Shockingly, New York is the only state in the nation that requires New York City and its 57 counties to pay a substantial portion of Medicaid — $7.6 billion, of which $2.2 billion is for counties outside New York City, and $5.4 billion for New York City.
The 63 counties of New York State are further handicapped by other State unfunded mandates – a haphazard patchwork of statutes and regulations the State requires the counties to fund. In addition, “…the state reduced its contribution to joint state/local expenditures, while it simultaneously reduced state Aid to Municipalities (AIM) funding, forcing localities to either increase property taxes or cut services” (Fiscal Policy Institute).
The result is that New York has the highest county property taxes in the nation, which drives businesses out of the state and stifles business growth. No other state comes close:
The State, as it did in the 1967 Constitutional Convention, must pass a constitutional amendment requiring the State to take over the costs of Medicaid and ending all local shares. Our specific suggestion is that the local share be phased out over 8 years, which means the state must find approximately $900 million per year out of its approximately $160 billion budget.
Currently, counties outside New York pay $2.2 billion per year in Medicaid costs. Eliminating this requirement would mean a dramatic reduction in property taxes, particularly in Western New York:
The solution to raise the funds to eliminate the Medicaid mandate is not to cut benefits. A dramatic decrease of 49.1% in local county property taxes may require a small increase in income taxes. However, properly done, the lowering of the county property tax will lead over time to local business growth and to significant increased revenue for the state.
Another possible idea would be former Lt. Gov Richard Ravitch’s suggestion (see below) that the state is disproportionally burdened, and should pursue a much higher percentage of reimbursement from the Federal Government than the low 50s it receives now. For instance, Oregon gets 73%, Michigan receives 69%, while Ohio gets 67%.
In the new constitutional amendment, in addition to centralizing Medicaid, the State must also lighten the burden of other mandates as Oregon has:
Except as provided in list below, when the Legislative Assembly or any state agency requires any local government to establish a new program or provide an increased level of service for an existing program, the State of Oregon shall appropriate and allocate to the local government moneys sufficient to pay the ongoing, usual and reasonable costs of performing the mandated service or activity.
Taking a comprehensive approach to banning unfunded mandates would help stop Albany’s continued cost shift where the buck is continually passed onto the backs of local governments, school districts and taxpayers. This would free up the counties to use the proceeds from their property tax to lower taxes on their citizens, invest in local services and grow their economies.