April 11, 2008
State Throws Current County Budgets Out Of Balance
The final 2008-09 State Budget will have an immediate negative impact on county budgets, resulting in service reductions and local property tax increases going into next year.
Of particular interest to counties, many of the onerous cost shifts proposed in the Executive Budget, including changes to historic funding formulas for public assistance and youth detention placements were defeated by the State Legislature. It was clear throughout the budget process that the Senate Majority and key members of the State Assembly repeatedly stood up to reject these ill conceived proposals.
However, the final budget includes a plan pushed by Governor Paterson that will result in an immediate reduction in municipal, not-for-profit, and other local funding, totaling over $270 million annually.
The Governor’s plan cuts funding for county programs, both mandated and optional, with education, Medicaid and other entitlement programs exempted from budget action. According to an analysis prepared by the Governor’s Division of the Budget, the 2 percent reduction will have a local fiscal year 2009 impact on municipalities of $50.9 million--$27.8 million in New York City, $21.6 million for counties, and $1.5 million for all other localities. The State’s analysis fails to recognize that these cost shifts are permanent and are effective April 1, 2008, having an immediate mid-year impact to every county budget in the state.
The following are preliminary highlights of the 2008-09 Executive Budget impacting counties by major program area.
Preschool Special Education
As expected, the final budget rejects the plan included in the Executive Budget to limit the growth in expenses for the Preschool Special Education Program for counties, excluding New York City, effective July 1, 2008.
Medicaid
The final budget implements the local Medicaid Cap, which limits local Medicaid payments in 2008 to $6.7 billion, an increase of $185 million or approximately 3 percent over 2007. Keeping with the current formula, all Medicaid administrative expenses incurred at the local level will be fully reimbursed under the final budget, including expenses associated with State initiatives to expand health care coverage. NYSAC successfully defeated a plan advanced by the Assembly majority to shift the cost of the growth of Medicaid administration to counties.
While the Medicaid Cap limits a county’s financial liability toward the Medicaid program, counties that operate public nursing facilities will still face challenges from the final state budget. The enacted budget rejects the proposed reduction in nursing home “rebasing” transition payments authorized in 2006-07, but accepts the proposed reduction of the nursing home inflationary trend factor by 25 percent beginning April 1, 2008.
Public Health
The 2 percent across the board cut included in the final budget will have a significant negative impact on local public health departments. The budget cuts all core programs, including the General Public Health Works program and the Early Intervention program. Compounding the impact to Early Intervention is a restructuring of the scheduled Early Intervention cost of living adjustment that will force counties to fund an effective 8.5 percent increase in SFY 2008-09 alone.
Welfare\Child Welfare
The enacted budget rejects the plan to break the long-standing policy of equal cost sharing in the payment of welfare benefits. Counties and New York State have always equally shared in the cost of public assistance at a 50% state, 50% local split. However, the Executive Budget included a plan to break this historic state/local fiscal partnership by shifting a portion of the State’s cost for the Family Assistance and the Safety Net program so that counties would pay 2 percent more, while the State share would decrease 2 percent.
The final budget accepts a plan to implement a local share for the cost of carving out 2-parent families from the federal work participation rates by removing the local district hold-harmless provision. This action will increase local costs by approximately $7.5 million.
The budget also includes a plan to increase the amount of child support collections passed through to custodial parents receiving public assistance from a maximum of $50 to $100 per month. This action is effective October 2008 and will cost counties approximately $1 million. Also, an increase from $100 to $200 was included for families where there is more than one child in the household. This provision is to become effective in January 2010 with an estimated local cost of $2.6 million.
The enacted budget rejects the Executive budget proposal to eliminate the 50 percent state share of the cost youth placed in secure and non-secure detention facilities. However, because of the 2 percent across the board reduction, counties will now have to pay 52 percent of the secure and non-secure claims.
The Flexible Fund for Family Services (FFFS) will be funded at $654 million, which represents level funding over last year. Child Care subsidies are separately appropriated at $356.3 million.
Child welfare preventive services will be significantly impacted by the 2 percent across the board reduction included in the final state budget. The budget only permits the state to reimburse counties 98 percent of the 65 percent state share of child preventive services which will force counties to reduce services or pass on the reductions to providers by amending service contracts.
Transportation
The Enacted 2008-2009 State Budget adds $60 million in additional funding to the CHIPs program bringing funding to $363 million, or a 13 percent increase over last year.
The Enacted 2008-2009 State Budget rejected this proposed extension of the DOT Single Audit Program, granting the program a one-year extension.
The Enacted 2008-2009 State Budget rejected the creation of a $60 million dollar grant program to repair and maintain both State and local bridges.
Higher Education
The final budget appropriates state formula aid of $2,675 Pre FTE to both SUNY and CUNY community colleges, restoring funding to last years level.
The final budget establishes a Higher Education Endowment but does not capitalize the endowment with State lottery proceeds as contained in the Executive Budget proposal.
