Tariff turmoil could complicate New York’s already-late state budget

This column originally appeared in The Politics Brief, our new weekly newsletter on the people, power and policies that shape New Yorkers' lives.

Sign up to get the full version where you can ask questions, share news tips and weigh in on the conversation. Hits inboxes on Wednesdays.

New York state budget negotiations are “stuck” over policy debates, a top lawmaker said, but reaching a budget could get trickier as each passing day brings more news of cuts to federal aid and a darkening economic outlook.

Senate Majority Leader Andrea Stewart-Cousins said little progress has been made on the $250 billion-plus spending plan since last week. Gov. Kathy Hochul isn’t engaging on the dollars and cents of the budget until she comes to an agreement with legislators on a trio of policy proposals that would make it easier to involuntarily commit someone to mental health treatment, restrict masks in public and change the laws on how evidence must be shared before a criminal trial.

“Before we can actually close down the budget, we wind up really grappling with difficult policy issues,” said Stewart-Cousins, a Democrat from Yonkers.

While those wheels spin, the budget’s fiscal foundations grow wobblier: A top JPMorgan analyst predicted President Donald Trump’s tariffs have increased the likelihood of a recession this year. Wall Street profits and bonuses account for about 20% of state income tax revenues, but will likely cool as the S&P 500 is down more than 15% since Jan. 1. State leaders assumed the market would rise this year. (Markets began to recover on Wednesday after Trump announced a pause on reciprocal tariffs for most countries except China.)

As the clouds gather, the budget is getting later and later. But not everyone is feeling pressure to get it resolved.

“I think it's one of the basic parts of our job,” said Assemblymember Ed Ra, a Republican from Nassau County. “We need to get a budget done and have some certainty in funding for the state because we don't know what tomorrow brings.”

E.J. McMahon, a fiscally conservative analyst, said the economic shock from Trump’s tariffs “should be setting off alarm bells at the budget negotiations table in Albany. But the market meltdown appears to be the last thing on the minds of Governor Hochul and state lawmakers.”

The Democratic governor hasn’t appeared publicly at the Capitol this week, but said recently that she doesn’t care if the budget is late and is willing to wait out legislators until she gets her way in the policy debates.

“I'm not going anywhere,” Hochul said. “I don't make vacations, so I'll be here to see this through.”

There is an added pressure point in this strategy: state legislators don’t get paid until a new budget is adopted. The longer things are unsettled, the longer legislators’ checks are withheld.

Assembly Speaker Carl Heastie said lawmakers won’t cave in because of personal economic pressure. He said the current market turmoil could have an effect on state tax collections, but it’s too soon to assess the damage.

“It could be a complication in trying to get this done,” Heastie said. “ I'm not saying it's good, but maybe the president will wake up and say, ‘this is the dumbest thing I've ever done in my life.’ I'm not optimistic that that's gonna happen, but – who knows?”

Listen here

We want to hear from you

If the budget’s late, should lawmakers keep getting paid, as Assembly Speaker Carl Heastie proposed? We'll share responses in next week's newsletter. (Sign up!)

This week in New York politics

• Federal immigration officials will be allowed to operate on Rikers Island for the first time in a decade. Read more about the move.
• A judge dismissed charges against Councilmember Susan Zhuang, who was accused of assaulting a police officer last summer. Here’s how restorative justice helped her case.
• Does Rep. Alexandria Ocasio-Cortez have the power to change the trajectory of the NYC mayoral race? This Democratic strategist thinks so.
• The Trump administration revoked $188 million in FEMA aid to NYC. Here’s why.
• The MTA and the federal transportation administration reached a deal in the congestion pricing fight. Here are the details.
• Sen. Chuck Schumer says hundreds of thousands of jobs in New York are at risk due to new federal tariffs on imported goods. Read more about how the tariffs may affect New Yorkers.
• Public safety on mass transit is a hot button topic in general, but this is how it’s affecting the NYC mayoral race.
• Remember the George Santos drama? He’s now facing seven years in federal prison on a slew of charges including wire fraud, identity theft and stealing campaign funds.
• Listen: Sen. Cory Booker gave a record-breaking 25-hour senate speech last week. He came on “The Brian Lehrer Show” to talk about it. Listen here.