Calls for Unspecified Cuts to “Our Health Care Facilities”
On July 29, New York Governor David Paterson announced in a televised speech that he is calling the State Legislature back to Albany on August 19 for a “special economic session” to address the worsening State budget picture. During his speech, Paterson announced that the current year’s budget is now running a deficit of $630 million and the projected deficit for SFY 2009-10 had increased by 28% in just two months from $5 billion in May to $6.4 billion. Further, the Governor said that barring legislative action, the three year budget deficit projection would grow from $21.5 billion to $26.2 billion. 

The following morning, the Governor offered more details in a televised press briefing, which coincided with the release of the Division of Budget’s (DOB) 2008-09 Financial Plan First Quarterly Update. The Governor noted that the State’s growing deficit is largely attributed to a reduction in revenue due to the slowing economy and distress within the financial services industry. In addition, DOB now projects much lower revenue than previously expected from the conversion of not-for-profit health plans to publicly traded corporations (e.g., HIP/GHI), causing a projected deficit in the Health Care Reform Act or “HCRA”  accounts starting in the next State fiscal year.  

 The Governor said that he will take immediate administrative action to cut spending in an attempt to close the current year’s $630 million budget gap, starting with a 7% cut in State agency spending (over and above a 3.35% cut already achieved earlier this year) and a hard hiring freeze, under which all new hires would have to be approved by DOB. According to the Governor, these administrative actions, which do not need the Legislature’s approval, would keep this year’s budget in balance. Further, the Governor announced that he is developing a legislative proposal to cut another $600 million—an attempt to get a “head start” on closing next year’s budget deficit. Although the Governor does not have a detailed legislative proposal at this time, he said that he would like to work with budget stakeholders to come up with a plan to share with the Legislature prior to the Special Session on August 19. In a speech on July 31 at the National Press Club, the Governor said, “I don’t have to tell State officials the areas that we’re obviously going to have to cut. They’re going to be the areas where we spend a lot of money—our education system…our health care facilities.” GNYHA is coordinating with the Governor, legislative leaders, union leadership, hospital and nursing home associations, and the Congressional delegation to help find possible solutions to deal with next year’s budget deficit, which could include Federal legislation (H.R. 5268) currently under consideration that would increase the Federal Medicaid matching rate, or “FMAP,” by 2.95%.