The New York State Assembly and Senate dropped their one-house budget proposals this week, and the opening offers are big — the Assembly piles on roughly $10 billion above Governor Kathy Hochul’s plan, with the Senate just behind. On this episode of From the Lobby, host Joanna Pasceri sits down with Jack O’Donnell, Managing Partner of O’Donnell & Associates, to unpack the two flashpoints likely to dominate negotiations: revenue and climate. O’Donnell argues the governor still holds the upper hand on taxing the wealthy, predicts a messier compromise on climate timelines, and expects New York City — under new Mayor Mamdani — to come out ahead. Plus: energy rebate checks, auto insurance caps, and the perennial question of whether Albany can deliver an on-time budget by April 1.
Joanna Pasceri
Hi, everyone, and welcome back from the Lobby with Jack O’Donnell, the podcast that cuts through the confusion and makes sense of what’s really happening in politics and government. And right now, Albany is buzzing. This week, the Assembly and the State Senate released their one-house budget proposals. They’re opening offers in the annual budget fight, and they’re big. What stands out and what actually survives the negotiations? Let’s bring in someone who spends a lot of time watching these moves. Jack O’Donnell is managing partner at O’Donnell & Associates and keeps a close eye on how decisions in Albany shape budgets, policy and business across the state. Jack, great to have you back from the lobby.
Jack O’Donnell
Joanna, great to be with you. I keep thinking that we’re in the busiest week and then the next week is busier.
Joanna Pasceri
I know, I agree. And I think it’s only going to get busier from here. So let’s start with the big picture. The Assembly and Senate released their one-house budgets and both spend more than the governor proposed. The Assembly adds about $10 billion, the Senate just short of that. What was your first reaction when you saw these proposals?
Jack O’Donnell
Well, you know, look, I think we’re all in a little bit of sticker shock. Whatever budget you look at, it’s a lot of money. But, you know, this is kind of how it goes. Right. The Assembly and Senate always add, some of it is they’ve got different priorities, some of it is less incentive to be fiscally prudent. And the third thing is Democrats have two-thirds majorities, so that’s a lot of mouths to feed. So they got to find places in the budget to take care of a lot of people. So, you know, not a lot of big surprises in the one-house. Right. Two major issues of contention with the governor. Right. I’m sure we’ll talk more about those, but one is revenue and one is climate.
Joanna Pasceri
Well, we talked last week about raising taxes on wealthy New Yorkers and corporations that the legislature wants. And it’s included in both of their one-house budgets and the governor doesn’t. At the same time, both houses are also proposing tax relief for low and middle income families and other affordability measures. Can all this spending happen without the tax hikes?
Jack O’Donnell
Well, probably not. But you know, a lot of this comes down to how do you define affordability and who is it affordable for? Right. As you see in these different budgets, who’s gonna pay for it? Look, they put it in so they could spread more money around. I think the Governor would love to have more money to spread around, but I think she has been very clear and consistent in her desire to not raise taxes on the wealthiest New Yorker. She talks about how those folks are already paying a big share of the budget, as it is a big share of the budget in the various municipalities. But I think the biggest concern she has, and one that’s shared by a lot of business groups across this state, is that the wealthiest New Yorkers are also the ones who are the most mobile, whose jobs can move. And we’ve seen that with the financial industries and banking industry. JP Morgan now has more people in Texas than New York. And if it becomes even less people in New York, it’s going to become a lot more expensive for the rest of us.
Joanna Pasceri
There’s a lot of pressure here with New York City Mayor Mamdani also pushing for this. Does she win this fight?
Jack O’Donnell
Yeah, Mamdani’s brought a lot of attention to this fight. Right. But as we’ve talked about on this podcast and in our Monday Morning Memo, it is not a new fight. The legislature has proposed these different revenue raisers, as they’re called, in Albany over the last decade, and the governor has won. I expect her to win this one. She’s got the upper hand in the budget negotiations, and I think she’s going to use it.
