Some state lawmakers said they’ll consider using opioid settlement dollars to backfill federal cuts to recovery programs in next year’s budget, while others plan to fight hard for other solutions to avoid tapping into the fund.
Each year, the state receives millions of dollars from lawsuits against opioid manufacturers and distributors that must be spent on addiction prevention. Facing a difficult budget cycle next session, it’s possible the Legislature could decide to use that money to ease the pain of federal cuts.
“I don’t necessarily have an objection to having the Opioid Settlement Fund money used as long as it’s for treatment of substance use disorder and doesn’t go into the general functions of government,” said Assemblyman Phil Steck, a Schenectady Democrat.
Steck, who chairs the Assembly Alcoholism & Drug Abuse Committee, says he’s not opposed to using settlement dollars to close budget gaps as the federal government pulls funding from Medicaid, housing, treatment for substance-use disorder and other services.
State law requires opioid settlement funding to be spent in addition to, and not replace, existing state programs. But it doesn’t prohibit the money from being used to supplant federal funding for addiction services.
The state Opioid Settlement Fund Advisory Board publicly clashed on the issue this summer, but failed to take an official position in its annual report of recommendations sent to state leaders earlier this month — leaving the question wide open next session.
The idea has angered several board members, who also fought with Steck about the idea last year.
“[Board members] are saying, ‘This is our money,’ but I said, ‘your money can be used to keep these programs going when the federal money is not there,’ ” the assemblyman said.
Overdose deaths are on the decline, but remain elevated in poor and minority communities.
Assembly Health Committee chair Amy Paulin said treatment and harm-reduction programs cannot be cut because they save lives.
She would not rule out using the settlement dollars as a possible resolution to backfill the critical federal aid.
“Protecting treatment and harm-reduction programs that save lives every day must remain a top priority,” Paulin, a Scarsdale Democrat, said in a statement Friday. “While I understand that opioid settlement funds must be used within the legal guardrails that prevent supplanting state dollars, we should do everything possible to ensure we don’t lose or weaken existing services. These programs are essential to reducing overdose deaths and we can’t risk losing them.”
But Paulin and Steck’s counterparts in the state Senate disagree.
“I do think it’s kind of overstepping in saying let’s pull money from here when we should always be trying to keep what we have and bring in more money,” Sen. Nathalia Fernandez told Spectrum News 1.
Fernandez, who chairs the Senate Alcoholism & Substance Use Disorders Committee, said there are ways for the state to avoid cutting harm reduction programs.
She carries two bills she wants in the budget to generate money and leave settlement dollars alone. One would create a 5-cent sales tax on alcohol, and the other would redirect opioid excise tax dollars to be used for services.
“I’m confident in these bills in being able to provide what we need and not having to tap into the opioid settlement dollars,” Fernandez said.
Senate Health Committee chair Gustavo Rivera is also firmly against using opioid settlement funds to replace less aid from Washington.
“This coming budget will be difficult as we navigate significant reductions in federal funding,” Rivera said in a statement Friday. “I stand with Sen. Fernandez that our commitment to addressing behavioral health issues of New Yorkers should not waver in the face of failures by the Trump administration and congressional Republicans. Cutting funding for behavioral health services will make all new Yorkers less safe and secure and I remain committed to finding solutions to prevent that, including taxing the wealthy.”
A spokesperson with the state Office of Addiction Services And Supports said Friday that the department is still reviewing the board’s report and recommendations.
“At this time, no decision has been made on how the recommendations for the coming fiscal year will be implemented,” OASAS spokesman Evan Frost said. “Opioid settlement funding will continue to be used to support various prevention, treatment, harm reduction and recovery initiatives across New York state designed to address the impact of the opioid and overdose epidemic. Once the board makes its recommendations every year, we review their report and decide how to best implement these recommendations.”
The department would not specify if it is considering using the settlement dollars to backfill cuts whenever necessary, or just next year.
Gov. Kathy Hochul will set the stage for the debate when she releases her executive budget proposal in January.
The governor, likewise, will not rule out using settlement dollars to keep harm-reduction and recovery programs whole.
“The governor is committed to making sure that New Yorkers struggling with addiction are met with strong support, resources and compassionate care,” a spokesperson for Hochul said. “New York state has funded the opioid settlement funds more than any other state in the country, nearly $400 million in total. The governor will continue to work with our partners in the legislature to wipe out the opioid epidemic.”
The state will have $310 million sitting in the fund when the state fiscal year ends in March, according to the Budget Division’s mid-year update for FY 2026.
Most of settlement dollars are given to localities in multi-year contracts, which means while some of the funding has been paid out, other money remains in the account and is distributed over the length of the contract, according to OASAS.
“This money has been awarded, and is being paid out through the agreed upon payment schedules per the contracts,” Frost said. “There are no delays on getting awarded money out the door.”
New York state is on track to receive $2.5 billion in settlement funds through 2040, but drug policy experts and advocates have been furious with the slow rollout of the funds.
“The state has not answered the following questions that the board’s been asking from the beginning,” said Rob Kent, president of Kent Strategic Advisors LLC. “How much is available? How much has been spent? How much is committed like for multi-year contracts for awards that were issued?…The law says they can’t use the money to pay for current things or for other purposes. They have to use it to increase services. If you don’t have that basic information, I just mentioned, how do you know whether they’re following the law?”
The opioid settlement advisory board gives recommendations to state leaders each fall, but ultimately cannot direct how the money is spent.
New York state has seen a drop in overdose deaths of more than 30% in the 12-month period ending in April of this year, according to OASAS.