
A perfect budget storm
With help from Amira McKee
Wall Street could be the state budget's savior next year — or a major headache.
Gov. Kathy Hochul and the Democratic-led state Legislature are already contending with a $3 billion hit to the Essential Plan taking effect next fiscal year, which provides health coverage to about 1.6 million low-income New Yorkers.
The cut is being heaped on top of a pre-existing $7.5 billion budget gap.
And if the financial industry — the engine that fuels New York's economy and tax revenue — goes south, the consequences for Albany could be massive.
'If we get hit not just with the federal restructuring, but with an economy that starts to slow down or tank — that's where we could get that perfect storm,' Comptroller Tom DiNapoli told Playbook in an interview on Monday.
That kind of financial turbulence would come at a bad time for the governor, who's running for a second full term next year.
She stands to be hit with political crosscurrents from lefty Democrats who'll push for tax hikes and from wealthy New Yorkers who contribute an outsize share of taxes to the state's coffers.
State officials are still assessing the fallout from President Donald Trump's megabill, a sweeping federal tax-and-spend package that includes significant cuts to Medicaid and food stamps.
Hochul told reporters Monday she plans to roll out a 'swat team' to find ways of saving money as the state also works to address the $750 million being slashed from the Essential Plan — cuts which will take effect Jan. 1.
She also defended her $2 billion rebate program, which was approved in the May state budget and will send New Yorkers cash this fall. Hochul insisted the money, which was pared down from the original $3 billion proposal, will help people make ends meet.
'Now more than ever families across New York will appreciate what I did for them and putting money back in their pockets,' the governor said.
DiNapoli, a Hochul ally, was not as enthusiastic about the check plan, which Hochul has framed as a way to bust inflation.
'I wouldn't say it was a mistake, but that creates spending that has to be balanced against these other cuts,' he said. 'Rebates are going to happen, hopefully that will help people.'
DiNapoli expects finding ways to offset the loss of $750 million in the current fiscal year will be relatively easy. The harder part comes next year when lawmakers and Hochul negotiate the state budget.
'My guess is everything will have to be on the table — cuts, tax increases,' DiNapoli said. New York Democrats have already trained their ire on Republicans over the federal cuts, pre-emptively blaming them even before the mega-bill became a mega-law.
There are limits, though, to the blame game. Hochul will still need to get a balanced budget on the books months before voters render their verdict on her tenure.
'It could be a tough budget,' DiNapoli said. 'It's an election year and there are more pressures in an election year.' — Nick Reisman
IT'S TUESDAY: Got news? Send it our way: Jeff Coltin, Emily Ngo and Nick Reisman.
WHERE'S KATHY? In New York City with no public schedule.
WHERE'S ERIC? No public schedule available as of 10 p.m. Monday.
QUOTE OF THE DAY: 'You know, the Dos Equis commercials, the most interesting man in the world? That is him. This guy is having this moment, and he's capitalizing on it.' — Trump adviser Alex Bruesewitz on FIFA President Gianni Infantino, in POLITICO's look at how the sports executive learned to navigate American politics ahead of next year's World Cup.
BONUS QUOTE OF THE DAY: 'Columbus is worse than pineapple on pizza.' — One of the signs at the Italian-Americans for Zohran Mamdani counter protest Monday, opposite a rally organized by The Italian-American Civil Rights League after discovering Mamdani had posted a photo flipping off a statue of Christopher Columbus.
ABOVE THE FOLD
WHAT HAPPENS IN VEGAS: A member of New York City Mayor Eric Adams' campaign team attended the same Las Vegas Bitcoin conference where the mayor spoke on the taxpayer's dime — the latest twist in a trip that has alarmed ethics experts several times over.
In May, Adams traveled to Sin City to deliver two speeches at the crypto gathering in his official capacity as mayor. During an on-camera interview Adams gave at the summit, his campaign spokesperson, Todd Shapiro, briefly pops into the frame just feet away.
Adams has already taken heat for hosting a fundraiser during his Las Vegas trip, as the Daily News and New York Post have reported. Government reform groups were also concerned about a POLITICO report that found a pro-Adams super PAC executive attended the event and discussed soliciting cash from the crypto community.
City statutes prevent the mayor from using official resources for campaigns, and election laws prohibit coordination between super PACs and candidates.
Shapiro said he was briefly at the Las Vegas confab at the behest of billionaire crypto investor Brock Pierce and that he did not perform any campaign-related activities — not even coordinating fundraising — while in town.
