ALBANY COUNTY — On the heels of his ninth State of the County address, Albany County Executive Daniel McCoy told The Enterprise this week that, with reserves at an all-time high while not raising property taxes in seven years —  actually lowering them in each of the past two years — the county’s “state is strong.”

 Albany County no longer has to borrow millions of dollars to make payroll, McCoy said, as was the case when he first took office eight years ago. In addition, McCoy said that Albany is among the lowest taxed counties in New York State. 

With residents paying $3.57 per $1,000 of assessed value in county taxes in 2019, the conservative Empire Center think tank shows Albany County tied for eighth lowest among the 57 counties outside of New York City (which is made up of five counties) in its 2019 tax analysis. Saratoga County at $2.39 per $1,000 is listed as the lowest.

For 2020, Albany County property owners will pay $3.49 per $1,000 of assessed value in county taxes. 

While Albany County has experienced mostly positive growth in McCoy’s time in office, recently, he, along with his fellow county and city leaders, were hit with a multi-billion-dollar broadside by the governor in his 2020 State of the State address.

The state versus its counties

Facing a $6 billion deficit for next year’s nearly $179 billion budget, Governor Andrew Cuomo sought to spread some of the burden. Up first, local governments inability to rein in Medicaid costs — the solution: Identify $2.5 billion in savings.

With a third of all residents enrolled in Medicaid, New York’s $75 billion Medicaid program is the country’s second largest, nearly doubling the third largest state-run Medicaid program, Texas at $38 billion. According to the state, it foots the bill for a quarter of the program’s costs, about $20 billion. 

Medicaid is the federal program, administered differently by states, that pays for health care for people with limited incomes or with disabilities.

With a $733 budget for 2020, Albany County Medicaid costs account for 9 percent of all county expenditures — this year, about $67 million. In 2019, costs accounted for 9.4 percent of expenditures, about $67 million. And, in 2018, Medicaid costs accounted for 10 percent of Albany County’s expenditures, about $66.4 million.

“Because local governments are no longer responsible for the cost of their programs, there is no financial incentive to control costs, and localities have failed to adequately monitor their programs, leading to overspending,” according to the governor. “Other factors, such as the cost of managed long-term care, the $15 minimum wage, increasing enrollment and support to distressed hospitals, have also contributed to the increasing costs of the Medicaid program.”

But the governor did say that the state would cover all increases in Medicaid costs for local governments as long as they stay under the state-set property tax cap in addition to keeping Medicaid-cost growth to just 3 percent annually.  

However, if local governments did not stay within both the levy limit and Medicaid-growth caps, they would be responsible for covering all of the Medicaid spending growth.

County governments have no cost-control power over Medicaid, which statewide has seen a near 40-percent increase in program enrollment since 2009.

Half of Medicaid funding comes from the federal government, while the states — rather, non-federal sources — are responsible for picking up the tab on the other 50 percent. 

The Medicaid law allows states to choose how they will pay for their half of residents’ medical expenses — the state can take on that entire cost or it can pass some of that cost along to its municipalities. Eighteen states have laws that mandate counties pick up a portion of non-federal Medicaid costs. 

In 1966, Governor Nelson Rockefeller signed into law that New York State would split, rather, hoist onto its municipalities, half of its half of Medicaid expenses. No other state in the country has higher mandated county contributions than New York, which the Empire Center in 2018 put at $8 billion per year.

In January 2012, the state-set property tax cap championed by the governor went into effect; it was extended in 2015 and made permanent last year. 

“Remember what we did,” the governor said in January, “we froze the cost of Medicaid to local governments to help those local governments meet their property tax cap … We have been paying all the increased costs in local Medicaid spending and holding local governments harmless.”

The governor’s 2011 cap on Medicaid growth did help counties, McCoy said, adding that any Medicaid increases wouldn’t affect this year’s county budget; the impact would be felt in 2021 and beyond.

The state-set property tax cap has saved New Yorkers billions and billions since it was introduced, but it’s also forced local school districts to cut jobs and programs, and has municipalities looking to Albany County to shoulder some of their increased costs.

Under the governor’s proposal, county governments could start to lose money, McCoy said, adding, “It could put us back in those days of big tax increases.”

“I don’t know why the state of New York doesn’t run [its Medicaid program],” McCoy said. “And if we’re not doing it right, please take it.”

Asked about the governor’s proposal to put more costs back on to the counties and the fairness of the decision, McCoy pointed to Albany County’s budget, 85 percent of which are costs mandated by either the state or federal government. 

Last year, for example, McCoy said that the state put Aid and Incentives for Municipalities (AIMs) funding back onto the counties. 

