ALBANY — One county executive wants to start his own Medicaid program. Another threatens to work to defeat incumbent state legislators unless changes are made. The head of the counties' lobbying group wants the state to freeze the counties' Medicaid bills.

These veteran public officials are unlikely revolutionaries, but they and their fellow county leaders from around the state are sitting on what is now the most uncomfortable place in New York politics: the intersection between Medicaid and property taxes.

"The greatest job-killing tax is the property tax,'' said Chemung County Executive Thomas Santulli, a Republican who wants to scrap Medicaid altogether and develop a new health-care plan for poor people in his county of about 90,000 people.

"People have connected the dots,'' he said. "They understand that Medicaid is the reason their property taxes are going up.''

Santulli's county raised property taxes by 14 percent last year and the sales tax by a percentage point to keep pace with the growth of Medicaid. Virtually all of the $21 million the county raised in property taxes was spent on Medicaid he said, leaving sales-tax receipts to pay for most other county services.

Medicaid is funded in New York by the federal government, the state and localities (counties and New York City). The local share has exploded in the last few years, going from $4.35 billion in 2001 to $6.3 billion this year. That's a rise of one-third in just three years.

Nassau County Executive Thomas Suozzi, a Democrat, thinks that the counties' problem is political as much as fiscal. He said since county officials pose no threat to state lawmakers (the way health-care unions and providers do) they feel no compunction about voting for extra benefits that add to the counties' expenses.

"Albany is a horrible, rotten, terrible, broken system,'' Suozzi told a group of government-reform advocates in the fall. "The problem is these guys are not threatened.''

He said his county faces a $90 million budget gap caused by the state this year: $50 million in increased Medicaid bills, $20 million in higher health-insurance premiums for its workers and $50 million more in contributions to the state public-employee pension system.

'We need a cap'

New York is one of only a handful of states that require localities to pick up any of the costs of Medicaid. That was done in part because New York City gets about two-thirds of all Medicaid dollars and upstate and suburban lawmakers were wary of shipping so much money from other parts of the state into the five boroughs.

That's still true today. If the state were to assume the entire non-federal share of Medicaid now, taxpayers outside New York City would have to contribute $1.9 billion more in state taxes than they would save in local tax cuts, according to an analysis by the state Business Council.

But if the state took over the whole non-federal share of the program, overall costs might come down because Gov. George Pataki and lawmakers would be more careful about how the money is spent, the head of the state Association of Counties said.

Limiting the counties' payments would be a first step.

"The counties are more determined than ever,'' said Robert Gregory, executive director of the state Association of Counties. "We need a cap.''

The counties pay 10 percent of the long-term-care expenses and 25 percent of most other Medicaid programs. While the growth of the long-term-care expenses has moderated, the programs the counties pay a quarter of have been shooting up.

They are programs like prescription drugs, managed care and reimbursements for physicians, said the association's fiscal expert, Kenneth Crannell.

He added that while the state has been able to save money by shifting the cost of mental-health and mental-retardation patients off of the state general expense ledger to Medicaid, counties have had to pick up part of that expense.

"We're our own worst enemy'' in terms of driving up Medicaid costs, he said.

Although most counties have seen big jumps in their property tax levies, that hasn't translated into dramatic increases in most property tax bills. County taxes account for an average of just under 20 percent of a total tax bill. School taxes take the biggest bite, and city, town and village taxes also account for a significant share.

Dramatic proposal

Pataki has proposed that the state take over the entire non-federal share of the cost of long-term care from the counties during the next 10 years, eventually saving them $2 billion a year. His Medicaid cuts proposed this year, including ending eyeglass and dental coverage for some adults, would save counties and New York City about $220 million. Lawmakers have yet to act on his plan.

While others are talking about making relatively modest changes in the program or simply rearranging how it's paid for, Santulli, the Chemung County executive, wants to do something far more dramatic.

He would set up a committee of doctors, nurses, pharmacists, Medicaid recipients and others to figure out how to fix it. They would have a plan ready by August that would run for two years and serve as a test to see if the changes they recommend could be implemented statewide.

But he needs the OK from the state and federal governments before the process can start.

"You've certainly brought attention to this issue,'' Sen. John R. Kuhl, R-Steuben County, told Santulli when the county executive delivered petitions and letters to the Capitol supporting his idea. "It's on the table now.''