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This year, 54 of 57 counties raised property taxes to meet costs they can't control.

The nation's highest-taxed state has no island of fat and happy taxpayers.

Nearly every county in New York has ratcheted up taxes beyond the inflation rate to wrestle with the same problems Erie County pushed aside for a while.

"The pressures that Erie County is facing can relate back to every county," said Ken Crannell, the director of intergovernmental services for the New York State Association of Counties. He added that local officials control just a small piece of county spending.

"That's what people have got to understand," he said. "No matter how good a job you do, the reality is the things that you can control are such a small percentage of what's impacting the taxpayers."

This year, 54 of 57 counties raised property tax levies an average 11 percent, according to the Association of Counties. Over the past two years, levies went up an average 22 percent, and seven counties planned sales tax increases, too.

County leaders across New York invoke the M-word, blaming Medicaid expenses that began climbing again with the recession that started this decade. Now spending for Medicaid -- the nationwide program providing health care to people who are poor, disabled and in nursing homes -- usually dwarf income from the property tax or the sales tax.

Medicaid costs soar

Erie County Executive Joel A. Giambra calls Medicaid the villain, saying its load on Erie County will have increased by $82 million between 1999, when he was first elected, and 2005.

Erie County, however, was the only New York county to go three years without raising its property tax, following two years of tax cuts. And in 2004, Giambra's idea to lure hundreds of workers into retirement fell apart without the state permission it needed, a $17 million problem.

With reserves now as low as they should go, Giambra wants to add a penny per dollar to the county's 4-cent share of the sales tax, which is at 8.25 percent with the state's portion. Giambra's new penny would raise $125 million next year to deal with a $130 million deficit.

It's still a short-term fix if Medicaid costs continue to spiral up at 11 percent a year.

Giambra's calling his new penny "temporary" -- in place only until Albany eases the Medicaid burden on counties. He needs 10 of the County Legislature's 15 members to authorize the sales tax increase in order for the State Legislature to even consider it. By all measures, he doesn't yet have support from county or state lawmakers.

"I am not prepared to vote for any new revenue increases until there is a concrete plan that would bring a new measure of reform to Medicaid," said County Legislator Charles M. Swanick, R-Kenmore. "Otherwise this is a Band-Aid approach to solving the problem, which will eventually bankrupt the county and bankrupt the State of New York, because there are limits to taxation."

Swanick sat on the Legislature in 1985, too, the last time Erie County added a temporary sales-tax penny to ease a budget crisis. The penny is still there.

Highest-taxed state

New York is the only state that expects its counties to pay so much of the nonfederal cost of the Medicaid program, Crannell said, and to a large degree Medicaid has spurred the tax increases that ensure New York remains the nation's highest-taxed state. Residents surrender 12.9 percent of their income to state and local taxes, according to the Tax Foundation.

In Monroe County, property taxes rose 18 percent over the last two years, and while County Executive Maggie Brooks won't raise the tax rate again in 2005, property tax income will still jump by $30 million because some towns and the City of Rochester revalued property.

Brooks says the $151.3 million budgeted for Monroe County's share of Medicaid -- 17 percent more than this year and 52 percent more than in 2000 -- will consume every penny raised from the county sales tax.

Onondaga County raised its property tax 14 percent over the last two years and this year added a penny to its sales tax, bringing it to 8.25 cents on the dollar. County Executive Nicholas Pirro says he could lower the property tax 45 percent if the state paid the local Medicaid share it now heaps on counties.

Albany County raised its property tax nearly 42 percent over two years, and County Executive Michael G. Breslin suggests a 28 percent increase for 2005. He doesn't expect sales tax income to help since it's growing at a listless 1.9 percent there.

"Once again," Breslin told county lawmakers, "our county share of Medicaid is higher than the property tax levy I am proposing."

In smaller Oneida County, home to the cities of Utica and Rome as well as the Turning Stone Casino, the Board of Legislators this week voted to raise the sales tax 1.5 cents per dollar, bringing it to 9.75 cents, New York's highest. County Executive Joseph Griffo calls it "the Medicaid sales tax."

Chautauqua County's property taxes went up 38.4 percent over the past two years, among the state's highest increases. For 2005, County Legislature Democrats suggest adding 1.25 cents to the sales tax. Chautauqua's Medicaid burden has more than doubled since 1999.

Niagara County held its property tax increase to a slight 3.3 percent, but for 2005, officials are looking for 9 percent more, with talk of a higher sales tax as well. Even then, officials predict the need to cut services and idle as many as 200 county workers.

Allegany County might raise its sales tax a half-penny, after a 29 percent increase in the property tax over two years.

Montgomery County, home to the City of Amsterdam, raised its property tax 30 percent over two years and wants 7 percent more for 2005. But Montgomery is at its constitutional taxing limit and must raise it first.

Westchester County Executive Andrew Spano tells visitors to the government's Web site how much the county spent on Medicaid in 2004 -- $167.7 million by Tuesday. That's $508,000 a day, $21,000 an hour. Westchester raised its property tax 33 percent over two years.

Some bright spots

Nassau County Executive Thomas Suozzi has been front and center with Giambra in calling attention to the Medicaid situation, but Nassau's health stands out in the crowd.

Suozzi inherited a mess when he took office in 2002. With a 19 percent tax increase, spending cuts and the oversight of a finance authority, the credit rating rose from nearly junk-bond status to the A ranks, and Suozzi is sharing more sales tax income with villages. The sales tax is at 8.75 percent there, the state's highest, until Oneida County's increase takes effect.

Putnam County, growing as a New York City bedroom community, raised property taxes a slight 3.5 percent since 2002. At the same time, Putnam, Nassau and every downstate county, plus those in the Southern Tier, levy a motor vehicle tax not seen in Erie County. Drivers pay $5 extra to register a noncommercial vehicle and $10 for a commercial vehicle, Crannell said.

In New York City, Budget Director Mark Page forecasts a $3.6 billion deficit in the coming fiscal year, partly created by costs it can't control, such as Medicaid and payments into the pension fund, according to the New York Times. City agencies will be asked to cut about 3 percent from their budgets.

GOP blames Democrats

Gov. George E. Pataki and State Senate Republicans blame the Democrat-controlled Assembly for blocking the Medicaid reforms that would save real money.

Assembly Majority Leader Paul A. Tokasz, D-Cheektowaga, said he'd like it if the state took over counties' Medicaid costs, as county officials wish, but where would Albany come up with $6.5 billion?

Even if counties gave Albany the revenue generated by a penny of their sales tax, an idea Tokasz has voiced, it would cover only a fraction of the cost, he says.

Then there's the notion of being careful what you wish for. A state takeover of all nonfederal Medicaid expenses could drain more income tax money from upstate residents if Albany doesn't prune the program, according to the Public Policy Institute, an arm of the state Business Council.

The institute says Medicaid spending per person is far more downstate than upstate. So if Albany paid the local share of Medicaid everywhere, more upstate income tax money would go to cover downstate bills.


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