State and Federal Update: May 19, 2025

STATE UPDATE

On May 8, Governor Kathy Hochul and the state legislature finally completed their work on New York State’s Fiscal Year 2026 budget, with the governor signing it into law the next morning. The budget directs $254 billion in spending, an increase of about $10 billion over the previous year. Specifically related to workforce development items that NYATEP tracks on an annual basis, the budget was approximately flat from Fiscal Year 2025, with roughly equal increases to workforce programs and reductions to college access programs.

It has been 15 years since New York passed a budget this late in the spring. By all accounts, the main reason for the delay was the governor’s insistence on including within the budget a series of policy decisions that lawmakers would have preferred to address through separate legislation. Among these were a slew of actions related to public safety such as adjustments to criminal discovery laws and millions in new spending to put police officers on every overnight subway train in New York City, as well as a “bell to bell” ban on cell phones in public schools.

Strictly from a workforce perspective, the budget was a mixed bag. Highlights included modest increases in state funding for summer youth employment programs and the Youth Opportunities Program, new investment for the governor’s ON-RAMP (One Network for Regional Advanced Manufacturing Partnerships) initiative, and significant new funding to help build or expand childcare facilities. Among the disappointing outcomes of the budget, the state’s earned income disregard cap—the level at which low-income workers lose eligibility for public benefits—remains at 200 percent of the federal poverty line, and no additional funding was provided to expand Registered Apprenticeships despite an initial proposal for $10 million in the executive budget released in January.

(NYATEP members can access a more detailed analysis of the budget here.)

The governor and state legislative leaders negotiated this budget under the shadow of potentially devastating federal funding cuts to New York State, described below. In particular, reductions to Medicaid, which accounts for more than half of the total $93 billion that flows from Washington, could have a catastrophic impact on the state safety net. As part of the agreement, the leaders agreed to return to Albany and revisit the state budget if necessary to respond to severe federal cuts.

FEDERAL UPDATE

The federal budget reconciliation package for Fiscal Year 2026 continues to make its way through Congress. The House of Representatives Budget Committee advanced the bill Sunday night, as a handful of Republican holdouts switched their votes from “no” to “present.” Speaker Mike Johnson (R-LA) hopes to have the full House consider the budget before Memorial Day. It will now go to the House Rules Committee.

To pay for tax cuts and new spending on the military and immigration enforcement, the measure proposes very significant cuts to Medicaid, food stamps, education, and clean energy measures. The Republican opponents on the Budget Committee had been holding out for even deeper reductions, and negotiations are ongoing to determine what will be in the final measure to be considered by the House.

Even if the ultimate product is no more severe than the current version, the budget is poised to do great harm to New York and New Yorkers—particularly those already on the economic margins. Regarding Medicaid alone, which the current proposal would cut by a projected $625 billion nationwide over the next decade, analysis from the Greater New York Hospital Association projects that the measure would cost the state a total of more than $10 billion and end coverage for more than 1.2 million current Medicaid beneficiaries. The Kaiser Family Foundation estimates that between 741,000 and 1.2 million New Yorkers would lose Medicaid coverage. Governor Hochul’s office has released a breakdown by congressional district of anticipated funding losses and newly uninsured New Yorkers.

The Supplemental Nutrition Assistance Program (SNAP) is also facing severe cuts related to new work requirements for recipients, with the latest proposal to reduce the program by at least $230 billion over the next nine years. In 2024, New York received $6.5 billion in SNAP benefits, which reached 18 percent of the state population. An estimated 670,000 New Yorkers would lose at least some portion of their SNAP benefits.

While the reconciliation measure does not directly impact funding for the Workforce Innovation and Opportunity Act (WIOA) or other discretionary programs, the cuts elsewhere will put severe pressure on those programs. Another concern is the impact on state and local budgets of unprecedented cuts to vital safety net programs: by one estimate, New York would have to raise taxes by 5 percent to make up for the Medicaid cuts alone. More likely are painful reductions in spending elsewhere in the budget, on everything from education to transportation and economic development.

Other federal updates:

• The Departments of Commerce, Education, and Labor continue to work through the Executive Order (EO) released in late April to determine the effectiveness of federal workforce programs and develop a plan to expand apprenticeships. They are expected to report their findings to the White House this summer, with potentially significant implications for WIOA programming and funding.
• Given the Congressional focus on the budget and executive agency attention to the EO, discussions around potential reauthorization of WIOA have stalled.
  Henry Mack III, the Trump Administration’s nominee to lead the U.S. Department of Labor’s Employment and Training Administration, has his confirmation hearing scheduled with the Senate Health, Education, Labor, and Pensions (HELP) Committee for Thursday, May 22.

NYATEP will continue to monitor events as they unfold and share details to our members as soon as possible. If you have an immediate questions or concerns, please contact David Fischer, Interim Executive Director, at [email protected].