NYAPRS Note: More today on several emerging themes on how to solve New York’s $6.1 billion budget deficit, $4 billion of which is attributable to the Medicaid program.
Raising Revenues or Cutting Spending: The Governor doesn’t want to raise taxes, the Assembly leader does and explicitly includes increasing mental health sector revenues as a priority and the Senate leader remains uncommitted while labor unions come out strong for more funding to avoid doing more for less.
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Staking out Positions: Assembly Speaker Carl Heastie, a Democrat from the Bronx, said during a Thursday speech that he would push for more funding for public schools, housing and mental-health services. The speaker’s position is at odds with Gov. Andrew Cuomo, who said Monday that he wasn’t looking for additional revenue. Senate Majority Leader Andrea Stewart-Cousins, a Democrat from Yonkers, said Thursday that raising taxes wasn’t her first priority. Several of her colleagues, though, are already calling for the repeal of tax breaks on private planes and yachts.
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“Gov. Cuomo in particular has forced austerity across New York and unnecessary stinginess with our communities,” said Charles Khan, organizing director for Strong Economy for All, a coalition of labor unions. “This year, in particular, we are not interested in his rhetoric. We are interested in resources.”
Making Economics on Improved Local Management Of Medicaid: County leader pledges to work with the Cuomo Administration
“I think we need to look at what the counties are best at doing in the Medicaid program, what the state is best at doing and how can we combine the talents together to develop the most efficient program,” New York State Association of Counties Executive Director Stephen J. Acquario said. Some of that work could be tackling fraud and abuse within the system, he said. Acquario said they look forward to working with the administration on the issue as Cuomo reconvenes a team to tackle the Medicaid issue.
Details Scarce On Cuomo’s Medicaid Deficit Plan
By Amanda Fries Albany Times Union January 10, 2020
ALBANY – Gov. Andrew M. Cuomo’s office on Thursday offered few details on what he meant when he referred to the state absorbing the rising costs of Medicaid from local governments during his State of the State address.
“Six years ago, we froze the cost of Medicaid to local governments to help them meet their property tax cap,” Cuomo said Wednesday. “For six years, we have been paying all the increased costs on local Medicaid spending. This year alone we’ll spend more than $4 billion in covering the costs.”
New York is facing a $6.1 billion budget gap largely due to a more than $4 billion tab for Medicaid, but lawmakers have yet to offer firm plans on how to address it. Part of the growing Medicaid debt is due to the state delaying payments into the next fiscal year.
Cuomo’s remarks Wednesday left some state fiscal experts wondering whether the executive is considering pushing some of the costs of Medicaid back to localities.
“It’s really hard to say, especially since they’ve kind of denied that that’s what they’re up to,” said Bill Hammond, director of health policy for the Empire Center.
Since Medicaid was instituted in the 1960s, New York and its localities have split the costs. In the 1980s, the state took over the bulk of the costs, leaving counties with a 10 percent share.
While counties in 26 states across the country contribute to Medicaid costs, only 18 of them are mandated to do so and New York’s localities’ share is by far the highest — topping $7 billion annually. New York City comprises the largest portion of the local share at about $5 billion with the remaining counties paying about $2 billion collectively. The costs to localities have remained flat since 2015, and the state has borne those increases.
Hammond said that in 2016 Cuomo had proposed unfreezing the local share for New York City, but it didn’t gain traction.
“It’s more money for the state and it wouldn’t take the form of a direct tax hike on anybody. It’s a way of getting money without taking the blame for raising taxes,” he said. “They sometimes point to the New York City economy being stronger than the rest of the state.”
New York State Association of Counties Executive Director Stephen J. Acquario heard Cuomo’s remarks as a call to action for localities. He said the federal program is extremely important and has been successful, noting that over six million New Yorkers are on Medicaid.
“I think we need to look at what the counties are best at doing in the Medicaid program, what the state is best at doing and how can we combine the talents together to develop the most efficient program,” Acquario said.
Some of that work could be tackling fraud and abuse within the system, he said.
