Tuesday, February 26, 2008

Paupers on the Potomac

(this ties in with Kathy's diary below - kinda the same, but different)

The nation's governors were in DC this past weekend for the National Governors Association Winter Meeting. They all get together, talk about their plans, swap Stupid Legislature Tricks (Oh yeah? Well, guess what mine did! Really? Mine did that last year! You got nothin' on me!), show off their enthusiastic spouses who are out there doing their own thing, break into regional groups to elect leaders and set goals... and then they descend on the White House to plead their case with an administration that is bound and determined to turn a deaf ear to our domestic needs.

States are suddenly facing some huge revenue shortfalls as the economy slows down; California's deficit alone is $16 billion. Makes our $2 billion last year look like chump change.

By NGA’s last count, 18 states must cut $14 billion to keep this year’s budgets in balance, and 18 states already know they’re running $32 billion short in the upcoming fiscal year. If the current downturn follows the path of previous recessions, 35 to 40 states could face budget cuts in 2009, NGA Executive Director Raymond Scheppach said in a Jan. 28 column for Stateline.org. That's largely because of a lag before economic effects show up in states’ revenues. Deficits are a far greater problem for states because, unlike the federal government, they must make cuts or even raise taxes to balance their budgets.

Well, we've been down the "raise taxes" road already, and to any state that is going to have to do that – have fun! The alternative of cutting budgets can't come at a worse time, especially with growing health care needs and a crumbling infrastructure affecting just about every state out there.

You get the impression that Bush would probably have them arrested for panhandling if he could. He intends to make more cuts to domestic spending; for example, Medicaid is undergoing some drastic changes that will put the burden of growing costs on state governments.

Governors of both parties strongly objected on Saturday to a half-dozen new federal Medicaid regulations that they said would shift billions of dollars in costs to the states, forcing them to consider cutbacks in services.

The rules, scheduled to take effect in the next few months, would reduce federal payments for public hospitals, teaching hospitals and services for the disabled, among others.

there's always more... denial, that is...

Some quotes from Republican governors about this problem - Gov. Jim Douglas of Vermont, and a brief explanation of the changes...

“Governors strongly oppose the changes,” said Gov. Jim Douglas of Vermont, a Republican who is chairman of the association’s Health and Human Services Committee. “The timing could not be worse.”

Govenor Schwarzenegger, who probably needs the help the most at this point, and a health official from Georgia...

Gov. Arnold Schwarzenegger of California, a Republican, said the rule changes “would effectively end the federal government’s participation in many crucial components of the Medicaid program.”

Dr. Rhonda M. Medows, commissioner of the Georgia Department of Community Health, said: “We understand the need for financial safeguards, but these rules, taken together, would have a tremendous adverse impact. They would undermine the health care safety net for the entire state of Georgia, reducing federal Medicaid payments for hospitals, nursing homes and school clinics.”

Response from the feds? "You're ripping us off".

Dennis G. Smith, director of the federal Center for Medicaid and State Operations, said the rules were needed to “protect the fiscal integrity of the Medicaid program.” Since 2003, he said, federal officials have persuaded 30 states to end “questionable Medicaid financing arrangements.” The purpose of such arrangements is to maximize the use of federal money while holding down the use of state and local revenue.

Although the most blatant problems have been corrected, the administration says, many states still use federal Medicaid money for purposes unrelated to Medicaid.

Michigan gets cut in the president's latest budget. Not sure if these rule changes are taken into consideration when they figured these numbers.

The White House said Michigan will get $5.5 billion in Medicaid funding in 2008, and an increase to $5.75 billion in 2009. But Dan Beatte, the director of Gov. Jennifer Granholm's Washington office, says the state actually expects $6.1 billion in the current year, meaning the president's proposal would be a net cut of $350 million.

"This budget extends our challenges and does nothing to help us advance our economic recovery goals," Beattie said, noting that 1.6 million people in Michigan, or 1 in 7 residents depend on Medicaid.

Governors will call on Congress to intervene on this issue (they will have to, obviously), and the battle will take place there.

When it comes to infrastructure, it looks like the governors will concentrate on the incoming president, putting pressure on the party platforms to make sure this is including in future considerations. Thirteen governors, including Governor Granholm, joined together to form a bipartisan coalition called "Building America's Future" that will keep this issue on the national stage.

The Building America's Future coalition will be comprised of state- and locally elected officials from around the nation and will become a repository of best practices on infrastructure funding issues. In the short-term, the coalition will work with the presidential candidates and the platform committees of the national political parties to ensure that the next president understands the enormity of the infrastructure crisis and is committed to increasing federal funding.

Gov. Ed Rendell, Schwarzenegger and New York Mayor Michael R. Bloomberg formed this group a month ago. How big is this problem? How does a trillion dollars over the next five years sound?

Ouch. And we can't even blame George for all of that.

As a share of non-defense federal expenditures, federal infrastructure spending has steadily declined since 1966. For the past 20 years, federal spending on infrastructure has averaged just 3.5 percent to 4 percent of total non-defense expenditures. Between 1956 and 1966, infrastructure spending as a share of total non defense federal expenditures was approximately 10 percent.

Today, the American Society of Civil Engineers, or ASCE, estimates the national infrastructure needs at more than $1 trillion dollars over the next five years.

Good luck to the governors on their quest to get the feds to pay attention - best guess is they can write it off for this year, gather together in their regional groups and coalitions and get those list of demands ready for a more receptive White House next year... and whoever gets the Big Chair is looking at some mighty big bills. He or she is going to need the most luck of all - along with the American people, who are going to pay big time for Bush's irresponsible borrow-and-spend-anywhere-but-America policies.

UPDATE: George says "meh" to any infrastructure stimulus plan.

President Bush rebuffed appeals from the nation’s governors on Monday to increase spending on roads, bridges and other public works as a way to revive the economy....

329 days to go.