'I want to clarify that I was not attending any Bitcoin conference on behalf of the campaign, nor was I aware of any formal event taking place,' Shapiro said. 'I was simply a guest of my former client, Brock Pierce, and have a personal interest in blockchain technology.'
Pierce sung the praises of Adams while at the conference.
'He's not about to be the crypto-mayor. He is the crypto mayor of the United States of America,' he said in an on-camera interview at the event. 'And it is mission critical to me — I believe New York City, the state and the nation, and therefore the world — that it stays that way and he stays the mayor of New York City.'
City Hall referred POLITICO to its statements from last week noting that the fundraiser was a small portion of the trip.
'The overwhelming majority of the trip was dedicated to discussing crypto policy for the city,' spokesperson Kayla Mamelak Altus said at the time. — Joe Anuta
CITY HALL: THE LATEST
MEMBER DEFERENCE IN DANGER: A majority of City Council members — from socialists to Republicans — oppose the Charter Revision Commission's approved ballot measures, saying they'll reduce elected officials' and organized labor's input on building housing.
'Mayor Adams' Charter Revision Commission is giving away the store to luxury housing developers while cutting our communities out of the process,' reads a statement organized by City Council Member Sandy Nurse and signed by 31 of her colleagues.
The commission voted Monday to place four questions on the November ballot that are meant to make it easier for the city to build apartments. A fifth question would start the process of holding city elections in the same years as presidential races.
Council Speaker Adrienne Adams and her leadership team blasted the 'misguided proposals' in a separate statement, saying they'd 'undermine the ability to deliver more affordable housing, homeownership opportunities, good-paying union jobs, and neighborhood investments.'
The council has a tense relationship with the mayor. The speaker and other members staunchly opposed ballot proposals from Eric Adams' charter revision commission last year too, but voters approved four out of the five. — Jeff Coltin
SCHOOL BUS WOES: Two prominent citywide Democratic electeds are demanding short-term extensions on school bus contracts and are pointing to persistent, adverse impacts on the 145,000 students who depend on taking buses.
The Panel for Educational Policy, the Department of Education's governing body, is expected to vote Wednesday to approve a 30-day emergency extension of the contracts.
In a Monday letter to Adams, Comptroller Brad Lander and Public Advocate Jumaane Williams urged him to limit any contract extensions to between one and three years after learning the administration is exploring a five-year timeframe.
Shorter term extensions would give state lawmakers in Albany time to enact legislation ensuring bus driver protections are included in new contracts, the pair said. The DOE could then rebid the contracts with improvements.
'The bus companies may be content collecting taxpayer dollars while delivering unacceptable service, but our students and families deserve far better — and they should not have to wait until 2030 for relief from a system that's failing them now,' Lander and Williams wrote.
State lawmakers didn't pass legislation this year that would protect bus drivers' wages and benefits. The contracts expired at the end of June.
Jenna Lyle, a DOE spokesperson, only said longer extensions are under negotiation when asked to confirm whether the city is eyeing a five-year extension.
'New York City Public Schools has been clear: our outdated busing contracts must be rebid to allow for flexibility and accountability and to ensure the best possible transportation system is available to our students,' Lyle said in a statement. — Madina Touré
THE DISTASTE IS MUTUAL: Israeli Prime Minister Benjamin Netanyahu dismissed some of Mamdani's campaign proposals as 'nonsense' and suggested he'd lose reelection if he wins. (CNN)
More from the city:
— The New York Young Republican Club argues Mamdani should be disqualified from the election for providing 'aid and comfort' to enemies of the US. (New York Post)
— Former Trump adviser Jason Meister formed an anti-Mamdani super PAC called Defend NYC. (City & State)
— A brand new $241 million jail unit in Bellevue Hospital is empty due to staffing issues. (THE CITY)
NEW FROM PLANET ALBANY
PLAY ON: A key legislative Democrat is pushing back against Trump's reported plan to limit college athletes' compensation.
Trump's plan, tentatively called 'Saving College Sports,' would set rules for how athletes can be paid for their name, image and likeness. The draft reportedly would classify college athletes as students and not employees — potentially limiting how much they could receive in promotional compensation.
Assemblymember Michaelle Solages, the chair of the Black, Puerto Rican, Hispanic and Asian Legislative Caucus, blasted the idea.
'This only further limits the legal rights of these young individuals by making them more vulnerable in these workplaces,' Solages said. 'This order has been delivered to the American people under the guise of protecting our young and vulnerable population, but will certainly prove detrimental to the future of the athletes that these sport institutions depend on.'
