On October 28, New York Governor David Paterson announced that his Division of the Budget (DOB) estimates $14 billion in State budget deficits from now through the next fiscal year, which ends on March 31, 2010. Specifically, DOB reported that the current year deficit is $1.5 billion (though the Governor stated that could worsen between now and the end of the fiscal year on March 31, 2009) and that the projected deficit for 2009–10 is $12.5 billion, or more than 22% of current State spending. The Governor stated that this is the largest dollar amount deficit ever recorded, though the deficit for State fiscal year 2003–04, caused by the recession following the September 11, 2001, terrorist attacks, was higher in percentage terms (28% of State spending).
DOB projects that Medicaid spending will increase $1.8 billion next year. Nearly half of the increase is attributable to several non-economic factors, including the fact that there is an extra, or “53rd week” of Medicaid payments in fiscal year 2009–10, the continuing shift of Medicaid costs from the county to the State, and decreased revenue transferred from other accounts. The remaining half of the increase comes from DOB’s projection that Medicaid and Family Health Plus enrollment will increase due to the economic downturn and utilization, in turn, will increase. A small portion of the increase is attributable to inflation in Medicaid payments to providers, which DOB estimates to be 3% in the next fiscal year.
Special Session: The Governor has asked the State Legislature to return for a second Special Economic Session on November 18 to find $2 billion in savings for this fiscal year and to get a head start on next year’s budget. Governor Paterson announced that he will release his budget proposal for the next fiscal year one month earlier than usual, on December 16, in order to get the budget debate going and to show the capital markets that New York is prepared to deal with its budget woes in a timely and responsible manner. GNYHA is deeply concerned about the impact of additional budget cuts on the already financially challenged hospital and nursing home communities, and has called upon the Governor and State Legislature to take a balanced approach to deficit reduction—an approach that treats all portions of the State budget equally, that includes new revenues, use of rainy day funds, and includes provisions to help providers reduce their costs, including significant medical malpractice insurance reforms.
Emergency Membership Meeting: To brief GNYHA members on the State budget situation, GNYHA is holding an emergency membership meeting in New York City on November 13, 2008. The meeting is open to GNYHA members only; to register, call 212- 246-7100.
