Monday Morning Minute: Deal Sealed on NY Budget Amid Medicaid Hikes & Political Tensions

 Summary of this Episode

Guests

• Joanna Pasceri: Director of Communications at O’Donnell and Associates.
• Jack O’Donnell: Managing Partner at O’Donnell and Associates.

Major Topics Covered

• • The New York budget deal is the latest approval in 15 years.
  • Concerns exist over the $254 billion budget and its 6% increase.
  • Alignment among business and labor groups was crucial for the unemployment insurance loan payoff.
  • Legislators expressed frustration over the opaque budget process.
  • A constitutional amendment is needed to change the budget process, but it’s challenging.
  • The Republican primary for governor is shaping up to be competitive.
  • Federal budget talks are complicated by the SALT cap issue.
  • The governor’s handling of the budget received mixed reviews from her party.
  • The political landscape can change rapidly, affecting future elections.
  • Public engagement in government processes is often lacking.

Full Transcript of the Episode

Note: This is a generated transcript. Please excuse any typos.

Joanna Pasceri (00:01.644)
The New York budget deal has finally been sealed. Hi everybody. And thanks for joining us from the lobby with Jack O’Donnell for our Monday morning minute. It’s when we chat with Jack, managing partner at O’Donnell and Associates about the issues featured in our award-winning newsletter, Monday morning memo. Jack says it’s the latest budget approval in New York in 15 years, but was it worth the wait? Let’s bring in Jack to find out more.

Hi Jack, and welcome to the podcast.

Jack O’Donnell (00:33.965)
Hey, Joanna, great to be talking again.

Joanna Pasceri (00:37.953)
You know, from the outside, the budget process seemed to drag along this year. But what do you think? In the end, did Albany craft a reasonable budget?

Jack O’Donnell (00:47.787)
Well, I’ll tell you, it seemed to drag along even more from the inside. You know, I grew up with budgets that were going this long. mean, we’ve had, you know, we had regularly June budgets. We had one August budget. And that was terrible. But you really had the assembly and Senate and governor all kind of fighting each other in those days. So, you know, this went on for a while.

Joanna Pasceri (00:52.876)
You

Jack O’Donnell (01:17.421)
Is it a good budget? I think it’s mostly good and maybe as good as can be. There’s a lot of good policies in there, some steps in the right direction, some things that are full of hope, but all of it is under this really dark cloud that’s coming out of Washington.

I think there are folks out there who think that the state should have doubled down on reserves, should have looked for other ways to cut spending. But the feeling here in Albany was, we’ll do that when we need to. And in the meantime, damn the torpedoes.

Joanna Pasceri (02:07.455)
Right, well the final total here, $254 billion, you say roughly a 6 % increase from last year. Should we be concerned about this or is this just the cost of doing business?

Jack O’Donnell (02:19.501)
Well, I think we have to be concerned about this. And I think a lot of folks in Albany, in the governor’s office, in the budget office, certainly, I think they are concerned about this. And this is why last year we saw a lot from the governor around school aid formulas. Last year she did a very good job of putting more money into reserves.

And so you know I do think there are folks who are concerned about that I’m concerned about broadly the the continued increases in Medicaid the continued increases in school aid funding. But where you can draw the line where you stop things I think that’s really hard I think there is a consensus in in New York politics that New York State wants to provide these services that New Yorkers expect these services. And so, you know, it’s a really delicate balance.

Joanna Pasceri (03:23.721)
You write in the memo about a last minute issue in the budget to pay off an unemployment insurance loan from the federal government using $7 billion from the state’s reserve fund. Is this a good move?

Jack O’Donnell (03:36.14)
Absolutely, Joanna. mean, I think this is, you know, one of those things where it was impressive to see the alignment of the state’s business groups, the state’s worker groups, especially some of the organized labor and labor unions. Everybody was pushing in the same direction here. You know, New York State was the only state that hadn’t really addressed this and the result was higher unemployment insurance premiums for businesses and at the same time lower unemployment checks for workers. And so anything that’s hurting kind of people on both sides of that equation, it was great to see the state kind of come together.

You know, governor deserves a lot of credit for this. Speaker Carl Hasty does. And especially our friend Harry Bronson, who’s the assembly labor chair, really pushing this thing to get it done.

Joanna Pasceri (04:44.758)
You know, one of the most read articles in the memo this week is the one detailing some blowback from legislators about how the governor handled this year’s budget. You give her some praise here, but some from her own party. These lawmakers went public with frustration. Why did that happen?