There have been efforts at the state level in recent years to set regulations for college athletes and their compensation. Hochul in 2022 signed into law a measure that bolstered compensation rules in college sports and allows athletes to retain representation to help negotiate deals. — Nick Reisman
More from Albany:
— Assemblymember Sarahana Shrestha wants to build a progressive movement in the Hudson Valley. (City & State)
— Like her predecessors, Hochul wishes she had more control over the State Education Department. (Capitol Confidential)
— The state pension fund is bulking up its private equity investments. (Chief Investment Officer)
KEEPING UP WITH THE DELEGATION
'GOOGLE IS FREE': Rep. Alexandria Ocasio-Cortez defended her pro-Palestinian record after her Bronx campaign office was vandalized with red paint accusing her of funding genocide in Gaza.
'Google is free. If you're saying I voted for military funding, you are lying. Receipts attached,' AOC posted on X Monday afternoon.
'My record on Palestine speaks for itself. I'm proud of it. One of the strongest in Congress. I throw down for pro-Palestine candidates. Largely unrecognized work. That's fine,' she said in another post on Bluesky.
Ocasio-Cortez voted against far right Republican Marjorie Taylor Greene's amendment to cut defense aid to Israel, a vote that failed 422-6.
The amendment 'does nothing to cut off offensive aid to Israel nor end the flow of US munitions being used in Gaza. Of course I voted against it,' Ocasio-Cortez posted on X about the Friday night vote. 'What it does do is cut off defensive Iron Dome capacities while allowing the actual bombs killing Palestinians to continue.' — Jeff Coltin
More from Congress:
— Trump's megabill would increase the federal deficit by $3.4 trillion and cause 10 million people to lose health insurance over the next decade, per a Congressional Budget Office forecast. (POLITICO)
— Rep. Elise Stefanik's ethics complaint against a D.C. judge was tossed by an appeals court. (Bloomberg)
— Jeffries reiterated he hadn't endorsed Mamdani for mayor and said they'd meet again when he gets back from Uganda (Fox News)
NEW YORK STATE OF MIND
— Buffalo community groups want New York to strike a better deal with Tesla. (Buffalo News)
— New York is among the states suing the Trump administration over barring undocumented immigrants from accessing federally funded services. (Gothamist)
— A job ad for a Nassau County district attorney candidate encourages people with criminal records to apply. (New York Post)
SOCIAL DATA
MAKING MOVES: Brendan Griffith was elected president of the New York City Central Labor Council, AFL‑CIO on Thursday. He was previously chief of staff, and was serving as interim president after Vincent Alvarez stepped down.
HAPPY BIRTHDAY: Former Rep. George Santos (R-N.Y.) … state Sen. Dean Murray … Patrick Jenkins … Red Horse's Doug Forand … Ariana Collado of the Bronx Dems … BerlinRosen's Louis Gonzales … Michael Jon Fieni of the Brooklyn Public Library … Annie Lowrey … CNN's Terence Burlij … Sam Brodey … Warren Bass … Peter Prengaman … Natacha Hildebrand … Maor Cohen … Don Van Natta Jr. … (WAS MONDAY): Shonni Silverberg ... Jane Ginsburg ... Jon Lovitz ... Eric Simonoff
Missed Monday's New York Playbook PM? We forgive you. Read it here.
