Cuomo Administration Warns of $10.1B in New Budget Cuts Amid COVID-19 Financial Toll

As COVID-19 engulfs state finances, the Cuomo Administration is looking to act on powers it was given in the recent state budget to push through as much as $10.1 billion in new budget cuts, including $8.2 billion in local assistance program and agency cuts.

These are likely to be advanced in May, the state Division of Budget (DOB) warned in a weekend press release that included new revenue forecasts and an economic impact assessment.

The 2020-21 State Budget, enacted in April, included a provision allowing for the Executive to propose mid-cycle cuts. In such an event, the Legislature has ten days to reject the Executive’s proposals through alternative actions.

That provision was introduced just as the COVID-19 crisis had taken hold. The state was already struggling with major fiscal imbalances, including a Medicaid shortfall prompting the Governor to reconvene the state’s Medicaid Redesign Team for cuts and program changes netting $2.5 billion in reductions.

In addition to facing their own COVID-19 fiscal impacts, home care providers and Managed Long Term Care plans are also already feeling the pinch of the state’s continuing — and growing — budget strains. This ripple effect includes the Cuomo Administration’s recent decision to delay as much as $3.4 billion in Medicaid premium payments to health plans. As HCA reported in last week’s Situation Report, the state is delaying the April 22 and April 29 Medicaid payment cycles until May 2, adding to the cash-flow burden already besieging MLTC plans and network providers alike.

In its weekend announcement, DOB projected a $13.3 billion shortfall, or 14 percent, in revenue from the forecast released in January and “estimates a $61 billion decline through FY 2024 as a direct consequence of the  COVID-19  pandemic.”

“As a result, in the absence of federal assistance, initial budget control actions outlined in the Financial Plan will reduce spending by $10.1 billion from the Executive Budget,” states the DOB press release. “This represents a $7.3 billion reduction in state spending from FY 2020 levels.”

Very little additional information is known at the time of this writing and HCA is seeking further details to determine any proposed funding decisions affecting home and community-based providers in light of this highly concerning announcement of further cuts. We will immediately inform the membership of further details.