New York State’s Annual Budget Process Explained
Whether you like it or not, the great state of New York spends money. A lot of money.
If we use the figures that New York Governor Kathy Hochul has in the first draft of the 2024-25 New York State Budget, that number is pretty big. In fact, bigger than it has ever been.
$233 Billion is a lot of money. In fact, New York has the second highest state budget in America. Just in case you missed it, there is a breakdown of how New York intends to spend all of your money. You can find that breakdown here. But have you ever asked yourself exactly how New York figured this out? What process does the Governor and Legislature take to determine how much we should pay in taxes and what the money should then be spent on?
If yes, then you've come to the right place to find out.
What Process Does New York Follow To Develop The State Budget?
I'm one of those people who is really interested in how our government operates. Thomas Jefferson once said that a well-informed citizenry is the best defense against tyranny, and that statement has rung true for the entirety of the United States. One of the best ways to make sure you're in the know is to understand what our government does with our money. I can think of 233 billion reasons why this is a good thing.
So, how does New York State come up with the annual budget? Even though New York's fiscal year runs from April 1st to March 31st of the next year, the budget process starts way before April.
The New York State budget process is really broken down into five big steps, and the details are listed right on the New York State Website.
- Agency Budget Preparation
- Usually starting in May or June of the year, each state agency begins looking at their needs and priorities for the coming year and submits those details to the state Budget Director to be included in the next year's budget review. State Agencies can start this process independently or wait for the budget director to send them a call letter.
- Division of the Budget Review
- By November of the year, the State Budget Director and other workers from the state's Division of the Budget gather all of the different departmental budgets and begin crafting a preliminary budget. This would include how much money is expected to be spent and how much money is needed to be raised through taxes and fees.
- The Governor’s Decisions
- When the end of December comes, the preliminary budget is passed to the Governor's office, and she (or he) begins reviewing and making any final changes before the budget is finalized and released during the State of the State address.
- Legislative Action
- Usually, by February 1st of each year, the budget is officially forwarded to the New York State Legislature for members to debate it and offer amendments (or changes). This starts in the New York State Senate's Finance Committee and the New York State Assembly's Ways and Means Committee. The legislation requires the completion of the budget by March 5th each year. Once the budget is debated and amended in the legislature, votes are taken, and the governor can sign the budget into law or veto it.
- Budget Execution
- Once the budget is voted on by the legislature and signed by the governor, which the law requires to happen by April 1st, it is officially finalized. Now it's time to execute the budget, actually spending the funds that have been allocated and collecting the taxes that are needed. This occurs throughout the year, with the state budget division keeping track of things and the State Comptroller ensuring they are working as they should.
All told, the budget process takes nearly the entire year to complete. Once completed, it starts over again in preparation for the next year.
Highlights from 2024-25 New York State Budget
Gallery Credit: Ed Nice