County officials across the state are fuming after getting a letter from New York state notifying them of a 1% cut in Medicaid reimbursement to help address a $6.1 billion state budget deficit.

For Cattaraugus County, it means a $1 million hole in its 2020 county budget of $250.6 million, County Administrator Jack Searles said Wednesday. For now.

That’s the first “ding” in the 2020 county budget, and it came as a surprise.

“It was something slid in a couple of budgets ago that if Medicaid grew above a certain percentage, the state health director had authority to curtail certain medical expenditures,” Searles said.

This is six weeks after county lawmakers passed the 2020 budget. “We didn’t know this was coming,” Searles insisted.

The impact will be felt across several departments, including nursing homes, Social Services, Community Services, Probation and the Sheriff’s Office.

Searles and other county officials across the state got a feeling when, in the closing moments of his State of the State Address last week, Gov. Andrew Cuomo referred to the possibility counties would be tapped for a portion of the Medicaid deficit.

“It was the elephant in the room,” Searles said. “We’d heard that before.”

The governor’s comment sent shivers through county administrators and executives.

Higher Medicaid costs for counties will not only impact property taxpayers, but could mean cuts to departments they have more control over like public works and public safety, Searles said.

Seventy percent of the county’s budget is mandated, with Medicaid being the largest portion of mandated cost.

Statewide, counties paid 25% of Medicaid costs when it started in 1966. Complaints from counties over increasing costs led former governor George Pataki to limit annual hikes to 3% in 2006. Cuomo further limited increases in 2012, and in 2015 froze counties’ Medicaid contributions.

Searles and other county officials are afraid counties might be headed back to the days of paying a share of spiraling Medicaid costs.

In the 2020 county budget, $19.5 million in Medicaid costs equal about 35.2% of the $55.4 million tax levy, or the amount raised by property taxes.

Searles said he’s unsure of how much the state cap on Medicaid has saved the county over the past few years, but that those savings are being calculated.

“Our concern is that we could be headed back toward (annual Medicaid increases),” Searles told the Olean Times Herald. “Without anything else happening, we lost $1 million since the budget was adopted in November. ... It’s caused quite a bit of concern to counties across the state.”

One area of concern to Cattaraugus County officials is using money from the county’s fund balance or surplus to pay higher Medicaid costs instead of bumping up the road and bridge construction program, Searles said.

Some county officials say “they were kind of led down the path” and the state would pick up Medicaid increases over a base year, Searles explained.

“We need to wait and see when he releases the state budget,” Searles said. “We are being asked to pay more while still operating under the context of the state tax cap.”

The New York State Association of Counties meets two days after the governor releases his budget on Monday, Searles said.

“This is a major topic of discussion among NYSAC members,” he said. “There is going to be a lot of discussion and debate that will happen relatively soon.”

(Contact reporter Rick Miller at rmiller@oleantimesherald.com. Follow him on Twitter, @RMillerOTH)