Governor Kaine Presents Budget

Governor Tim Kaine announced today a series of proposed budget changes for the next state fiscal year beginning July 1, 2007 as he addressed members of the state Senate and House money committees.  The unveiling of the Governor’s budget represents the initial step in the overall process to reach agreement with the General Assembly on the state budget.  Working in the state’s favor this coming year is the fact that budget forecasters are now predicting a $690 million general fund surplus for the remaining biennial budget.  In addition to the surplus in general fund resources, there is $339 million in surplus funds identified in the budget introduced one year ago.  Those monies, intended to address one-time transportation needs, were never allocated by the General Assembly in 2006.  Thus, the total amount considered in the budget amendments for the remainder of the biennium is slightly over $1 billion.

The Governor repeated his concerns that since the factors that have created the surplus are not projected to continue into the future, his plan to address additional spending needs would largely concentrate on one-time projects and expenditures.  Typically, amendments in the second year of the budget are not intended to fund major new initiatives and given the ongoing focus on addressing the Commonwealth’s transportation challenges, most veterans of the budget process predicted little new funding for programs beyond those needing critical attention.

In the area of Medicaid and long term care, the Governor highlighted the statistic that half of all Virginians who reach age 65 will need some form of long-term care and the fact that Virginia lacks a sustainable public strategy to address the aging population.  Governor Kaine announced that he is proposing start-up funding for one additional Program for the All-Inclusive Care of the Elderly (PACE) site in Northern Virginia.

He also proposed a language only amendment "without funding" to improve the quality of care Virginians receive in nursing facilities by directing the Department of Medical Assistance Services (DMAS) to establish nursing facility pay-for-performance standards.   At a minimum, this amendment sets the stage for the Administration to seek funding in next year’s new biennium budget to implement a nursing home pay for performance program.  With these criteria in place, the state can create a financial incentive for facilities to achieve and maintain high-quality care.  DMAS had previously announced their intention to seek $5 million to implement the program in the state’s fiscal year beginning July 1, 2007.  VHCA will be working with both the Administration and members of the General Assembly during the upcoming session to explore opportunities to obtain funding for this important program in state fiscal year 2008.

In response to a request from VHCA and other advocates for long term care, the Governor is proposing a modest increase in the monthly personal needs allowance for Medicaid residents – the first since 1988.  With General Assembly approval, the current $30 monthly allowance will be increased to $40 effective July 1, 2007.
 
Based upon recent discussions with a senior health policy advisor to the Governor, it appears that the Administration plans to let the Governor’s Health Reform Commission created in 2006 complete their work and submit their recommendations before serious consideration is given to additional health funding needs.  Our request for additional Medicaid payment to address increased technology related investment by nursing facilities will be considered along with a host of other needs in the 2008-2010 biennium budget. 

The budget proposal contains no amendments to existing Medicaid nursing home payment levels for state fiscal year 2008.  Funding for full inflation adjustments to rates and cost ceilings is assumed in the Governor’s proposed budget.  For Auxiliary Grant assisted living providers, the Governor announced earlier this week the rate for residents of assisted living facilities will be raised approximately 6.7 percent, effective January 1, 2007. The increase will bring the maximum monthly rate to $1,048, up from the current $982. In addition, the personal care allowance that residents receive will rise, from the current $70 to $75.

The Governor concluded his comments on health by highlighting his concerns related to health care workforce issues.  Virginia is currently facing a nursing shortage and projects a shortage of nearly 16,000 nurses by 2015.  With nurses in greater and greater demand, fewer nurses choose to become nursing educators, leaving the state unable to teach enough nurses to meet the growing needs.  To begin to address this critical need, the Governor proposed a 10% increase in the salaries for nursing faculty in conjunction with advanced degree scholarship programs. 

Among the key changes, outside of health care, to the second year of the biennium budget are $100 million in borrowing for a medium-security prison in Grayson County, $79.5 million for K-12 education, including $64 million for teacher raises, $250 million for sewage treatment plants, $161 million for transportation, and $175 million for construction cost overruns on existing building projects around the state.

Over the next few days, VHCA staff will be reviewing the new Budget Bill (House Document No. 1) released today by the Governor and will communicate issues of interest to our members as we continue to prepare for the upcoming 2007 General Assembly session.