Solving The Fiscal Crisis of New York’s Counties

by Bill Samuels for City & State

New York is the only state in the country that still forces counties to pay a huge portion of Medicaid costs by raising property taxes every year.
It’s time to lift the county property tax burden once and for all, and that can only be done through a full state takeover of the local share of Medicaid.
Gov. Andrew Cuomo should begin the process this year with a down payment of $733 million in the state budget. That amount is approximately one third of the total estimated $2.2 billion property tax burden Albany places on all of the state’s counties outside of New York City.
Over the next three years that burden can be eliminated and county property taxes can be reduced by nearly 50 percent statewide, if Albany steps up and properly funds Medicaid.

Cuomo has taken some important steps toward property tax reform, including recently proposing $1.7 billion in temporary property tax credits for homeowners.
But his efforts won’t permanently tackle the root cause of county property tax increases: Albany’s unwillingness to fund Medicaid fully at the state level.
Medicaid is a vital program and should be protected, but it will continue to be the single biggest driver of property tax increases in our counties, so long as Albany keeps refusing to pay for it.

When New York’s counties pay for Medicaid by raising property taxes, they shift public resources away from infrastructure, economic growth and investment in innovation.

The most extreme example is Erie County, where 97 percent of the county property taxes go to Medicaid. But the situation is equally dire and worrisome across the state: Onondaga County pays 80 percent, while Orange County pays 64 percent of county property taxes to Medicaid.
The list goes on and on.

Because of this Medicaid burden, many counties are on the brink of collapse, or close to it.

Until Cuomo and leaders in Albany address the primary reason for skyrocketing property tax increases, they won’t solve the fiscal crisis of counties.
Democrats and Republicans have already proposed versions of a full state takeover of Medicaid, and now is the time to get it done. This urgent reform should move forward in Albany this year.

Cuomo can appeal to both parties and find significant support for it.

For Democrats, the state takeover is a way to preserve Medicaid while freeing up billions of dollars in our counties that can be invested in additional public goods and services. And for Republicans, it’s a way to achieve real mandate relief and real property tax reform, both upstate and downstate.
Indeed, there is broad, bipartisan agreement that we cannot allow New York’s homeowners, working people and businesses to continue to be harmed by higher property taxes.

No other state in the country imposes such an unfair burden on its counties and cities.
It’s wrong and must end.

Taking the fiscal straightjacket off our local county executives and mayors will transform our state economy and usher in a new era of business expansion, innovation and shared prosperity.

There are different ways to get this done in the state’s $140 billion state budget.

Some options include shifting the cost from a burdensome property tax to a more progressive income tax, and finding efficiencies in both Medicaid and other areas without any tax increase.

We can have that conversation over financing. But one thing is not up for debate: the need for Cuomo and Albany to solve the fiscal crisis facing our state’s counties and cities.

New York often presents itself as a leader, the first state to do big and important things that influence the national agenda and set the example for others to follow.

But on property taxes, we are lagging behind the rest of the country, and it’s embarrassing.
Bill Samuels is a Democratic reform activist and founder of EffectiveNY. He is discussing his proposal for a full state takeover of Medicaid at today’s City & State conference, “Property Taxes and New York’s Future: Solving the Fiscal Crisis of Counties.”

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