By Hinman Straub
Governor Kathy Hochul delivered her State Fiscal Year (SFY) 2026 Executive Budget address on Tuesday, January 21, 2025, in the “Red Room” at the State Capitol in Albany. Her Executive Budget proposal totals $252 billion, a $8.6 billion increase (3.6%) over SFY 2025.
Tax receipts and other state revenues have increased significantly in recent months, resulting in a General Fund surplus of approximately $3.5 billion in FY 2025. The budget plan includes several actions to reduce out-year budget gaps to $4 billion in FY 2027, and $7.4 billion in FY 2028. New York now has $21 Billion in “rainy day” reserves.
The Governor’s budget proposal includes initiatives unveiled in her State of the State of the State of the State address on January 14, and in other previous announcements. In her remarks announcing the Executive Budget proposal, she stated her priorities as being to reduce income taxes and the effects of inflation, increasing access to childcare and school meal assistance, housing, safety on subways, the transition to clean energy, and eliminating cell phone use in public schools.
Executive Budget Highlights of the 2026 Executive budget proposal most directly related to NEAFA include:
AGRICULTURE
Farm Labor Specialist. The Executive Budget proposal includes $702,000 for the farm labor specialist program.
NY Farm Viability Institute. The Executive Budget proposes $1 million for this program.
New York State Veterinary Diagnostic Laboratory at Cornell University. The Executive budget proposes $8.270 million in funding to support animal health surveillance and control, avian disease, cattle health, milk production, Johnes disease and salmonella dublin bacteria, genomic surveillance, and forensic pathology programs.
Cornell University Ruminant Center. The Executive Budget proposes $750,000 to support the Cornell University Ruminant Center.
On-Farm Health. The Executive Budget proposal includes $1.25 million for the on-farm health and safety program administered by Mary Imogene Basset hospital.
New York State Occupational Health Clinic Network (OHCN) and New York Center for Agricultural Medicine and Health (NYCAMH). The Executive Budget proposal includes $9,560,000 for this program.
PRO-DAIRY. The Executive Budget proses the following support for the Cornell Pro Daily Programs:
Core Program: The Executive Budget proposal includes $1,463,000 to support the Pro-Dairy core program.
Dairy Profit Teams: The Executive Budget proposes $374,000 for the Dairy Profit Teams.
Dairy Advancement Program: The Executive Budget proposal includes $700,000 for the Dairy Advancement Program.
Dairy Farm Modernization Grants. The Executive Budget proposes includes an new $10 million in capital appropriation to implement the dairy farm good and growth fund to allow for increased investment in on-farm milk storage capacity and improve in efficiencies in milk transfer systems and cooling technologies.
NY FarmNet. The Executive Budget proposes to include $1.4 million for NY FarmNet.
Agricultural Education and Outreach Programs. The Executive Budget proposes to include $2 million for agricultural education and outreach programs. These funds support the following programs:
$1 million for Future Farmers of America.
$1 million for Agriculture in the Classroom.
$500,000 for Agricultural Educators.
$250,000 for Cornell 4-H.
$250,000 for the New York City Urban Agriculture education and outreach.
Integrated Pest Management (IPM). The Executive Budget proposes the following investments in integrated pest management:
Within Cornell University Integrated Pest Management program, the proposal would provide $4.25 million allocation to support this work, including support for farmers for adopting integrated pest management practices and field trials.
$1 million proposed to be available through community nonpoint pollution control for community integrated pest management.
$250,000 is proposed for Cornell for pesticide pest management control.
Agricultural Nonpoint Source Pollution Control. The Executive Budget proposes $20 million for this program.
Agribusiness Child Development. The Executive Budget proposes includes $10.3 million in funding and $3.2 million.
Farm to School Initiatives. The Executive Budget proposes to include $750,000 to the Department of Agriculture and Markets to support development of farm to school initiatives.
Weigh-in-Motion Technology. The Executive Budget proposes to authorize use of weigh-in-motion technology to help keep overweight vehicles off bridges and highways and improve traffic flow. Each listed agency or authority would promulgate its own regulations for weigh-in-motion technology to automatically enforce truck weight limits and impose monetary penalties for lack of compliance.
