, which was launched just last year.

As a resident of the City of Albany, this one is an item that I'm very excited to see - $400 million in the Governor's Budget for the City of Albany's rescue plan. Two hundred million of that will be for economic development projects to spur growth and development in this downtown corridor, sort of in this radius around the Capitol building here. But, going down State Street engaging consultants, trying to choose exactly what are the right projects for the moment: How do we get young people to remain here in, in the City of Albany and not move out to the suburbs? How do we get people to come into the City of Albany and spend money, and then maybe go back to the suburbs if that's where they live? How do we get people to just use the City of Albany and appreciate it better than they do today?

I love the place, but this $200 million will help to catalyze more people to come in and enjoy the city that I know. It'll also include $150 million for the State Museum. Many of us have been there. We're renovating the State Museum into a world class center where all of our children could enjoy the space is something that the Governor is focused on. I think that it's long overdue. We have support for the reimagining of 787. This governor has done a lot to reconnect communities. Think about I-81 in Saratoga - not Saratoga, in Syracuse. Taking out roadways that previously split disadvantaged communities and reconnecting communities.

Also think about the Kensington highway out in Buffalo. Doing the same thing here in 787. There's a lot of community engagement to bring people back to the waterfront and also to get rid of some of the highways there. Some other moves to the Empire State Plaza, some modest things. One of the capital investments, not involving the City of Albany, is that we also have a $30 million investment in the State fairgrounds - just improving their entertainment venue, which we know as Chevy Court. And with that, I think I can stop talking. You've seen a lot of these subjects, so obviously there's a little bit of repetitive stuff there. And, obviously, I hope that you were able to access our documents on DOB's website. And with that, again, I'm joined with Matt and Mark and let's get underway.

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