What to watch for in NY Gov. Kathy Hochul’s 2023 State of the State

New York Gov. Kathy Hochul has spent the last several weeks hinting at her legislative agenda for the coming year, making clear she intends to put forward plans to bolster housing and improve public safety across the state.

On Tuesday, she’ll begin to flesh out the details.

At 1 p.m. Hochul will deliver her annual State of the State address live from the Assembly chamber of the state Capitol in Albany. It will be Hochul’s second State of the State since she took over for former Gov. Andrew Cuomo in 2021, but it will be her first with an at-capacity audience: Last year’s speech came in the middle of a COVID wave, and just a few dozen people were allowed to watch in person.

Hochul’s agenda-setting speech will lay out her priorities for the upcoming legislative session, which will be the first since she won a full term in November. In the coming weeks, New Yorkers will learn how Hochul intends to pay for everything; her state budget proposal is due by Feb. 1.

Here’s what to watch for as Hochul delivers her speech, which will be streamed live on the governor’s official website:

Hochul expected to lay out housing plan

Hochul has pledged to go big on housing in 2023, amid a severe shortage of affordable apartments and record-high homelessness.

She has previewed a plan to create 800,000 new units across New York over the next decade.

“It’s an ambitious goal, but it’s one we must meet,” she said in a speech last month.

The governor outlined some steps to get there in a joint report with Mayor Eric Adams, which focuses on easing the conversion of Manhattan offices into housing and lifting the rules that cap the size of new residential development. She has also frequently discussed plans to build more housing along transit corridors.

Other proposals will likely face resistance across the political spectrum.

Hochul may preview a modified version of the state’s expired 421a tax abatement — a controversial program that provided hefty, decades-long property tax breaks to developers in exchange for some income-restricted apartments in new buildings. Hochul last year proposed an alternative that reduced the income cap on so-called “affordable” housing, but the plan failed during budget negotiations. Supporters of the tax break say it is necessary to fuel new housing development.

Progressive lawmakers have floated a compromise to enact a new tax break as well as a state-funded Section 8-style rent subsidy for low-income tenants known as the Housing Access Voucher Program. They’re also renewing their push for a “good cause eviction” bill, which would cap annual rent increases and prevent landlords from evicting tenants without a legitimate reason.

Hochul may also put forth a new plan to allow additional apartments on lots designated for single-unit homes — the kind of property rules common in the New York City suburbs, and some outer borough neighborhoods. Towns typically ban so-called “accessory dwelling units” and reduce legal housing stock by preventing homeowners from renting out their basements, top floors and garages to tenants.

Hochul ditched the plan to override the exclusionary zoning after facing backlash from her Democratic gubernatorial primary challenger Tom Suozzi and the Republican nominee for governor Lee Zeldin, two lawmakers from suburban Long Island. She may tweak the proposal to reward towns that adjust their zoning laws to allow for more housing, said Marc Norman, the associate dean at NYU’s Schack Institute of Real Estate.

“The only way you’re going to solve a housing crisis is with more housing, and we don’t have enough,” Norman said.

What kind of public-safety fixes will Hochul pursue?

Hochul, a Democrat, won a full term in November, but Zeldin was able to cut it relatively close in part by homing in on the issues of crime and public safety over the course of his campaign.

Public opinion polls continue to show public safety remains at the forefront of voters’ minds. Overall, major crime increased by 23% last year in New York City, though murders and shootings were down by 11% and 17%, respectively.

Hochul has made clear she intends to make an issue of it in Albany this year.

“We must and will make our state safer,” Hochul said in her Jan. 1 inaugural address. “This means New Yorkers can walk our streets and ride our subways, our kids can go to school, free of fear. And we’ll work together with our partners, our mayors, to get it done.”

What form will Hochul’s public -safety push take? That remains to be seen.

When state lawmakers briefly reconvened in December, Hochul made an unsuccessful push to further tweak the state’s 2019 bail reforms, which prevented judges from holding defendants on cash bail in most misdemeanor and non-violent felony cases.

The bail laws have become a frequent source of criticism from people like New York City Mayor Eric Adams, who has urged Hochul and lawmakers to allow judges to hold defendants based on whether they could pose a danger to the community.

Progressive-minded lawmakers, meanwhile, say that could invite bias into the process, particularly against people of color.

The MTA needs more money. How will Hochul get it?

Hochul is expected to propose a new revenue stream for the MTA to help the transit agency plug an expected $600 million budget shortfall this year. The governor and the MTA have not revealed any details publicly about what form that would take, but it could be a new tax.

MTA Chairman Janno Lieber warned if new money doesn’t start flowing soon, the agency will begin planning for service and job cuts. Fare hikes are already on the table. This year the MTA is planning to raise fares and tolls 5.5%, after last year, as Hochul was running for governor, she announced a delay in the planned fare and toll increase.

The MTA is running short on operating expenses because fare box revenue remains far below pre-pandemic levels.

In February 2020, 38% of the MTA’s budget for running trains and paying workers came from fares, while 38% came from taxes. The financial plan for this year expects 37% of the budget to come from taxes, while just 23% would come from fares.

“The MTA urgently needs new dedicated revenue sources from the state, and Governor Hochul is best positioned to help the MTA through her executive budget,” Rachael Fauss, senior policy advisor with the watchdog group Reinvent Albany, wrote to Gothamist. “Any new taxes should be lock-boxed and given directly to the MTA, preventing future raids during the budget process.”