ESFPA E-News

SFY 2026-27 Executive Budget Highlights

On Tuesday, January 20^th Governor Hochul released her SFY 2026-27 Executive Budget which sets the stage for her fiscal and policy agenda for the legislative session. It also includes the Governor’s priority legislative proposals, known as Article VII Bills, which provide her significant leverage in enacting key legislation she wants to accomplish her goals for 2026.

All in, the SFY 2026-27 Executive Budget totals roughly $260 billion, about $6 billion more than SFY2025-26. The Governor's spending plan comes a week after her 2026 State of the State proposal, focusing on universal childcare, public safety and ghost guns, child online safety, immigration and more. You can read the Budget Book and find all supporting documents here.

Now the Legislature gets to respond and if revenues are up as the Governor suggests, you can expect that the Legislature will want to spend more.

On the business, energy and environment fronts there is not a lot in the SFY 2026-27 budget at this time. That could be good. Here is a summary of where we see things that we normally watch in the budget.

Economic Development

$10 million in funding for the new Manufacturing Modernization Program, which will support the State’s small and mid-size manufacturers. This new program will establish a network of Centers across the State, focused on assisting small and mid-sized manufacturers in adopting new technology. It is not clear how this may affect the existing New York Manufacturing Extension Partnership network and we will have to see how the proposal unfolds.

$2 million in funding to support New York’s Future Bioeconomy. The funding will create a research and development consortium and pilot a greener economy for industrial hemp by constructing a processing facility and workforce training center. In the State of the State, the Governor noted this would focus on hemp-based construction and building materials, but the budget documents do not mention this.

Environment, Energy and Agriculture

$425 million for the Environmental Protection Fund (EPF) is again provided to support critical projects that work to mitigate the effects of climate change, improve agricultural resources, protect our water sources, advance conservation efforts, and provide recreational opportunities. Breakdown includes:

• Wood Products Development Council - $20,000
• Regenerate NY cost share program $500,000
• Hemlock Woolly Adelgid $500,000
• Climate & Applied Forestry Research Initiative (CAFRI) $1.5 million. 
• Community Forests $500,000
• Easements for Land Trusts $1.5 million

$50 million is included to support New York’s ongoing efforts to reduce its own carbon footprint. This continued investment will accelerate State facilities’ decarbonization efforts and provide resources to initiate procurement practices that prioritize sustainable and climate-resilient design initiatives. We will be looking to see if some of this will be devoted to reducing embodied carbon in State buildings through the use of more wood in construction.

The Governor’s budget is surprisingly silent on any new climate funding initiatives.

Article VII Budget Bills for 2026

The Governor’s policy and legislative agenda in this budget is very light compared to previous years. This is always a good sign and one that should be welcomed by the Legislature. Whether this leads to a timelier budget or not, who knows, but it does take some major policy issues out of the deliberations

Transportation, Economic Development and Environmental Conservation (TED)

Part R – State Environmental Quality Review Act (SEQRA)

The Governor’s State of the State message proposed regulatory reform related to housing and possibly some other state and local government reforms. The Article VII legislation appears to be limited to proposed changes to SEQRA largely limited to housing and some limited mixed-use development. While these reforms may have some indirect market benefits in stimulating housing development that may benefit our sector there are no real regulatory reform benefits that benefit us.

Public Protection and General Government (PPGG)

Part G - Cracking Down on Auto Insurance Fraud to Lower Rates for Everyday New Yorkers

The Governor has proposed significant changes in insurance law dealing with intentional fraudulent insurance claims that she feels are driving insurance rates for automobiles, affecting individuals and commercial carriers.  These changes are aimed at reducing claims and payouts for fraudulent and staged accidents. We will monitor these proposals but already the Trial Lawyers have geared up to oppose these measures.

Fifth Round of ‘Regenerate NY’ Forestry Cost Share Grants is Now Open

DEC recently announced that approximately $5 million in funding is now available in the fifth round of the State’s ‘Regenerate NY’ Forestry Cost Share Grant Program. The grant program is designed to assist private landowners in growing the next generation of forests, which are crucial for mitigating the impacts of climate change, providing wildlife habitat, protecting air and water quality, and supporting green jobs and local economies. Funded projects will enhance efforts made through New York’s 25 Million Trees Initiative to restore and sustain the state’s natural landscapes.

For Round 5 of this grant opportunity, DEC’s goal is to support underserved landowners and priority projects. A portion of the grant funds will be reserved until March 10, 2026, for landowners and projects that meet the following criteria:

Landowners:

• active or veteran military landowners;
• first time landowners (owned property less than 10 years); and
• State or Federally recognized Indian Nations or Tribes.

Or projects dedicated to:

• Improving the health of significantly degraded forests due to an insect pest or disease outbreak; and
• Large scale planting projects (greater than 5 acres).

