Cuomo pitches budget savings to combat Medicaid burden

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New York Gov. Andrew Cuomo wants to tackle the state’s budget gap by controlling spending instead of with major revenue increases.

Cuomo released his $178 billion 2021 fiscal year budget proposal Tuesday amid the Empire State grappling with a $6.1 billion shortfall tied largely to a $4 billion increase in Medicaid costs. The Democratic governor, who reiterated his previous opposition to tax increases as a solution to state’s budget challenges, told lawmakers Tuesday that cost-saving measures without gimmicks is a better path forward.


“There are no gimmicks,” Cuomo said in budget remarks delivered before the state legislature in Albany. “This is not the time to come up with creative, although irresponsible revenue sources to solve a problem.”

Among the saving initiatives Cuomo pitched were abolishing the state’s office of Real Property Tax Services, reducing the public workforce by 1,000. Cuomo also proposed creating a new tier of state employee benefits and pensions that he says would save tens of billions of dollars.

New York deferred a $1.8 billion Medicaid spending deferral for next year and the Cuomo administration has eyed other saving measures including across-the-board reductions in rates paid to providers and health plans. Cuomo spoke Tuesday about a Medicaid Redesign Team he has convened charged with identifying cost-containment measures that will provide roughly $2.5 billion in gap-closing savings 2021.

The Empire State’s long-term Medicaid enrollment increased 12% in 2019, more than twice the expected rate of growth, according to the Department of Health. Cuomo said in his budget speech that eventual cuts and savings to Medicaid won’t affect local governments as long as they stay within the 2% property tax cap along with limiting increases to 3% or lower.

“All our stakeholders want a system that is sustainable,” according to the rush transcript of Cuomo's remarks prepared by his press office. “We are so proud that we are at 18 million people being covered, we want to show that it is done fiscally and it is sustainable and it is going to exist in the future and that why is why we need to make these reforms.”

For the second year in a row Cuomo urged lawmakers to legalize recreational marijuana, which would net an estimated $300 million of new tax revenues once the measure took effect. He also pitched other policy changes that would eventually generate new revenue, including legalizing sports betting and allowing alcohol sales at movie theaters.

New York’s general obligation bonds are rated Aa1 by Moody’s and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.

Ahead of Cuomo's speech, the Office of the State Comptroller reported that 2020 fiscal year tax revenues from April 1 through Dec. 31 came in $1.3 billion above state projections. Despite the unexpected revenue boost, David Friedfel, director of state studies for the independent Citizens Budget Commission, said taxes are not the answer to the Medicaid predicament and the state needs long-term fixes that involve more spending discipline.

“Spending has outpaced revenues and even what they expected to spend,” Friedfel said. “Revenues are not going to be enough to close the gap and they need to control spending.”

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