Property Tax Relief DETAILS
Property Tax Relief
The Medicaid Mandate is a multibillion dollar burden on local business growth. Let’s fix it and lower county proper taxes 49%.
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 62 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.
- The recent Senate bill included the Faso-Collins Amendment, which would end the Medicaid funding formula and make the state pick up Medicaid’s cost to the counties. According to the New York Times, Governor Cuomo “intended to force counties to include a “Faso-Collins Federal Tax” on their property tax bills. The revenue to be raised would be equal to the $2.3 billion that would be lost because of the amendment, which he called a “reckless and dangerous political maneuver.”” –Lisa Foderaro, The New York Times, “Senate Health Bill Could Set off a Tax Tussle in New York,” July 3, 2017.
- Making the State pay the full cost would reduce county property taxes a whopping 49.1%!
- New York City spends 9% of its budget on Medicaid. Chicago, Los Angeles, Miami and the other major cities in the country pay nothing. By eliminating New York City’s unique Medicaid allocation, it will free up 5.4 billion dollars for other city initiatives.
- Of the 50 highest property tax burdens in the nation, 30 are in counties of Upstate and Western New York.
- According to the New York State Association of Counties, in 2015, nine state mandates consumed 99 percent of the property taxes levied by counties outside New York City.
- The practice of using local revenues to subsidize the State Budget is the number one reason why New York’s property taxes are the highest in the nation. – The New York State Association of Counties, NYSAC Real and Permanent Mandate Relief White Paper.
- “There should be no higher priority for NY political and civic leaders than to seek a share of the Federal contribution to Medicaid that bears a rational relationship to the state’s poverty levels.” –Richard Ravitch, 2010 Lieutenant Governor’s Report
- Governor Mario Cuomo advocated it, but his son Andrew has not put the full support of his office behind it yet.
- “New York’s policy of requiring counties and New York City to pay a sizable share of Medicaid costs is out of step with other states and results in an inequitable distribution of Medicaid costs among New York taxpayers.…the burden of the local share of Medicaid costs falls hardest on the poorest counties.” —Citizens Budget Commission
The most recent data from the counties outside New York City show the terrible burden unfunded mandates have become:
In 2016, New York has one of the highest effective real estate tax rates in the country when property taxes were measured as a percentage of home value. These killer property taxes can be attributed to the costly, budget-busting unfunded mandates handed down from the state to municipalities and school districts.
Local Share for Medicaid
Local Share has an inglorious fifty-year history.
In 1966, Governor Rockefeller and the Legislature decided to allocate up to 50% of the State’s share to NYC and our counties.
The next year, the 1967 Constitutional Convention proposed: “All Medicaid costs not paid for by the National Government will be borne by the State Budget. There will be no local share.” Unfortunately, the suggested new Constitution was voted down.
In 2011, a working group of Cuomo’s Medicaid Redesign Team proposed: “The State should…implement a plan…that phases out reliance on local taxes [property taxes].” But Cuomo cut out this recommendation.
All these years later, nothing has changed. New York State is now ALONE in passing to local communities the strangling burden which kills economic growth.
Lt. Gov Richard Ravitch’s Suggestion
The State must pursue federal action on issues where New York is disproportionately burdened or constrained in its efforts to control costs.
- There should be no higher priority for New York political and civic leaders than to continue to seek a share of the federal contribution to Medicaid that bears a rational relationship to the State’s poverty levels and its high cost of health care….
The FMAP Formula: Maximizing federal funding has been especially costly to New York because the rate of reimbursement it receives from the federal government—its Federal Medical Assistance Percentage, or FMAP – is relatively low…with an individual state’s FMAP based on the state’s average per capita income relative to the average per capita income of the country as a whole. Because New York has a high average income, it gets the minimum FMAP of 50 percent.
But two states the same average per capita income can have very different Medicaid needs. The first state may not have high-income people – but may not have many poor people, either. The second state, with the same average income, may have some people with very high incomes but many more people in poverty, who place large burdens on the state’s Medicaid program.
New York is the second type of state, one with great Medicaid needs – as well as high health care costs. New York’s share of the federal contribution to Medicaid does not properly reflect those needs and costs….
While any proposal to alter the calculation of the FMAP will be controversial, there is a broad consensus that the present formula is seriously flawed as a measure of Medicaid needs. Various options have been proposed for adjusting the formula to take more accurate account of these needs. One option would make some part of the FMAP dependent on the percentage of a state’s population with income below the federal poverty level. Another option would weight the poverty figure by age, to take account of the increased costs of serving the elderly poor. Still other proposals would weigh state health care costs. But there should be no higher priority for New York’s political and civic leaders than to continue seeking a share of the federal contribution to Medicaid that bears a rational relationship to the State’s Medicaid needs.
In addition to Oregon, as mentioned above, many states have constitutional or statutory restrictions on unfunded mandates:
- 12 States have Constitutional Restrictions on Unfunded Mandates: AK, AL, CA, HI, LA, MA, MI, MO, NH, NJ, NM, TN
- 11 States have Statutory Restrictions on Unfunded Mandates: CT, IA, IL, MT, NV, RI, SC, SD, VA, WA, WI
- 4 States have Constitutional and Statutory Restrictions on Unfunded Mandates: CO, FL, ME, OR
Let’s look at how a few other state constitutions have restricted unfunded mandates:
- (a) With respect to any provision of a law enacted on and after January 17, 1996, and with respect to any rule or regulation issued pursuant to a law originally adopted after July 1, 1996, and except as otherwise provided herein, any provision of such law, or of such rule or regulation issued pursuant to a law, which is determined in accordance with this paragraph to be an unfunded mandate upon boards of education, counties, or municipalities because it does not authorize resources, other than the property tax, to offset theadditional direct expenditures required for the implementation of the law or rule or regulation, shall, upon such determination cease to be mandatory in its effect and expire. A law or rule or regulation issued pursuant to a law that is determined to be an unfunded mandate shall not be considered to establish a standard of care for the purpose of civil liability.
Article VIII, Section II, paragraph 5 added effective December 7, 1995.
The Alabama Unfunded Mandate Amendment, also known as Amendment 7, was on the November 3, 1998, election ballot in Alabama as a legislatively referred constitutional amendment. It was approved. It proposed that no state law or executive order that required spending by a municipality or county could go into effect without either the approval of the local governing authority or the appropriation of necessary funding by the state legislature.
No other state funds Medicaid the way New York does.
There is no amendment in New York’s Constitution covering unfunded mandates.
“2016’s Property Taxes by State,” by John S Kiernan, WalletHub, March 7, 2016.
“Alabama Unfunded Mandate Amendment 7,” Ballotpedia.
“Counties Provide Roadmap To Unfunded Mandate Relief That Would Protect Taxpayers And Save Local Governments – Will Albany Have The Courage To Follow?” by Assembly Minority Leader Brian Kolb, September 7, 2012.
“Fiscal Policy Institute Analysis of the Executive Budget,” Fiscal Policy Institute, February 7, 2017.
Lieutenant Governor’s Report on Controlling Increases in the Cost of New York Medicaid, by Richard Ravitch, September 20th, 2010.
“Real and Permanent Mandate Relief,” New York State Association of Counties, December, 2015.
“Senate Health Bill Could Set off a Tax Tussle in New York,” by Lisa Foderaro, The New York Times, July 3, 2017.
“STOP Albany Coalition Launched to End Mandate Madness,” Westchestergov.com.
“Unfunded New York State and Federal Mandates and Mandatory Reporting Requirements,” Valley Central School District.