By Jimmy Vielkind 

ALBANY, N.Y. -- New York state lawmakers approved parts of the state budget late Tuesday but missed a midnight deadline because of disagreements on funding for Medicaid and potential changes to the state's bail law.

Members of the state Senate voted on three budget bills between sundown Tuesday and dawn on Wednesday but said they were still negotiating with Gov. Andrew Cuomo on the overall spending plan. Democrats, who dominate the state Assembly, passed one bill to pay the state's bondholders.

During a Tuesday afternoon radio interview, the Democratic governor didn't say how late the budget would be, but said it was a difficult exercise because of falling receipts. Lawmakers faced a $6.1 billion deficit when Mr. Cuomo proposed a $178 billion budget in January. The coronavirus pandemic caused revenue to drop between $9 billion and $15 billion below the $88 billion that they projected in February, the state's Division of the Budget estimated.

"We have to finish the budget to tell you the size of the budget," Mr. Cuomo said during a Tuesday press briefing.

Legislators said they would grant Mr. Cuomo unilateral power to reduce spending below the levels approved in the document if revenues didn't materialize. Legislators said Tuesday that they didn't plan to increase taxes on the wealthy as part of the budget, despite calls from progressive lawmakers and labor unions.

While actual bills detailing spending for health care and state agencies hadn't been completed as of Wednesday morning, lawmakers said they had agreed to keep the amount of aid to public schools -- the second-largest state expenditure -- flat. It typically rises by around 4%, or roughly $1 billion, each school year.

Robert Lowry, deputy director for the New York State Council of School Superintendents, said districts were grateful to avoid a cut given the overall economic climate, but were wary of possible midyear reductions.

"No one wants to contemplate cutting teachers and reconfiguring classes part way through the school year," he said. "We all have to hope that Washington comes through with more help for states, local governments, and schools."

Mr. Cuomo and legislators said they hadn't reached an agreement on legalizing recreational marijuana as part of the budget and had abandoned the topic for now. Lawmakers did agree to a new process for siting wind and solar farms and to increase penalties for acts of domestic terrorism.

As of Tuesday night, disagreements over possible cuts to the Medicaid program -- which funds hospitals and provides health care for more than 6 million New Yorkers each year -- remained a sticking point.

Mr. Cuomo has pushed for changes in the program that would reduce spending by $2.5 billion a year and tighten eligibility requirements for certain home-care programs. Democrats in the state Senate urged him to hold off on his restructuring and instead accept up to $6 billion in supplemental federal health-care aid.

Lawmakers also hadn't reached an agreement on changes to the state's new bail law, which took effect Jan. 1 and prohibits cash bail for most misdemeanor and nonviolent felony offenders.

Mr. Cuomo, as well as Republicans, law-enforcement officials and Democrats from suburban and rural areas have said the law hurts public safety and that judges should have more discretion over whether defendants are held before a trial.

Assembly Speaker Carl Heastie, a Democrat from the Bronx, and other legislators from inner-city districts said the law has reduced economic and racial disparities in the criminal justice system and shouldn't be rolled back.

Without a budget in place, Comptroller Tom DiNapoli said his office was unable to process paychecks for roughly 120,000 workers in state agencies -- including some at the Department of Health who have been helping to respond to the coronavirus outbreak.

State budgets are often adopted a few hours or days after the March 31 deadline with minimal effect. But Mr. DiNapoli's office said that a budget needed to be adopted by Monday evening to authorize direct deposit for a payroll period that concludes Wednesday.

Mr. Cuomo's office said the Democratic comptroller had the authority to process the payroll. But Jennifer Freeman, a spokeswoman for Mr. DiNapoli, said his office was following longstanding precedent.

"Hardworking state employees should not be held hostage to budget gridlock," she said.

Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com

(END) Dow Jones Newswires

April 01, 2020 09:26 ET (13:26 GMT)

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