Sales Tax Intercept & Medicaid

27 Feb

Legislator Cindy Locklear has an interesting post about a piece of legislative esoterica which may save Erie County money. She outlines the “Sales Tax Intercept” or “Reverse Revenue Sharing” option here:

Under this option, the state will keep a fixed portion (reported by senate majority leader Senator Bruno to be the county’s capped Medicaid amount for SFY 2006/2007) of all the county sales tax receipts and give the rest back to the county. “The county, in turn, will no longer make any Medicaid payments to the state” according to Tarron Bragdon, a researcher with the Empire Center for New York State Policy.

Analysts indicate that if a county’s sales tax rate of growth (exclusive of rate increases) is less than the annual Medicaid rate cap of 3%, this option may be cost effective and result in a lower local share for Medicaid costs. Bragdon states “In low sales tax growth counties, the future ‘cost’ to the county of the sales tax intercept is less than the future increase of capped Medicaid payments.”

However, this election, once made, cannot be rescinded. Further, the “window of opportunity” for evaluating this option and making the election is limited. Counties which determine to elect this option must do so by legislative adoption of a statutorily proscribed resolution which must be received by the NYS Department of Health no later than September 30, 2007. Once that date has expired, the option is no longer available.

It’s clear that we don’t have the complete picture to enable legislators properly to do a cost/benefit analysis of this idea, but it’s intriguing.

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