Mayor Bloomberg vs. Gov. Paterson In Medicaid Money Fight
Gov. Paterson and Mayor Bloomberg are showing a unified public front on the Senate health care bill, but they're in a heated backstage battle.
The governor is steamed that the city pushed language into the Senate bill forcing the state to give it more cash - while the mayor says Paterson is cheating the city.
"They're screwing us on Medicaid," one city official said.
The Bloomberg administration says the state is shortchanging the city $500 million in health care stimulus money. The city sued the state over it in July.
Joined by officials from Las Vegas and Los Angeles, the city last week got Senate Majority Leader Harry Reid to increase state-to-local funding in the Senate bill.
However the state wants to strip it from the bill.
Last March, the state agreed to pass $2.7 billion of its overall health care Stimulus funds to localities, with $1.92 billion earmarked for the city.
Bloomberg aides argued that typically the state bears 66% of Medicaid costs, but is hanging on to as much as 80% of the Medicaid Stimulus money.
The state says a 3% cap on local spending on Medicaid growth will save the city $1.2 billion.
Bloomberg and Paterson agreed on one thing yesterday: New York needs more from the final health reform legislation.
"The governor and I will have to get through some tough times together," Bloomberg said. "We won't always agree on everything. You have a right to be wrong."
N.Y. School Groups To Sue Governor Over Withholding Planned Aid
Groups representing New York public schools plan to go to court and challenge Governor David Paterson’s authority to defer aid payments this month to ease a state cash shortage.
Paterson said yesterday he would withhold $750 million of payments this month to schools, local governments and health insurers to avert a squeeze after the Legislature in the third- most populous U.S. state didn’t cut spending as much as he wanted.
The governor said New York “may” run out of funds this month, even after borrowing from its investment pool and reserves. Withholding payments was preferable to the chaos that would result “because no one knows what to do when you run out of money and you still have obligations,” Paterson said at a press conference today.
“It is likely we will sue,” said David Albert, director of communications and research at the New York School Boards Association. Group members “are concerned about the ability of the governor to do this going forward.”
School districts in New York are allowed to sell bonds and notes, including revenue anticipation obligations backed by anticipated state payments. Paterson’s actions come in the middle of the school year, after districts submitted budgets to public vote in May and sent property tax bills based on those spending plans in September.
Cuts in state aid are more difficult to handle at mid-year when districts have less time to compensate with spending cuts, said Kevin Casey, executive director of the School Administrators Association of New York.
Cutting Expenses
“If you know you have $100,000 less income at the beginning of the year, you can eliminate one position, but if the reduction comes at mid-year you have to cut two positions to get the same dollar savings in a six-month period,” Casey said.
When Paterson initially proposed outright cuts in school aid Oct. 15, the governor said 95 percent of the state’s more than 600 districts had reserves available to cover the loss. He sought to impose the biggest reductions at the financially strongest districts.
Yesterday, he announced an across-the-board 10 percent, or $150 million, paring of the $1.5 billion of aid payments due tomorrow. The cuts will avoid breaking the state law, which doesn’t allow the governor to impound appropriated funds, he said.
Aid to New York’s school districts, set at $21.9 billion in the beginning of the year, is the largest segment of the $133.2 billion state budget. New York schools spent $15,981 per pupil in 2007, the most of any state and 65 percent more than average, according to the U.S. Census Bureau.
Cities’ Reductions
Paterson’s withholding of 10 percent, or $45 million of the state’s $450 million aid payment to municipalities tomorrow comes just two weeks before the Dec. 31 end of the fiscal year for 44 cities, said Peter Baynes, executive director of the New York Conference of Mayors.
Paterson said yesterday he was obliged to withhold state aid because lawmakers’ $2.77 billion plan for reduced outlays and generating additional revenue approved earlier this month isn’t enough to ease the state’s cash squeeze in December or close an estimated $3.2 billion deficit for the year ending March 31.
Senate Democrats are exploring “all legal options,” because “the governor’s actions are clearly impoundment by another name, and the courts have long determined he does not have that authority,” said Travis Proulx, a spokesman for Senate Democratic leader John Sampson of Brooklyn.
Manage the Cash
Assembly Speaker Sheldon Silver, a Manhattan Democrat, was more conciliatory when he appeared with Paterson at a news conference in New York City today. It is the job of Paterson and Budget Director Robert Megna “to manage the cash of the state” in an appropriate manner, an activity not subject to lawmakers’ approval or disapproval, Silver said.
“Right now it appears to be a postponement based on cash flow,” Silver said. “I assume at some point, that cash will come back to those school districts.”
Paterson’s announcement of the withholding described the moves as a cash management action rather than eliminating the obligation to pay. “As sufficient revenue becomes available, the state will potentially pay the amounts that were delayed,” the announcement stated.
Next Budget
Other actions to close this year’s deficit will be part of the budget Paterson said he will present in mid-January. The governor “reserves the right to institute further payment delays over the remaining months of the fiscal year in order to preserve the state’s cash position,” according to the announcement.
For the next fiscal year, state projections showed a $6.8 billion deficit, followed by a $14.8 billion gap the following year when federal stimulus aid runs out, and $19.5 billion the next year, when temporary increases in the state’s top income tax rates expire. The figures didn’t incorporate the spending cuts and other actions approved by lawmakers and Paterson this month.
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Sources: Bloomberg News, NY Daily News, Google Maps
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