County, state at odds on IOUs

CANTON — St. Lawrence County officials say they are prepared to stop paying the state for mandated programs and fees collected on its behalf if Albany by Sept. 3 does not pay $13 million it owes the county.

Gov. David A. Paterson this week promised to make counties whole by the end of August for all state reimbursement owed. The pledge came after Oneida County withheld two weeks' worth of Medicaid payments to the state because the state owes the county more than $30 million in reimbursement for mandated programs.

The state and counties each pay 25 percent of the total cost of Medicaid; the federal government funds the other 50 percent. Counties pay upfront the cost of other programs required by state law, like child welfare and public health programs, and the state later reimburses them.

St. Lawrence County Administrator Karen M. St. Hilaire said St. Lawrence and other counties are poised to join Oneida's protest if the state doesn't pay up soon. It's not unusual for there to be a lag in state reimbursement, but Ms. St. Hilaire has said the state — which is facing a $9.2 billion current-year deficit — is much farther behind in payments than in previous years.

She said if the state doesn't settle its debt soon, the county might not be able to pay bills or make payroll.

"There are a large number of us who are prepared to ask our legislators to allow us to stop paying," Ms. St. Hilaire said. "We send the state about $2.5 million a week for Medicaid alone. The motor vehicle fees we collect add to that, and we also pay for other programs. I'm, frankly, prepared to stop sending any money until we get some back."

A state Division of Budget spokesman said the state on Thursday began sending payments to counties.

"A chunk of what we've said we're going to make good on by the end of August, we're actually going to make good on by the end of July or early August," Erik J. Kriss said. "The problem this year and going back into last year is that revenues have been depressed, and yet our obligations, particularly for Medicaid and welfare, continue. That's why we've been very cautious and conservative with making payments."

Mr. Kriss said the state will be able to live up to its promise. He said budget bills passed by the Assembly and proposed by the governor close the state's budget gap. The Senate has not yet acted on the proposals, but Mr. Kriss said once that happens, the only unknown is whether the state will receive about $1 billion in federal assistance for Medicaid.

"In a sense, it's not that much, but in another sense we need it to balance the budget," he said. "In the meantime, state income tax, sales tax and other tax revenues continue to come in."

However, Legislature Finance Committee Chairman Peter W. FitzRandolph, D-Canton, said he remains skeptical about the state's ability to pay.

"I don't know where they're going to get the money from," Mr. FitzRandolph said. "As long as we have cash, it's not a big deal, but if we get to the point where we don't have cash, we'd have to issue tax anticipation notes to make payroll. If the reason we do that is because the state owes us money, that's just crazy."

Mr. Kriss said he understands St. Lawrence County's predicament, but cautioned against other counties following Oneida County's lead.

"If one person says they're going to withhold payment because we're not paying the money, we're going to have less money to pay," he said. "Everybody owes everybody money, and everybody is short."