After several years of tightening their belts on spending and taking other steps to bring Oswego County into strong financial standing, officials are worried that all the cost-saving measures may soon come undone.

Due to cost shifts facing county governments in this year’s state budget, Oswego County will be forced to raise taxes, but officials are still unsure exactly how much.

After recently attending the New York State Association of Counties (NYSAC) County Budget Finance School, County Administrator Phil Church, County Treasurer John Kruk and Chief Accountant Mark See reported back to the Finance and Personnel legislative committee with the alarming news that as things stand right now, the county will be forced to raise this year’s tax levy by at least 5 percent, due to the cost shifts implemented in the state budget.

The shifts referred to by NYSAC Executive Director, Stephen Acquario, as “The County Budget Dilemma” have created a statewide issue with county governments. In Acquario’s presentation, he spoke on the dilemma, stating, “Mandated and uncontrollable costs have risen sharply ... state and federal aid hasn’t.”

Church explained, “The state has called what they have done a 2 percent cut on aid, when in actuality what they have done is shift costs to the counties.” The “cap” that the state has put on the rising costs of Medicaid is just one example of this shift. Church said that while a cap was put in place, it was a 3 percent annual increase that the cap was put on. Thus, local Medicaid costs for counties across the state still increase by $185 million each year, before anything else is even factored in. This is a mandated cost that must be paid by counties.

“That 3 percent is equal $660,000 annually that has to go directly on our tax levy,” Church said.

Kruk recalled the skyrocketing costs of Medicaid nearly bankrupting the county a few years back and hopes these shifts will not have the same effect.

“The legislature of the past few years has done a good job righting itself from our financial problems. We were in a budget crisis years ago because of Medicaid costs,” he said. “We had to lay people off, raise sales tax and make many difficult cuts to get back in the good standing we are in now. We must try to be careful to not fall back, but with this 2 percent shift, we are certainly put in danger.”

Also included in the state budget is a 2 percent cut to aid localities funding, which the state claimed would not have an effect on municipalities’ budgets this  year. However, as Church explained, due to differing fiscal calendars, with Oswego County’s starting on April 1, this will impact the 2008 county budget. Almost all programs funded by counties are affected and, in most instances, the state will reduce the claims paid back through cash payment by two percent. Church cited Child Welfare Services as an example.

According to Church, with the state currently shouldering 65 percent of the share and counties covering 35 percent of the claim, with the new shift, the county will only receive back $63.70 on a $100 claim, as opposed to the $65 they would have previously. “This seems like a pretty small amount when you are dealing with a $100 claim,” Church said. “But imagine when you are dealing with millions of dollars, you can see where it would really add up ... If all stays equal, for the next eleven months, just what has been done here will increase our tax levy by at least 5 percent.”

Church and Kruk agreed that the task at hand is to combat these issues and minimize the potentially staggering effect these cost shifts will have.

“The first step was to come back and educate the officials and the public on what is going on with these cost shifts,” Church said before the committee. He also said that the legislature must look for ways to limit their spending, offering up two ideas on how to accomplish that goal.

First, he spoke of the prospect of cooperative purchasing, which entails counties banding together and bidding out as a region as opposed to just accepting state bid.

He explained that a fee of one half of 1 percent is added when a purchase is made through state contract, thus, even though a vendor pays that fee it drives up that vendor’s bid to cover such costs. This type of cooperative bidding, Church felt, could even begin helping with the dilemma this year.

The other way that Church has been asked to explore savings is through researching the actual savings for taxpayers through the cap the county put on the sales tax of gasoline in 2006. As it stands now, the county only collects tax on the first $2, and the purpose of initially imposing the tax was to give residents a break at the pumps.

However, it has recently been discovered by neighboring counties, including Onondaga, through analysis studies, that the consumers were actually paying the same there as anywhere else and the savings were going to those in the oil industry.

Over the course of the next few weeks, Church intends to conduct a similar study and if the cap were to be repealed, the extra money earned would go directly toward lowering the property taxes that are certain to rise as a result of the state budget.

Revisiting the county’s past financial woes and the hard work done to rectify that problem, both Church and Kruk felt an unfair burden has now been placed on counties across the state with the cost shifts. “New York state is now projecting a $20 billion deficit, but they did not do as we did when we faced these troubles,” Church said. “They aren’t sharing in the sacrifice ... they are adding jobs, upping costs and just shifting the burden down on the counties.”

Kruk noted that in year’s past, Oswego County has been successful in maintaining its finances and keeping taxes down by running government like a business. “This doesn’t just affect the counties, it is hurting the cities, the towns, the villages and not-for-profit organizations,” he said. “When we faced these troubles, we didn’t pass it off on the villages and towns ... it is really unfair.”