ALBANY, N.Y. — Gov. Kathy Hochul on Thursday announced that she and state lawmakers had reached an agreement on a roughly $229 billion state budget that would change the state’s bail laws, increase the minimum wage and provide urgently needed funding for New York City’s transit system.
The deal capped weeks of contentious negotiations that divided the governor and the Democrat-led State Legislature, delaying its expected passage by almost a month — the latest budget in over a decade.
The broad strokes of the “conceptual agreement” were revealed by the governor at an impromptu news conference at the State Capitol on Thursday evening; some of the details, Ms. Hochul said, were still being “fine tuned.”
Representatives for Andrea Stewart-Cousins, the majority leader in the State Senate, and Carl E. Heastie, the Assembly speaker, confirmed the deal. Lawmakers, who had already left Albany for the week because they had not anticipated an agreement, are expected to vote to approve the budget as early as next week.
“I know this budget process has taken a little extra time, but our commitment to the future of New York was driving this,” Ms. Hochul said in the ornate Red Room, adding that the process was “not a race to a deadline, but a race to the right results.”
The negotiations pitted Ms. Hochul, a moderate Democrat in her first full term, in an ideological tug of war against a more progressive-minded legislature where Democrats hold supermajorities. The outcome was a mixed bag of modest wins for both sides, bitter bargains and toppled plans.
The governor, who won a narrow election victory last year on a promise to combat crime, clinched one of her top priorities: modifying the state’s bail law to give judges greater discretion to detain people awaiting trial.
But the protracted discussions over the bail law, one of the most politically explosive issues in Albany, took a toll on other policy issues, forcing Ms. Hochul to compromise heavily in order to claim victory.
The governor had sought to eliminate a cap that would allow over 100 new charter schools — which are privately run, but publicly funded — to open in New York City, a proposal that met with a swift backlash from top Democrats, as well as teachers’ unions. In the end, Ms. Hochul accepted 14 new charter schools in New York City by reviving “zombie licenses,” or permits awarded to schools that had closed, and a total of 22 across the state.
Democrats also found common ground on a plan to raise the state’s minimum hourly wage by two dollars to $17, up from $15, by 2026 in New York City, Long Island and Westchester County. It would hit $17 by 2027 in the rest of the state, and future increases statewide would be pegged to inflation.
The move riled Republicans and some business groups who said it would lead to job losses, and upset progressive Democrats and major unions who have clamored for an increase of as high as $21.25, saying the city’s minimum wage would still be lower than other cities, like Seattle and Los Angeles.
It appears that the budget agreement will result in a hodgepodge of other Democratic priorities, from a ban on natural gas in new buildings to funding for free meals for school children, to a pilot program to make free five bus routes in the city.
The deal also included a lifeline to salvage the finances of the city’s transit system, which is projecting a deficit as a result of reduced post-pandemic subway ridership levels.
The budget, her office said, provides new funding for the Metropolitan Transportation Authority through a lump-sum payment of $300 million from the state, an increase in the payroll tax paid by big city-based businesses and a slice of future revenues from soon-to-open casinos. In a partial win for Mayor Eric Adams, a representative for the governor said that the city would need to contribute $165 million, significantly less than the yearly $500 million payment Ms. Hochul had proposed.
Ms. Hochul also said that lawmakers had accepted her proposal to significantly overhaul the state’s approach to mental health in part by freeing up 1,000 psychiatric beds for people who are mentally ill, a move the governor described as “a monumental shift.”
The deal, she said, also gives the state more tools to fine and close down illegal shops selling weed that took root in New York City during the slowdown in issuing licenses to dispensaries.
On other fronts, the governor’s priorities unraveled.
These included her ambitious housing plan, which called for the construction of 800,000 new units over the next decade by allowing the state to override local zoning laws. Lauded by experts who said it would help reverse the state’s housing shortage, the plan faced intractable resistance from lawmakers, forcing Ms. Hochul to back away from it during negotiations.
Lawmakers managed to knock down other divisive ideas, including Ms. Hochul’s proposed tuition hikes for in-state students at city and state universities, a change to the way the state measured emissions, and a ban on the sale of menthol cigarettes that was opposed by Big Tobacco and had divided Black leaders. Lawmakers did agree, however, to raise taxes on cigarettes to $5.35 a pack, up from $4.35.
Ms. Hochul, for her part, managed to fend off proposals that had been championed by Senate and Assembly Democrats, including efforts to increase income taxes on the superrich and a tenant-friendly measure opposed by the real estate industry that would have limited a landlord’s ability to raise rents.
The governor has made crime a cornerstone issue since taking office in 2021, but it took on greater importance after her Republican opponent, Lee Zeldin, seized it to drive his campaign — narrowing Ms. Hochul’s margin of victory to the single digits.
The governor’s changes to the bail laws, which she has repeatedly said were her biggest priority, built upon adjustments she had won last year, when she allowed judges to consider factors like the severity of the crime, and whether or not the accused had access to a gun, when making decisions on whether to hold defendants on bail.
The effect of those changes was limited, because New York law said that judges can use the “least restrictive” means to ensure defendants returned to court. But this year’s proposed changes would, for the first time allow judges to set bail with public safety in mind.
A bright spot for progressive Democrats was the inclusion of two climate measures favored by environmental advocates.
The first will ban the use of natural gas in new buildings beginning at the end of 2025. The ban, which would not apply to current gas stove owners, is seen as a critical step in reducing the state’s dependence on fossil fuels, and meeting emissions-reduction goals. A second measure will allow the New York Power Authority to build and own wind and solar projects to boost clean energy generation.