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| May 27, 2003 |
Volume 3, Issue 7 |
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| The Living
Income Initiative is a special project of the NC Justice and Community
Development Center. It is |
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As part of the huge tax cut bill just passed in Washington, $20 billion has been allocated to the states to help with their budget problems. NC will receive $278.3 million to help with its Medicaid program and $273.7 in other grants for a total of $552 million. This will help with NC's budget hole of over $400 million. (Source - Center on Budget and Policy Priorities. If we cut Medicaid and spend less in 2003 then the amount the state gets for Medicaid would go down.)
Bad News - NC House takes this Federal Money and Still Cuts Medicaid and Other Critical Health Programs. Advocates had hoped that getting over $500 million in relief money from the federal government would make unnecessary the draconian cuts in Medicaid proposed by the NC House and restored by the NC Senate. (Examples include elimination of health coverage for pregnant women, children, and families and closing of the NC Health Choice affordable children's health insurance program.)
Put this in perspective: The House's current cuts in Medicaid of pregnant women, children, and families and the closing of the NC Health Choice program only save about $9.9 million this year and $45.3 million next year. So you can imagine the impact of a $200 million cut. That's enough to shut down the entire NC Health Choice program and throws thousands of the disabled and vulnerable off of Medicaid.
Take Action! Our Message to Legislators: Don't Turn Your Backs on the Needy Just When We Get More Money from the Federal Government Call
your legislator and ask - Please use the federal moneys to fill the budget deficit for next year and raise additional revenues for the following years!
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Background: In April the House passed its version of the state budget for State Fiscal Years (SFY) 2004 and 2005. They filled the budget deficit with $885m in cuts to agencies, $384 by delaying tax cuts set to go into effect on July 1 and $60m from using some tobacco settlement trust funds. The Senate then quickly passed their version of the budget which would raise over $100m in new revenue not included in the House budget and cut $118m less from agency budgets and the programs they fund. House and Senate negotiators privately were trying to hammer out a single state budget, when they learned that state revenues were down and they had an additional $400m budget hole to fill. Today House budget negotiators sent a summary of a compromise proposal to the Senate that incorporates new money Congress has budgeted to help states with their huge deficits. The House’s budget compromise proposal also incorporates the latest state fiscal numbers which show that the state has $400m less revenue. The Bottom Line: NC Gets More Federal Money AND House Still Proposes Huge Cuts Congress is sending North Carolina at least $509.7m in federal grants and additional Medicaid money for this and the next state fiscal year(from now through June 30, 2004) to help with rising Medicaid costs and the growing state budget deficit. Today the NC House proposes this money NOT be used to restore programs that were cut in their previous budget proposal. The House would only replace $14m of the $885m in cuts they made to agencies (only $3.5m more in HHS, Education and JPS). In fact, for every new Medicaid dollar the federal government would send to North Carolina this and next year, the House would take a state dollar out of the Medicaid program. In dollars and cents that means the federal government is sending us $236m in additional Medicaid dollars and the House proposes removing $236m in state dollars currently budgeted for Medicaid. Consequently, there is no net gain in Medicaid spending and the state would still have to cut the program immediately. Even worse, the state would have to cut Medicaid by an additional $200m in 2004-05. This is because the federal moneys are for only next year (2003-04). Since the House proposal replaces “recurring” state money with “one time” federal money, a hole is created in the Medicaid program in 2004-05. In addition, the House would make more cuts than included in their first budget by telling the Governor to cut $20m in 2004 and $50m in 2005. These cuts known as “management flexibility” or “negative reserve” are left to the Governor to determine how and where best to make them. If
Not on Medicaid and Other HHS or Education Programs, Where Would the
House Spend the Money?
Summary: More Money, Same Cuts In the end, our preliminary analysis shows that the House would spend $436.5m more in its newest budget proposal (as compared to its first budget proposal) but still make the same substantial cuts to Medicaid, other Health and Human Services programs, Education and other critical budget areas. In addition, they increase the number of unspecified budget cuts in SFY 2004 and cuts to Medicaid in the second year of the budget (SFY 2004-05) substantially, especially to the Medicaid program. *This analysis reflects our current understanding of the House proposal based on a summary report released by the House on May 27 and an oral presentation made by fiscal staff to the Senate budget conferees. Exact numbers may change as more information is released. |
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