An ABC Member's Guide to The FY 23-24 New York State Budget
On Wednesday, May 3rd, Governor Hochul signed a $229B budget bill approved by the State Legislature the night before. This budget comes in over a month late, making it one of the latest budgets in over a decade. This year's budget is $9 billion more than last year's budget.
Below is a comprehensive guide for ABC Empire State Members to better understand what's in the budget and how that might impact your business. This budget recap does not contain everything found in the state budget. Instead, it's tailored to specifically focus on issues that are important to contractors operating in New York:
The following statement on the New York State Budget is attributed to the Associated Builders & Contractors, Empire State Chapter President Brian Sampson:
“Governor Hochul and elected leaders have been discussing for months their desire to make New York more affordable. That seems to be nothing more than a convenient talking point since they’ve passed a budget that did the exact opposite. This budget makes energy, construction, housing, and the overall cost of living dramatically more expensive.
There was a focused effort on energy and accessing renewable power. We agree that we need to focus on renewable alternatives. However, every project will now be subject to prevailing wage, which increases construction costs for taxpayers by 20-25%, and Project Labor Agreements, which limits the workforce to less than 30% of construction workers. How does the state expect to complete these projects on time and within budget when they are sidelining 70% of construction workers in New York? Why does it think private power producers are going to build projects in New York over other states that don’t force them to eat higher wages and benefits and slow walk the approval process?
The Governor and our elected officials talked about addressing the affordability and housing crisis by building 800,000 new affordable units. Yet this went unaddressed in the budget. They said they’ll deal with it post-budget. Yet, in this budget, they’ve actually made housing more expensive by passing the All-Electric Buildings. Combine that with higher mortgage rates, building material costs, inflation, and we have an even worse crisis on our hands than before this budget passed.
Explain to New Yorkers how this budget addressed the affordability crisis in New York. We don't see it. It really shouldn’t surprise anyone anymore why people continue to flee New York in record numbers. They aren’t escaping the weather. They’re escaping the unaddressed affordability crisis that leaders in Albany continue to make worse by passing bad policies like those contained in this final budget deal. New Yorkers deserve better.”
Authorizes NYPA to Build Renewable Energy Generating Projects
The Enacted Budget authorizes and directs NYPA to plan, design, develop, finance, construct, own, operate, maintain, and improve, either alone or jointly with other entities, renewable energy-generating projects in the state, including its territorial waters. The Enacted Budget includes new provisions requiring the acquisition of any land for a project to be purchased from a willing seller at fair market value, which is supported by the determination of an independent appraiser. Other new provisions are included to protect productive farmland from being utilized for projects.
The bill will require NYPA (in consultation with New York State Energy Research and Development Authority (NYSERDA), Office of Renewable Energy Systems (ORES), Department of Public Services (DPS), “climate and resiliency experts,” labor organizations, and environmental justice and community organizations) to produce a study and report on the state’s progress toward renewable goals and separately produce a strategic plan to attain such goals.
The bill will also require Project Labor Agreements and Preaviling Wage Mandates on all of these projects.
Climate Action Fund
The Enacted Budget establishes the New York Climate Action Fund, which would consist of revenues generated pursuant to regulations and actions taken by NYSERDA or any other state entity pursuant green house gas emission reductions. This would include future regulations establishing a cap-and-invest program for greenhouse gas emitters.
The Fund would consist of three separate accounts with differing allocations, as follows:
• Thirty percent to the consumer climate action account;
• Three percent to the industrial small business climate action account; and
• Sixty-seven percent to the climate investment account.
Projects that receive at least $100,000 of funds from the account are subject to prevailing wage and Project Labor Agreements, including, but not limited to, construction projects for affordable housing.
All Electric Buildings
On or after Dec. 31, 2025, the building code will prohibit the installation of fossil-fuel equipment and building systems in any new building under seven stories. There is an exception for new commercial/industrial buildings greater than 100,000 sq ft square feet (this is a carve-out for Micron in Syracuse). This will then extend to all new buildings after Dec. 31st. 2028.
