Gov. Kathy Hochul (D-NY) has reached an agreement with state lawmakers on a $268 billion budget proposal for fiscal 2027, a plan that includes the largest climate energy investment in New York history.
The proposal came five weeks late and $8 billion over the initial proposal as Hochul adopts an “all-of-the-above” energy approach, balancing the push for renewables with pragmatic approvals of fossil fuel projects amid negotiations with the Trump administration.
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“The negotiations were not easy,” Hochul said on Thursday. “There were very substantive disagreements, tough choices, and powerful special interests trying to influence the outcome.”
Approximately $3 billion to $4 billion has been allocated to energy policy, about 1.5% to 2% of the total budget, as the state faces steep 7% increases in energy costs annually, outpacing most national averages.
Hochul is championing budget highlights that “fuel economic growth and job creation,” as legislative leaders cautioned that many issues, including the size of the final budget, still needed to be worked out.
HOCHUL’S $268 BILLION NEW YORK BUDGET MEETS MAMDANI’S HALFWAY ON ‘TAX THE RICH’ AGENDA
$1 billion energy rebate
The keynote of Hochul’s budget proposal in terms of energy policy focuses on balancing clean energy and climate goals alongside affordability.
In light of the state fighting for data centers to pay their share of energy consumption, Hochul is proposing that New Yorkers receive a $1 billion energy rebate to offset rising utility costs.
This allocation also aims to establish thermal energy networks on State University of New York campuses, retrofitting homes with clean devices like heat pumps, and supporting business decarbonization.
Information on the rebate checks and their distribution is expected to come in the coming days.
Increasing uptake of energy assistance programs
The proposal also creates a new “Ratepayer Protection Plan” that would prevent customers from paying for lobbying and certain executive expenses, tie utility executive pay to affordability, and require lower-cost options during rate increase requests.
New York state invests more than $1 billion annually in programs to help families lower their energy bills, such as the Energy Affordability Program, EmPower+, and the Weatherization Assistance Program. These programs reduce costs through cash assistance, monthly discounts, and weatherization and efficiency upgrades. Despite these benefits, these programs are not being fully utilized by qualifying ratepayers.
To make sure these critical programs are implemented in a complementary manner and to increase awareness and access for vulnerable New Yorkers, the governor will streamline planning and administration of these programs to increase the impact of public funds targeting energy burden reductions and make these programs simpler to access.
Infrastructure improvements
Other notable points of investment from the budget proposal include $500 million for clean water infrastructure that supports municipal drinking water, a $125 million state superfund program to remediate hazardous waste with a 10-year reauthorization of the program, and $108 million to build climate resiliency.
Hochul is also pushing for New Yorkers to become part of a “virtual power plant” to help ease strain on the electric grid.
Initially proposed in February, the governor said the idea is that utility companies would reduce electric bills by $25 a month for a full year. In return, you would allow the utility company to adjust your smart thermostat by a few degrees on days when electricity usage is soaring — typically the hottest days of the year — to throttle back your air conditioning and save energy.
Grid operators call this “demand response,” and it’s a well-established practice among large commercial and industrial companies. Now, state energy officials want to tap into the potential for residential demand response.
The state Public Service Commission will develop the rules for Hochul’s program, which she calls Excelsior Power.
The budget also includes reforms to New York’s State Environmental Quality Review Act aimed at speeding up housing and infrastructure projects.
The proposal would exempt certain housing developments from additional environmental reviews if they are considered unlikely to have significant environmental impacts.
The plan also establishes a two-year time frame for completing environmental impact statements.
Heated legislative responses
Hochul reiterated that the budget focuses on affordability and long-term investments across the state.
“I promised a budget that works for working people and expands opportunities for all New Yorkers and I was not going to back down from that fight,” Hochul said. “Alongside my partners in the Legislature, today we are delivering on that promise. This budget includes sweeping changes to lower costs, enhance public safety, protect our communities from federal overreach and invest in the future of New York families.”
Democratic Assembly Speaker Carl Heastie responded to the news immediately after, saying it is close but “there is no deal.” He went on to call the announcement premature and argued that the numbers could still change.
Democratic state Sen. Andrea Stewart-Cousins’s spokesperson issued a statement agreeing with Heastie: “We are getting close, but there is certainly no budget deal yet, and we agree with the assessment by the speaker. We hope to close it down soon but there are many outstanding issues, especially regarding the actual financial plan.”
Hochul’s announcement comes as a “general proposal,” a spokesperson for her office said after receiving backlash from legislators.
