The explosive growth in Medicaid spending in recent years has not only jeopardized state finances, but those of localities as well. New York is one of only a small number of states that requires counties to pay a share of Medicaid costs (about 20 percent on average). However, counties are given no authority to choose which medical services to provide under their locally administered programs, as all such decisions are made in Albany.
Medicaid costs to counties soared 32 percent on average between 1999 and 2002 – and up to 70 percent or more in some cases – and double digit growth is expected in each of the next two years.
In some cases, counties’ entire local property tax levy is consumed by Albany-mandated Medicaid costs. Counties have little choice but to pass these higher costs onto local property taxpayers in the form of higher tax levies or reduced local services.
Even as long-term reforms are contemplated for the $40 billion Medicaid program, it is clear that county governments need immediate relief to help avert property tax increases that could cripple our state’s economy.
My Assembly colleagues and I have offered a plan that would help ease the heavy tax load on citizens. The first part is to provide emergency relief to counties through a $200 million Emergency Medicaid Relief Program that should be part of the new state budget. These funds, to be distributed to counties, could be used to reverse recent tax hikes and restore cuts in vital services. This relief would save Fulton County $1.7 million; Herkimer County $1.6 million; and Otsego County $1.1 million.
The other segments of our plan that would give local governments millions in fiscal relief are:
- Five-year state Medicaid takeover – The best relief for local taxpayers must include a gradual state takeover of the local share of Medicaid program costs. I continue to believe the state has an obligation to cover the costs for programs that it mandates, like Medicaid.
- Fighting Medicaid fraud – Medicaid fraud is believed to cost state and local governments hundreds of millions of dollars each year. Counties that aggressively seek out fraud would get to keep a share of recovered funds, for use in the county’s tax-relief or general funds.
- Ban unfunded mandates – Albany-ordered mandates add to the cost of local government in New York, which means higher property taxes for local residents and businesses. I support a ban on all new unfunded mandates on local governments.
- Pension reform – Local municipalities will be socked this year with 12 and 16 percent increases in their contribution requirements. These higher costs must, by current law, be shouldered by local taxpayers. I support reforms that will lessen the burden on local taxpayers for these unexpectedly high contributions.
State government should recognize the enormous negative impact that higher taxation places on the state’s economy and more importantly on local economies. If our plan is implemented, taxpayers would be released of an ever tightening albatross around their necks.