The prohibition does not apply to any building existing prior to Jan 1, 2025.
The prohibition in new buildings allows exemptions for:
- The generation of emergency backup power and standby power systems
- Manufactured homes
- Buildings or part of a building that is used as a manufacturing facility
- Commercial food establishments
- Car wash
- Hospital & other medical facilities
- Critical infrastructure, including but not limited to:
- Emergency management facilities,
- Wastewater treatment facilities/water treatment and pumping facilities
- Agricultural buildings
- Fuel cell systems
*New buildings that fall under the exemption, except for agricultural buildings, need to limit the use of fossil fuel systems to the area of the building that is difficult or infeasible to electrify and needs to be constructed in a manner that is electrification ready. Exemptions need to be periodically reviewed by the building code council.
The code shall also allow for exemption of a new building construction project that requires an application for new or expanded electric service when electric service cannot be reasonably provided by the grid as operated by the local electric corporation or municipality provided, however, that the PSC shall determine reasonableness for purposes of this exemption.
Department of Transportation:
- $100M for local highways
- $60M for CHIPS
- $40M for State Touring Route Program
- $500M for Clean Water Infastruture
- $400M for the Environmental Protection Fund
- $224M for the South Shore Staten Island Seawall
- $200M for the EmPower Plus Program
- Most of these projects will require PLAs!
- $1.7B for a New Department of Health Research Laboratory
- $1B health care capital program (multi-year)
- $890M for Mental Health Housing Expansion
- $2.4B for SUNY/CUNY construction
- NYRA is receiving $455M to redevelop the Belmont Race Track *this project will have a PLA*
- $90 million for the New York Works statewide capital infrastructure program
- Adirondack Park Agency received $30M to pay for the rehabilitation and construction of facilities
- $20 million in New York Works funding for construction at the Conklingville Dam
Interested in learning more about specific project allocations? Contact Tanner Schmidt
Index the Minimum Wage to Inflation
The budget increases the state’s hourly minimum wage from 2024-2026.
Downstate (New York City, Nassau, Suffolk and Westchester counties):
- $16 on and after January 1, 2024
- $16.50 on and after January 1, 2025
- $17 on and after January 1, 2026
- $15 on and after January 1, 2024
- $15.50 on and after January 1, 2025
- $16 on and after January 1, 2026
Beginning on January 1, 2027, the hourly minimum wage rate will be a wage of “not less than the adjusted minimum wage rate established annually by the commissioner.” This rate will be determined by the previous three-year periods published by the northeast region's non-seasonally adjusted consumer price index.
Exceptions starting in 2027:
There will be no minimum wage increase be no increase if the following year if any of the following occur, limited, however, for two consecutive years:
- If the non-seasonally adjusted consumer price index for the northeast region urban wage earners and clerical workers (CPI-W) is negative
- If the three-month moving average of the seasonally adjusted New York State unemployment rate rises by ½ % or more over the previous year
- If there is a recurring decrease in the seasonally adjusted total non-farm employment for New York State
Tax Law Changes:
- Brownfield Cleanup Program
- Amends the brownfield redevelopment tax credit to, among other things, allow the site preparation credit component to be claimed for up to seven years from the issuance of the certificate of completion (“CoC”) when the taxpayer was issued a CoC between 7/1/15 and 6/24/21.
- Extended Provisions of Tax Law
- Extend the current 7.25% business income tax rate for three years, through tax year 2026, for taxpayers with a business income base over $5 million and extend the current 0.1875% capital base tax rate for three years, through tax year 2026.
- The historic properties rehabilitation credit is currently available for taxable years beginning before January 1, 2025. This would make the credit available for an additional five years through taxable years beginning before January 1, 2030.
M/WBE Statewide Disparity Study
NY extended the statewide disparity study regarding the participation of minority and women-owned business enterprises in state contracts through August 15, 2024.