Posted on 12/06/2002 6:22:39 AM PST by Fury
ALBANY - County Executive Joel A. Giambra is asking state leaders to raise the sales tax by 1 percentage point and use the more than $1 billion in new revenue to fund Medicaid, the health care program for poor and elderly people. If the state were to approve such a plan, the total sales tax in Erie County would be 9 percent. But counties then would be able take the money that they previously spent on Medicaid and use it to cut property taxes or pay for services, such as police. The unusual call for a sales tax increase comes as county governments across New York are slapping property owners with double-digit tax increases and cutting services because of the increasing state mandates in the Medicaid program. Giambra, a political ally of Gov. George E. Pataki, insists his tax-increase plan is his own and is not being floated, as some lobbyists in Albany privately suggested, as a trial balloon for the governor in anticipation of the unveiling next month of his 2003 state budget. "I'm not questioning the need for the Medicaid program. I'm questioning how you pay for it, and paying for it out of the local property tax is totally inappropriate," Giambra said. "It's just not manageable to pay for Medicaid on the backs of the real-property taxpayers." Giambra joins county leaders across the state calling on the state to do more to help localities with Medicaid costs. His plan is believed to be the first to identify a funding source - a sales tax increase - to persuade Albany to end the approximately 25 percent that counties must pay for every Medicaid dollar spent. The Pataki administration was noncommittal toward the Giambra plan. "We're aware of the proposal, and we'll take a look at it," said Michael McKeon, a Pataki spokesman. The plan, hailed by some in Albany for furthering the debate over Medicaid spending, has some major impediments. Persuading state officials to raise a state tax by more than $1 billion - so soon after an election when Pataki insisted he'd do everything to avoid tax increases - is the Giambra plan's first hurdle. Even if state officials went along with the tax increase, there would be great incentive for Albany to keep the money - especially with the state facing a $10 billion deficit of its own over the next 16 months. Finally, the proposal applies only to counties outside New York City, which will not sit well with the lawmakers from the five boroughs, who make up about 40 percent of the State Legislature. "That presents a challenge," said Daniel Walsh, president of the influential Business Council of New York State. Walsh, a former Assembly majority leader, recalled how geographic splits killed the last serious measure for a state takeover of county Medicaid costs, during the 1970s. Still, Walsh said he supported Giambra's plan for serving "as a lightning rod." "The Medicaid issue is not going to go away," he said. Gain is $1.4 billion A new state entity with taxing authority would be created under Giambra's plan to administer the program. The entity would ensure that counties relieved of Medicaid costs must either cut county property taxes by the same level or use the Medicaid savings to take over the costs of services - from law enforcement to parks - of cities, towns and villages. Giambra, a longtime proponent of consolidating government services, said the carrot-and-stick approach of forcing counties to either cut property taxes or pick up some services will make the program work. "This will allow counties to become regional governments in New York State," said Giambra, who is also co-chairman of a Pataki-appointed task force studying ways to improve the efficiency of local governments. Giambra was to formally present his proposal this afternoon at a regional conference of the state Government Finance Officers Association. Could aid police merger In 2003, the projected Medicaid tab for the county will be $159 million, but property taxes are expected to generate $129 million, according to Bruce L. Fisher, Giambra's chief of staff. In the late 1980s, Medicaid consumed only about 44 percent of property taxes. If the plan is approved, Giambra said, he would use the Medicaid savings to create a "regional incentive fund" to help cities, towns and villages reduce taxes by taking over some services they now provide. Part of the money could go to help Mayor Anthony M. Masiello's plan for the county takeover of the Buffalo Police Department, he said, though he cautioned that the full $89 million that Masiello is looking to save would not be included. "We should make this offer to every city, town and village in the county. We would not use all the money for the city of Buffalo," he said, adding that the Buffalo police plan would have a greater chance of happening if his plan is approved. For decades, local officials have criticized the state's requirement that counties pick up about 25 percent of the cost of Medicaid, which provides health insurance for low-income individuals, most of whom are elderly. The federal government funds half of the program's costs, and the state one-quarter. Local government leaders