State legislators warned of higher property taxes if federal Medicaid money diverted from counties

Editor’s Note: Orleans County officials say it would add $1,059,034 per year in expense to the county budget, or 5.6 percent of the county’s tax levy if the state ends the Affordable Care Act enhanced Federal Medical Assistance Percentage (eFMAP) federal pass-through.

Press Release, New York State Association of Counties

One unintended consequence of the proposed $227 billion state budget is that it will increase the cost of home ownership and rents across New York State, according to testimony presented last week by the NYS Association of Counties (NYSAC).

The 2024 Executive State Budget proposes to withhold $625 million in federal funds that counties have used for more than a decade to prevent local property tax increases.

In testimony to the New York State Legislature’s Joint Budget Committee on Local Government, NYSAC detailed the harm that the proposal would do to local taxpayers and encouraged state lawmakers to reject this proposal.

The proposal would reverse 20 years of precedent by ending the practice of sharing federal Medicaid aid with counties that help pay for the program. If enacted, the first year of this action will cost counties $281 million and another $345 million to New York City. In three years, the impact of this new proposal will compound, costing local taxpayers more than $2.5 billion over the three-year period.

“Not only does this proposal harm New York’s local taxpayers, but it also subverts Congress’ intent for this funding to be shared with the local governments that contribute to the state’s Medicaid program,” said Clinton County Administrator Michael E. Zurlo, president of NYSAC. “At $7.6 billion a year, counties in New York contribute more than all other counties in the nation combined.”

The budget proposal targets eFMAP funding that was provided to states as part of the federal Affordable Care Act (ACA). In New York State, the ACA eFMAP has been used by the state to help fund the Medicaid program and by counties to help stabilize property taxes and provide other needed local services.

In a letter to the Governor, all 19 of New York’s county executives called on the State Legislature to reject a proposal in the Governor’s budget that ends the longstanding practice of sharing federal Medicaid funds, known as enhanced Federal Medical Assistance Percentage (eFMAP), with counties.

“As a former county official, you can appreciate that new costs imposed on local governments eventually come out of all New Yorkers’ pockets in the form of increased property taxes which make our state a less affordable place to live, work, or start a business,” said the letter signed by New York’s bi-partisan group of county executives.

Instead of sharing these federal dollars with counties to apply toward local tax relief, the state budget and financial plan divert the funding to other areas in the $227 billion state budget, including depositing $5.4 billion in reserves.

The impact of the state’s withholding of the federal Medicaid assistance will be felt as soon as the budget is enacted because counties’ 2023 budgets are already locked in place.

“A major factor in the creation of our state’s affordability crisis is the state’s long history of imposing higher and higher costs on its local governments,” said NYSAC Executive Director Stephen J. Acquario. “The last thing the state should do is burden local taxpayers with more costs that will drive up the cost of homeownership and rent, increase business expenses, and make New York more unaffordable.”