Acquario said they look forward to working with the administration on the issue as Cuomo reconvenes a team to tackle the Medicaid issue.
Cuomo’s office declined to answer specific questions about the issue, and directed a Times Union reporter to a previous statement issued Wednesday by Melissa DeRosa, the governor’s secretary.
“What we’ve seen in the last several months and which you’ll be hearing more about in the budget in a couple of weeks is that when the state took over the growth in Medicaid costs and held the local governments’ harness but allowed the local governments to continue administering the Medicaid program, there was a loss of control in terms of how the money was being spent, when it was being spent, why it was being spent, and that has created structural issues that now have to be addressed,” DeRosa said during a NY1 interview.
“We are not going to do this in a vacuum. We have a very successful Medicaid redesign team that we put into place nine years ago. We’re going to replicate that model this year. We’re going to get all the stakeholders around the table. No one wants to do anything to undermine the great progress we’ve made in healthcare.”
A Cuomo spokesman said details would be included in the governor’s proposed budget when it is released later this month.
New York State Lawmakers Stake Out Position in Tax Clash
Legislators face pressure to find ways to increase spending—not reduce it
By Jimmy Vielkind Wall Street Journal January 10, 2020
ALBANY, N.Y.—Democrats who control New York state government are heading for an intraparty clash over tax policy as they seek to plug a $6.1 billion budget deficit.
Assembly Speaker Carl Heastie, a Democrat from the Bronx, said during a Thursday speech that he would push for more funding for public schools, housing and mental-health services. Mr. Heastie later told reporters he would advocate for raising more revenue.
“We prefer not to cut,” Mr. Heastie said. “I want to make sure we have enough revenue to cover what it is that we need.”
Mr. Heastie has previously pitched raising income taxes on millionaires without success. But the state’s 213 legislators are all up for re-election in November, and face pressure to find ways to increase spending—not reduce it.
The speaker’s position is at odds with Gov. Andrew Cuomo, who said Monday that he wasn’t looking for additional revenue. Senate Majority Leader Andrea Stewart-Cousins, a Democrat from Yonkers, said Thursday that raising taxes wasn’t her first priority. Several of her colleagues, though, are already calling for the repeal of tax breaks on private planes and yachts.
Republicans in both chambers said they oppose tax increases. Senate Minority Leader John Flanagan, a Republican from Long Island, said high taxes were contributing to the number of people leaving the state.
Mr. Cuomo said Wednesday that he would seek to cut the corporate taxes paid by small businesses from 6.5% to 4%. The governor’s aides declined to estimate the financial impact of the proposal, but said it would affect 36,000 taxpayers.
Corporate taxes account for just over $4 billion of the state’s $174 billion budget. Most of the state’s revenue comes from personal income taxes, which are projected to bring more than $55 billion to Albany’s coffers in the fiscal year that starts on April 1.
David Friedfel, director of state studies for the Citizens Budget Commission, a nonpartisan fiscal watchdog, said top earners account for an outsize share of overall tax revenue. Based on 2016 data, New York taxpayers with taxable income of $1 million or more represented 1% of filers but provided 37% of income tax revenue.
“This isn’t a revenue issue. Revenues are coming in at or above expectations—this is a spending problem,” Mr. Friedfel said of the current deficit.
Mr. Cuomo will propose a budget in the coming weeks. After a Monday speech to business and civic leaders in Manhattan, the governor said he would resist calls for higher spending.
“The answer’s not always more money. And some of these situations are structurally problematic,” he said. The budget deficit is largely the result of a $4 billion overrun in the state’s Medicaid program.
Lawmakers will spend the next three months exchanging proposals and counterproposals on the budget, but progressive organizations held a rally Tuesday to start pushing the governor.
“Gov. Cuomo in particular has forced austerity across New York and unnecessary stinginess with our communities,” said Charles Khan, organizing director for Strong Economy for All, a coalition of labor unions. “This year, in particular, we are not interested in his rhetoric. We are interested in resources.”