State budget in final negotiations before deadline; county concern over Medicaid issue continues

Mar. 31--LOWVILLE -- The state budget will be done by April 1. It has to be. But the state budget has been hit by the coronavirus and the symptoms are just starting to show.

The Executive Budget proposed in January by Gov. Andrew Cuomo had a number of provisions that concerned north country county leaders.

Removing the 3% cap on the amount of increased Medicaid expenditures counties pay and moves to allow the state to keep federal Medicaid funding rather than sharing it with counties were two of the most egregious, according to Lewis County Manager Ryan Piche.

"It would have been a hard-enough budget to have our voices heard on, but with this year being how it has, with limited debate and emergency funding, we've been even more limited in how much we've been heard on it," Mr. Piche said, speaking of his colleagues in Jefferson and St. Lawrence counties, among others.

The bipartisan Families First Coronavirus Response Act, signed into law on March 18, took care of one of those concerns by including an increase to the Medicaid cost-sharing stipulation known as the Federal Medical Assistance percentage and "enhanced" it so the money would go to the places that administer Medicaid.

In 48 states, that is only done by state governments, but in New York and California, the counties also administer and contribute to the health insurance program for low-income families and individuals.

The 3% cap, which inspired the statewide "Keep the Cap" campaign used to lobby against removing the provision until the rapid spread of COVID-19 became the more pressing topic, is still on the table.

The quarter of Medicaid costs paid by New York counties was frozen in 2012, at $5 million because the year before, the 2% tax cap was created and for the counties to be able to pay their share of Medicaid programs growing by about 6% annually, Mr. Piche said counties would have had to break the cap.

As a compromise, counties have been paying the $5 million and any increased expenses up to 3% with the state covering any increased costs beyond that threshold ever since.

Mr. Piche said if the cap is removed as proposed by the governor, paying for the 8% to 10% growth in Medicaid expenses, many of which are required by the state with no county-level input, would likely require a property tax increase much greater than that 2% cap, triggering further penalties on the county.

While the federal eFMAP provision will net Lewis County about $170,000 toward Medicaid expenses, the loss of the 3% cap would cost the county about $400,000 annually, said Mr. Piche.

Gov. Cuomo similarly described his reason for refusing the one-time $6 billion payment in federal eFMAP money that comes with a condition that no changes can be made to Medicaid programs by the state.

He said the changes proposed by his Medicaid Redesign Team would be a recurring cut of $2.5 billion over multiple years, ultimately saving more money to help heal the budget gap.

The budget, which started with a $6 billion gap, is now looking at a 13% to 15% deficit because of increased spending on the pandemic, losses from the stock market and the anticipated plunge in sales tax revenue as the pandemic continues. On the county level, the trickle-down impact is also predicted to be massive.

"Counties face a quadruple threat of declining local revenues, especially sales tax, but also mortgage recording taxes and hotel occupancy taxes; higher spending necessary to respond to the health emergency; the loss of state reimbursement; and the potential of significant losses for small businesses on our main streets that could threaten jobs and the property tax base over the short- to mid-term," the New York State Association of Counties said in its document on the economic impact on counties by the COVID-19 crisis.

The association came up with two scenarios, the milder of which predicts sales tax revenue falling about 4% below the normal average for each county with a recovery back to average after about six months.

The more severe scenario would result in a more serious recession that would cause sales tax revenue to slide to about 12% below the average with a longer time before improvement.

For Jefferson County, the association calculated the mild scenario would cause a 4.3% loss of sales tax revenue totalling $3.4 million, while the more severe prediction is a 13% loss of $10.1 million in revenue.

The association estimated a 3.4% revenue loss for Lewis County in the mild scenario translating to $417,856, while the more severe circumstances could cause a 10.3% loss totalling $1.27 million.

A $2.12 million loss of revenue from a 3.6% decrease in taxable sales under the mild scenario for St. Lawrence County jumps significantly to an 11% loss of $6.42 million under the more severe potential economic conditions in the association's forecast.

The more mild scenario predicted for Oswego County would mean a 3.5% decrease of revenue translating to a $1.6 million loss with the more severe situation resulting in a 10.7% decrease in revenue amounting to $4.93 million.

In both scenarios, the sharpest impacts are on industries related to tourism, recreation, and restaurants.

"The more severe of the two scenarios in no way represents a worst case," the document said, as an increasing number of "well-regarded economic forecasting firms" have lowered their forecasts since the calculations were made as the pandemic grows in the state and the country.

Gov. Cuomo said in his Thursday morning press conference that the uncertainty of revenue has made it necessary to make "adjustments that are almost mathematical reflections of what the revenues are" on a quarterly basis.

"We're going to adjust the budget through the years to reflect the actual revenue," the governor said. "We'll say on day one, 'OK, we intended to give you $100. We don't have $100, so we're going to give you $95. But I can only give you $95 if I get $95. And I'll let you know quarterly,'" he said.

Mr. Piche said Lewis County will have additional fallout from state cuts because of its hospital and nursing home, and the kind of budgeting the governor is suggesting would make the task of staying on budget extremely challenging.

"For counties, it's about reacting to the state. Right now, it's about our constituency and of course, right now, we are lobbying, but the counties have become good at responding to the state's financial decisions and flexing county finances accordingly," he said.

The majority of counties around the state, including those in the north country, will get their sales tax share agreement renewals, amounts that account for between 20 and 25 percent on average of county budgets, approved as one piece of legislation added to the budget.

Final budget negotiations with the state Senate and Assembly are ongoing.

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