On August 12, New York Governor David Paterson signed a budget bill that incorporates the language of S6725A. See the text of that bill here.
The new law provides that if the U.S. Census Bureau counts prisoners at their prison address in the 2010 census, then state prison authorities must determine the pre-incarceration address of each prisoner, and report it to another state agency. That other state agency will then calculate the population of each locality, under the assumption that each prisoner lives at his or her residence prior to being imprisoned. If the prisoner lived outside New York state before being incarcerated, he or she won’t be counted at all, for purposes of New York state redistricting.
Because U.S. House and state legislative districts must have approximately equal populations, the result of this policy will be to decrease the population (for redistricting purposes) of a few low-population upstate counties that have tens of thousands of prisoners. Thanks to Bill Van Allen for this news and for providing the bill number.