On May 7th and 8th, the New York State Legislature passed the Enacted Budget covering New York State Fiscal Year (FY) 2026, which runs from April 1, 2025 to March 31, 2026. While the final Budget package has not been delivered as of today (May 9th), Governor Kathy Hochul is expected to sign the bills shortly. SPG’s overall summary of the Budget so far is available here.
Overall, the Enacted Budget includes total spending of $254 billion in FY 2026, an increase of almost $11 billion (5.3%) from revised FY 2025 estimates. This is up from $252 billion as proposed by the Executive. In preparation for potential federal uncertainties, the Enacted Budget also authorizes (but does not mandate) Governor Hochul to make unspecified spending reductions if a shortfall of $2 billion or more is projected by the end of FY 2026. If an imbalance is projected in a quarterly financial update, the Governor will submit a plan to the Legislature and the Legislature will have a chance to issue an alternative plan. Before withholding any payments, the Governor would be required to use at least $2 billion of reserves. She could also propose other use of reserves to cover shortfalls. The following would be exempt from such cuts:
- Public assistance payments related to people on supplemental social security (SSI);
- Reductions that would violate federal law;
- Payments of debt services and other constitutionally required payments;
- Payments the State must make due to court judgments.
For the new FY 2026, DOB is projecting a 9% increase to the overall Medicaid budget. This excludes $1.2 billion of “virtual spending” due to the new managed care organization (MCO) tax which is revenue-neutral. The MCO tax will bring in $3.7 billion in resources, of which $1 billion will be used to offset Global Cap cost growth and $2.7 billion used for investments in the health care system. DOB noted in its initial Financial Plan that it will seek to achieve “recurring savings in future budgets to ensure long-term Medicaid spending levels are sustainable.”
The Budget includes modified versions of several of the Governor’s other major policies, including a $150-400 direct payment to taxpayers with income of up to $150,000 ($300,000 for joint filers), which will cost about $2 billion. This was decreased from a $300-500 proposed payment.
SPG’s summary, linked here, provides further detail on these and other health care-related highlights from the Budget. As further Budget documents are released, we will update this summary. Where available, legislative sources are marked in [brackets].