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Politico
33 minutes ago
- Politico
Pritzker's gerrymander jab draws fire
☀️☀️☀️Happy hot Thursday, Illinois. The Cubs will host the 2027 MLB All-Star Game at Wrigley Field, via Crain's. TOP TALKER MAP MOVES: Gov. JB Pritzker scolded Texas Republicans and President Donald Trump this week for their brazen attempts to redraw congressional maps in the Lone Star State with the goal of giving GOP candidates an even cushier ride to Washington. No cheating: That the president is 'encouraging Texas — and Texas being willing to do this — should be an indicator to the rest of us that if they're going to cheat, that that's not a proper way to act,' Pritzker said at an unrelated news conference. 'I think we ought to play by the rules. Everybody.' Illinois Republicans did a spit take. 'It's rich that the governor now claims to support playing by the rules — after he enthusiastically signed into law the most gerrymandered maps in the nation,' said Illinois House Minority Leader Tony McCombie. 'Phony' and 'disingenuous' is how state Rep. Ryan Spain, the deputy minority leader, put it. The backstory: In 2021, when Democrats worried the House might slip from their grasp, Illinois Democrats approached redistricting with surgical precision — eliminating two Republican congressional seats and reinforcing their own fortress in D.C. How it changed: Illinois, which lost a seat due to population changes, went from having 13 Democrats and five Republicans in Congress to 14 Democrats and three Republicans. This week, Pritzker left open the possibility of more map tweaking. Asked if Illinois would try to 'counterbalance' what Texas might do, Pritzker said: 'We have to see what they decide to do about Texas.' We reached out to lawmakers on the redistricting committee to see if there's any appetite for another round of map-making. No one responded. And a spokesman for Senate President Don Harmon told Capitol News' Ben Szalinski, 'That's not something we're pursuing.' Redistricting 'overreach' can be a risk, says Ryan Tolley, executive director of CHANGE Illinois, which supports fair mapping. He pointed to how Illinois lawmakers also carved up state legislative districts in southern Illinois, with the goal of favoring Democratic incumbents LaToya Greenwood and Jay Hoffman. But the outcome backfired. Greenwood lost. 'Democrats run the risk of creating thin margin districts. The big question would be whether they could pick up a seat,' Tolley said. And if they don't, 'they could end up hurting more than helping.' That might not stop Democrats, however. One political strategist we talked to acknowledged, 'There's always more you can do,' a reminder that gerrymandering is a bipartisan blood sport that's never really over. RELATED Obama to headline fundraiser in response to GOP redistricting efforts, by POLITICO's Andrew Howard THE BUZZ REALITY BITES: Mayor Brandon Johnson's CFO says a property tax hike is 'likely' in the 2026 budget, via Bloomberg's Isabela Fleischmann and Romaine Bostick. 'It is likely that that will be part of the package,' Jill Jaworski said at Bloomberg's New Voices event in Chicago. 'We haven't rolled out the full package yet, but the package is going to include cuts [in expenditures], and it is going to include proposals for increasing our revenues.' Jaworski also talked at length about what the city is doing to attract new business, the city's tax burden — and areas of the city that work. Watch it here From the Tribune: Johnson's team emphasized the budget was not yet finalized and that the mayor 'is focused on identifying progressive revenue opportunities that ensure that the ultra-wealthy pay their fair share and that this budget is not balanced on the backs of working people,' report A.D. Quig and Jake Sheridan. RELATED Chicago Public Schools is grappling with a massive budget deficit: 'District officials say they expect to save about $165 million after laying off some central office staff and crossing guards this summer. But leaders are still searching for $569 million in either savings or revenue,' by WBEZ's Sarah Karp. If you are LaToya Greenwood, Playbook would like to hear from you! Email: skapos@ WHERE'S JB At the State of Illinois Building at 1:30 p.m. to celebrate the building being renamed the Jesse White State of Illinois Building At 2300 South State Street at 1:15 p.m. for a ribbon-cutting at 23rd Place at Southbridge Where's Toni At the Cook County Building at 9 a.m. to preside over a County Commission meeting — At the Cook County Building at 12:45 p.m. to spotlight a youth and the arts movement — At the State of Illinois Building at 1:30 p.m. for its renaming Have a tip, suggestion, birthday, new job or a (gasp!) complaint? Email skapos@ MORNING MONEY: CAPITAL RISK — POLITICO's flagship financial newsletter has a new Friday edition built for the economic era we're living in: one shaped by political volatility, disruption and a wave of policy decisions with sector-wide consequences. Each week, Morning Money: Capital Risk brings sharp reporting and analysis on how political risk is moving markets and how investors are adapting. Want to know how health care regulation, tariffs, or court rulings could ripple through the economy? Start here. BUSINESS OF POLITICS — MAKING IT OFFICIAL: State Rep. Margaret Croke is officially launching her campaign for state comptroller today, promoting a 'Rule of 3' video, with a hat tip to juggling her three children. Croke has served nearly five years in the Illinois General Assembly and before that worked in the governor's office. 