The following is from the Wall Street Journal:

The Paterson administration, under mounting pressure from county governments owed hundreds of millions of dollars by the state, is promising local officials that Albany will wipe out a backlog of unpaid bills by the end of August.

The governor’s office made that assurance Monday as it sought to contain a revolt by county leaders, who have threatened to cut off their mandated weekly Medicaid payments to Albany unless the state rapidly cleared its debt to local governments.

Tensions heightened last week after an upstate county executive ordered a temporary hold on Medicaid payments to Albany, which collects a portion of the cost of the entitlement program from localities.

For a second consecutive week, Oneida County, which claims Albany has fallen behind on more than $30 million in reimbursements, is freezing its Medicaid payment to the state.

In a letter last week to Gov. David Paterson, Oneida’s county executive, Anthony J. Picente Jr., warned that the state’s lag is “threatening to destroy our credit rating and our ability to properly serve our residents.”

Explaining his decision, Mr. Picente stated that out of “principle” he would refuse to borrow money to cover the state’s overdue bills. “I’m still withholding,” he said on Monday. “Until I get relief, I still have a cash-flow issue, and I have to get money out the door for our expenses.”

Other counties have warned they may follow his lead, a development that could plunge Albany into even deeper fiscal disarray.

The state budget office “expects to have the backlog of payments to counties cleared by the end of August,” stated Jessica Bassett, a spokeswoman for the governor, in an e-mail.

“This is not pursuant to an agreement of any kind, but rather is a matter of the Division’s timeline in processing the backlog of payments,” she said.

That message was conveyed to a representative of county leaders, who is scheduled to meet with the state’s budget director on Tuesday in the hopes of getting a firmer assurance.

“There will be a meeting tomorrow to validate that agreement,” said Stephen Acquario, executive director of the New York State Association of Counties.

The Paterson administration said it would not be paying interest on the delayed payments, a decision that Mr. Acquario criticized as “blatantly unfair.”

“We ought to receive interest on the late payments or the state should simply pay their bills,” he said.

The threat of a county revolt is the latest sign of a wider fallout from the state’s cash crisis. In recent months, owing to budget gridlock and overly optimistic revenue projections, state budget officials have had to resort to emergency measures to keep cash flowing.

While counties are accustomed to a backlog in unpaid bills, local officials say the delays have grown worse, as counties have grappled with their own fiscal problems.

County leaders say the unpaid reimbursements are largely for mandated public welfare and health services, including contracts for child-care and special-education providers.

“They can’t wait until the end of August,” said Rockland County Executive C. Scott Vanderhoef, who said Albany owes the county $70 million, including for bills dating back to December. “They’re going to have to do it in a systematic way sooner rather than later.”

Mr. Vanderhoef said his county is considering a suspension of Medicaid payments or legal action against Albany.

(Source: WSJ)