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Counties could take legal action if NYS budget includes Medicaid cost shift

County leaders across New York State are relieved that the Legislature rejected Gov. Kathy Hochul’s budget proposal to withhold expanded federal Medicaid aid from localities, a move that would have cost them millions of dollars annually. However, they remain vigilant and warn that they will pursue legal action if the changes appear in the final state budget due next month.

Onondoga County Executive Ryan McMahon states that the proposed change would cost his county $14 million, which would be “devastating” as they are already partway through their fiscal year.

New York has the second-largest number of people enrolled in Medicaid in the country. Under the Affordable Care Act, federal eligibility for Medicaid was expanded, with Congress agreeing to pay an increased share of the costs to states and local governments. McMahon claims that Hochul’s proposal to shift enhanced Federal Medicaid Assistance Percentage payments to the state’s coffers is illegal and would result in localities facing $625 million in new annual costs.

Despite the Senate and Assembly not including the proposal in their one-house budgets, Hochul continues to defend it, arguing that counties are in better fiscal shape due to higher tax revenue and state aid for local programs. She asserts that the extra federal funds meant for Medicaid increases should go to the state, which is shouldering those costs.

However, McMahon argues that nothing proposed would offset the multi-million-dollar gap the Medicaid cost changes would create for counties. He emphasizes that counties across the state are in strong fiscal shape because they have made difficult cuts and decisions during the pandemic.

The nonpartisan Citizens Budget Commission, along with lawmakers from both political parties, agree that localities’ responsibility for Medicaid should remain in place, as it is the state’s job to manage and pay for the federal program. New Assemblyman Matt Slater urges his Democratic colleagues to keep the change out of the final budget to prevent localities from raising property taxes or cutting services.