The New York State Association of Counties provides more information about what the EFMAP, or Enhanced Federal Medical Assistance Percentage, program is and how a proposed clawback of those funds will affect counties in New York.

PJ Wendel

Chautauqua County Government could be hit with a $4.3 million shortfall this year should New York State move forward with clawing back Medicaid funds.

The Enhanced Federal Medical Assistance Program (E-FMAP) funds are monies from the federal government to New York State that are meant to go to local counties, but Governor Kathy Hochul‘s proposed budget holds onto those monies.

County Executive PJ Wendel said if this stays in the budget, it would put counties back 20 years. He said the idea of the state holding onto E-FMAP monies isn’t new and that former Governor Andrew Cuomo had proposed doing the same in the past, “But the Budget Director, who was the Budget Director under Governor Cuomo, Robert Mujica; we were told kind of slipped this in without the Governor’s (Hochul) knowledge. Well, we all said this on a meeting last week, if anybody slipped anything into our budget without our knowledge they probably wouldn’t be working for us. This person has since left, so there’s a vacant position for.. I think there’s an Acting Budget Director now. So the Budget Director position is really vacant so we’re going after a ghost.”

Wendel said the claw back of funds is going into the state’s fund balance and not designated for any specific program.

He said he learned this week that the state is also behind on Medicaid reimbursements to counties to the tune of $8 million for Chautauqua County alone.

Should the Medicaid claw back continue to be part of the state budget when it’s passed April 1, Wendel said the $4.3 million that Chautauqua County would lose in funding is a large portion of the budget, “As you know, we have a very favorable fund balance. This year we did use $4 million in capital projects. So, I’d hate to cancel any of those capital projects cause they are necessary and sometimes, it’s most often times, deferred maintenance and stuff we’re putting off. We do have the ability right now to cover that, but why is it that we are being punished for being fiscally prudent when the Governor can’t seem to get their budget under control?”

Wendel added the New York State Association of Counties, which he is a member of and sits on the board of directors, is working to negotiate with Hochul’s office on this item. He said he hopes those who have pull with Hochul, like Erie County Executive Mark Poloncarz, can sway her to pull this out of the budget. Wendel said he doesn’t believe the State Legislature has any say over the budget item and that it’s at the Governor’s discretion.

Governor Kathy Hochul presents her 2024 State Budget

Governor Kathy Hochul has unveiled her $227 billion state budget for 2024-25.

This budget is $5 billion more than the current year, with a 2.4% increase in all spending.

Hochul said public safety is her top priority, budgeting $337 million.

She is proposing $40 million for funding discovery law changes that have required local prosecutors to make evidence available to defense counsel on a fast basis. The budget also backs $20 million for pre-trial services.

Hochul has also proposed $50 million to aid communities affected by gun violence and $35 million in capital grants for combating hate crimes.

Annual school aid will increase $3.1 billion, or 10%, for a total of amount of $34.5 billion. This includes fully funding the Foundation Aid formula for the first time in 17 years.

Also under education spending is $125 million to expand full day pre-kindergarten and $250 million for tutoring programs to help students recover from learning loss.

As previously announced, Hochul allocated $1 billion toward Mental Health with that multi-year funding going toward the creation of 1,000 inpatient beds, $30 million to expand school-based mental health care, and increased funding for outpatient services.

Hochul wants to expand housing in the state by building 800,000 new units, counting those that are already in development. The budget includes a plan that would allow projects to move ahead over the objections of local zoning regulations if a community is failing to meet targets. Funding for housing includes $250 million for infrastucture support and $20 million for planning assistance.

Child care assistance will receive a $7.4 billion increase over four years. Hochul said this is the most ever. The budget also would provide instant eligibility for child care assistance for anyone receiving government support. Co-pays would be lowered and more support is being proposed for child care providers.

Under health care, the budget seeks to address access issues by adding more than $1 billion in health care capital funding, expanding Medicaid coverage for 7.8 million low-income New Yorkers, and improving access to aging services and high-quality long-term care.

However, the New York State Association of Counties (NYSAC) President Michael Zurlo said Hochul’s budget includes an “unprecedented shift that will saddle local taxpayers” with up to $1 billion in new Medicaid costs by pocketing Enhanced Federal Medical Assistance Program (eFMAP) funds that were intended to go directly to local governments to help hold costs

While there is no personal income tax increase in Hochul’s budget, she is proposing to extend a higher tax rate for wealthy corporations that had been set to expire at the end of the year.

