Medicaid costs  have led
to a
  Monroe County deficit.
 

  The County proposal
to increase
  the local sales tax
to resolve that
  shortfall does not
have much
  support.
 

  The county filed
a lawsuit
  against its City,
schools, towns
  and villages
concerning the
  distribution
of sales tax
  revenues. 
 

  $24,000,000
in annual revenues
  to local school districts
is at stake.   

A NYS office
ruled in 2007 that
the county
cannot adjust
the sales tax
distribution formula
unilaterally.

       Fact #1- County governments were established by NYS to handle responsibilities that are better
       overseen regionally, eliminating duplication of services among villages and towns while being responsive
       to local needs.  Medicaid is one of the designated county responsibilities.

       Fact #2 - Over the past decade, Medicaid costs have risen significantly.  In that time, the County
       leadership has refused to raise property taxes, which combined with sales taxes and state aid
       constitute their main revenue sources.

       Fact #3 - Unlike most states, NYS requires that County governments pay for 25% of Medicaid costs.
       NYS also offers the largest selection of Medicaid covered services of any state (states can choose
       from an approved list), which has led to NYS’s per person Medicaid spending being more than double
       that of any other state.

       Fact #4 - To control Medicaid's impact, NYS now lets counties select between accepting a 3% annual
       limit on the increase in Medicaid costs, or joining the Medicaid Intercept which allows NYS to annually
       adjust a base amount for Medicaid by changes in sales tax revenues and to "intercept" a county's
       Medicaid obligation when sales taxes are sent to Albany, returning to the County only what is left. 
       Joining Intercept, is permanent and irrevocable. 

       Fact #5 – Monroe County has a long history of sharing sales tax revenues with its other local taxing
       governments– school districts, Rochester, towns and villages.  The Morin-Ryan Act, a state law,
       established a formula for sharing the revenue from the first three cents of our local sales tax. 
       The fourth penny of local sales tax, which is not a permanent tax, is shared by another formula and is
       renewed every two years.  Monroe County’s school districts receive approximately $53,000,000 of
       revenue each year from these shared taxes. 

       The Controversy – Monroe County, doubting that an annual 3% increase would cover the actual
       Medicaid increase without raising its property taxes, explored the Intercept option, arguing that the
       Intercept would free it from future Medicaid bills.  It argues that its only obligation to its sales tax
       partners is to share what's left of sales tax revenues after the "intercept", estimating that
       post-"intercept" sales tax revenue for county schools would be reduced by 42%, approximately
       $24,000,000 less each year. 

       School representatives have asked the County Legislature not to solve their problem by creating
       new ones for other local governments, pointing out that the Intercept solution is not a solution for our
       County taxpayers. Adopting the Intercept would shift the County’s deficit onto schools and other local
       governments, forcing them to raise property taxes and/or cut programs and services. 

       At first it appeared that the County listened. The County Executive announced her Community
       Solution - choose to adopt the Intercept and at the same time raise the sales tax by three-quarters
       of a cent to restore what was lost to the partners.  But that idea met with resistance from our Albany
       legislators, the Rochester Business Alliance, and others. 

       So, while the County Executive spoke about a Community Solution, the County government filed a
       lawsuit against its sales tax sharing partners, seeking approval to adopt the Intercept and to share only
       whatever revenue was left after the Intercept was paid.  The court ruled that the County could adopt
       the Intercept but did not clarify the County's obligations to its sales tax partners.   

       What next? – As responsible stewards of public education, we cannot ignore the County’s
       encroachment on school resources.  The lawsuit defendants are preparing arguments for the Appellate
       Court, seeking Court affirmation of the existing sharing agreements and questioning whether the lower
       court decision reflected the intention of the State Legislature in passing the Intercept Law.  We do not
       believe the Legislature intended to allow counties to unilaterally alter pre-existing agreements.  And,
       because the Intercept takes sales tax revenues to cover Medicaid costs, $117,000,000 in County
       property tax revenues would be freed up in its budget, giving the County a windfall while reducing
       revenue to the schools, City, and towns. 

       What you can do –

v      Contact your County legislator to say that you are paying attention to this issue. 
(Contact information is provided below.)

v      Tell your legislator that the County should not claim hero status for refusing to raise 
property taxes when it forces other governments to raise theirs. 

v      Ask your legislator to seek a solution that benefits rather than penalizes the people of
Monroe County, that doesn’t solve the County deficit by creating deficits for everyone
else, and that resolves this issue through open discussions, not the courts.