N.Y. State Budget Battle Centers Around Medicaid

IT The Buttery, a coffee shop near the Capitol in Albany, business is down a sharp 25 percent. Manager Nicholas Thomas says the state employees who eat here are "running scared." Many have already been laid off. Another 3,900 state workers would be let go under the new $30.2 billion budget proposed one week ago by New York Gov. Mario Cuomo.

In nearby Cohoes, officials last week passed a new budget that calls for a 14 percent property tax hike. Cohoes comptroller Michael Gagnon says the aim is to keep services despite a one-third cut in state aid.

One need not look far for evidence of the combined squeeze of the recession and the sometimes desperate efforts of New York state lawmakers to keep their budget - second- largest in the nation - in balance. Even parking tickets in Albany and New York's other large cities now carry a $5 state surcharge.

"It's a bad precedent - the state taxes everything that moves," comments Edward Farrell, executive director of the New York State Conference of Mayors. He says the "cumulative effect" of past budget cuts has been the most difficult to absorb and has driven up property taxes in about 80 percent of all cities and towns.

New York is not the only state grappling with serious budget problems these days. But its expected deficit - close to $5 billion for the next fiscal year - is one of the largest, and the wrangling here over what to cut and what to keep has been unusually partisan and protracted.

Much of the fight has centered on Medicaid, the federal-state health care program for the poor, which is considered particularly generous in New York and is one of the fastest-growing components of the state budget.

Republicans, who control the Senate, strongly oppose any further cuts in school aid and insist that Medicaid in New York offers too many too much with too few limits. They love to point out that New York pays almost twice as much for Medicaid as California, yet serves one million fewer people. Democrats who control the Assembly and tend to come more from the cities where most welfare and Medicaid funds are spent, prefer to lay the brunt of any Medicaid cuts on health-care providers rather than clients.

Agreeing on a budget and then coping with rising deficits as the demand for services grows have become a virtual year-round job for legislators here. "It's been like a continuous budget crisis for the last 36 months," says Stanley Hornak, a spokesman for the Civil Service Employees Association (CSEA).

The state's credit rating has been downgraded twice in the last two years. The state's political failure to deal with its budget gap is cited as key.

New York begins its fiscal year in April, three months ahead of most states, and many here hope that 1992 may open a new, quieter chapter in the New York budget wars. For starters, all 211 legislators are up for reelection - presumably eager to leave Albany as early as possible.

"I think we're going to get a budget on time for the first time in eight years," says Governor Cuomo, who recently suggested docking legislator pay for each day a budget is late. He says he thinks legislators are now as aware as he is of the state's economic straits and the need for more discipline. "It's entirely possible that we're at a turning point," he says.

The governor says he has made a number of reforms, including more than $1.1 billion in Medicaid savings, in the direction of both Democratic and Republican concerns in his current budget. Negotiations during a special fall legislative session to deal with the current budget deficit also helped narrow the differences. "We're within $200 million of a deal right now," insists the governor.

Assembly Speaker Saul Weprin, a fellow Democrat from Queens, says he is also "cautiously confident" that lawmakers will approve a budget by April.

A quick check of lobbyists around the state capitol reveals widespread disapproval of the governor's budget cuts, perhaps a sign that his attempt to be evenhanded has succeeded. As CSEA President Joe McDermott puts it, "The proposed budget manages to offend almost everyone."

Much now depends on the Republicans and on how determined they are to push for further reform. "The governor's budget is a step in the right direction, but, I don't think the crisis is over," says Sen. Joseph Bruno (R) of Rensselaer County. "If we don't get the growth of government under control now, we will never do it."

"There are some people in this state who really believe that government should do everything," notes Dr. Robert Penna, a staff aide to the Senate Finance Committee. "It's very, very difficult to change deeply entrenched ideas."

William Stevens, an aide to Sen. Majority Leader Ralph Marino, says the effort in the new Cuomo budget to raise fees on hospitals and nursing homes could force some nonprofits to shut down and avoids reform by simply raising more revenue.

Yet it is not just Republicans who are calling for further Medicaid reform and a reordering of state priorities. Louis Grumet, executive director of the New York State School Boards Association says he thinks Medicaid for state authorities is becoming the equivalent of the Department of Defense for US officials - immune from criticism. "The governor and the Assembly seem to be unwilling to bring the spiraling Medicaid situation into line."