'Our state comptroller can't control what happens in Washington, but they can ensure Illinois' finances are managed with efficiency, transparency and oversight,' she said in a statement announcing her campaign. 'With the chaos coming out of the Trump administration, strong leadership at the state level is more important than ever before.' — FIRST IN PLAYBOOK: In IL-07, Richard Boykin, the former county commissioner, will kick off his campaign for Congress with businessman Willie Wilson at his side. Details here — FIRST IN PLAYBOOK: George Alpogianis is launching his campaign for 9th District Democratic State Central committeeman, and he's being endorsed by Congresswoman Jan Schakowsky, state Sen. Laura Murphy, state Rep. Kevin Olickal and Niles Township Supervisor Bonnie Kahn Ognisanti, according to his team. — Senate race: Robin Kelly pledges to confirm only pro-LGBTQ+ judges in U.S. Senate bid, by Jake Wittich in the Windy City Times — In IL-09: Daniel Biss has been endorsed by the International Association of Fire Fighters Local 742, representing Evanston's fire and EMS personnel. It's the first labor endorsement in the race. Biss, the mayor of Evanston, is running for the open seat now held by Congresswoman Jan Schakowsky, who's retiring after 2026. — Robert Carroll is seeking the Democratic nomination for DuPage County sheriff, where he was a top aide. 'I'm running because every resident deserves to feel safe, respected and heard — no matter where they live, what they look like, or where they come from.' he said in launching his campaign. More from the Daily Herald's Susan Sarkauskas. ILLINOIS' POPE — Legislation aims to protect pope's U.S. citizenship: 'The measure would exempt popes with U.S. citizenship from federal tax obligations, and prevent their citizenship from being revoked during their tenure as supreme pontiff,' by The Pillar's Jack Figge. CHICAGO — Startup joins Chicago's growing quantum campus, plans to build its own computer: 'Infleqtion, a startup with roots in Boulder, Colo., and Chicago, says it will build a commercial quantum computer at the Illinois Quantum & Microelectronics Park planned for the former U.S. Steel mill on the South Side,' by Crain's John Pletz. — City investing $40M to improve conditions at 7 homeless shelters, by Block Club's Michael Liptrot — Feds want 15 months for ex-City Club President Jay Doherty in ComEd Madigan plot, by the Sun-Times' Jon Seidel — SCOOP: Ex-Loretto leader and pal accused of stealing millions are living large in Dubai, by Block Club's Kelly Bauer — University of Chicago considers restructuring arts and humanities division to cut costs, by the Tribune's Kate Armanini COOK COUNTY AND COLLARS — Harvey, Ill., to lay off about 10 percent of its city workforce: 'After every effort to avoid cuts — including eliminating discretionary spending, enforcing tax compliance and making painful operational adjustments — we have no choice,' said Harvey Mayor Christopher Clark, via CBS 2's Adam Harrington and John Odenthal. — Crystal Lake Park District holds another contentious meeting as board cleared of violating Open Meeting Act: 'Yelling, booing mark session,' by the Northwest Herald's Michelle Meyer. — Ex-Worth Township supervisor gets probation in Oak Lawn red-light camera bribery case, by the Tribune's Jason Meisner SPOTTED — Happy anniversary! New Chicago Consulting, headed by managing partners Tom Bowen, Christina Nowinski Wurst and Tracy Mayfield celebrated their 11 years in business earlier this week with a gathering of friends and clients. In the room: Former Mayor Lori Lightfoot, Ald. Jason Ervin, city Treasurer Melissa Conyears-Ervin, former Deputy Gov. Jesse Ruiz, County Commissioner Scott Britton and former Congresswoman and Mercury Public Affairs partner Cheri Bustos. Reader Digest We asked about crazy things you've seen on the El. Bob Kieckhefer: 'Ronnie Woo Woo on the Red Line headed to Wrigley.' Kevin Lampe: 'The excitement of arriving at Comiskey Park (Yes, that is still the name to me.) or Wrigley Field and the emotional discharge depending on the outcome of the game at departure.' Ed Mazur: 'Red Line: a man with a squawking chicken perched on his head. Honestly.' Tara Price: 'One time my law school roommate and I saw the bare behind of a gentleman through his ripped jeans as he stood up, leaned against the railing of the seats directly in front of us. Some things you wish you could unsee.' Josh Witkowski: 'I've seen guys openly selling weed while moving car to car.' NEXT QUESTION: What policy or law noticeably improved your community? KEEPING UP WITH THE DELEGATION — Congressman Mike Quigley (IL-05), a member of the House Intelligence Committee, criticized Donald Trump's social media attacks on President Barack Obama, saying Trump's use of an AI-generated video of Obama was 'deeply unsettling,' according to a statement. Earlier this week, Trump accused Obama of 'treason' over an investigation into Russian influence in the 2016 election. THE NATIONAL TAKE — Appeals court finds Trump's effort to end birthright citizenship unconstitutional, by The Associated Press. The move drew praise from Illinois Atty. Gen. Kwame Raoul. 