This week the Governor introduced his second budget, which continues to highlight a difficult fiscal environment for the State and its counties. The Budget remains austere, but it provides a much better starting point from which to govern and manage scarce taxpayer resources, when compared to last year.

According to the Governor, the projected $3.5 billion budget gap was closed through a combination of new resources, stemming from a revised personal income tax system as agreed to by the Legislature in December, and the continuation of targeted cuts, ending automatic cost of living adjustments for a variety of state programs and squeezing more management efficiencies out of State government.

Another important ingredient of the Governor’s Budget is the beginning of significant mandate relief for county government. The Budget includes important reforms to four of the biggest and/or fastest growing cost centers for county property tax payers, including the following.

• The implementation of a “hard cap” on county Medicaid costs which will provide nearly $1.2 billion in savings to counties over the next five years.  Under current law, these costs grow by $183 million per year and the Budget proposes to gradually absorb that annual growth and then cap it.
• Pre-school special education and early intervention health services are also targeted for significant reforms.
• Important pension reforms have also been proposed.  These pension reforms are estimated to save taxpayers (outside New York City) nearly $80 billion over the next 30 years.

Counties have long proposed fundamental change in a number of state mandated programs that county taxpayers are required to finance under State law. The Governor’s budget provides a good start on reducing the level of mandates that counties must fund and builds a solid foundation for achieving additional reforms in the future.

However, even with these important mandate relief proposals in the budget, a lot more needs to be done, and at a faster pace. Based on conservative revenue projections and the costs counties must support because of state mandated spending, counties in aggregate face a $32 billion fiscal gap over the next 10 years if dramatic, fundamental changes are not implemented. Critical fundamental reform of state mandates, far beyond the positive steps the Governor is proposing, are still necessary to provide stability for New York’s property taxpayers.