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Griffo: County Needs Medicaid Sales Tax
To Meet Runaway Medicaid Costs

 Proposed 2005 Budget Freezes Property Tax Levy,
Creates Foundation for Long-Term Fiscal Survival

Saying that “the Medicaid system is broken and we are going broke paying for it,” Oneida County Executive Joseph A. Griffo today unveiled his 2005 budget proposal, which freezes the county property tax levy and imposes a 1.5% Medicaid Sales Tax.

“The proposed 1.5% Medicaid Sales Tax is a matter of fiscal realities,” Griffo told the Oneida County Board of Legislators in his annual Budget Message. “It is not an attractive option, but it is the only one left because cost-containment and Medicaid reform were among the casualties of Albany ’s dysfunctional gridlock. This budget cannot just solve the 2005 budget gap, but must create the foundation to address projected future cost increases in Medicaid, which is projected to grow at double digit rates every year.”

Griffo said the 2005 budget reflects cost increases in mandated programs, as well as the impact of revenue loses.

           “Because state government could not agree on common sense reforms that everyone knows are needed to fix the bloated and ineffective Medicaid program, and the state keeps juggling cost formulas for other social services programs to pile more costs upon us, Oneida County has been force-fed more than $13 million in state-imposed spending increases in 2005,” Griffo said.

Noting that Medicaid had been the driving force behind sales tax increases in both the 1980s and 1990s, Griffo starkly outlined the impact of Medicaid on Oneida County and all of New York ’s counties. “This is not a one-year dilemma. We face an endless landslide rolling down to bury us deeper and deeper in Medicaid spending that is dumped on us by somebody else. As we budget for 2005, we must create a solid fiscal foundation for 2006, 2007 and beyond. Although we are able to offer property taxes a year without an increase, we recognize that property taxes will need to rise in the future. Creating the Medicaid Sales Tax now will help us limit future increases.”

Griffo said County Government must adapt to what he called “this harsh, new reality” by focusing resources on core missions. He said during two months of work, he and his budget team reduced a $38 million budget gap down to $26 million.

“Yesterday’s accepted practice is tomorrow’s luxury – and there is no room in this budget for luxuries,” he said, noting that to fill the budget gap, he and his budget team:

• Conducted line-by-line reviews to reduce spending.
• Denied dozens of requests for new spending and cut some budget lines back as far as 2003 levels if that was warranted.
• Cut overtime budget lines.
• Wiped out equipment purchases unless grant funds were being used.
• Imposed an across-the-board cut on departmental discretionary items such as supplies and travel and followed that up with a 55% cut on cell phones to send a message that business as usual is gone forever.
• Made cuts in library aid, and eliminated funding for cultural agencies pending a new funding arrangement that will give us greater impact without taxpayers footing the bill.
• Eliminated 55 positions, although up to 10 may be added to operate Griffiss Airfield. Restructuring in County Government during 2005 will further reduce the numbers of county employees, Griffo said, adding: “ County Government will not function the way we need it to work until we complete a thorough reorganization that improves operational accountability, reduces costs and focuses government on its core missions. That restructuring discussion is now under way at the Health Department, where we will continue to find the right option to avoid duplication of services.”

Griffo said the cuts were not enough. “Even that level of cutting left us with a $26 million budget gap. That would have meant a 48% property tax levy increase – far beyond what people can afford,” he said. “We developed the Medicaid Sales Tax that will be dedicated to paying our rising Medicaid costs now and in the future.”

Griffo noted that unlike the property tax, which hits only property owners, the Medicaid Sales Tax, which is projected to raise $27 million in 2005, will be paid by visitors, tourists, and others, which spreads the burden as widely as possible. “In a county where 60% of our properties have some form of exemption, the sales tax is one of the few options we have for broad-based coverage,” Griffo said.  “Further, the combined property tax burden here is already too high. The Public Policy Institute reported that Oneida County ’s combined property tax load was 25% above the national average. Adding to that would be an unmitigated disaster to businesses and homeowners.”

Griffo also noted that the Medicaid Sales Tax helps to address Medicaid costs that are expected to keep rising after 2005.

“Increasingly, counties are becoming ATMs for programs with costs counties cannot control because we don’t set the rules,” Griffo said. “This county budget is the victim of the state’s historic inability to reign in the Frankenstein monster that it has created. Our local share now totals more than $1 million per week. And we can do nothing but pay that bill, week after week. We have no voice in services, no voice in cost controls, no voice in anything once a person is declared eligible – and even those rules have been loosened by Albany .”

Griffo said the 2004 numbers for Medicaid are staggering. Long term care for seniors costs $8.3 million, up 13.9% from 2000. Managed care costs through HMOs total $9.3 million, up 343% from 2000. Prescription drug costs will total $11.3 million, up 85.5% from 2000.

“Our Medicaid rolls have risen 35 percent since 2000. There are about 40,000 people in Oneida County on Medicaid,” Griffo said. “To illustrate what that means in Oneida County , if those people were one community, it would be the second-largest in the county, exceeding the entire population of our second largest city!”

“Reform is needed, but it is nowhere in sight,” Griffo said. “Capping Medicaid is one option that is being proposed, but with the snail’s pace of change in Albany , we could face another five years of rising costs before a cap is even considered. This budget plans for worst-case scenarios like that because from our experience, anything else is a plan doomed to fail.”

“This budget represents a series of tough choices and shared sacrifices that are required to overcome the incredible financial challenges that are only going to get worse unless the state and federal governments address the way Medicaid is funded in New York State, Griffo told the legislators. “If we put off this day of reckoning, a year from now, we will be looking at even worse choices, and an even greater dilemma. This budget sets the course for our fiscal survival. It will not be an easy course to follow. But it is necessary.”