FOR RELEASE:

County Property Tax Increases Drop
by Half after Medicaid Cap Enacted

County property taxes increased by half as much in 2006 as they had in the prior five years, in large part because Medicaid costs were $190 million less than they would have been without the Medicaid cap, according to a research brief with county-by-county data issued today by New York State Comptroller Alan G. Hevesi.

For 2006, property taxes for counties overall increased by an average of 3.3 percent compared to an average annual increase of 7.0 percent from 2001 to 2005. In January 2005, before the Medicaid cap was enacted, the Comptroller’s Office estimated that county property taxes would have to increase by an average of almost one-third by 2010 to keep pace with Medicaid growth rates projected at that time.

“Last year, the Legislature and Governor took an important step towards reducing the heavy financial burden Medicaid has placed on counties, and our analysis shows that their actions are having positive results,” Hevesi said. “The Medicaid cap introduced a much-needed element of predictability in Medicaid spending and is helping moderate property tax growth. This is a positive development for county governments, but it is clear that this moderation in growth is dependent upon continued implementation of the cap.”

“The good news is that in most counties, taxpayers are seeing a significantly smaller increase in the county portion of their property taxes. However, Medicaid costs still remain a significant problem for State taxpayers,” Hevesi said.

The 2005-06 State budget included a statutory cap on the growth rate of local Medicaid costs. In 2006, local expenses are capped at 3.5 percent above 2005 expenditures, with the cap phasing down to 3 percent by 2008.

The research brief analyzed the Medicaid cap and its impact on county property taxes in 2006. Findings include the following:

• More than three-quarters of the counties (49 out of 57) had 2006 property tax levy increases below their individual five-year growth trends.
• Medicaid costs continue to grow under the cap, increasing by an estimated $66 million in 2006, which represents roughly half of the $131 million increase in total county property taxes levied this year.
• Without the cap, counties would have seen their property taxes grow by another $190 million to nearly $4.3 billion, or 4.7 percent higher than actual 2006 property tax levies. Instead, statewide property tax levies total $4.1 billion.
• The benefit to counties as measured as a share of their 2006 property tax levies range from 12.2 percent for Rockland County to 0.7 percent for Hamilton County.
• The 10 counties with the highest levels of Medicaid expenditures subject to the cap, including Suffolk, Nassau, Westchester, Erie, Monroe, Onondaga, Orange, Rockland, Albany and Oneida, account for $117 million, or roughly 60 percent, of the estimated $190 million of Medicaid costs that the State is picking up from the counties’ share for 2006.
• The 10 counties with the largest property tax levies, including Nassau, Westchester, Suffolk, Monroe, Erie, Onondaga, Orange, Dutchess, Niagara and Albany, account for two-thirds of all property taxes levied in the State ($2.7 billion out of $4.1 billion). These counties received $115 million, or about 60 percent, of the estimated $190 million of Medicaid costs that the State is picking up from the counties’ share for 2006.
  

Click here for a copy of the research brief.
Click here for a copy of county-by-county data.
  

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