Kaine Unveils Budget

VHCA (12/18/2009)

Today, Governor Kaine presented his biennial Budget to the General Assembly.  Unfortunately, Virginia’s revenues continue to decline, making unprecedented cuts necessary both for the remaining 2010 budget and the 2011-2012 budget.  When new spending requirements such as the funding associated with Medicaid utilization increases are considered, the total general fund shortfall increases to $1.8 billion in FY 2010 and to $4.5 billion in the 2010-2012 biennium.

Governor Kaine is recommending steep additional cuts totaling over $3.4 billion to all agencies and state programs.  All health care providers and services will be cut in the Budget he has introduced.  As anticipated, funding for inflation adjustments within Medicaid payments to nursing facilities and for the rebasing of cost ceilings has been eliminated.  These cuts total $18.9 million in state fiscal year 2011 or about $2.98 per patient day.  Governor Kaine did not propose cuts to current Medicaid rates for nursing facilities.  

In addition to slashing expenditures, the Governor is proposing the elimination of the car tax in exchange for a one percentage point increase in the statewide income tax – an attempt to raise an estimated $1.9 billion which would be given entirely to localities and would more than make up for the annual state car-tax subsidy to localities.

Republican leaders in the House of Delegates quickly announced that the Governor’s tax plan is dead on arrival signaling the need for the incoming McDonnell Administration and the General Assembly to identify additional cuts of at least one billion dollars.

Other initiatives incorporated in the Governor’s budget proposal include the layoff of 664 employees and elimination of 1,879 unfilled positions. These reductions are in addition to the 1,651 state workers laid off since 2007.  State employees would also be required to pay a higher portion of the employee contribution to their pensions under the Virginia Retirement System beginning July 1. The budget proposal also reduces funding for administrative and support personnel in K-12 education and cuts funding for higher education to 2006 levels.  In public safety, the budget proposes postponing trooper schools for the Virginia State Police and imposes cuts of 20 percent on local law-enforcement offices, including sheriff's offices.

VHCA staff are continuing to meet with members of the General Assembly and the incoming Administration to highlight the devastating impact of additional Medicaid cuts on the delivery of quality long term care services.  Members are encouraged to continue to meet with their own legislators about the critical need for adequate Medicaid funding.  Additional information will be shared with members as we continue to review the proposed budget.