Economic Development
The budget enacts an economic development capital program encompassing the Upstate Revitalization Fund, targeted Downstate Initiatives and general capital projects designed to support the revitalization of the state’s economy. The economic development capital investments will be financed through the issuance of $1.5 billion in Personal Income Tax (PIT) bonds, $40 million from the State’s general fund, and $100 million in State Mortgage Agency (SONYMA) excess Mortgage Insurance fund reserves. The Upstate Revitalization fund was reduced from the original $1 Billion executive proposal, but the basic proposal framework and programs remain intact.
The budget appropriates $ 2.3 million for local Empire Zone administrative funding which was deleted in the original executive budget proposal
The budget extends the existing Power for Jobs Program for one year.
The budget appropriates $20 million for tourism advertising, and $5.1 million for the tourism matching grant programs
The budget rejects the executive proposed $ 5 million tax on local development agencies
The budget extends the motion picture production tax credit until 2014 and increases the amount of production costs eligible under the credit. The language increases the cap on the tax credit to $65 million in 2008 and gradually increased the cap ceiling to $110 million in 2013
Public Protection
The Enacted State Budget includes funding for the DOCS “cook/ chill” food production Center at the Oneida Correctional Facility. This increased funding will allow local jails to take advantage of these low cost, nutritional meals. Local jails will have the option to purchase bulk quantities of chilled foods that are easily reheated, or cook/ chill products. This initiative has the potential to save local jails $730 annually per inmate.
The Enacted State Budget provides funding for a new re-entry unit at the Orleans Correctional Facility to improve the transition of inmates back to Erie County. This 60 bed unit houses inmates who will be released to nearby Erie County and allows parole officers, social workers, employment counselors, community organizations volunteers and others to meet with inmates prior to their release.
The Enacted State Budget provides $600,000 to the Division of Parole to hire 19 new officers to focus exclusively on directing parolees to housing, employment and addiction services within their communities in an effort to promote parolee success rates.
The Enacted State Budget further reduced the overall reimbursement to local probation departments by approximately $1 million. However, it did include $3 million in unrestricted probation aid to assist to local probation departments, resulting in a net increase of $2 million in funding to local probation departments.
The Enacted State Budget provides funding for the creation of three additional local re-entry task forces. Onondaga, Dutchess and Niagara counties will join nine other counties that currently use these task forces to prepare for and manage their most high risk offenders released from state prison.
The Enacted State Budget includes $1.5 million for the District Attorney Loan Forgiveness Program as part of the Legal Services Assistance Fund.
The Enacted State Budget rejected the creation of an office of Indigent Defense Services to oversee and monitor the provision of the criminal defense services statewide, make recommendations for reform and provide attorney training and administration services. The Enacted Budget also rejected the proposal to amend section 98-b of the State Finance Law to cap, the amount of funding which may flow to counties from the Indigent Legal Services Fund under the current distribution formula to $72 million.
The Enacted State Budget rejected pay increases for state paid judges.
The Enacted State Budget rejected closure of three underutilized prison camps and one medium security facility. The State believed this measure would have saved the State a projected $33.5 million in annual operating costs and avoided an additional $30 million in capital costs.
Revenue
The Enacted 2008-2009 State Budget rejected the local option fee increase on recorded documents.
The Enacted 2008-2009 State Budget modified this proposed increase fee for the new Enhanced Drivers License, increasing the fee to $30 and accepting the proposal to increase to the county DMV retention percentage.
The Enacted 2008-2009 State Budget accepted changes to the Tax law to allow for the collection of sales tax on certain Internet sales within New York State.
The Enacted 2008-2009 State Budget rejected the proposed increase to the Real Property Transfer Fee.
The Enacted 2008-2009 State Budget rejected the proposed changes set to streamline real property tax administration and the restructuring of local "maintenance aid” programs, which promote annual revaluation and reassessment, as well as provide incentives for county assessing.
The Enacted 2008-2009 State Budget delays the scheduled increase to the Basic Middle Class Star Rebate program by one year, fully phasing in the program in during 2010-2011. The Enhanced Middle Class Star rebate program for seniors will remain unchanged under the proposal. The Enacted 2008-2009 State Budget rejects the consolidation of taxes on gasoline & diesel fuel.
General Government\Mandate Relief
The Enacted 2008-2009 State Budget modifies the proposed changes to SMSI grant program accepting the changes to the program but removing any reference to the upcoming LGEC report and funding the program at $29.4 million.
The Enacted 2008-2009 State Budget rejects this proposal all of the shared services & consolidation enhancements proposed by in the Executive Budget Proposal including:
- Consolidated tax collection and assessment,
- Enhancements to shared services plans,
- Health insurance consortiums, and
- Shared highway services enhancements.
The Enacted 2008-2009 State Budget rejects any modifications to VLT host community aid. It rejects the proposed purchasing and procurement reforms.
The Enacted 2008-2009 State Budget includes updates to the Wicks law including
- Increasing the current $50,000 threshold to $3 million for projects in New York City, $1.5 million for projects in Nassau, Suffolk, and Westchester counties, and $500,000 in all other counties;
- Allowing for the pre-qualification of bidders;
- Providing protections for sub-contractors; and
- Authorizing the use of project labor agreements for projects otherwise subject to the Wicks Law.