'The universal injunction was both necessary and appropriate. As a birthright citizen, I will not stop fighting to protect the constitutionally protected right to citizenship that is unquestionably guaranteed to all children born in this country to parents who are not yet naturalized citizens.' — 'POTUS is clearly furious': White House is frustrated by all-consuming Epstein coverage, by POLITICO's Rachael Bade — Trump's 'massive' deal with Japan is giving US automakers heartburn, by POLITICO's Daniel Desrochers and Chris Marquette — Supreme Court green-lights Trump's firing of consumer product safety regulators, by POLITICO's Josh Gerstein TRANSITIONS — Adrienne White-Faines has been named president and CEO of Planned Parenthood of Illinois. She starts in September. Most recently White-Faines was chief strategy officer for the American College of Physicians. The Tribune's Lisa Schencker has more. — Kara Spak is now media senior director at the 120/80 Group, a digital health marketing firm. She was a Northwestern hospital media relations manager and earlier a Sun-Times reporter. EVENTS — Saturday: State Rep. Adam Niemerg's free fishing derby for kids ages 4 to 15 will be held at Sam Parr. Details here TRIVIA WEDNESDAY's ANSWER: Congrats to Mary Kay Minaghan for correctly answering that a traditional 'Chicago handshake' is a shot-and-a-beer combo of Heileman's Old Style and Malört. TODAY's QUESTION: What Chicago location was designated a National Historic Landmark in 2006? Email your answer to: skapos@ HAPPY BIRTHDAY State Rep. Abdelnasser Rashid, former Chicago City Treasurer Kurt Summers, Lockport Township Supervisor Alex Zapién, entrepreneur Michael Ferro, Holtz Industries President James Straus, WGN Radio's Anna Davlantes and Global Strategy Group's Nicole Jaconetty -30-


Politico
43 minutes ago
- Politico
Capitol agenda: Thune dishes on his 2026 midterms strategy
John Thune's approach to the midterms is a shaping up to be a mix of Donald Trump and Mitch McConnell. In an interview previewing his 2026 strategy, the South Dakota Republican told POLITICO that he's already 'coordinating closely' with Trump, including giving recommendations on potential candidates. The majority leader's goal is to make sure that the Senate GOP campaign wing is 'rolling in the same direction' as Trump and Trump's political arm. But Thune said he's willing to intervene in contested GOP primaries where he thinks a candidate would be doomed in the general election — an old McConnell tactic that sometimes annoyed others in the party. 'We're all about preserving and protecting and expanding our majority,' Thune said. 'So we want the best candidates on the field.' Thune has three states so far where GOP senators are retiring: Alabama, Kentucky and North Carolina. Each is likely to have a competitive primary that pits factions of the party against each other. In North Carolina, Thune said in Wednesday's interview that he had spoken with Lara Trump about the seat being vacated by GOP Sen. Thom Tillis. Thune said the president's daughter-in-law 'would be great' before dropping the caveat, 'if she were to decide to do it.' Thune hinted we could hear more soon. Four GOP senators granted anonymity to speak candidly said Wednesday evening they didn't expect her to jump in. On Thursday, POLITICO broke the news that Republican National Committee Chair Michael Whatley was entering the race and that Lara Trump had opted out. Thune's potential primary problems aren't limited to seats where Republicans are retiring. They're facing a likely jam-packed primary field in Georgia, where Gov. Brian Kemp passed on challenging Democratic Sen. Jon Ossoff, whose own party is bullish about keeping his seat. Thune said he believes the state is a 'real pick-up opportunity' but that Republicans 'need a good candidate.' Thune also has work to do in Iowa, with some of his members concerned that GOP Sen. Joni Ernst might retire. Thune believes she'll run, and in the meantime has 'encouraged her to, and told her we'll do everything we can to help her' if she does. Then there's Texas. Thune said it 'remains to be seen' if Trump will get behind Sen. John Cornyn, who is facing off against MAGA favorite Ken Paxton. Thune said Trump 'wants to see how the race plays out.' The majority leader said he believes Cornyn would be 'by far the best general election candidate.' Asked about Paxton's recently-announced divorce — with his wife citing 'biblical' reasons for the breakup — Thune said voters will realize 'there's a real contrast between these candidates, both in terms of experience and accomplishment, but also I think that those character issues are always a factor.' That's not all Thune told us. He made news on Mike Johnson and Jeffrey Epstein, his CR strategy and more that POLITICO Pro readers got in an exclusive Q&A. What else we're watching: — About that shutdown deadline: Thune said Congress will need to pass a short-term funding bill to prevent a shutdown in October. His plan is to get signed into law as many of the 12 appropriations bills as possible, then use the patch to fund the rest of the government. — Epstein issue poised to resurface: Speaker Mike Johnson has been putting out fires in his conference related to the Jeffrey Epstein files and sent the House home early for recess. Some of his members have warned that they'll try to force votes upon their return if the administration doesn't deliver more documents. — Cooper watch: Former North Carolina Gov. Roy Cooper is expected to announce a campaign for Senate as soon as Monday, according to two people familiar with his decision. The announcement would be enthusiastically welcomed by state and national Democrats as North Carolina represents one of the few offensive opportunities for the party. Meredith Lee Hill and Elena Schneider contributed to this report.
