New York Gov. Paterson proposes $1.04 billion in budget cuts, including $506 million to Medicaid

Aug 13 2008

New York Gov. David Paterson (D) on Monday proposed cutting this year's state budget by 1%, or $1.04 billion, including $506 million in Medicaid cuts, to avoid a looming budget deficit, the New York Times reports (Peters, New York Times, 8/12).

Paterson has asked state lawmakers to return to Albany, N.Y., on Aug. 19 to reopen the budget and consider his cuts or find their own solutions to avoid a budget deficit that is expected to reach $6.4 billion next year (Scott, New York Post, 8/12). If approved, this year's budget will be $120.2 billion -- a 3.9% increase over last year's budget but less than the inflation rate, which was 4.2% during the first half of 2008.

Paterson is proposing slowing Medicaid spending growth from the budgeted 4% to 1.7% this year (New York Times, 8/12). According to the Rochester Democrat & Chronicle, because the federal government pays for half of New York's Medicaid program and local governments pay 16% of the program's costs, "cuts in programs would have to be considerably above $1 billion to meet Paterson's state-savings figure" (Gallagher/Sharp, Rochester Democrat & Chronicle, 8/12). The Medicaid cuts include $269 million in funding for hospitals and nursing homes.

Paterson said, "We have got to stop this frenzy about spending and lack of accountability," adding, "We need from the Legislature real and reoccurring cuts. We need a sense of understanding of how serious this problem can get" (New York Post, 8/12). State Senate Majority Leader Dean Skelos (R) said that instead of cuts, lawmakers should be working to reduce Medicaid fraud and collect tobacco taxes from products sold on American Indian reservations, which could reach $400 million annually (Karlin, Albany Times Union, 8/12).