Agricultural Farmland Protection Program. The Executive Budget proposes to amend certain definitions to consider food security and urban agriculture lands as part of the local planning process. It would also clarify and streamline the current program’s processes and authorize additional financial assistance programs supporting various agricultural stakeholders and organizations.
CLIMATE
Climate Mitigation and Adaptation Projects. The Executive Budget proposes a $1 billion appropriation to support capital spending associated with the recently approved Climate Action Fund, pursuant to the state’s Climate Leadership and Community Protection Act (Climate Act). Eligible projects would include those intended to reduce greenhouse gas emissions and pollution, decarbonize and retrofit buildings, utilize renewable energy, advance clean transportation initiatives, implement thermal energy networks, and use green infrastructure.
Clean Water Infrastructure. The Executive Budget proposes an additional $500 million in clean water infrastructure funding over two years, for drinking water and wastewater infrastructure, and water quality protection.
Environmental Protection Fund. $400 million is proposed for the Environmental Protection Fund (EPF), which provides funding for environmental programs such as land acquisition, farmland protection, invasive species prevention and eradication, enhanced recreational access, water quality improvement, and environmental justice.
Sustainable Future Program. The Executive Budget appropriates $1 billion for the Sustainable Future Program. For services and expenses of climate mitigation and adaptation projects including but not limited to: reducing greenhouse gas emissions and pollution; decarbonizing and retrofitting buildings; creating and utilizing renewable energy; advancing clean transportation initiatives; building, repairing, and maintaining thermal energy networks; for the design, construction, repair, or improvement of green infrastructure; and for purposes consistent with the general findings of the scoping plan prepared pursuant to section 75-0103 (“CLCPA”) of the environmental conservation law, subject to a plan approved by the director of the budget. Qualifying projects funded by this appropriation shall be subject to the same standards and provisions stated in section 224-f of the labor law and section 66-v of the public service law, and treated in the same manner as if funded from section 99-qq of the state finance law (Cap-and-Invest Climate Action Fund).
EMPLOYEE RELATIONS AND LABOR
Reduced Penalties for Failing to Comply with Frequency of Payments. The Executive Budget proposes to amend the penalties imposed under Article 6, Labor Law Section 198 for employers that fail to timely pay wages as required by Labor Law Section 191 (frequency of payments for workers).
Presently, a failure to pay wages pursuant to the requirements of Section 191 results in an employee being entitled to 100% liquidated damages for the untimely portion of the wages paid. This outcome is a result of a 2019 Appellate Division, First Department decision, Vega v. C.M. & Associates, that found an employer liable for failing to pay manual workers weekly as opposed to bi-weekly and imposed 100% liquidated damages for the first week of wages paid in the bi-weekly paycheck.
The amendment proposed in the Executive Budget seeks to lower the penalty imposed for failure to timely pay wages, particularly considering the significant impact to employers subject to a six-year statute of limitations but will provide increased penalties for repeated violations.
If an employer is found to be in violation, where the employer paid the employee wages on a regular payday no less frequently than semi-monthly, the penalties for failing to timely pay wages shall be amended to limit the damages as follows:
First Violation: no more than 100% of the lost interest due because of the delay in the payment of the wages:
Second Violation: no more than 300% of the lost interest due because of the delay in the payment of wages, when the employer is already subject to an order of violation.
Third Violation: liquidated shall be 100% of the total amount of the untimely paid wages, when the employer is already subject to two orders of violation.
Expanded Enforcement Powers to Collect Lost Wages. The Executive Budget proposes to amend Labor Law Sections 218(3) and 219 (3) to provide the Commissioner of DOL additional powers to enforce final non-appealable orders/decisions that impose penalties and wage payments upon employers for violations of Articles 6 (Payment of Wages), 19 (Minimum Wage) or 19-a (Minimum Wage for Farm Workers) of the Labor Law. While this amendment is contained within Article 7 of the Labor Law, which applies to all employers, Articles 6, 19 or 19-a of the Labor Law do not apply to public sector employers.
