Governor Kathy Hochul’s fifth State of the State address has set the stage for what promises to be a contentious budget season in Albany, with affordability as the centerpiece of her 2026 agenda. On this episode of From the Lobby, host Joanna Pasceri sits down with Jack O’Donnell, managing partner of O’Donnell & Associates and one of Albany’s top insiders, to unpack what Hochul’s pitch to working families really means as lawmakers head into an election year. O’Donnell explains why the Governor’s proposals — from childcare to utility oversight — are likely to be broadly popular, but warns that paying for them will trigger real friction with the legislature, businesses, and a public increasingly anxious about the cost of living. The conversation also turns to Washington, where O’Donnell offers cautious optimism that Congress may finally avoid a shutdown ahead of the January 30 funding deadline.
Joanna Pasceri
Governor Hochul’s State of the State is now in the books. Where does she want to lead New York? And how tough is the road ahead? Hi, everyone, and welcome back to From the Lobby with Jack O’Donnell, the weekly podcast where we jump into the biggest stories in politics and government with Jack, managing partner of O’Donnell & Associates and one of Albany’s top insiders. Governor Hochul has delivered her State of the State, setting the tone for the new year. How did she do, and what does it mean for the upcoming budget battle? Let’s bring in Jack. Jack, welcome back to the lobby.
Jack O’Donnell
Thanks, Joanna. Great to be back with you. You know it’s game on, right?
Joanna Pasceri
Exactly. Everything’s kicked off now. This was Governor Hochul’s fifth State of the State address. How did she do? Did anything stand out to you?
Jack O’Donnell
Wow. Five. I thought the Governor did what she needed to do. The speech is not gonna necessarily go down in any history books, but she did a very good job of setting out an agenda for New York’s families. She has this theme that your fight is my fight. And I thought she did a good job putting that together and really offering some real, if not solutions, at least showing working families in New York that she’s on their side. So I thought she did well.
Joanna Pasceri
Affordability continues to dominate voter concerns across New York. Do you think her proposals will go far enough to win over legislators and the public?
Jack O’Donnell
I think everything she talked about is going to be broadly popular with the public and with the legislature. The challenge is, the devil is in the details here, and then the real, real devil — and the, I guess, the hell — is how you pay for all of it in what’s already shaping up to be a challenging year. That’s where she may have some disagreements with the legislature, and that’s where we’ll see how supportive the public is about those decisions. Providing childcare to people, providing additional oversight around utilities and energy costs — those kinds of things are going to go over really well with New Yorkers.
Joanna Pasceri
How do you think the Governor’s affordability agenda will impact businesses and economic development in New York?
Jack O’Donnell
Well, that’s exactly what we’re waiting for the budget to see. It comes down to who’s gonna pay for all of these things. Where is the money gonna come from? I think businesses across the state already feel pretty hard done by New York, and if they’re being asked to pay more or to shoulder more of these burdens, that’s where we’re gonna start seeing the friction. The State of the State is a great opportunity for the Governor to seize the agenda, to talk about what she wants to do. But really, the different pieces of the budget — we expect to see those on Tuesday from the Governor. She’ll probably present some of them. The budget director will probably do a more detailed presentation. That’s what everybody’s really waiting to see.
Joanna Pasceri
It’s an election year for Governor Hochul and state legislators. How is that going to complicate her agenda and the budget process?
Jack O’Donnell
Election years are a big deal — not just for her, but we’ve got 213 state legislators facing election. What’s interesting is, you’ve got a Republican Party that across the state is energized by how well President Trump did in New York two years ago. But you’ve also got Democrats, and especially the Democratic left — the progressives, the Working Families, the Democratic Socialists — who are very energized by Zohran’s victory in New York City last year. So you’re gonna see a lot of energy around primaries, around election challenges, and that really forces folks to deliver and sometimes forces Democrats further to the left, Republicans further to the right. But the truth is, everything in Albany is political whether it’s an election year or not. So it’s gonna certainly ramp up the rhetoric. It’s gonna make some things a little harder to do. It’s certainly gonna mean there’s a lot of energy from the legislators to get the heck out of Albany. They’re only scheduled to be in session until June 6th this year, I believe, which certainly is the earliest scheduled adjournment in my recollection in the last 20, 30 years. So it’s gonna make everything a little bit harder.
Joanna Pasceri
Do you have any budget process predictions? Will there be a lot of pushback? Will we have an on-time budget? What do you think?
Jack O’Donnell
Well, it’s Albany, so I’m always gonna go on, the budget’s gonna be higher and later. But again, what we haven’t heard from the Governor is what the budget is gonna look like. And that’s a real challenge for her. I think New Yorkers and especially legislators are gonna wanna make sure that the state is doing everything they can to fill in the gaps that are being left as the federal government limits funding to a lot of projects, limits the kind of healthcare they are supporting. We’ve heard from the budget director about some other holes, even if it’s gotten a little better with tax receipts over the past year. So it’s gonna be a challenge to continue providing those services. I think a lot of folks in the legislature are gonna really wanna make sure that New York State continues to provide healthcare coverage to people who are from other countries — whether they are citizens or not yet. That’s gonna set up some friction points, but also it’s very expensive. And all of this is in a climate where we’ve already had double-digit Medicaid hikes over the last decade. So how you pay for all of that and how you keep the state solvent — that’s gonna cause some real friction.
Joanna Pasceri
Do you think the Governor will have to cave on increasing taxes on the wealthy? She said she doesn’t want to do it, but you never say never in politics?
Jack O’Donnell
I mean, you certainly can’t ever say never in New York. But look, I expect the Governor is going to be really strong on this. She has been very, very clear about not raising taxes on the wealthiest New Yorkers. Number one, those are the folks who are already keeping the state budget coffers filled. But also, those are the most mobile people. It’s easier for them to move to Florida than some others. So I expect the Governor will stay strong on that. I think it’s something she believes personally. But we’ve already heard some wiggle room around the corporate tax rate. There may be other fees, there may be other new revenue generators. It’s going to be a challenge because a lot of us, starting with the Governor, don’t like increasing taxes. So it’s going to be a real struggle.
Joanna Pasceri
Let’s turn now to Washington. Before we let you go, Jack, we are marching closer to the January 30 deadline. Is progress being made on funding the government?
Jack O’Donnell
You know, it actually is. And I don’t want to be overly optimistic about what’s happening in Washington, but there’s been some real work done on actual — not just moving forward with funding, but actual appropriations bills, which is how the government is supposed to be funded and how it has not been funded in a very long time. There’s some optimism around that. I think there’s a real sour taste in the mouth of members of Congress from both parties about any kind of shutdown. So I think there’s a lot of deal making and negotiation going on behind closed doors, and some of it in public. But I’m optimistic that enough of those appropriations bills have the support that we’re not going to see a shutdown. But we’ll keep watching that closely.
Joanna Pasceri
We’ll look forward to reading more about that in your next Monday Morning Memo. Jack, thanks again for joining us.
Jack O’Donnell
Thanks so much, Joanna.
Joanna Pasceri
So much is happening in politics and government this year, and it’s all moving fast. Stay ahead of it with us — we have you covered. Be sure to check out our 2026 legislative preview, where we break down the biggest policy decisions ahead and the political risks on the horizon. You can find the full preview on our website at odonnellsolutions.com. And while you’re there, make sure you’re signed up for our Monday Morning Memo — Jack’s concise, no-paywall look at the political and policy issues that could impact you or your business, delivered straight to your inbox every week. Thanks for listening, everyone. We’ll be back soon from the lobby with Jack O’Donnell.
