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Governor’s Budget Shifts Hundreds Of Millions Of New Medicaid Costs Onto Local Taxpayers

On Wednesday, February 1st, Governor Hochul unveiled her 2024 Executive Budget. The $227 billion spending plan includes numerous proposals that will impact counties, but by far the most significant was the proposal to end the longstanding practice of sharing federal Medicaid funding with counties.

Specifically, the Executive Budget calls for the state to stop sharing federal funds, known as eFMAP, that are granted to the state through the Affordable Care Act. A portion of these funds are “passed through” to counties, lowering the amount each county contributes to the Medicaid program, and contributing to counties' success in holding property tax rates in check for the last 10 years.

These funds were included in Affordable Care Act as a way to incentivize states to expand the Medicaid program. The law required states to share a portion of this money with counties that help pay for Medicaid, which every county in New York does.

The State is proposing to keep all of these federal savings going forward and use them to cover further expansions of Medicaid eligibility and benefits and to increase payments to healthcare providers.

The elimination of the ACA eFMAP federal pass-thru will cost the 57 counties at least $280 million more annually, and approximately $1 billion when New York City is included (this is NYSAC's estimate based on historic shares of ACA savings pre-COVID – the state believes the NYC cost will be about $345 million annually).

We all know that new costs imposed on our local governments eventually come out of New Yorkers' pockets in the form of higher property taxes or cuts to services.

Nine state-mandated programs consume nearly 90 percent of county property tax receipts. And when the state shifts new or more costs to counties, that burden becomes even more challenging to the homeowners, renters, and businesses who shoulder the local property tax burden. That happened when the state intercepted local sales tax dollars, increased the local share of foster care and social services, and forced counties to fund more of the transportation costs for children with special needs. When the state shifts costs to counties, housing costs increase, and services are cut. On the flip side, when the State reduces costs to counties, our regional governments reduce the burden on local taxpayers.

It is the strong view of NYSAC that congress intended these federal savings to be shared with counties proportional to the amount they contributed toward Medicaid.

NYSAC will be using every tool at our disposal to fight this proposal and we encourage all our members to tell Governor Hochul to reconsider this misguided proposal, adhere to Congress' intent, and continue to share this federal funding so that we can do our part to make our state more affordable.

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