The additional powers proposed in the amendment include the Commissioner’s ability to issue warrants under its official seal directed to the Sheriff of any county in which real or personal property of the defaulting employer is found. Alternatively, the Commissioner may direct an officer or employee of the DOL to file a copy of such warrant with the county clerk in any county where such property is located.
It should be noted that the ability to obtain poundage and/or fees that are otherwise available to the Sheriff are not available to the Commissioner. The filing of the warrant may become a lien in the same manner as a warrant issued by the Sheriff.
Increased Child Labor Penalties in Relation to the Violations. The Executive Budget proposes to align the penalties imposed with the severity of the violation of the child labor laws.
The proposed amendment would substantially increase labor law civil penalties for violations related to child labor. The fines for a first-time violation would increase from $1,000 to $10,000, with second violations increasing from $2,000 to a minimum fine of $2,000 with a maximum fine of $30,000, and third or subsequent violations increasing to at least $10,000 with a maximum of $75,000, which is an increase from the previous maximum of $3,000.
The amendment would also provide for imposition of tiered and substantially higher fines when the violation involves illegal employment during which a minor is seriously injured or dies. Currently, the penalty is treble of the maximum penalty but is not set with a range of $3,000 to $30,000 for a first violation, $6,000 to $90,000 for a second violation and $30,000 to $225,000 for a third or subsequent violation.
While these proposed fines are substantially higher, the DOL would have authority to reduce the penalty if the violation does not risk the safety or health of the minor, so long as the employer agrees to certain statutory provisions, such as immediate payment, required training, providing employees with child labor resource information and other related obligations, including a plan to ensure future compliance and submission of documentation of same.
The proposal would increase the criminal penalties for violations of the statute, by changing the penalty from a misdemeanor to a felony with increased fines from $500 to $1,000 and imprisonment from sixty days up to one year (or a combination thereof) for a first offense and further increased penalties for second or subsequent offenses.
The proposal would create two felony categories for “criminal negligent homicide of a child worker” and “endangering the welfare of a child” where a child dies or serious injury while employed in violation of child labor laws.
Farmworker Housing Program. The Executive Budget proposes $5 million to support the services and expenses of the Farmworkers Housing Program.
Extend the Authorization of the MWBE Business Program. The Executive Budget proposes to extend New York State’s Minority and Women-owned Business Enterprises (MWBE) program for two years (July 1, 2027). According to the Governor, the Division of Minority and Women’s Business Development (DMWBD) oversees the statewide MWBE program in New York State and is charged with three primary functions:
To encourage and assist state agencies that are engaged in contracting activities to award a fair share of state contracts to MWBEs.
To review applications by businesses seeking certification as a MWBE and to maintain a directory of certified MWBEs.
To promote the business development of MWBEs through education and outreach to agencies and MWBEs.
Increase Discretionary Procurements for MWBEs and Service-Disabled Veteran Owned Businesses. The Executive Budget proposes to increase the state agency discretionary procurement threshold for MWBEs and SDVOBs from $750,000 to $1.5 million and increases the public authority discretionary procurement threshold in Public Authorities Law for MWBEs from $500,000 to $1.5 million and includes SDVOBs. According to the Governor, increasing the number and value of non-competitive contracts by raising the discretionary procurement threshold will increase access to contracts and help more MWBEs and SDVOBs work directly as prime contractors for state agencies and authorities.
Digitizing Youth Working Papers. The Executive Budget proposes to update and digitize the process by which a minor applies for working papers or employment certificates.
This proposal would provide for the creation of a database for the employment of minors by the State Department of Labor in consultation with the NYSED. This would be a confidential database not accessible to the public. Employers would be required to register and provide information to the database upon the hiring of a minor prior to the start of employment. Minors will be required to register with the database to obtain an employment certificate or permit.
Any employment certificate issued under this provision shall be issued electronically and maintained within the DOL database. This would eliminate the employer’s requirement to maintain the physical employment certificate of the minor employee at the employer’s place of business. It would also eliminate the DOL Commissioner’s requirement f to notify the local superintendent of schools, monthly, the names of illegally employed children.
