Governor To Deliver Budget Today

Governor Spitzer, who pledged not to raise taxes, will propose today raising taxes on private health maintenance organizations so that they pay the same rate as other health insurers, sources say.

Among the closely watched elements of Mr. Spitzer's 2008-09 executive budget, which he is set to deliver to lawmakers today, are the revenue-raising measures that the administration has chosen to help the state close a $4.4 billion budget gap.

Aside from calling for higher taxes on managed care companies, Mr. Spitzer is also expected to propose selling off state-owned land upstate and downstate, including land occupied by psychiatric hospitals.

The governor is also expected to propose increasing various state fees, closing business "tax loopholes," and dipping into reserve funds to balance the budget.

As a candidate and as governor, Mr. Spitzer has repeatedly said that he would not raise taxes. The administration does not consider closing loopholes or increasing fees as tax increases.

Mr. Spitzer has also said he would not increase spending by more than personal income growth, which is about 5.3%.

While targeting private HMOs, Mr. Spitzer is likely to call for modest Medicaid cuts to the hospital industry.

Sources say Mr. Spitzer will call for a major shift in how Medicaid money is distributed. The administration will propose reformulating base inpatient reimbursement rates that hospitals receive by pegging the rates to 2005 hospital cost estimates.

The rates have been linked to 1981 data, with annual increases each year.

The change could yield more than $100 million in savings, which the administration is planning to use to pour more money into community clinics, hospital clinics, and doctor's offices.

The aim of the administration is to encourage hospitals to steer their resources to outpatient and preventive care, which officials say will lower Medicaid costs over the long run by reducing the number of patients in need of long-term hospital care.