In 2021, former Governor Andrew Cuomo had increased the tax rate for corporations taking in at least $5 million a year in revenue from 6.5% to 7.25%. The increase was only supposed to be temporary and set to end after three years, but Hochul wants to extend it for another three years. The extension would bring in between $800 million and $1.1 billion annually. Democrats are expected to support the extension.

The State Legislature now has until April 1 to approve a fiscal plan.

In the scorecard, counties noted they were encouraged by proposals that address key priorities, including permanency in local sales tax rates, ending the diversion of local taxes to pay for the State’s Aid and Incentives for Municipalities (AIM) program, as well as significant investments in public health, support for veterans, and infrastructure.

It also flagged areas of concern, including the continued diversion of local sales taxes to support a distressed health facilities fund and increased Pre-K provider rates, which are needed but they say should not be funded by county taxpayers.

ALBANY – The New York State Association of Counties (NYSAC), today released an updated report on the economic impact of the novel coronavirus on New York’s counties that projects potentially catastrophic drops in revenue between $1.5 billion to $3.6 billion over the next year.

The report was unveiled during a digital press conference today, during which Dutchess County Executive Marcus Molinaro and Erie County Executive Mark Poloncarz joined NYSAC Executive Stephen J. Acquario to discuss the impact that revenue losses will have on the ability of counties to reopen and recover from the COVID-19 pandemic.

“Counties are facing an economic calamity that exceeds what we saw in the worst of the great recession, and this time it’s occurring in the middle of a global pandemic,” said NYSAC President John F. Marren, chair of the Ontario County Board of Supervisors.

“Without help from the federal government in the form of direct aid to state and local governments, the counties who are leading the effort to stop COVID-19 and lay the foundation for reopening will face savage cuts to staff and services that could not come at a worse time,” said Albany County Executive Dan McCoy, president of the NYS County Executives Association.

Poloncarz said, “Counties across New York State are facing unprecedented challenges as they respond to the COVID-19 crisis, with economic impacts straining budgets and forcing difficult decisions in everything from the provision of necessary services to personnel and staff cutbacks. Despite significant revenue losses and bleak sales tax projections we are doing all we can now at the county level to protect the health and safety of our constituents while preparing for an eventual ‘re-opening’, but we will need help soon. I am joining Dutchess County Executive Molinaro and my executive counterparts statewide in urging the federal government to pass another financial assistance package to help in mitigating the impacts of these losses we are all experiencing so we can continue to work for our communities.”

The report details how counties face a quadruple threat of:

• Declining local revenues, especially sales tax, but also hotel occupancy taxes, mortgage recording taxes, gaming revenues, among other revenues;
• Higher spending necessary to respond to the health emergency and meet the State’s requirements for reopening;
• The loss of state reimbursement; and
• The potential of significant losses for small businesses on our main streets that could threaten jobs and the property tax base over the short to mid-term.

“Our initial report created an outline of what the economic impact of COVID-19 would look like. Now, as we have more data available, we’re able to color in those lines a little more, and the picture is much darker than we previously thought,” said Acquario. “Just as counties led the closing of our communities, counties are going to be leading the reopening and these numbers make it abundantly clear that we will need significant help from the state and federal government to accomplish that mission.”

The map that establishes each of the 10 regions of New York under the Governor’s reopening plan. It follows the same boundaries as the regions used for the State’s 10 Economic Development Councils.

Local officials from across Upstate New York – including here in Jamestown – are raising questions and voicing concerns about the details of the COVID-19 reopening plan Gov. Andrew Cuomo announced on Monday.

County leaders say they are unsure certain requirements can be met without local governments having to increase spending in what will already be a tough budget year.  Specifically, the New York State Association of Counties say they are learning this week that the governor’s plan to enlist an “army of tracers” may not come with any financial support.

In addition, local government representatives from across upstate are also questioning the governor’s proposal to use the state economic development regions to phase in reopening, saying it is not the right geographic strategy. That sentiment was shared locally Monday night by some Republican members of the Jamestown City Council.

“I’m really disappointed that we’re considered part of the Western New York Region as opposed to the Southern Tier. If you look at the numbers [from the Western New York region], they’re so skewed by Erie County – the people with infections, people who’ve died, hospitalizations – everything in the whole Western Region is getting skewed by Erie County,” said councilman Brent Sheldon. “I understand the governor saying ‘If we open up certain things people are going to come here because of it.’  But not if we open up manufacturing and construction. That’s not going to bring people from Erie County down here. It’s when you get to phases three and four [that might happen].”

Council President Tony Dolce also said it was disappointing that Chautauqua County has to follow the lead of Erie County.

