New York county leaders Tuesday said local governments will be essential in upcoming budget negotiations for the Legislature to most effectively cut Medicaid spending — arguing social services staff must be included in discussions to help the state maximize program savings.

More than $1.2 billion in Medicaid cuts proposed in Gov. Kathy Hochul's executive budget was a leading topic of discussion at the state Association of Counties' annual conference this week held in Albany. 

The governor's proposed changes come as New York's Medicaid expenses continues a vicious ascent, fueling state fiscal gaps and projected multi-billion-dollar budget deficits in the coming years.

"It's a big issue," said Dave Lucas, NYSAC's director of finance and Intergovernmental affairs. "We're trying to put people on watch, fiscal watch, so to speak, that the state needs to be successful in controlling costs of that program and they haven't to date.

"...If the state needs more resources because spending is growing beyond their own means, we're afraid they'll turn to us," he added.

Counties pay a capped $7.6 billion into the state Medicaid program, about $5 billion of which comes from New York City.

Last year's budget included a change to gradually shift Federal Medicaid Assistance Percentage payments, or federal aid that helps localities shoulder the cost of Medicaid, to the state.

Lucas on Tuesday warned county officials about the potential consequences if state leaders fail to rein in Medicaid costs, which could force localities to increase property taxes or cut local services to foot the bill.

"We want to make sure the counties are involved because we're a payer," Lucas said. "We have a lot of local expertise and we think that could be very helpful in this situation."

Officials from New York's 62 counties gather in Albany each winter for NYSAC's annual conference to discuss legislative priorities and lobby for what they want lawmakers to fight for in the next budget.

County leaders this budget cycle will pressure the Legislature to give counties the authority to collect sales tax on vacation rentals, VRBOs, Airbnbs and other similar hotel rentals.

Association leaders estimate the change would generate $30 million in new tax revenue for counties and the state. 

"Right now, our hotels... they have to pay sales tax, they have to pay bed tax to their counties and the state of New York," NYSAC Legislative Director Ryan Gregoire said. "We're looking to level that playing field. [And] we're really going to be pushing lawmakers hard. We've got to get this done in the budget this year."

Hochul's proposed $2.4 billion spending on migrants and related services was notably absent from NYSAC's workshop Tuesday with county leaders about this year's budget priorities. 

NYSAC leaders support the $2.4 billion, but Lucas said the resources must be flexible and available to localities outside New York City that need reimbursement for services for asylum seekers.

"There's a lot of upstate counties as well that have a huge boost in the number of people they are dealing with, and homelessness is a problem statewide," Lucas said. 

He added the state needs fiscal intervention from the federal government.

"We would like to see a recognition that there are pockets of upstate communities where these migrants have left New York City and are now trying to find housing in upstate areas. So we do need to recognize that it's not just New York City dealing with this problem," Lucas said.

NYSAC is also focused on a series of bills to "rescue" Emergency Medical Services, or EMS, across the state amid lengthy wait times and steep staffing shortages.

The association wants to create mechanisms to increase Medicaid reimbursements for ambulance providers, to create special taxing districts to be created to fund EMS and remove the services from localities' real property tax cap.  

But overall, county officials said Hochul's budget is fair to counties — with several Tuesday saying this executive proposal is the first in years that does not impose unfunded mandates on local governments.

"It looks like this is probably the first budget in a while that accomplishes those goals," Onondoga County Executive Ryan McMahon said. "So needless to say, we're happy about that."

New York has lagged behind other U.S. states in recovering the jobs the state economy lost during the COVID pandemic, with most of those jobs recovered within the national economy by mid-2022. Data from the state Budget Division shows jobs lost across the state during the pandemic will not be recovered until late 2026.