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Struggling counties urge relief of state mandates

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New York's counties are making a push to get Governor Cuomo and state lawmakers to take their growing fiscal crises seriously. They say they need relief from some state mandates that they say are bringing some counties to the brink of bankruptcy.

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New York Association of Counties Executive Director Stephen Acquario said his lobby and advocacy group has already begun researching laws governing municipal bankruptcies, in case struggling counties in New York have need of guidance. But he said he hopes it would be a last resort.

We can declare bankruptcy...But it's a drastic measure, what is that telling the people of New York? -Stephen Acquario, NYSAC
“Yes we can declare bankruptcy.” Acquario said, “But it’s a drastic measure, what is that telling the people of New York? That we can’t run our government? It’s a terrible situation.”
Counties say they are squeezed between the recently-enacted 2 percent property tax cap and state rules that they say they’re running out of money to fund. Acquario says the data shows a “very serious” widening gap between the money that counties take in in revenue, largely from property taxes, and the cost of state-mandated programs. That difference will reach $4.2 billion annually by the end of the decade.
One county, Cortland County in Central New York, is almost at its constitutional taxing limit, several counties are under a state-run financial control board, and others are spending down their reserves at an alarming rate.
Acquario said the largest mandate that accounts for much of the counties’ budgets is the requirement that counties pay for 25 percent of the state’s $54 billion in annual Medicaid costs. The federal government pays just over half, and the state pays for the other quarter, but Acquario said federal and state government have greater resources to come up with the money, like an income tax and other taxes and fees. He said counties have to rely on just the property tax and a “narrow band” of taxpayers to fund a vast health care program. He said it’s “absurd” and no longer sustainable.
Governor Cuomo and the legislature have already taken over all county Medicaid expenses that rise above 3 percent each year, but have not agreed to take over all of the $7.5 billion in costs to counties and New York City. Acquario suggested that perhaps a takeover could be done in phases, with the state paying for long-term care costs first. He said nearly $3 billion in savings expected from the federal Affordable Health Care Act, also known as Obamacare, could help pay for the partial takeover.
The counties also believe a waiver Gov. Andrew Cuomo's Medicaid Redesign Team is requesting from the federal government could bring in more funds. And they urge Cuomo’s Medicaid overhaul panel to look at reducing some benefits, as well, to more closely match what’s offered in the private sector.  
The counties would also like to get out of an obligation to pay for almost half of the costs of preschool education for disabled children. Acquario said school districts should pay those costs instead, and that if schools were responsible for the expenses, they might find ways to save money in the program.
Without help from the state, Acquario said he expects 20 percent of all counties to exceed the tax cap in the budgets they are now putting together. If 60 percent of a county’s legislators agree to raise taxes beyond the 2 percent limit, then the property tax cap can be overridden.
County leaders are also taking other steps to reduce costs, like privatizing the running of nursing homes, or selling them outright. They are also laying off workers.
Governor Cuomo appointed a task force to try to provide some relief from mandates. It was due to issue a report last June, but missed that deadline and has not set a new date to report.

NCPR's David Sommerstein spoke with Stephen Acquario earlier this week about county budgets and mandate reform. Hear that interview here.


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