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Facing $870 Million Fiscal Emergency, Counties Call for State Action
As a confluence of federal cost shifts, general inflation, rising pension obligations, and growing healthcare costs are creating a fiscal emergency for county governments, the New York State Association of Counties (NYSAC) is calling for support in the SFY 2027 State Budget.
Starting in 2027, counties will be forced to absorb at least $870 million in higher costs from federal changes to the Supplemental Nutrition Assistance Program (SNAP) program, reductions in federal Medicaid revenue, growth in current pension obligations, and other state mandated cost shifts. These increases arrive as counties are already showing signs of fiscal stress, with 12 counties exceeding the property tax cap in their 2026 budgets—the most in a decade.
Counties are calling on the Governor and State Legislature to assume the local share of new SNAP administrative costs and provide meaningful county relief, on par with what has been proposed for other municipalities, in the enacted SFY 2026–27 budget.
“Counties are the backbone of New York’s service delivery system, implementing state and federal programs in every community,” said Stephen Acquario, executive director of NYSAC. “But this wave of new costs is just unsustainable, and without state partnership, local governments will be forced into difficult choices that could reduce services to residents and businesses.”
A Perfect Storm of Cost Pressures
Federal Cost Shifts
Beginning October 1, 2026, under the “One Big Beautiful Bill Act,” the federal share of SNAP administrative costs drops from 50 percent to 25 percent—shifting an estimated $170 million in new annual costs to counties and New York City. At the same time, New York’s SNAP error rate exposes the state to up to $1.2 billion in annual federal penalties beginning as early as October 2027.
New York is one of only three states in the nation that requires counties to both administer SNAP and pay a share of its administrative costs. When the federal share drops from 50 percent to 25 percent, counties—not the state—are left holding 75 percent of the bill.
“Nearly three million New Yorkers depend on SNAP each month—the vast majority are children, seniors, and people with disabilities,” said Phil Church, President of NYSAC. “If counties cannot meet the administrative demands of a restructured program, New Yorkers who depend on these benefits will suffer. We warned our Congressional Delegation this would happen and urged a federal delay.”
Medicaid Cost Shifts
New York State is unique in its requirement that counties and New York City must pay a direct share of the program costs of Medicaid services. Today, this cost exceeds $7.6 billion annually.
In SFY 2024, the State began to phase out the annual sharing of $625 million in federal Medicaid funds. By early 2025, these federal savings to counties were completely eliminated. Counties and New York City are now absorbing this loss in funding into local budgets.
“For just a handful of mandated programs, including Medicaid, counties and New York City contribute more than $14 billion annually in local taxes,” said Ryan McMahon, president of the New York State County Executives Association. “And yet, every budget proposal this year allocated zero dollars in new state revenue sharing or unrestricted aid to counties.”
Pension Costs—Before and After Enhancements
Based on the State Comptroller’s October 2025 actuarial report, NYSAC projects that employer pension contributions for FYE 2027 will increase by approximately $180 million for counties alone—before any benefit enhancements currently under consideration in this budget take effect.
The pension enhancements now being discussed could add another $125 to $150 million in new annual costs for counties, bringing the potential total to $330 million. Most of this new higher state-imposed expense was not accounted for when counties adopted their budgets in late 2025.
“It is worth noting that a central purpose of the 2012 Tier 6 reforms was precisely to prevent local governments from bearing these costs—with an explicit commitment that the State would pre-fund any future benefit enhancements. That commitment should be honored,” noted Acquar |