Jack O’Donnell (05:02.603)
Well, I think number one, it’s some of that give and take, right? So, you know, my praise for the governor is on the results that are in the budget. I think these legislators who live through the budget process, you know, feel a little differently about it from a political standpoint.

I think you have to respect the governor using the political tools at her will to get the results she wanted. On the same time, if you’re on the other side of that, you know, that maybe doesn’t feel so good. I also think, you know, the criticism that we saw from Senator Skoufis, it was just as much criticism of the legislature and of his colleagues for not having… voted to override vetoes for not using their investigative and oversight authority. So I think he’s mad at the process and I think everyone who lives in New York has reason to be upset at the process. It is opaque. It is certainly not timely. It is not democratic with a small d.

But that’s the process and that’s kind of the reality of where we find ourselves. A lot of us maybe wish things went more the way they go in high school civics, but this is the reality of the world in which we live.

Joanna Pasceri (06:42.748)
Is there anything they can do about changing the process?

Jack O’Donnell (06:46.44)
Well, it probably starts with a constitutional amendment, which would be really hard to pass and hard to get voter and public support for. You know, we don’t see as often the public get into the weeds of how government works and engage on that. I mean, it’s tough and it’s hard, and that’s why they…you know vote for assembly members and and senators and governors to to to do that work so they can do other things but you know it’s very hard to change i mean the other piece of it is is exactly what senator school for said about the legislature could start overriding vetoes are threatening to or holding votes you know we haven’t seen that since I don’t know if my recollection is correct, the end of the Pataki administration, and that was heck, long time ago, 2004 maybe. So it is certainly possible, but it takes a commitment in standing that I don’t know that everyone in the legislature has. And I think some of them are happy with the outcomes here too.

More to see. We’ll see how Senator Skoufis follows this up. He’s a popular elected official in his district with growing national influence. The new DNC chair recently named Senator Skoufis to his, I don’t know, for lack of a better word, cabinet. And so I think we’ll hear a lot more from the senator. It’ll be interesting to see what he says.

Joanna Pasceri (08:37.299)
Well, it’s a year away, but our readers are also very interested in what you wrote about the race for New York governor. Who do you think will get the nod to run for the GOP?

Jack O’Donnell (08:47.337)
well you know this is going to be a really interesting thing to to watch i think if the republican primary were held today and that would be a least a phony can you know she is the highest name recognition and the best fundraising and then and apparently one of the better relationships with with president from i think that a year is a whole lifetime

It used to be a lifetime, now it’s six or seven lifetimes at the speed at which political and governmental issues happen in the world and they’re broadcast and tweeted and Instagrammed. So I think we have a long way to go and a lot of this comes down to what happens in Congress. How popular is the president as we go into the mid-year elections?

You know, no matter what his standing is with the general public at that point, he’ll certainly be the kingmaker when it comes to the Republican primary vote. And so I think we’ll have to wait and see what he says.

Joanna Pasceri (09:56.466)
Well, turning now to Washington, where the federal budget talks have hit a snag over SALT, the cap on state and local tax deductions, our New York delegation in Congress pushing hard against a cap. Will it hold up approval of that one big, budget bill?

Jack O’Donnell (10:13.096)
Yeah, the BBB. mean, absolutely. mean, we’ve been writing for months now on the delicate balance that the Republican majority in the House has between people on the far right who want even deeper cuts and people who more on the center-right who want to make sure that their constituents aren’t missing out on services.

You know, this is an added complication. These Republicans from Democratic leaning states, you know, think New York, New Jersey, California. This is really important for them to bring home and the sort of

Jack O’Donnell (11:06.451)
They use the offset from the SALT cap a few years ago on the original Trump tax credits basically to pay for those tax cuts. So, going to be a lot of pressure here. I think absolutely the bill is not ready to go and won’t be without a compromise on this and a massive compromise on Medicaid.

Joanna Pasceri (11:33.681)
Favorite read in our news links this week?

Jack O’Donnell (11:37.659)
You know, this week, I was very focused on, again, what’s happening in Washington. I think these salt stories are really interesting. There’s even some within the ranks, depending on the average income of the districts.

There’s some pushback, right? There was an offer this week on capping the deduction at $30,000, which we heard from Congressmember Nicole Meliotakis that that sounded good to her, but folks who are in more affluent districts further out on Long Island absolutely rejected that and rejected it as insulting you know, reading about some of those nuances was an important part of what we covered this week.

Joanna Pasceri (12:41.062)
All right, Jack, once again, thanks so much for your insight on the memo this week.