“What was the determination? Who drew the lines? We’re in the Southern Tier when it comes to our congressional district, but yet we’re in Western New York for this. No matter where the line is, someone is going to open before someone else and someone is going to go somewhere else. There is no real, 100 percent way to control where people go and what they are going to do. It’s unfortunate and disappointing,” Dolce said.

Meanwhile, Councilwoman Kim Ecklund simply called the decision to put Chautauqua County in the Western New York Region “disgusting.”

Jamestown Mayor Eddie Sundquist noted that it was unlikely the state would make any changes at this point and move Chautauqua County to the Southern Tier.

Gov. Cuomo had announced last month that the state would take a regional approach to reopening – based on the 10 economic development regions of the state. He provided more details on the “New York Forward” reopening plan on Monday when he listed the seven metrics or criteria that each region will be required to meet in order to reopen (see chart below), following established guidelines from the Centers for Disease Control.

source: https://www.governor.ny.gov/programs/new-york-forward

Under that criteria, none of the regions currently meets the standards, which include declining COVID-19 infection rates and testing at least 3 percent of the population on a monthly basis. But Western New York was included as a “high risk” zone, primary because of the number of growing cases and hospitalizations in Erie County.  The governor also said once reopening begins, it would be done through a four-phase process, with manufacturing and construction being part of the first phase while businesses focusing on entertainment would be the last to reopen.

The plan by the Governor loosely follows the suggested plan from local state legislators Sen. George Borrello and Assemblyman Andy Goodell, who proposed a reopening plan  in April that would also use the existing regional economic development zones as a template, but which could also be adjusted if necessary to reflect unique situations within the zones.

According to the Division of Budget’s Summary, “The scope and depth of the reductions to local aid programs needed to balance the FY 2021 Budget have no precedent in modern times. In the absence of Federal aid, nearly every activity funded by state government in the aid to localities budget … will face steep cuts.”

These cuts are expected as the COVID-19 pandemic is spiking demand for social services such as TANF, HEAP, child support, child welfare services and adult protective services.

“Local governments are teetering on the edge of a fiscal cliff as demands for services rise and economic activity is at a standstill. Counties are the foot soldiers in the war against COVID-19, and without direct federal support, they’ll be running out of the resources necessary to continue the fight,” said NYSAC President John F. Marren.

Early estimates project revenues from local sales, which are the lifeblood of local government, are falling off a cliff. Initial projections from the most recent data available show severe declines in retail activity, including:

• Motor Vehicle & Parts Dealers – loss of 23.7%
• Gasoline stations – loss of 18%
• Department stores – loss of 23.9%
• Clothing & Accessories – loss of 50%

These categories of economic retail activity represent some of the largest segments of the economy contributing to sales tax, a major source of revenue for county governments.

“Local taxpayers cannot absorb the loss of this revenue and state aid cuts. As Congress negotiates the next COVID-19 response package, we are asking them to ensure that there is direct and flexible funding for the county governments who are on the front lines of this critical public health and economic crisis” said Albany County Executive Dan McCoy, president of the New York State County Executives’ Association.

“County governments are facing an unprecedented perfect fiscal storm as severe revenue loss and high demand for social service program are threatening to overwhelm county governments interfering with our efforts to combat COVID-19,” said NYSAC Executive Director Stephen Acquario. “Without help from the federal government in the form of direct aid to local governments, counties simply won’t be able to provide the essential services that are crucial to stopping the virus and reopening our communities.”

Local government has borne the brunt of the fiscal impact – from organizing the response to COVID-19 cases to revenue drying up amid businesses shuttering .

Counties outside New York City are expected to lose a cumulative $2 billion in sales tax revenue due to the coronavirus pandemic. Both the New York State Association of Counties and the New York Conference of Mayors are each calling for federal funding in a phase IV stimulus package known as the Coronavirus Community Relief Act.

“The Coronavirus Community Relief Act would provide a $250 billion stand-alone fund for COVID-19 related costs for communities with fewer than 500,000 residents,” Sundquist said. “This comes after smaller municipalities were mostly left out in the CARES act, which only provided a direct federal fund for states, tribal groups, and cities larger than 500,000 residents, which comprises only 14% of the United States population.”

“County leaders are the onsite incident commanders, serving as the generals on the ground. They are developing innovative ways to stop the spread of the virus, modeling courage at the local level, and are focused on strengthening their communities during this global pandemic,” said NYSAC Executive Director Stephen Acquario. “The NY Counties Lead campaign will share the stories of innovation, courage and community that exemplify the work of our county leaders and heroic frontline workers they oversee.”

Meanwhile, Congressman Tom Reed on Tuesday said he will support the effort to get the funding, adding that the Phase IV stimulus package will likely be developed and finalized in May.

