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Cuomo's budget proposes legalizing cannabis, trimming Medicaid spending 

Governor Andrew Cuomo released a $178.6 billion budget proposal Tuesday. In it he detailed plans of how to deal with a $6 billion dollar budget deficit largely caused by increased costs for Medicaid, as well as plans to legalize the adult recreational use of cannabis in New York.

The costs of Medicaid have been rising, partly due to more people receiving health care through the Affordable Care Act, or Obamacare, and increases in the state’s minimum wage, which has led to higher labor costs.

Cuomo, in his budget speech, focused on rising costs in the Medicaid programs administered by local county governments, who pay a share of the program. Since 2013, the state has paid for all cost increases incurred by the counties, as well as the City of New York’s Medicaid programs.

Cuomo said because the state pays for the cost overruns, which he said run in the billions of dollars, the local governments don’t have incentive to hold the line on costs.

“That’s the blank check syndrome,” Cuomo said.

Cuomo said the state will continue to cap county governments' Medicaid costs, but that help will come with new conditions. Counties will have to stay within the state’s 2 percent per year property tax cap, and must not increase their year to year spending on Medicaid by over 3 percent, or the state will no longer help them with the extra costs. If counties can limit that growth, Cuomo said, the state would reward them by allowing them to keep a portion of any savings incurred.

The governor said he will reconvene a Medicaid redesign commission to trim $2.5 billion dollars out of the program's budget. He promised that the cuts will not have an impact on Medicaid patients, and said that overall he plans to increase health care spending by 3 percent.

Counties responded cautiously, saying in a statement that they are willing to help the governor achieve his goals.

Monroe County Executive Adam Bello said that his administration is evaluating Cuomo's budget proposal and its potential effect on local Medicaid costs.

"This is an ongoing process, but my number one priority will be to determine the best way to minimize the impact of any changes and advocate for Monroe County's taxpayers," Bello said in a brief statement.

Bill Hammond, health care policy analyst with the conservative leaning fiscal watchdog group the Empire Center, said the factors leading to the Medicaid overspending are not really the fault of local governments.

“Local governments did not cause the rise in Medicaid costs,” Hammond said. “Penalizing them or giving them skin in the game is not an effective way of reducing costs.”

Hammond said it’s unlikely the legislature would agree to penalizing local governments if they don’t hold down costs.

The governor also wants to increase school aid spending by 3 percent, or around $826 million more dollars. He said he wants to target more of the existing aid to the state’s poorest schools, which he predicts will cause a political battle between richer districts and poorer districts.

“We need the guts to do it,” Cuomo said. “The current formula is designed to achieve political needs, not equity.”

The governor did not propose any major new revenues to help close the deficit; a financial analysis by his budget office predicts that increases in existing tax revenues will help close the gap.

One plan that could bring in $300 million dollars in additional revenue when fully implemented is the proposed legalization of adult recreational use of marijuana. The governor is proposing a 20 percent tax on retail sales of the drug, along with a wholesale tax of $1 per gram of cannabis “flower” — that's bud, in layman's terms.

Democratic legislative leaders also responded cautiously to the governor’s budget plan. Senate Leader Andrea Stewart-Cousins said she does not want all the health care decisions left to a commission.

“There’s no way that we won’t be involved,” Stewart-Cousins said. “Because it’s extremely important, obviously.”

Stewart-Cousins said she supports the governor’s aim to reduce the growth in Medicaid spending without harming patients.

Cuomo also made a case for another pay raise for lawmakers. The second phase of a planned raise has been delayed because a related requirement that lawmakers also forgo most outside income was thrown out in court. The governor said he’d support the next phases of the pay increase if lawmakers agree to release their tax returns.

Karen DeWitt is Albany correspondent for WXXI News.

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