The Enacted 2008-2009 State Budget modifies the proposed changes to the Aid and Incentives for Municipalities (AIM) program, accepting the AIM threshold adjustments, exempting AIM from the 2% across the board cut and added 11.6% more in AIM funding for 33 specific cities.
Summary
NYSAC is completing its review of the 2008-09 Enacted State Budget and will be publishing a full report, including a detailed review of the permanent 2 percent across the board reduction and the impact it will have on county services and local property taxes. Please contact the NYSAC offices with any questions. (Ken Crannell)
NYSAC Inks Partnership with MEGA To Help Counties Save on Energy Costs
The New York State Association of Counties (NYSAC) and the Municipal Electric & Gas Alliance (MEGA) this week announced a new partnership designed to help counties save money on energy costs, one of the fastest growing costs in a county budget.
“NYSAC is dedicated to serving our member county officials in the interest of better, more efficient, modern and cost-effective government. Our partnership with MEGA is an extension of these efforts,” said Stephen Acquario, NYSAC Executive Director. “Innovative programs like MEGA provide an avenue for reducing the costs of necessary goods through cooperative efforts.”
MEGA serves as an aggregator whose primary purpose is achieving the best terms while securing the lowest and most stable rates for electricity and gas commodities for its members. For the two year period from April 2005 to April 2007, MEGA helped its members save over $3.3 million on electricity alone for a total of $7.86 million since the program's inception in 1999.
The Alliance was first formed in 1998 as an energy partnership between Tompkins and Tioga Counties. Two years later, Broome, Cortland, Schuyler and Otsego counties joined MEGA, which was reorganized as a non-profit, community-based local development corporation in 2001.
“Currently we serve 12 counties and over 100 municipalities. With this partnership and the addition of more counties, we will increase our buying power and help to lower energy costs for all participating municipalities,” said MEGA Executive Director Barbara Blanchard. The partnership has resulted in the immediate interest of 9 other counties, which are currently in the process of enrolling in the program, according to Blanchard.
For more information, contact Pete Savage at the NYSAC offices. (Mark LaVigne)
State-County Partnership Could Save on Jail Costs
Under a provision in the 2008-09 State Budget, counties can partner with the state to lower the cost of providing meals to county jail inmates. The Oneida Correctional Facility’s Food Production Center in Rome could start offering county jails the option to purchase meals starting this year.
More than 40 county officials from 19 counties across New York State took a fact finding tour of the facility this week to determine whether the program would benefit their county.
“Currently, on average counties pay about $5 a day to feed their inmates, while the State Department of Correctional Services (DOCS), which uses the Food Production Center, feeds each of its inmates for $2.28,” said NYSAC Executive Director Stephen J. Acquario. “We’re pleased that counties are exploring this opportunity.”
The Food Production Center has the physical room to prepare and provide every county in the State, outside of New York City, with meals for an average of $3 a day, including transportation costs.
When the Food Production Center opened in 1992, it served 5,000 State inmates. In October 2003, they began serving all State inmates. The Food Production Center currently serves 62,000 inmates at all 70 State Correctional Facilities and 1,200 at the Oneida County Jail with over 83 million pounds of food and drink annually.
For more information, contact Ken Crannell at the NYSAC offices. (Mark LaVigne)
NYSAC, Empire State Development, Cornell University Schedule Webinar on Census Population Numbers
On April 22, 2008, NYSAC will host a Webinar on the impact that recently released US Bureau of the Census Population estimates will have on New York State counties.
The Census Bureau Population estimates are utilized to allocate relative shares of funding to states and local communities under state and federal funding formulas. During this one-hour session, counties will be able to learn about the impact these estimates will have on counties in the coming year. County officials will also be provided with information concerning the process to challenge population estimates that appear not to represent the real population growth of their county.
This session, which will take place from 10 to 11 a.m., will be conducted by experts from NYSAC, Empire State Development’s New York State Data Center and the Program on Applied Demographics at Cornell University. This session is also sponsored by the New York State Association of County Planning Directors, the Community and Rural Development Institute at Cornell and the Pelletier County Government Institute.
Participation in this Webinar is a free service provided by NYSAC, but pre-registration is required. Click here to register for the Webinar, or visit our website at www.nysac.org.
Registrants in the Pelletier Institute will receive 1 continuing education credit towards their certificate of achievement through their participation in this Webinar.
Counties are urged to closely examine their population estimates to determine their accuracy. Copies of the Census Bureau population estimate tables can be downloaded from our website at www.nysac.org/Policy_and_Research/. (Jeff Osinski)
42nd County Finance School Registration Underway
Sign up today for the 42nd County Finance School, which will be held at the Sheraton Syracuse University Hotel on April 30-May 2, 2008. It offers an array of programs designed to support county budget operations and other critical financial issues. For more information and to register, visit
www.nysac.org/Conferences/Finance_School.php.
Save the date for the NYSAC Fall Seminar
The NYSAC Fall Seminar will be held September 24-26, 2008 in Niagara Falls, Niagara County.
Upcoming Next Week
The Senate and Assembly are scheduled to be in session on Monday through Wednesday.
