ALBANY, N.Y., February 7 – Enactment of a cap on growth in local Medicaid costs last year caused county property taxes in New York State to drop by half, according to a research brief with county-by-county data released by New York State Comptroller Alan G. Hevesi.

Medicaid costs have been dramatically rising and have posed a major fiscal problem for county governments for decades, Hevesi said. The cap on growth in local Medicaid costs was a major accomplishment in relieving pressure on local property taxes. Total county property taxes are growing at approximately half the rate of the previous five-year period.

County property taxes in 2006 increased overall by an average of 3.3 percent compared to an average annual increase of seven percent from 2001 to 2005, according to the report. In January 2005, before the Medicaid cap was enacted, Hevesis office estimated that county property taxes would have to increase by an average of almost one-third by 2010 to keep pace with Medicaid growth rates projected at that time.

The Medicaid cap introduced a much-needed element of predictability in Medicaid spending and is helping moderate property tax growth. This is a positive development for county governments, but it is clear that this moderation in growth is dependent upon continued implementation of the cap. The good news is that in most counties, taxpayers are seeing a significantly smaller increase in the county portion of their property taxes. However, Medicaid costs still remain a significant problem for state taxpayers.

The research brief analyzed the Medicaid cap and its impact on county taxes in 2006 and made the following findings:

More than three quarters of the counties (48 out of 57) had 2006 property tax levy increases below their individual five-year growth trends;

Medicaid costs continue to grow under the cap, increasing by an estimated $66 million in 2006, which represents roughly half of the $131 million increase in total county property taxes levied this year;

Without the cap, counties would have seen their property taxes grow by another $190 million to nearly $4.3 billion or 4.7 percent higher than actual 2006 property tax levies. Instead, statewide property tax levies total $4.1 billion;

The benefit to counties as measured as a share of their 2006 property tax levies range from 12.2 percent for Rockland County to 0.7 percent for Hamilton County;

Ten counties with the highest levels of Medicaid expenditures subject to the cap (Suffolk, Nassau, Westchester, Erie, Monroe, Onondaga, Orange, Rockland, Albany, Oneida) account for $117 million or roughly 60 percent of the estimated $190 million in Medicaid costs that the state is picking up from the counties share in 2006.