Governor Paterson, Majority Leader Smith, and Speaker Silver Announce $2.7 Billion in Relief to Local Governments Through Increased Medicaid Reimbursements

Press Release

GOVERNOR PATERSON, MAJORITY LEADER SMITH, AND SPEAKER SILVER ANNOUNCE $2.7 BILLION IN RELIEF TO LOCAL GOVERNMENTS THROUGH INCREASED MEDICAID REIMBURSEMENTS

Federal Economic Recovery Legislation Will Help Prevent Increases in Property Taxes as Local Governments Face Significant Budget Shortfalls

Governor David A. Paterson, Senate Majority Leader Malcolm A. Smith, and Assembly Speaker Sheldon Silver today announced that county governments and the City of New York will receive an estimated total of $2.7 billion in fiscal relief through increased Federal Medical Assistance Percentages (FMAP) reimbursements for Medicaid over 27 months as part of the American Reinvestment and Recovery Act. These funds will help prevent further increases in New York's property tax burden, which is already among the highest in the nation, as local governments seek to close significant budget shortfalls.

"I have worked tirelessly with governors across the country and New York's congressional delegation to ensure that not only states, but also local governments, receive the federal resources they need to help weather an unprecedented economic storm," said Governor Paterson. "In particular, this funding will help prevent many local governments from further increasing our State's already crushing local property tax burden, as they address their substantial budget shortfalls."

"We are confident that this major increase in FMAP will be a significant help to counties across the State and help mitigate pressure for increasing property taxes," said Senate Majority Leader Smith. "Together with cost savings in Medicaid, this funding will alleviate some of the burden placed on local governments during this time of dire economic crisis."

"The increased FMAP assistance to New York is evidence of President Obama's stimulus package at work," said Assembly Speaker Silver. "These funds lighten the load on local governments, which have for months faced tough budget decisions. The FMAP money will help counties control Medicaid costs and hopefully put the brakes on further cuts to the essential services people rely on. We are confident that during this economic recession, the decisive action provided from the federal stimulus package will help our state and local governments as we move through difficult economic times."

Of the total $2.7 billion in estimated FMAP funding that local governments will receive over 27 months, it is projected that $513.8 million will be provided in State fiscal year 2008-09, $1.4 billion in 2009-10, and $816.4 million in 2010-11. Based on current projections for Medicaid caseload and expenses in the Executive Budget, New York City would receive an estimated $1.9 billion, while the rest of the State will receive approximately $776 million. A region-by-region allocation is detailed at the end of this press release. For a county-by-county allocation, please visit: http://www.budget.state.ny.us/pubs/press/2009/countyFMAP.pdf.

This $2.7 billion in estimated federal FMAP economic recovery funding for counties and the City of New York will supplement the significant relief that the State already provides to these entities. Currently, the State caps growth in local Medicaid expenses at 3 percent annually and has fully assumed all costs for the Family Health Plus (FHP) program. Despite the current budget crisis, Governor Paterson's Executive Budget maintained support for the Medicaid Cap and FHP takeover as an important tool to help local officials manage rising costs. This initiative is expected to provide $684 million in relief in local fiscal year 2009. Since its inception in 2005, it has provided cumulative relief of $2.3 billion.

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