Private landowners planning to restore or establish five or more acres of forest land in New York State may apply for grant awards ranging from $10,000 to $1 million. A 10 percent match is required. A portion of the funding for projects in this round will be available upfront to assist with the high costs associated with these practices. Eligible projects include:

• Planting trees to restore or create new forests;
• Creating young forest habitat to initiate natural regeneration and improve wildlife habitat;
• Thinning to remove unhealthy or close growing trees to promote forest health or regrowth;
• removing competing or invasive vegetation that would interfere with seedling establishment and growth; and
• Installing tree protection to prevent deer browse of young tree seedlings.

Applicants must work with a forester or a qualified natural resource professional to develop their project.

A portion of the grant funds will be reserved for priority landowners and projects until Tuesday, March 10, 2026. Any remaining funds will then be made available to all qualified applicants. Applications will be accepted until 3:00 p.m. on August 31, 2026, in SFS Grants Management. Grant funds will be awarded on a rolling basis until funds are exhausted, or the August 31 deadline.

Expanded funding for the fifth Round of Regenerate NY is supported by the USDA Forest Landowner Support Grant, the Environmental Protection Fund, and the Arbor Day Foundation.

For more details about the grant opportunity, including application criteria, visit DEC’s website. For more information, read the January 16 press release. 

Forest Tax Law Changes Effective March 1st

The NYS Department of Environmental Conservation (DEC) recently announced the finalization of regulation changes to the Real Property Tax Law Section 480a, also known as the Forest Tax Law. The goal of the overhaul of the 50-year-old regulations is to streamline processes and reduce administrative barriers on participating forest landowners, while strengthening sustainable timber management on enrolled lands.

The state enacted the 480a Forest Tax Law in 1974 to encourage long-term management of forested land. The law provides a property tax incentive for private forest landowners who commit to managing their woodlands sustainably under an approved forest management plan. 

The revised regulations:

• lower administrative and compliance burdens for landowners and consulting foresters by extending the period that an approved forest management plan covers from 15 years to 20 years and requiring fewer plan updates;
•  provide greater flexibility in forest management work planning by moving away from an annual schedule;
• strengthen sustainable forest management on enrolled lands by requiring efforts to establish adequate forest regeneration and explicitly banning harvest practices that remove most of the commercially valuable trees at the expense of future growth and future financial return; and
• standardize program expectations, administration, and compliance by establishing a training requirement for consulting foresters working with enrolled and prospective landowners.

You can find out more about changes to the regulations here.  DEC released the draft regulations in 2024 and received 260 public comments from 33 separate organizations and individuals. A responsiveness summary document is available on the DEC website.

Changes to Forest Tax Law come into effect on March 1, 2026. DEC will be offering training starting on January 30^th at the NY Society of American Foresters Conference in Syracuse and throughout New York over the next several months. At the website noted above, you can find some of the new forms to be used and soon will be the new "Toolbox" which will be the successor to the Forest Tax Law Handbook.

The Hardwood Federation Wants to Hear from YOU

The Hardwood Federation Board of Directors is meeting soon to take stock of 2025 activities and prioritize and plan advocacy efforts for 2026. The Federation is asking for folks to weigh in and let them know what is top of mind for you and your business in the new year. Please take a few minutes to complete the 2026 Hardwood Federation Policy Survey.

Your input makes a difference! Please Respond by Thursday, January 22, 2026. Click the link below to access the survey:

Federal Appropriations

As we race to the end of January, the House and Senate are working to get appropriation bills passed before the Continuing Resolution running the government expires on January 31st. Late last week the full Senate passed a three-bill “minibus” appropriations package that includes the Fiscal Year 2026 Interior, Environment and Related Agencies appropriations bill. The vote was 82-15. The measure now heads to the President’s desk for his signature.

As we mentioned last week, the measure allocates $15 million to the Community Wood Grant program. Earlier versions of the bill in the House were silent on Community Wood, meaning zero dollars for this program. So that is a win for Community Wood, an initiative carried by the Senate that provides meaningful grants for sawmill upgrades and facilities that generate biomass heat and power.  

In addition, the legislation funds the Wood Innovation Grant program at $30 million and includes FRA’s long-supported directive encouraging EPA, USDA, and DOE to recognize biomass energy as carbon neutral. Also, the bill increases funding slightly for the Forest Inventory and Analysis program.

No guarantees, but just maybe we will see a federal budget by the end of January, albeit 4 months late.

Mass Timber

The Northern Forest Center has been working to pilot more use of mass timber in small residential construction. As part of this project, they commissioned a look at the current supply chain for mass timber serving the Northern Forest states of ME, NH, VT and NY, and the future outlook and feasibility of a robust regional CLT/glulam supply chain. The report, authored by Mass Timber Advisors and TMBR, is complete and online here.

Key topics include raw material sourcing, existing production capacity, distribution channels, end-user demand, transportation logistics, supplier networks, code and policy drivers, future investment opportunities, and infrastructure needs.