In 2019, the state eliminated traditional AIM payments to towns and villages, replacing actual funding with a new state payment equal to what those municipalities would have received under the traditional AIMs program. That meant “payment” from the state no longer actually came from New York State; rather, counties were placed on the hook for town and village AIMs funding, which was to be paid out of county sales-tax revenue. 

“It was a program started by the state in the 1970s; now, I’m paying for AIMs funding?” McCoy said. “Seriously?”

He continued, “And I have no control or say over it?”

McCoy also pointed to the governor’s proposed changes to the School Tax Relief program, known as STAR, as another recent example of the state’s placing more burden on the counties. The proposed change, at first blush, seems like a winner: Homeowners who don’t pay their property taxes would not be eligible for a STAR exemption.

But what the governor is proposing, McCoy said, is that, if someone falls behind on their mortgage payments and isn’t paying his taxes, it’s incumbent on Albany County to tell the state that that person is late paying his taxes, which means that property owner will lose his STAR exemption.

The loss of STAR exemptions puts more of a burden on homeowners who, for whatever reason, are already behind because they can’t pay their mortgage, he said, which only compounds the problem for the county. 

Albany County, McCoy said, keeps all “cities, towns, and villages whole,” so, for example, if a New Scotland resident living in the Voorheesville School District fails to pay her school taxes in a given year, Albany County ends up paying that resident’s school-tax bill — which the school district would be completely unaware of, meaning that Voorheesville would have no idea that the district resident isn’t paying her tax bill.

But now, under the governor’s proposal, since Albany County guarantees tax local levies and enforces delinquencies, to save money, it would have to apply for that New Scotland resident’s STAR exemption, McCoy said. “That’s going to be another burden,” he said.

In effect, it’s a cost-saving measure that also costs the county money. 

Opioids lawsuit

In 2018, Albany County filed a lawsuit against four pharmaceutical companies involved in the manufacturing, marketing, and sale of prescription opioid pain medications seeking to “redress harm from a long-running and far reaching fraudulent scheme perpetuated” by the makers of prescription opioids.

At his 2019 State of the County address, McCoy announced that the county’s lawsuit was amended to include the distributors (the middlemen between the manufacturer and retailer) of prescription opioid pain medications. 

The county’s suit was consolidated with, what is now, 2,700 other lawsuits into a single multidistrict litigation federal case that is being heard in the Northern District of Ohio Eastern Division in Cleveland.

In dollars and cents, the national economic burden of the opioid crisis has been estimated at a wide variety of costs, including: $50 billion to $188 billion annually; a four-year economic-burden estimate of $631 billion, between 2015 and 2018; a $1 trillion estimated burden for the years between 2001 and 2017 — with another $500 billion in economic burden projected for the following three years, 2018 to 2020.

Last week, it was reported that 21 states had rejected an $18 billion settlement proposal from three major drug distributors. The most recent proposed settlement before that, from October 2019, was worth about $48 billion in cash, treatment drugs, and services over 20 years.

So how can McCoy ensure that the opioid producers and distributors pay what they owe? 

To start, McCoy said, the first problem is that opioid producers aren’t like Big Tobacco, which continues to take in billions in revenue each year. 

In 1994, Mississippi filed the first state lawsuit against Big Tobacco. And over the next few years, the rest of the country followed suit, as state after state filed lawsuits against tobacco companies in an effort to recoup Medicaid costs expended to treat smoking-related illnesses.

In November 1998, the country’s four biggest cigarette makers and 46 states entered into the Tobacco Master Settlement Agreement, and, in exchange for an exemption from all legal liabilities, the tobacco industry agreed to payout $206 billion over the next 25 years.

New York’s tobacco settlement payout was worth about $25 billion — and by all accounts it would appear that both the state and its counties squandered nearly all that money; nationwide, less than 10-percent was spent on anti-smoking programs as the money instead paid for projects ranging from bridges and road repair to museums.

The tobacco companies have been described as “Goliaths,” and had the comparatively smaller pharmaceutical companies been the size of tobacco industry, the settlement would be closer to $500 billion to $1 trillion.

Ultimately, McCoy said, the money received in a settlement would do little to help municipalities in recouping their opioid-related costs. But more than money, McCoy wants to end the opioid epidemic in part by upending the entire pain-pill-prescribing process — no more 30-day supplies of painkillers; three-day supplies and follow-up visits with a doctor. 

According to a site set up for the National Prescription Opiates Litigation, in a hypothetical billion-dollar settlement, Albany County would receive a $480,000 payout; for comparison, Suffolk County, which has been ravaged by the opioid epidemic, would receive nearly $4 million.