Virginia Budget Puzzle: No Quick Solution

VHCA (2/6/2009)

There is growing speculation that legislators could delay until April their work to balance the state budget.  Senators in both parties are discussing the possibility of finalizing only the fiscal year 2009 budget, adjourning as scheduled at the end of February and then focusing on the 2010 budget when legislators return to Richmond in April.

This approach could upset Sunday's scheduled rollout by the Senate and House money committees of their versions of a spending plan to address a shortfall of at least $2.9 billion.  Because the state has not finalized tax collections for January, Governor Kaine is delaying until at least mid-February an updated revenue report – one that many predict will contain more bad news.  In a letter yesterday sent to budget leaders in both the Senate and the House, Secretary of Finance Richard Brown indicated that the next revenue report will be disappointing, possibly requiring more cuts.

The uncertainty over how much money Virginia will receive from President Barack Obama's economic stimulus plan, as well as when it will be available, adds another major variable in the struggle to balance the state’s budget.  While estimates vary, at least $4.1 billion is anticipated, but it is unclear as to the discretion available to state lawmakers on spending the funds.

Virginia legislators and policymakers are closely monitoring the progress of the federal stimulus bill as it will play a key role in solving the Commonwealth’s budget dilemma.  On February 5th, an amendment to the pending economic stimulus bill, was offered by U.S. Senator Charles Grassley that specifies that no state can be eligible for enhanced Federal Medical Assistance Percentage FMAP (Medicaid) funds if the state reduces seniors’ eligibility standards, benefits, or if the state reduces provider payments.

According to the American Health Care Association (AHCA), despite many governors’ best efforts, nursing facility residents’ Medicaid benefits are being slashed in a growing number of states – to the detriment of seniors and the providers who care for them.

Specifically, the Grassley effort strengthens the current “maintenance of effort” (MOE) requirements for receiving enhanced FMAP Medicaid funds.  Currently, the American Recovery and Reinvestment Act of 2009 (S. 1), would require states to maintain their efforts on Medicaid eligibility – but not in any other area. The Grassley amendment could be voted on at any time within the next few days.  Along with AHCA, we encourage our members to contact Senators Jim Webb and Mark Warner by clicking here and urging them to vote in favor of the Grassley MOE Amendment.  Once the bill has passed the Senate, a House-Senate conference committee will begin negotiations on a final bill.

For nursing facilities, the stimulus bill now being debated in the Senate contains a number of key provisions: the increase in Federal Medical Assistance Percentage (FMAP) funding to states, the provision to ensure prompt payment to long term care providers, the funding provided to states for Health Information Technology grants and loans, and funding provided to train nurses and other primary health care providers.  In addition to the Grassley amendment, a variety of amendments have been filed and are expected to be voted on before the bill is ultimately approved, most likely sometime next week.