Yahoo
an hour ago
- Yahoo
Texas AG claimed three homes as primary residence. Democrats are being probed for similar issue
WASHINGTON (AP) — Texas Attorney General Ken Paxton and his wife, Angela, are longtime owners of a $1.5 million house in a gated community outside Dallas. In 2015, they snapped up a second home in Austin. Then another. The problem: Mortgages signed by the Paxtons contained inaccurate statements declaring that each of those three houses was their primary residence, enabling the now-estranged couple to improperly lock in low interest rates, according to an Associated Press review of public records. The lower rates will save the Paxtons tens of thousands of dollars in payments over the life of the loan, legal experts say. The records also revealed that the Paxtons collected an impermissible homestead tax break on two of those homes, and they have routinely flouted lending agreements on some of their other properties. It is a federal and state crime to knowingly make false statements on mortgage documents. It's also against the law in Texas to collect a homestead tax break on two separate properties. Violating the terms of a mortgage could allow lenders recourse to seek full payment of a loan, according to legal experts. Mortgages have become political fodder The mortgage revelations are likely to become fodder in the Republican primary for a U.S. Senate seat in which Paxton is seeking to topple the incumbent, John Cornyn. The situation is further complicated by the Trump administration's criminal pursuit of Democrats over similar issues. President Donald Trump has accused two of his political foes — Sen. Adam Schiff of California and New York Attorney General Letitia James — of committing mortgage fraud, though legal experts say the circumstances are less serious. The Democrats have long been objects of Trump's ire for having led various investigations into his conduct as president and as a business executive. Paxton, himself, has weighed in on the investigation of James, saying he hoped authorities would look into her conduct. 'I hope that if she's done something wrong, I hope that she's actually held accountable,' he told supporters last month. The Justice Department has launched a criminal investigation of James, FBI director Kash Patel told Fox News in May. The department received a criminal referral for Schiff last week from the Federal Housing Finance Agency, its director William Pulte confirmed in a social media post. Neither the Justice Department nor the FHFA responded to an inquiry about whether they may investigate Paxton, too. James' attorney, Abbe Lowell, urged the Trump administration to investigate Paxton instead. 'If this administration was genuinely interested in rooting out fraud, it appears they should stop wasting their time on the baseless and discredited allegations against the New York Attorney General James and turn their attention to Texas,' said Lowell, a prominent Washington attorney whose past clients include Hunter Biden, Ivanka Trump and Jared Kushner. In a statement, Marisol Samayoa, a Schiff spokeswoman, blasted the criminal referral as 'a transparent attempt' by Trump 'to punish a perceived political foe who is committed to holding him to account.' She added that Schiff disclosed to his lenders that he owned another home that was a principal residence and sought guidance from an attorney. It is unlikely that Paxton, a staunch Trump ally, will face the same federal scrutiny as James and Schiff. It's equally doubtful that Paxton will face much legal trouble in Texas: His office is one of the primary agencies tasked with investigating allegations of mortgage fraud. Ken Paxton and his spokesman did not respond to multiple requests for comment. Angela Paxton, who is a state senator in Texas, did not respond to requests made through her office. Three of the Paxtons' homes are each listed as a primary residence Documents reviewed by the AP show the Paxtons hold mortgages on three homes — one in suburban Dallas, two in Austin — that are each listed as their primary residence. The designation comes with a considerable financial upside. Interest rates on primary homes are significantly lower than those for mortgages on secondary homes or investment properties, saving buyers tens of thousands of dollars — if not more — over the life of a loan. Making a case against Paxton would require "establishing both that Paxton was aware of the contents of the mortgage document, and also that he was actively aware at the time that he signed it that this was not going to be a primary residence,' said Jennifer E. Laurin, a professor at the University of Texas Law School in Austin. Legal experts say it is possible that the Paxtons' lenders prepared the documents and that the couple did not carefully review them before signing. Even if that were the case, some legal experts say that Paxton, as an attorney and Texas' top law enforcement officer, ought to have known better. 'If he filled out lender documents knowing that they were false, then that is a false statement to obtain a mortgage on favorable terms. That would be actionable,' said Arif Lawji, a veteran Texas real estate attorney. 