ITHACA, N.Y. — With New York facing a projected $6.1 billion budget gap in 2020, state lawmakers like Assemblywoman Barbara Lifton are being presented with tough decisions on how to close the growing hole left by growth in Medicaid expenses.
“I’m not saying it’s going to be an easy year,” Lifton told the Ithaca Voice in an interview. “It’s going to be a tough year.”
Governor Andrew Cuomo released a mid-fiscal-year budget indicating that the state is projected to overrun its budget largely due to the growing costs of New York’s $70 billion Medicaid program, the costliest in the country. Currently, the Medicaid program is operating with a $2.9 billion deficit, which the Department of Health expects to rise to $3.9 billion by 2023.
To balance the books, the state will have to take action before the end of the fiscal year which ends on March 30. In previous years the state has deferred Medicaid payments to hospitals and nursing homes until the next fiscal year to help close the gap, pushing the problem into the next fiscal year.
Moody’s, one of the “big three” credit rating agencies, found that even after deferring $2.2 billion in payments from this year, the state would still need to account for $1.8 billion in budget gaps.
This means that smaller budget gaps have been avoided in recent years by some fiscal trickery, essentially kicked the can down the road. Moody’s report shows that the state won’t be able to solve the problem the same way this year.
“I think there are other places, probably in the budget, we could go look for money if we need to fill that Medicaid gap,” Lifton said, but where exactly those funds come from could lead to an even more contentious budget battle in Albany over the next few months.
Gathering in the capital for conference meetings over the last few weeks, Democratic Senate Majority Leader Andrea Stewart Cousins, shied away from suggesting the state may raise taxes to fill the gap. Assembly Speaker Carl Heastie, on the other hand, indicated that his chamber was in favor of tax hikes.
Details on any such tax, and what tax bracket it may affect, haven’t been made clear at this point.
Lifton, however, isn’t opposed to raising taxes on top earners, and she believes other Assembly Democrats would agree with her.
“We’re a very wealthy state,” she said about a possible tax on the top one or two percent of earners in the state. “We have some extremely wealthy people and I’m okay if it comes to that.”
This budget gap is the largest New York state has faced since a $10 billion gap during the recession in 2010. To make up for that gap, the state made a six percent cut to education aid in 2011, placing the burden on schools to make up the difference.
That same year, the state instituted a two percent tax cap on how much local governments and school districts could raise property taxes each year, effectively restricting them from recovering the lost revenue. Earlier this year, the legislature made that two percent cap permanent despite Lifton and other Assembly Democrats’ opposition.
“I don’t want to see a local tax. I don’t want to see that horrible property tax increase,” Lifton said. “It needs to be on the broad-based taxes at the state if we raise any taxes it all and it needs to be in a very progressive way.”
State Senator Tom O’Mara did not respond to request for comment.
Governor Andrew Cuomo has said that his plan to close the gap will be unveiled in his State of the State address on Jan. 8, the same day lawmakers return to Albany for the 2020 legislative session.