Eric Adams and Kathy Hochul Suddenly Remember That We Collect Taxes to Pay for Services

And just like that, New York state's budget for fiscal year 2025 went from facing a $4.3 billion deficit, to boasting a $2.2 billion surplus. What happened?

According to Governor Kathy Hochul, who made the announcement of the state's sunnier financial outlook while she presented her 2025 budget proposal on Tuesday morning, a lot more tax revenue came in during the second half of 2023. "It could have been bad news but it turned out to be better news," Hochul told reporters.

"We have to live within our means," Hochul was saying just a few months ago, when it came to possible budget cuts at the City and state levels. But the tax revenue wasn't a surprise to the Fiscal Policy Institute, a nonprofit research group that has been calling out the governor's overly conservative estimates for months.

The revenue miracle allowed for Hochul to frame her budget as onet with no cuts—but also one that doesn't have much in the way of big ambitious spending. There's additional money to help the City pay to house migrants ($2.4 billion), and some new money to help the state's mental health crisis. But her budget largely means that the state's massive climate transition and affordability crises have been put mostly on the backburner, in favor of tax breaks and other incentives. 

“Instead of taking decisive action to ensure every New Yorker has a stable home, Governor Hochul has once again proposed tinkering around the edges on the same failed housing policies that brought us into this crisis," Cea Weaver of Housing Justice for All said in a statement following the budget proposal. 

What about the revenue-generating side of things? What will Hochul do if the state legislature decides to raise taxes on New York's wealthiest in order to attempt to deal with some of the most critical issues facing New Yorkers? "I will say no," Hochul told reporters on Tuesday. 

Likewise downstate, New York City Mayor Eric Adams had spent the better part of last week ostentatiously undoing a handful of serious budget cuts he had announced last fall—another two-step involving, first, portents of doom and gloom that are then magically resolved by tax revenue that most financial analysts not employed by City Hall knew would be robust. On Tuesday, Adams presented his own budget for the City's next fiscal year (which begins July 1), and announced that further cuts to this year's budget, which were set to take effect in April, could be reversed—owing to greater than expected tax revenues, less spending on migrants, and the state sending more support to the City (thanks to its own tax windfall). 

While Adams took credit on Tuesday for the restoration of the cuts he himself imposed (made necessary in part by his own haphazard no-bid spending on migrants), other veterans of the City's budgeting process were less amused. 

Adams wasn't seeing it that way: 

At the state level, Albany-watchers were also unenthused by Hochul's tempering of expectations, especially because when factoring in inflation, the budget itself has shrunk. 

"This is a conservative budget that increases overall state spending by 0.5 percent, less than the 2.4 percent average rate of inflation, while increasing spending by state taxpayers by about 4.5 percent," the watchdog group Reinvent Albany said in a statement, reacting to the budget proposal. 

So what exactly is the game New York's leaders have been playing for months by claiming we're broke? For one, it forestalls the expansion of state and City funding for critical services and forecloses on the idea of the government spending more money. Because if people got the idea that taxes actually did work to fund nice things for everyone without the constant threat of having them taken away…well, we might go ahead and do something really crazy.