Reform the Human Rights Complaint Process. The Executive Budget proposes to make changes addressing discrimination claims handled by the Division of Human Rights (“the Division”). These changes include:
Allowing for the Division to designate a required form and procedure for making signing and filing complaints.
Eliminating the obligation to obtain the consent of the complainant to issue a dismissal for administrative convenience in a housing discrimination case.
The Executive Budget also proposes the creation of a “Discrimination Complaints Escrow Fund”. The fund would be used to accept the deposits for all conciliation, settlement and other monetary award funds of the Division
TAX
Tax Disclosure for CLCPA. The Executive Budget proposes to allow DTF to share certain tax information from returns of petroleum or fossil fuel businesses with DEC or NYSERDA to implement the CLCPA.
Establish the CATALIST NY Program. The Executive Budget proposes to establish the Companies Attracting Talent to Advance Leading Innovations and Scale Technologies in New York (“CATALYST NY”) Program. Under the CATALIST program, the Department of Economic Development (DED) would accept applications from New York State incubators to become "CATALIST NY incubators." Selected incubators would then nominate small businesses they have supported to be designated as CATALIST NY small businesses. The CATALIST NY small businesses would be eligible to provide a personal income tax benefit for up to eight of its newly hired full time employees: the wages of these new employees would not be subject to state personal income taxes. CATALIST NY would sunset in 10 years.
Extend and Amend the Excelsior Jobs Program. The Executive Budget (Subpart A) proposes to extend the existing excelsior jobs program for ten years, from 2029 to 2039. Additionally, the proposal would provide for enhancements to the program, including:
Adding semiconductor supply chain projects to the list of eligible sectors of business. It would make the semiconductor supply chain projects eligible for a benefit of up to 7% for excelsior’s jobs tax credit component, 3% for excelsior’s investment tax credit component, and up to 7% for excelsior’s research and development tax credit component.
Create the new semiconductor research and development project program would provide a tax credit of up to 15% of the cost or other basis for federal income purposes on qualified investment made by a semiconductor research and development project.
Create the new semiconductor manufacturing workforce training incentive program would provide a tax credit equal to 75% of eligible wages, training costs and wrap around services up to $25,000 per employee, up to $1,000,000, per eligible non-semiconductor manufacturing business, and up to $5,000,000 per eligible semiconductor manufacturing business.
The proposal would repeal the current employee training incentive program (ETIP) effective December 31, 2028.
This proposal would alter and expand the Jobs Retention Tax Credit Program (“JRTCP”). The proposal would update the JRTCP to assist additional emergency-impacted businesses. The program would be expanded to support small businesses at risk of leaving the state or closing operations due to the economic impact of an event leading to an emergency declaration by the Governor.
Expand the Credit for Employment of Persons with Disabilities. The Executive Budget proposes to increase the tax incentive to employers that employ persons with disabilities. Currently, the maximum credit per qualified employee is limited to $2,100. This proposal would increase the amount of the credit for taxable years beginning on or after January 1, 2025, to $5,000 in qualified first-year wages earned by each qualified employee or, alternatively, where the federal work opportunity tax credit applies, $5,000 in qualified second-year wages earned by each qualified employee.
Extend the Alternative Fuels and Electric Vehicle Recharging Property Credit for Three Years. The Executive Budget proposes to extend the alternative fuels and electric vehicle recharging property credit for three years through tax years beginning before January 1, 2029.
Extend the Workers with Disabilities Tax Credit for Three Years. The Executive Budget proposes to extend the workers with disabilities tax credit for an additional three years through tax year 2028. The credit provides tax incentives to qualified employers for employment of persons with disabilities. The credit would otherwise expire this year.
Extend the Hire a Vet Credit for Three Years. The Executive Budget proposes to extend the hire a vet tax credit for an additional three years. The credit would be available through tax years beginning before January 1, 2029, for veterans who begin employment before January 1, 2028.
Increase the Article 9-A Estimated Tax Threshold. The Executive Budget proposes to increase the threshold at which corporation tax filers are required to make estimated tax payments, from $1,000 to $5,000, beginning on January 1, 2026.