The Cuomo administration has admitted there is a “structural imbalance” in its massive Medicaid budget, which means the Empire State’s biggest single government program is spending beyond its means.

So, what does Gov. Andrew Cuomo plan to do about it? Some hint of the answer might be forthcoming in a midyear financial update — whenever, that is, Cuomo gets around to issuing one as required by law.

That report is now two weeks overdue.

Meanwhile, the Medicaid cost overrun points to a broader budget problem: With the economy and tax receipts still growing in line with projections, for the first time in nearly three decades, New York has an operating deficit not caused by an economic downturn.

The problem started to simmer (with little notice) at least a year ago, when Medicaid expenditures began to consistently run ahead of budget projections. It boiled over in the spring, when the governor balanced his budget by rolling over more than $1.7 billion in Medicaid payments from late March to early April — a maneuver not revealed until after the current budget had been passed by the Legislature in Albany.

In a disclosure document slipped out last month, the governor’s Budget Division asserted that the state might realize “savings” of up to $2 billion on Medicaid this year, while still “leaving an imbalance in the range of $1.5 billion.”

In other words, Cuomo might just kick the can farther down the road.

The last time New York ran this deeply in the red without a recessionary excuse was during the 1970s and ’80s. In those days, the state got in the habit of issuing short-term revenue notes every April to cover billions in local-aid payments routinely rolled over from one year into the next.

The annual “spring borrowing” was finally eliminated by the creation in 1990 of the Local Government Assistance Corp., or LGAC, authorized to issue $4.7 billion in long-term bonds to help the budget catch up with local aid.

All these years later, the state budget still includes $372 million in debt service payments on the last of the LGAC bonds, which won’t be retired until four years from now.

It isn’t as if the governor’s ­options are limited. His first-term Medicaid reforms gave him more authority to impose cost controls and reduce provider rates. This year’s budget bills handed him unprecedented authority to cut local aid if needed to close a deficit.For any government — as for any business or household — delaying bill payments isn’t a positive financial sign. In New York’s case, however, the reason for the Medicaid rollover wasn’t so much a lack of cash as the governor’s need to keep claiming he has held annual spending growth to 2%, per his longtime pledge, when it was closer to 4% last year.

In fact, Cuomo is armed with more budget-control power than any of his predecessors were. The question is how, when and whether he intends to use it.

Cuomo’s intentions might be less of a mystery at this point if he hadn’t, for a ninth consecutive year, simply blown off the Oct. 30 statutory deadline for filing a mid-fiscal year financial update. Since 2011, he has consistently been at least a week late; In 2012, he didn’t put it out until Nov. 29.

The mandated report was intended to give the Legislature and the public a clearer fiscal outlook at the start of New York’s annual budget preparation process — but legislative leaders don’t seem to care about the governor’s flouting of the law. The Senate and Assembly fiscal committees also have ­ignored a Nov. 5 deadline for ­issuing their own spending and revenue projections, as required under a 2007 law that was supposed to ensure a “quick start” to the budget process.

That leaves Comptroller Thomas DiNapoli as the only state official to consistently meet his reporting deadlines. Last week, in his latest report, DiNapoli warned that Cuomo’s deferral of Medicaid payments — and the possibility of yet another Medicaid rollover this year — “raise troubling questions as to whether the State may return to historical practices of allowing operating deficits to recur, and potentially increase, from year to year.”

Cuomo “should provide details on the specific causes of the imbalance and clarify the state’s expected response as soon as possible,” the comptroller added.

He might have added: Don’t hold your breath.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

Instead of Facing Fiscal Crises, NYC, State are Burying Their Heads in the Sand

The headlines surrounding this week’s New York City budget naturally focused on #DefundthePolice demands. But for all its larger potential implications for New Yorkers’ security and quality of life, the partially illusory $1 billion “cut” in the Read More

A Corona Commission for New York

New York is finally ahead of the coronavirus, but its outbreak stands as a world-wide horror story. A sophisticated city was caught unprepared and suffered some of the worst levels of infection and death. The need for an investigation is clear. The harder Read More

Cuomo’s Stall: Gov Keeps Holding Off on Budget Cuts

On April 2, with New York’s COVID-19 curve still rising ominously, state lawmakers  almost unchanged from Gov. Andrew Cuomo’s pre-pandemic January proposal. With the economy in a coma and revenues crashing, the plan obviously was awash in red ink. Read More

Washington shouldn’t fund NY’s “normal” budgets

With the coronavirus lockdown continuing to erode tax revenues, Gov. Andrew Cuomo has turned up the volume on his demands for a federal bailout of the New York state budget. In a weekend briefing, the governor repeated his estimate that the Empire State will need help closing a deficit of $10 billion to $15 billion. “I don’t have any funding to do what I normally do,” he said. Read More

Why is NYC the epicenter?

In case it wasn’t obvious from the headlines and body count, New York is currently suffering more severely from the coronavirus epidemic than almost anywhere else. Read More

NY lawmakers letting Cuomo make all tough budget decisions — when he gets to it

The coronavirus pandemic has just claimed its first big institutional victim: the New York state Legislature, which handed Gov. Andrew Cuomo broad and unprecedented leeway to cut state spending in the fiscal year that began Wednesday. Read More

How the federal relief bill cheats New York

In the predictably messy $2 trillion coronavirus response bill approved by Congress on Friday, one provision stands out as a particular travesty: the nonsensical way it distributes public health funding to the states. Read More

As coronavirus rages, Albany’s health-care taxes are simply inexcusable

#NYCoronavirus: What he had stumbled onto was one of Albany’s dirtiest little secrets — an addiction to taxing health care, which has gotten steadily worse over the past quarter-century. And now there’s a danger that the coronavirus crisis will become an excuse for state lawmakers to hike the taxes and hit consumers even harder. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.