[nfbwatlk] Olympian/TNT 9-13-11 State sharpens budget knife

[Nightingale, Noel]

From: Olson, Toby [mailto:TOlson2 at ESD.WA.GOV]
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Subject: FW: FYI: Olympian/TNT 9-13-11 State sharpens budget knife



From: Stevenson, Jim (HCA)
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Subject: FYI: Olympian/TNT 9-13-11 State sharpens budget knife

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State sharpens budget knife

Gov. Chris Gregoire's call to plan budget cuts of up to 10 percent sounded draconian a month ago. But they may become reality - as the governor and others now fear Thursday's revenue forecast will erase $1 billion to $2 billion more from state coffers.
By BRAD SHANNON
The Olympian/TNT
September 13, 2011
Gov. Chris Gregoire's call to plan budget cuts of up to 10 percent sounded draconian a month ago. But they may become reality - as the governor and others now fear Thursday's revenue forecast will erase $1 billion to $2 billion more from state coffers.
The governor's worst-case scenario called for cuts across all of state government totaling $1.7 billion. The state Health Care Authority's share at the 10 percent cut level was $445 million - a situation that is putting some Medicaid programs and the Basic Health Plan firmly on the chopping block.
One of the most severe Medicaid cuts would end state payments for prescription drugs for Medicaid participants no longer in a hospital or nursing home.
"I still can't get to $445 million without eliminating prescription drugs at some point,'' authority director Doug Porter said in an interview last week. "Without prescription drugs (cut), I get to $300 million.''
Agencies all across state government must submit plans to the governor's Office of Financial Management on Sept. 22, exactly a week after the revenue forecast. Including money in a voter-approved "rainy day" fund, the state has just $163 million in reserves to last through June 2013, according to OFM, so a bad forecast of any size puts the state into the red.
Porter thinks he could save $45 million over two years by eliminating Basic Health, which subsidizes health insurance costs for low-income workers. Democrats fought hard to preserve BHP in scaled-back form this year, calling it a bridge to federal health care reform in January 2014.
Another $38 million might be saved by cutting health coverage for children who can't document their legal residency or who have been in the country legally for fewer than five years.
Getting rid of the Disability Lifeline, which provides medical care and shelter to disabled people ineligible for other aid, could save $110 million. Similarly, Porter could go after certain kinds of funding for hospitals to save $63 million.
"It's (all) doable mathematically, and it should be doable legally," Porter said. "I can't defend any of this as good policy. People say is this a good idea to do this, I'd say no ... It's where you can do it; it's not where you should do it.''
If the cuts come to pass, Porter said, he needs 30 to 60 days' notice before starting them, because there are legal notice requirements. So he needs to hear soon - if cuts are to be enacted by Jan. 1, as OFM's budget instructions require.
For state prisons, legislative action would be needed to allow early release of inmates, which is one option for spending cuts cited by the Department of Corrections.
Spokesman Thomas Shapley at the Department of Social and Health Services, which is preparing for cuts of up to $573 million, said his agency is working with numbers and developing its plan. But he did say in an email that "it is certain that a reduction of this magnitude would be felt across our programs and services and have serious impacts on the people we serve."
Ingrid McDonald of AARP Washington said last week that she fears the DSHS cuts would include another reduction in home care hours, or tighter eligibility rules, that make more of the elderly and disabled ineligible. Home care hours were cut by 10 percent in March, and McDonald said home care helps people stay in their homes, avoiding costlier nursing homes.
AARP sees other threats on the horizon from the federal government that would be compounded by state cuts. "What I think is more likely is cost shifting of Medicaid to the states,'' she said. "Some people think of Medicaid as a poor people's program."
"The decisions and ideas are not very palatable, that's for sure,'' state budget director Marty Brown said Friday. "My biggest thing now is - am I asking for enough? Is 10 percent enough? It is an awful question to have to ask.''
Brad Shannon: 360-753-1688 bshannon at theolympian.com<mailto:bshannon at theolympian.com> www.theolympian.com/politicsblog<http://www.theolympian.com/politicsblog>