complain that New York has the largest county cost sharing for Medicaid in the nation and that they are given no say in trying to reduce costs in the state-run program. The Giambra proposal is a long shot, although he said the lobbying campaign already has begun. "I'm drumming up support because I know this is going to be a heavy lift," said Giambra, who added that he has held casual talks about his plan with Pataki and legislative leaders. Giambra already has begun advocating his plan to his fellow county leaders, of both parties, around the state. "Joel's proposal puts revenue on the table to deal with (Medicaid costs)," said Chautauqua County Executive Mark Thomas, a Democrat. "It's going to take a creative solution to solve a problem where the state does not have the revenue to pick up the burden of Medicaid." Other county executives have been pitching for steep cuts in Medicaid spending. Earlier this week, Nassau County Executive Thomas Suozzi called for scaling back certain types of Medicaid coverages, such as hair loss treatments, that are helping to drive up costs. He warned that counties across the state might have to raise property taxes an average of 33 percent over five years if Medicaid costs keep rising at their average rate of 12 percent yearly. Suozzi, a Democrat, offered tentative praise for Giambra's plan. "It's an interesting proposal," he said of the broad outlines. "As long as it's coupled with property tax relief, I'd be more inclined to it." But Suozzi said the state should, before looking at new taxes, concentrate on cutting some Medicaid benefits, which he said cost more in New York than the combined Medicaid costs in Texas and California. Giambra is pushing his plan as an economic stimulus. Forcing big tax increases on property owners to pay for Medicaid, he said, is a situation that will only worsen in the coming couple years. He said one study has shown that homes lose $1,000 in value for every $80 in new property taxes. But critics have long called the sales tax regressive, hitting lower-income individuals harder because they pay the same amount of tax on a product as a wealthy person. Some say the lower the sales tax, the more people spend, thereby helping the retail economy. Giambra, however, insisted the sales tax is a fairer way to fund the county portion of Medicaid because it is based on consumption. Moreover, he said, millions of out-of-state visitors to New York will help fund the plan when they buy taxable goods. "I don't know of any situation where a business moved out of the state because of sales taxes, but I certainly know of businesses that don't move in because property taxes affect the bottom line," he said. As the fiscal crisis hits home this year, Medicaid is becoming the mantra for virtually every county executive. Westchester County Executive Andrew Spano has been the most vocal, going so far as to air television commercials blaming Albany mandates, chiefly in the Medicaid program, for his proposal to increase property taxes by 28 percent. Alternatively, he said, the county sales tax will have to go up. No plan for county hike "That's not something we're even considering," Giambra said. Such a move would put Erie County "at a huge disadvantage" with neighboring counties, he said. The Giambra plan also goes beyond what is being pushed by the New York State Association of Counties, which is lobbying to freeze the current county Medicaid share. "It's an innovative and thoughtful proposal because it has the potential of not only eliminating the local share of Medicaid at the county level but also providing meaningful tax relief to the residents at the local level as well," the group's executive director, Robert Gregory, said of Giambra's proposal. Unlike some plans for Medicaid, Gregory said Giambra's might be taken more seriously in Albany because it includes a way to pay for it.
The Giambra plan would raise the state sales tax by 1 cent, to 5 cents per dollar, generating an additional $1.4 billion in the coming year. The sales tax is second, behind the income tax, as the greatest source of tax revenue for the state government. This year's budget forecasts more than $6 billion in sales tax receipts for Albany.
In Erie County, Medicaid is the fastest-growing expense in the county budget and is outstripping what the county brings in from property taxes.
Giambra insists his state sales tax plan is not part of any grand scheme, as some of his critics have suggested, to eventually raise the county sales tax.
e-mail: tprecious@buffnews.com
Welcome to New York, where the Republican officeholder proposes raising taxes to shore up the massive social welfare system, and the g**d*** Democrats are the ones who suggest cutting benefits. No wonder this state is so deeply screwed, when the lib politicians have a frigging monopoly on common sense.
A clever reporter might. Of course, that excludes the entire staff of the Snooze, by definition... ;)
Nice to meet you. Just read in the Rochester paper that Pataki admits there is a $2 billion budget shortfall. Not much time to close that gap.
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