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Counties respond to Hochul plan concerning federal Medicaid funding

The New York State Association of Counties is warning of possible tax hikes and service cuts if the plan accepted.

BUFFALO, N.Y. — As budget talks continue in Albany with an April 1 deadline, there is something new this year under discussion, which may affect property owners here and around the state. 

2 On Your Side looked more on potential impacts of Gov. Kathy Hochul's plan to change the flow of federal Medicaid funding from the counties back to state government. 

New York State Senator Sean Ryan bluntly puts it this way: "It's going to blow a budget hole in almost every county in New York State, so we need to fix it during this budget process. We can't go back to the days of you know we're going to save money on the state by pushing the costs down to the local taxpayer."    

It would sweep or "intercept," as the New York State Association of Counties puts it, up to $2.9 billion over the next four years into state government from federal funding designated by Congress to help counties handle Medicaid spending under the original Obama Affordable Care Act.

That association's Executive Director Stephen Acquario warns: "If this shift of the magnitude of what's being proposed is actually in the final state budget, we're looking for anywhere between 5 and 10 percent of a property tax increase for any individual county across the state. Now that doesn't mean that counties are going to actually raise those property taxes. That's a power of last resort."    

The association estimates the counties and New York City could collectively lose $625 million this year. 

Erie County's potential budget hole is at $15 million to start, and then up to $25 million each in future years. That could mean options, beyond the worst-case property tax hike, of cuts in county services for veterans, seniors, and road work, or dipping into municipal "rainy day" fund balance, as Erie County would do.

Erie County has a budget surplus for this year to cushion the blow, but again, there are concerns for coming years and other counties in the region may be worse off. County officials say the state has also pulled back millions in other funding in past years. 

Acquario added: "We thought we were well beyond this type of state gamesmanship with Medicaid. This is the same proposal, in fact, the exact same proposal, advanced by Governor Cuomo in 2019, just before the pandemic."

State officials, in a three-page reply, stress the state has taken over more Medicaid costs since 2015, state investments in health care, and other spending assistance to counties.

Their official statement reads:

"Governor Hochul understands the financial burdens that are placed on county governments, which is why the FY 2024 Executive Budget includes nearly $6.2 billion in major local aid programs for counties outside of New York City building on over $30 billion in funding to counties in major local aid programs and other assistance since 2018.

"Additionally, as a result of the State’s recent actions to increase enforcement and compliance of taxes due from online sales, counties and local governments have benefitted from an additional $1.37 billion in local revenue since 2020. Despite taking over the growth of Medicaid in 2015 creating total savings of $37.9 billion for all counties and New York City, the State has not been adjusting the amount of enhanced federal funding the State retains for Medicaid expansion with the State assuming almost $1 billion annually in what would otherwise be local costs.

"Given the Governor's historic healthcare investments, the State is utilizing the available federal dollars to fund critical investments in Medicaid to ensure access, promote equity and stabilize the health system serving New York's most vulnerable. We will continue working with county leaders, other local government leaders, and the legislature as we finalize a budget that meets the needs of all New Yorkers.”   

And again, Senator Ryan emphasized: "That will be the hope, as we enter into three-way negotiations, is to remind the budget director of the costs of pushing this problem onto the county."

Governor Hochul has also previously suggested that with her budget's record setting funding boosts to education, local school districts should try to cut their property taxes, which they estimate at being half our local tax bills.

But one knowledgeable school source told 2 On Your Side that there's no way that would happen due to the districts' costs with extra programs and needs for students.    



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