Significant federal cuts are expected to hammer some of New York’s economic development programs meant to strengthen the workforce, lawmakers said Thursday, as state agencies prepare for a difficult budget cycle.

State assemblymembers held a public hearing in Albany on Thursday to examine economic development programs that could be on the chopping block. But the impact on those programs remains unclear with the ongoing federal government shutdown, and Congress’s passage this summer of HR-1, or the Big Beautiful Bill.

“Let’s not focus just on what we’re doing, but what the federal government is doing to us,” Gov. Kathy Hochul said Thursday morning in New York City — blasting cuts that will slash mass transit and the state’s security apparatus.

Meanwhile, Empire State Development President and CEO Hope Knight defended the state’s workforce development programs to lawmakers.

“We see some reductions in some of our programs, but are just awaiting more discussion with our state and federal partners to better understand what the impact will be,” Knight said.

Empire State Development and other agencies are waiting on clarity from Washington to understand the magnitude of federal cuts, but programs that are set to expire could be among the first to see reductions.

“We’ll just have to continue to monitor to figure out how we might support these businesses if that funding were to go away,” Knight said.

That includes millions of dollars for the federal Manufacturing Extension Partnership, which sunsets at the end of the year.

Manufacturers Alliance of New York President and CEO Randy Wolken said that funding is critical for the success of small and mid-sized companies across the state.

“That kind of impact for small and medium manufacturers, without the kind of help from the MEPs networks, could make it more difficult to secure the resources they need to make products,” he told Spectrum News 1.

Wolken said work is on schedule for Micron to build a new factory in Syracuse to build semiconductor chips, and will not be affected by spending changes.

Assembly Small Business Committee chair Marianne Buttenschon said the state must focus on more workforce housing — even with less aid from Washington.

“It’s great to tell someone, ‘We need you, we want you to work within our community,’ but then we forgot to provide you a place to live,” said Buttenschon, a Democrat from Marcy in Oneida County.

Buttenschon said state agencies must assess which programs and regulations are impeding small business growth as they make their budget requests.

But businesses are expected to feel the sting of less federal aid for workforce training, agriculture and millions of dollars slashed from scientific research — impacting innovation programs at Cornell University and others statewide.

“We’ve really moved forward in biosciences and agriculture, and it’s actually kind of scary to think what the results of those cuts might be,” said Assemblyman Al Stirpe, who chairs the Economic Development, Job Creation, Commerce & Industry Committee. “It’s more than economic. It’s going to be thousands of jobs…but the lack of the products that come out of the research that’s done that help people who really need something to save their lives — it’s disconcerting for sure.”

Stirpe said with changes to SNAP benefits or food stamps, lawmakers will have to prioritize spending on health and education to keep people alive.

“Other than that, you’re going to just have to throw everything up in the air and whatever lands, that’s what you’re going to do,” he added.

Stirpe, a Democrat from Cicero, said it’s time for the state to impose higher taxes on the rich to make up a portion of the difference.

But Republican lawmakers like Assemblyman John Lemondes argue that it will continue to drive more people out of New York — one of the nation’s leading states for outmigration — and hurt its workforce even more.

“We’re losing businesses, we’re losing workers… We are chasing our population away, yet at the same time, we’re pretending that the circumstance doesn’t exist,” Lemondes said. “We’re ignoring it.

“We can add program after program after program and add money to all kinds of things, but if we’re chasing our No. 1 asset away — people, human capital — we’re not accomplishing anything,” Lemondes added. “The boat’s getting more holes in it, and we’re not plugging them fast enough.”

Lemondes recounted testimony from witnesses Thursday who said other states integrate services for businesses so it’s easier to determine what entrepreneurs need and how to access it.

“Everybody’s happy and it’s much more efficient,” he said. “We don’t have that here.”

Business leaders have long criticized the state spending billions of dollars per year on workforce development programs to spur economic growth, arguing there’s a lack of return on investment.

ESD President and CEO Knight pushed back on that claim Thursday, arguing New York’s Gross Domestic Product has increased 20% and the state has 800,000 more private sector jobs in the last four years since Gov. Hochul took office, or an increase of 10.6%.