New York State Comptroller Thomas DiNapoli on Tuesday announced that the economic slowdown will cost New York State between $4 and $7 billion in revenues for the next fiscal year that starts on April 1.

“The amended revenue forecast released by the Comptroller is very troubling for local governments and property taxpayers,” said New York State Association of Counties President Jack Marren. “Local taxpayers will face challenges on four separate fronts at a time when we are fighting the coronavirus outbreak. The first will be an increased demand for health and human services during a recession, the second is a loss in critical local sales tax revenues we use to fund state and local services delivered in our community, the third will come in the form of looming cuts from the state budget, and the fourth will be further reductions in local quality of life services.”

The Comptroller’s estimates assume the ultimate impact is a mild recession, the higher end of the range assumes something more severe. These estimates are also before the consideration of any federal stimulus that may be forthcoming which could provide significant help to the economy and state receipts, such as an increase in federal Medicaid matching funds which would directly benefit the State Financial Plan.

“Our county leaders understand that all levels of government and all facets of society will be severely impacted by the response to COVID-19, but we also believe that the state and federal government needs to invest in our communities because we are on the front lines of fighting the spread of the coronavirus, and helping the people most impacted by an economic downturn,” said NYSAC Executive Director Stephen Acquario.

A forthcoming report from NYSAC will project that the loss in sales tax revenues will exceed $1 billion for county governments across the state. This does not account for the local workforce related revenue losses, and the costs associated with responding to the COVID-19 pandemic.

“Counties are concerned that this fluctuation in projected revenue could result in cuts to state aid that help to fund vital services such as public health, services for older Americans, and public safety operations such as 9-1-1 dispatch services and sheriff road patrol,” said President Marren. “Any reduction in state assistance during this emergency public health response will compound the negative revenue outlook that counties are facing.”

“As we have always done, counties stand united behind managing the cost of Medicaid and improving the quality of care for those in need,” said New York State Association of Counties (NYSAC) President John F. Marren, the Ontario County Chair. “However, any state Medicaid proposal must protect local taxpayers by keeping the current cost control caps in place.”

New York is one of the few states in the nation to require county funds to cover the cost of Medicaid, and the only one that required county taxpayers to fund a full half of the State’s share when it was implemented in 1966. Today, counties and New York City fund $7.6 billion of the state’s more than $70 billion Medicaid program.

In 2012, to help counties and local governments adhere to the 2% property tax cap, Governor Andrew Cuomo and State Lawmakers enacted a zero growth Medicaid cap. The cap helped counties stabilize and, in several cases, reduce county property tax rate levies.

“Counties will work with state leaders and with the Medicaid Redesign Team (MRT) to address what is under local control, but we cannot absorb additional costs without jeopardizing vital services that our residents depend on,” said NYSAC Executive Director Stephen J. Acquario. Counties are represented on the MRT by Suffolk County Executive Steve Bellone, who also sits on the NYSAC Board of Directors.

The Executive Budget proposal includes three separate initiatives that would impact the Medicaid local share counties pay in support of the state Medicaid program:

1. 1. Capping eFMAP Federal Fiscal Benefits to Counties
      Under this proposal the Budget proposes to cap the amount of federal savings that have been accruing to counties and New York City from the Affordable Care Act, funneling any savings to the state. This provision is effective April 1, 2020, but no fiscal impact amount is provided in the budget for this proposal.
   2. Require Counties and New York City to Adhere to the 2 Percent Property Tax Cap or Lose the Benefits of the State Funded Local Medicaid Growth Cap
      If a county fails to stay under the property tax cap, or if New York City’s property tax levy grows more than the county property tax cap allows, then they would lose all of the savings from the local Medicaid cap in that year. This provision is effective April 1, 2020.
   3. Adhere to a Local Share Medicaid Costs Increase of No More than 3 Percent
      If a county’s local share and associated savings exceeds three percent in any given year, county taxpayers must refund to the state any excess benefit over three percent. This provision is effective April 1, 2021.

“The Medicaid cap has been crucial in helping counties stay under the property tax cap and save local taxpayers money. While we welcome the opportunity to work with the MRT to lower Medicaid costs overall, we maintain that property taxpayers should not shoulder the burden of Medicaid cost increases that counties are not empowered to restrain. We can’t cap what we can’t control, and our taxpayers should not be penalized for that,” said Albany County Executive Dan McCoy, who also serves as president of the New York State County Executives’ Association.

For additional information and resources related to the SF2021 Budget Medicaid Proposals visit https://www.nysac.org/medicaid.