Cuomo targets Medicaid, pension costs

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ALBANY -- Gov. Andrew M. Cuomo's executive budget would offer relief to local governments from two of their most nagging and costly problems: rising Medicaid and pension costs.

Under his proposal, the state would begin taking over the growth of Medicaid costs to the county and administrative costs of the program. For new state employees, he's proposing creating a new, less generous pension tier or offering them the option of a 401(k)-type plan.

Counties pick up $8 billion of the state's Medicaid costs, which will total $54.04 billion in the new fiscal year. The state caps the local share of Medicaid growth at 3 percent but Cuomo said it should go further. The reduction in the local share of Medicaid spending growth would be phased in over three years, costing the state $370 million in the third year. It would save local governments $1.2 billion over five years.

Local governments and schools will see pension costs rise from $4.5 billion in the current fiscal year to a projected $6.6 billion by fiscal 2014-15.

Cuomo proposed creating a "Tier VI" pension program for new employees that would increase employee contributions and raise them further if the stock market performed poorly.

Ken Brynien, president of the state Public Employee Federation, called the proposal "nothing more than a false choice of accepting severely reduced pension benefits or joining an inefficient 401(k)-style pension system."

Suffolk County Executive Steve Bellone said the proposals represented the "first time we first time we have a governor tackling mandate relief in a meaningful way. These things are very important to the county as we seek to deal with our fiscal challenges over the long term."

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