New York’s upcoming budget includes changes that will gradually withhold federal aid from localities for Medicaid over the next three years. County leaders fear this move will force them to raise property taxes and cut local services to cover the difference. The policy, which takes effect immediately, will begin with withholding 25% this fiscal year, totaling $219 million, and will eventually phase out the federal contribution to localities completely by April 2026.
Governor Kathy Hochul initially proposed a more aggressive plan, which was rejected by both the Senate and Assembly. However, the three-year phase-in period is seen as a compromise by Senate Majority Leader Andrea Stewart-Cousins. Despite this, the nonpartisan Citizens Budget Commission estimates that the change could increase property taxes between 7% and 14%.
Several county leaders argue that the federal aid must legally go to New York’s localities and are considering legal action against the state. New York has the second-largest number of residents enrolled in Medicaid in the United States, and the poorest of the state’s 62 counties will bear the greatest share of the cost shift.
Officials with the state Association of Counties and other lawmakers opposed to the proposal have declined to comment on the announced framework until the final budget legislation is released.
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