Joanna Pasceri
Well, you did mention climate policy. Governor Hochul wants to roll back some of the state’s climate targets after a memo was released showing the current timeline would lead to high energy costs for New Yorkers. But neither the Assembly nor the Senate seems very interested in doing that. Does she get what she wants here as well?
Jack O’Donnell
This one’s a lot more complicated and harder and much more nuanced. Right. The governor has been talking about these climate issues for a while and some of the threats that they pose and the costs. But at the same time, I think she’s variously allied on the goals. Right. But it comes down to how soon, how quickly and how do we do things? And there are big pieces of this that a lot of the advocates said, look, the technology will catch up, the market will find a way and provide incentives, and that hasn’t really happened. And so, look, I think the governor will find some victory here or some middle ground. This one is a lot harder, though, because we have not seen a specific proposal from her. Right. I mean, we’re just hearing her talk about the concern. I expect behind closed doors, she probably has some specific things in mind, and it’ll be interesting to hear a little more about them as the budget conversation continues.
Joanna Pasceri
The Assembly also calling for rebate checks to help people with energy bills. We’ve seen checks for inflation and other costs before. Do ideas like this really make a difference to voters, or are they just more about politics?
Jack O’Donnell
I think it’s a mix, right? I mean, I think this is certainly a signal from the Assembly majority that they hear their voters, they hear New Yorkers when they say energy is expensive and heat is expensive and all of these things are going up. But does it matter to voters? It matters to voters when it goes down or when they feel like things are getting better. And sometimes a check helps with that.
Joanna Pasceri
Both chambers also want to send more than $5 billion in additional funding to New York City. The governor already committed to one and a half billion dollars. How critical is it to bail out New York City? Will some compromise be reached here?
Jack O’Donnell
I suspect so. I mean, look, New York City has the most members, some of the most powerful members, and as a result, the city is going to do well in this budget. I think a lot of folks want to see the new mayor succeed. There is a deficit in New York City, and I expect the final state budget will do more to help him bridge that gap.
Joanna Pasceri
Now the real negotiating begins. What do those conversations look like behind the scenes?
Jack O’Donnell
Yeah, this is the infamous three men in a room, even though two of them are women now. Right. Or three people in a room, I guess, but that doesn’t sound as ominous. A lot of staff work goes into these things and things are prepared, but a lot of it comes down to some trading. And the governor says, well, what about this? And this is what I’m looking for. And the Assembly says, we can’t live with that. Or we can. And the Senate leader pushes back and says, well, I got to take that to my members, and then says, no. One-house budgets are an opportunity for all of them to stake out their negotiating positions. Right. And what happens is the governor and the leaders agree on the biggest pieces, and then some of those things are broken down further into issue areas that we call budget tables. And there was a time when people literally sat at the table and negotiated, right? This will go from the governor to the secretary’s level and then down to even more subcommittee levels. And they kind of work through, as we like to say, buckle up right here we go.
Joanna Pasceri
And the big question that we ask a lot this time of year — I don’t know if you’re going to get a different feeling at this point. I know we’ve talked to you before about it, but do you think this budget will be on time?
Jack O’Donnell
You know, look, I don’t think there are a lot of huge fights. I guess the one other we didn’t mention was the governor’s proposal around auto insurance rates and capping injuries and awards to that. You know, that’s a big fight. The Assembly and the Senate left it out. So there are a few places of contention here. I don’t know that Albany is capable of getting anything done on April 1st, but I suspect it’s going to be close enough that at least we’ll say it was a timely budget, if not on time.
Joanna Pasceri
The next Monday Morning Memo is sure to be interesting. Jack, always great insight. Thanks for joining us from the lobby. The one-house budgets are just the starting point. Now comes the bargaining and the decisions that will shape taxes, spending and policy all across New York. We’ll be watching closely. And if you want more insight like this, check out our Monday Morning Memo, Jack’s weekly newsletter on the most talked about stories in politics and government and some you aren’t hearing about. Sign up is easy. Head to our website at odonnellsolutions.com. Thanks for joining us, everyone. We’ll see you next time from the lobby with Jack O’Donnell.
