State of the State Analysis: Affordability is Expensive

Gov. Kathy Hochul’s Address Focuses on Affordability, but Critics Argue it Falls Short

ALBANY, N.Y. (NEXSTAR) — Gov. Kathy Hochul delivered her State of the State on Tuesday, spending a long portion of the address focused on affordability. But economic think tanks—the Fiscal Policy Institute and the Empire Center for Public Policy—criticized her proposals from different directions, for simultaneously falling short and costing too much.

Proposed Measures

Hochul pledged to fight for families, lower costs, raise wages, create jobs, and committed to improving housing, healthcare, and transit. She called for concrete solutions to ongoing challenges like inflation and high rent. Her proposed measures include:

• Middle-class tax cuts: Hochul proposed cutting middle-class income taxes by up to 5% for taxpayers who make under $323,200 per year. Cuts across five tax brackets would be the lowest in decades and benefit 8.3 million New Yorkers, she said.
• $3 billion inflation refund: The governor floated a first-in-the-nation inflation rebate, refunding $3 billion in surplus tax revenue to 8.6 million taxpayers. Joint filers making below $300,000 would get $500, and single filers making under $150,000 would get $300.
• Expanded child tax credit: Doubling or tripling the child tax credit to offer up to $1,000 per child under 4 and $500 for children between 4 and 16. These credits could cut child poverty by almost 18% statewide.
• Federal SALT deduction: Hochul wants the feds to eliminate the federal SALT deduction cap, which she said costs New Yorkers some $12 billion each year.

Criticism from Economic Think Tanks

But the State of the State drew sharp criticism from the Empire Center for Public Policy, an Albany-based think tank. They called out the proposals for emphasizing redistribution and one-time stimulus payments rather than reducing costs for goods and services. From their perspective, the inflation rebate costs the state $3 billion and lacks a meaningful economic impact.

Ken Girardin, the Empire Center’s research director, blamed Albany’s policies for slowing New York’s economic recovery after the pandemic and condemned her approach for avoiding deeper structural problems. “The redistribution strategy laid out by Governor Hochul today is a plan to make elected officials feel better about the problems they’re still refusing to confront,” he said.

Fiscal Policy Institute’s Perspective

At the Fiscal Policy Institute, meanwhile, Director Nathan Gusdorf agreed that the State of the State agenda relies on temporary fixes rather than taking on expensive structural changes and long-term issues like housing or healthcare. But contrary to the Empire Center, the Fiscal Policy Institute argued for more spending, not less.

Gusdorf pointed out that New York has money in the bank, with tax receipts passing projections by over $1 billion and a likely multi-billion-dollar surplus. “Now is the time for expansive public investment to lower the cost of housing, establish universal childcare, secure the future of Medicaid, rebuild the state workforce, and adapt to the challenges of climate change,” he said. “These investments—not one-off tax rebates—are what will guarantee affordability for working-class New Yorkers in the long term.”

Conclusion

The State of the State address highlighted the ongoing challenges of affordability in New York, but critics argue that the proposed measures fall short of addressing the root causes of the problem. While some advocate for more spending to address long-term issues, others argue that the focus should be on reducing costs for goods and services. As the state moves forward, it remains to be seen whether these proposals will have a meaningful impact on the lives of New Yorkers.

FAQs

Q: What are the proposed measures to address affordability in New York?

A: The proposed measures include middle-class tax cuts, a $3 billion inflation refund, expanded child tax credits, and eliminating the federal SALT deduction cap.

Q: What do economic think tanks think of the proposed measures?

A: The Empire Center for Public Policy criticized the proposals for emphasizing redistribution and one-time stimulus payments, while the Fiscal Policy Institute argued for more spending to address long-term issues.

Q: What is the current state of New York’s economy?

A: New York has a likely multi-billion-dollar surplus, with tax receipts passing projections by over $1 billion.