ALBANY — If New Yorkers want their county property taxes cut by 50 percent or more, there could be one quick way to do it.
New York would just have to figure out a way to pick up the $8 billion tab.
A new report this week said if the state paid for the counties' share of Medicaid costs, it would provide $8 billion in relief to county governments — an average of a 27 percent reduction in county taxes.
For some counties, their share of the state's $70 billion Medicaid program takes up as much as 79 percent of their total property tax revenue.
So if the state paid the full cost — as counties for years have lobbied for — it could provide direct property-tax relief to homeowners in a state with among the highest taxes in the nation, the report from the Empire Center, an Albany-based fiscally conservative think tank said.
"This system puts a disproportionately high burden on localities with poorer residents and weaker tax bases," the report's author Bill Hammond wrote.
"Even for wealthier counties, Medicaid is one of Albany’s most onerous unfunded mandates — a major, ongoing expense over which local officials have no control."
For decades, counties have complained about having to pay a portion of the cost for the health insurance program for the poor and disabled. And New York has the largest and most generous Medicaid program in the nation.
Medicaid in New York remarkably covers more than 6 million New Yorkers, or about one-third of the population, the report found.
Counties have argued that the state and federal governments control Medicaid, yet counties are stuck with paying a portion of the bill — which few states require.
Without the Medicaid tab, counties said they would be able to lower residents' tax bill.
The state Association of Counties said the state's decision in 1966 to fund Medicaid in part with local taxes "was the singular most costly mistake that the state has ever made.
The group's executive director Stephen Acquario said a state takeover over Medicaid costs would provide true, long-term property tax relief.
"Local government officials know that property taxes are too high, and state mandates requiring the cost of Medicaid and other state programs on the local tax base are the primary reasons for that burden," he said.
But the savings from a state takeover of Medicaid would largely benefit New York City, which has the biggest Medicaid participation.
Of the $7.6 billion now paid by local governments, $5.3 billion comes from New York City, the report said.
Some lawmakers have pushed for a state takeover of Medicaid costs, but it hasn't gained much traction at the state Capitol.
In 2006, then-Governor George Pataki got the Legislature to cap the growth of counties’ Medicaid expenses at 3 percent per year, shifting more costs to state government.
Gov. Andrew Cuomo took a larger step in 2012 when he and lawmakers agreed to freeze the local share of Medicaid costs as of 2015.
The 2012 law has been significant, saving local governments $3.3 billion a year.
Counties once paid about 25 percent of Medicaid costs while the state paid 25 percent and the federal government paid the other half.
Now counties pay about 12 percent of the total Medicaid budget.
“All growth in the Medicaid program for counties is being absorbed by the State, helping local governments manage their budgets and reduce the burden placed on property taxpayers," said Morris Peters, spokesman for the state Budget Division.
For the state to take on another $8 billion in Medicaid costs would be a huge undertaking, particularly as the state faces budget shortfalls in the coming years.
The Empire Center said the state could consider a change in the local sales-tax structure to pay for a state takeover of Medicaid, increasing state taxes or finding new savings in the program.
Another option could be to phase in a takeover during a decade or more, or still require New York City to pay for a portion of the cost.
"Regardless of how approached, such a takeover would represent a major change in a program affecting the lives and livelihoods of millions of New Yorkers," the report warned.
"The cost and complexity of the task should not be underestimated, and all options would require difficult trade-offs."