Gov. David Paterson got it right when he issued an open letter to both presidential candidates recently calling on them to repair what he correctly describes as the “fractured bond between the federal government and states.”
“This partnership was once a source of America’s strength,” Paterson wrote in the letter. “Yet time and time again, the current administration [in Washington] has hung the states out to dry.”
We also need to repair the partnership between the state and local governments. By connecting the dots from the federal government passing costs down to the state, which in turn passes the costs down to counties, there is a clear result: 75 percent of our local tax burden comes from unfunded mandates.
County government has little say in how these mandated programs are developed, with the state making the laws, setting policy and determining what expenses they will pay.
The state Legislature can no longer shift the cost to our counties. Aside from federal and state aid, county revenue is generated through property and sales taxes and service fees. By shifting the costs to counties, the state is shifting the tax burden from a progressive income tax to a regressive property and sales tax.
County resolution
Among the actions Gov. Paterson is urging is an increase in the federal share of Medicaid — the nation’s health insurance plan for its neediest citizens. A resolution that I introduced and that passed the Schenectady County Legislature unanimously this past week is in the same spirit as Gov. Paterson’s call for a stronger partnership between the states and the federal government.
The resolution we passed calls on the governor, the state Assembly and the state Senate to form a stronger partnership with counties and to reform the way state government passes mandated costs down to county government — starting with the state assumption of the local share of Medicaid cost.
It makes no sense to me that New York is the only state in the nation that puts half its share of the cost of Medicaid on local property taxpayers, while our state legislators profess their concern about the excessive burden carried by those same property owners. No other state in the nation funds Medicaid this way.
Today, the cost of Medicaid in New York state is paid through a three-way split by the federal government, the state and counties.
Originally conceived as a way to reform county spending on health care for the indigent in the 1960s, this three-way approach to paying for Medicaid has become a heavy burden for upstate property owners as the cost of health care, and with it the cost of Medicaid, has risen more sharply than anyone could have imagined then.
Despite a state-imposed cap on local Medicaid cost increases, the actual Schenectady County cost of Medicaid has risen more than 70 percent since 2000. In real dollars, the local share of this cost to Schenectady County property owners is more than $30 million in the budget proposed to the Legislature by the county manager earlier this month.
Fairer solution
The intent of the resolution that I introduced and that my colleagues passed is to draw attention to the inequity of a funding scheme that forces the cost of health care for the indigent onto property owners who are already struggling to make ends meet. Many of those property owners earn only slightly more than the people who meet the income requirements for Medicaid.
There is a better way. The state should fully fund its share of the Medicaid program. I would suggest, as I did in a second resolution that passed the county Legislature last week, that the fairer way to pay for health care for the indigent is for the state to spread the cost through the state income tax. Everyone should pay their fair share. My resolution called for an increase on the highest tax bracket — for those earning $1 million or more per year in taxable earnings. I think that is much fairer than expecting local property taxpayers to shoulder the cost of a state program. The result would be a 50 percent reduction in the Schenectady County property tax levy.
The reality is that Schenectady County’s budget is being shaped by these state and federal mandates rather than by our own local priorities. These mandates leave the county with scarce resources to pay for programs that make it a special place to live, such as the library, county parks or the Glendale Home. Our highway department has to do more with less to maintain our county roads. Our Office for the Aging has to be more creative in providing services to our aging population.
Schenectady County government is doing what it can to contain costs. We have seen great savings in the cost of welfare through reform and increased efficiencies. The Department of Social Services management and staff have done a remarkable job creating an efficient operation, one of the best in the state compared to other counties. This includes having the 2nd highest Medicaid efficiency rate in New York state.
We were one of the first counties to partner with the state to purchase food for our inmates, saving county taxpayers over $50,000 per year. We have partnered with our employee unions to reduce the cost of employee and retiree health insurance, creating annual savings of more than $3 million.
Re-examine mandates
Gov. Paterson asked that New York state do more with less to combat our state fiscal crisis. New York counties have been doing more with less for years.
We need New York state to not just cut funding or pass expenses down to our counties, but to re-examine their mandates and find new and more efficient ways to administer these programs.
If the state could find a way to fully pay for Medicaid, as every other state in this nation does, Schenectady County could cut property taxes in half.
We in Schenectady County government understand the economic crisis facing our state. We ask Gov. Paterson and the Legislature to please not balance our state’s checkbook on the backs of local taxpayers.
Gary Hughes is a Schenectady County Legislator. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.
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