'He's the chief enforcement officer. You have to be accountable for stuff you do that's wrong.' Paxton collected two 'homestead' tax breaks Low interest rates are not the only perk the Paxtons secured, records show. In 2018, they simultaneously collected homestead property tax breaks on their family's home in suburban Dallas, as well as on a $1.1 million home in Austin, property records and tax statements show. A homestead tax break is a property tax reduction that a homeowner is only eligible to collect on one property that is also their primary home. The suburban Dallas home is where the Paxtons' family has long resided. It's where Ken and Angela Paxton are registered to vote. It is located in the state Senate district that Angela Paxton represents in the Legislature, which Ken Paxton held before his election in 2014 to be attorney general. It's also where Ken Paxton's Senate campaign website until recently said he lived. Lawji said the Paxtons' simultaneous collection of two homestead tax breaks appears to be a more clearcut violation. That is because one must obtain a form and submit it to taxing authorities to receive such a tax break, making it an 'intentional act,' he said. The tax break was worth several thousand dollars, a fact that confounded real estate lawyers. 'Why would you try to do all of this,' Lawji said, 'when you are the attorney general? That's a bigger question to me than the money, when you are AG and have to enforce this law.' Paxton may have violated mortgage terms by renting properties Separately, land records indicate the Paxtons may have violated the terms of at least two mortgages on other houses they own. The mortgage on a home in College Station, Texas, says the property is for the Paxtons' exclusive use and cannot be rented out. Doing so would be grounds for terminating the mortgage, the document states. The home has been listed for rent on real estate websites on-and-off since at least 2022. Ken Paxton also holds a $1.2 million mortgage on a '5 bedroom luxury cabin' in Broken Bow, Oklahoma, that is for rent on Airbnb and other short-term rental sites, records show. The property's mortgage stipulates that it cannot be rented out. Representatives for Stifel Bank, Cornerstone Home Lending and Benchmark Mortgage, which issued the mortgages in question, did not respond to requests for comment. Schiff and James come under fire from GOP Paxton's real estate dealings are in many ways distinct from those of James and Schiff, the Democrats targeted by the Trump administration. The investigation of James centers on forms she signed in 2023 while helping a niece buy a home in Virginia. One form stated that James intended to occupy the home as her 'principal residence.' But in other documents, the New York attorney general made clear she had no intention of living there. An email to the mortgage loan broker two weeks before she signed the documents stated the property 'WILL NOT be my primary residence.' 'As I've said from the beginning, if prosecutors want to know that truth about Attorney General James' mortgage applications, we are ready and waiting with the facts,' said Lowell, James' attorney. For over a decade, Schiff owned homes in Maryland and California, the state he represents, that were both designated as his primary residence. In 2020, then a congressman, Schiff designated his Maryland property as a second home — a step Paxton has not taken. Paxton has faced legal and political challenges Paxton's real estate dealings are not the first time he has drawn scrutiny for his conduct while in office. Before his election as attorney general, Paxton, then a state senator, admitted in 2014 to violating Texas securities law and paid a fine. He spent roughly 10 years under state indictment on securities charges while serving as attorney general. The charges were eventually dropped in 2024. Other alleged misdeeds in office led to his impeachment by Texas' GOP-controlled House in 2023. He was acquitted in a trial by the Senate. Angela Paxton did not cast a vote in his impeachment trial and recently filed for divorce, citing Ken Paxton's infidelity and other 'recent discoveries.' She did not elaborate. What ultimately unleashed the impeachment push was Paxton's relationship with Austin real estate developer Nate Paul, who pleaded guilty this year to one count of making a false statement to a financial institution. In 2020, eight top aides in Paxton's office told the FBI they were concerned the state's top law enforcement official was misusing his office to help Paul over the developer's unproven claims about an elaborate conspiracy to steal $200 million of his properties. The House impeachment managers accused Paxton of attempting to interfere in foreclosure lawsuits and issuing legal opinions to benefit Paul. They also alleged that Paul employed a woman with whom Paxton had an affair in exchange for legal help and that the developer paid for expensive renovations to the attorney general's home in Austin. That would be the same house that he declared in mortgage documents was his third primary residence. Solve the daily Crossword