State comes up a little short on budget: $6 billion

What are government budgets without political grandstanding, passing blame, and abdication of responsibility?

Fresh into the second year of her first term, state Sen. Alessandra Biaggi is applying what she learned last year to untangling Gov. Andrew Cuomo’s proposed 2020-21 budget. Although she’s still got a lot to learn about how political games are played in Albany, Biaggi doesn’t need a rulebook to see what’s going on.

“First and foremost, we have a deficit,” she said. “That’s undeniable.”

Last fall, the state’s budget division announced an updated financial outlook that contained a possible $6.1 billion shortfall for the next budget cycle, driven largely by the soaring costs of Medicaid.

In his State of the State address in early January, Cuomo shifted the deficit blame to local governments. Since the state froze local contributions in 2015, the governor said counties have added more people to Medicaid locally without “skin in the game” of having to pay for it.

Some budget hawks, like the right-leaning Empire Center for Public Policy, point out that much of the budget problem is self-inflicted. The state increased minimum wage from $9 to $15 in 2018 for many larger businesses, which added $1.5 billion to the deficit, according to the policy group. Cuomo increased across-the-board Medicaid payments to hospitals and nursing homes last year. The administration delayed nearly $2 billion in Medicaid payments in the current fiscal year’s budget instead of dealing with the deficit last winter.

The $178 billion executive budget unveiled in mid-January projected a nearly 2 percent increase in state funding. Included in the document were a number of policy changes like legalizing recreational marijuana, cash bail reform, continued business and middle-class tax decreases, and expansion of a child tax credit.

But the plan to make up more than $6 billion was more nebulous. About $2.5 billion would come from a Medicaid restructure, another $2 billion from tax receipts, and the final $1.8 billion in cuts to local aid programs. State officials mentioned possibly holding local governments accountable for any Medicaid overages beyond 3 percent.

Elected officials have pressed the governor for more detail. What kind of aid funding will disappear? Will there be a cap on how much local governments will be expected to supplement? How will this affect regular people, like those in the northwest Bronx?

The vagueness, the culpability, and the rhetoric hits a sour note among lawmakers. Attempts to obfuscate the origin of the deficit while casually threatening to cut already overburdened public services is “just out of line with what we are required to do as representatives,” Biaggi said.

Parts of the governor’s budget just don’t add up — particularly the touted increases in education funding.

“Every category that I’m going through and reading is like a sleight of hand,” the senator said, “like it’s switching things around and moving things around.”

Rather than propose a new revenue stream — like a “low-hanging” win with pied-à-terre tax on second homes — Biaggi and other progressives wonder why Cuomo first chose to cut services vital to low-income residents.

Although he’s been through a few decades of state budgets, the current conversation about Medicaid funding is troubling to Assemblyman Jeffrey Dinowitz.

Cuomo faced a $10 billion deficit in 2011, his first year as governor. He managed to close that gap not though raising taxes, but by large cuts to state programs. Some were straightforward cuts to operational budgets. Others were large reductions in spending for education and Medicare.

In the current situation, Dinowitz fears Cuomo plans to take the same approach. The governor assembled a Medicaid redesign team this month, co-chaired by Northwell Health hospital system head Michael Dowling and Dennis Rivera, former chief of the state’s largest health care union, 1199 SEIU. Cuomo tasked a similar group with a redesign in 2011.

“There was talk about eliminating waste, fraud, abuse, corruption and of course nobody would disagree with that. But usually that doesn’t amount to so much,” Dinowitz said. “The fact is, the Medicaid budget in particular has increased significantly in recent years.”

And that’s a good thing because more low-income people are getting the health care they need but can’t afford, he said. But the people Cuomo appoints to oversee cuts may not see it the same way.  Some lawmakers fear nursing homes and other long-term care facilities will bear the brunt of the funding cuts.

“In addition, any time we cut a dollar for Medicaid, we’re losing $2,” Dinowitz said, “because whatever we cut, we lose the federal share as well.”.

That change could have lasting effects at home, Councilman Andrew Cohen said.

The city has “not budgeted money for if the state screws us — we’re not going to pay it, we shouldn’t pay it,” Cohen said. “The state made this commitment to the City of New York in terms of Medicaid, the state should not be trying to balance its budget on health care of poor people.”

His own district’s largest private employer, Montefiore Medical Center, depends on Medicaid to treat 80 percent of its patients, Cohen said. If the state paid less for medical care and fewer people were served, “the impact on the district — never mind the City of New York — would be profound.”

Expecting local governments to shoulder the overwhelming cost of health care doesn’t actually save anyone money in the long run, Cohen said. Uninsured people still go to emergency rooms when sick. That cost is handed off to state agencies that then scramble to find funding.

“Moving the deck chairs on the Titanic is not going to save anybody,” Cohen said.