New Yorkers on welfare may rise 3 pct: study

By Joan Gralla

NEW YORK (Reuters) - The ranks of New Yorkers who need welfare as the economy follows Wall Street downhill will likely rise next year, along with the number of people who turn to Medicaid for health care, a report said on Thursday.

The economies of both New York City and New York state are taking a one-two punch from Wall Street's declining profits, which are denting tax revenues and causing thousands of financial workers to lose their jobs.

Each high-paying Wall Street position creates as many as four service jobs, including what Mayor Michael Bloomberg has said are vital entry-level jobs at shops, restaurants and hotels.

New York state Assembly Republicans, who are the minority party, in a report predicted that nearly 513,000 will be on welfare in the state's next fiscal year, which begins April 1.

That would mark a 3.2 percent increase in the number of those on welfare, which will cost the state almost $850 million -- a $20 million increase from this year -- and the federal government $1.36 billion, the report said.

Democratic state Comptroller Thomas DiNapoli has warned more will likely need welfare and Medicaid, the state-federal plan for the poor, elderly and disabled, as jobs grow scarce.

Though there often is a six- to 12-month lag between an economic downturn and rising caseloads, DiNapoli, in a report on Wednesday, said: "Those who lose their jobs may face extended periods of unemployment in the current economic climate."

New York might also have to spend more on public aid if the federal government does not extend benefits, he added.

A similar pattern could develop with Medicaid, though New York Gov. David Paterson, faced with a $12.5 billion budget deficit next year, has targeted this program for cuts.

Citing the "downward moving economy," Assembly Republicans forecast 3.6 million people will get Medicaid benefits this year at a cost to the state of $17.7 billion.

In 2009, 4.8 percent more residents will need Medicaid, driving the state's cost up to $19.4 billion, they said.

New York is the only state that requires city and county governments to foot some of Medicaid's bill, a policy Bloomberg bashed this week when he detailed $1.5 billion of budget cuts.

The city is home to about two-thirds of New York residents who rely on Medicaid, estimated Doug Turetsky, the spokesman for the Independent Budget Office. "If you're poor enough for welfare, you're poor enough for Medicaid," Turetsky added.

(Reporting by Joan Gralla, editing by Gary Crosse)