Budget Outlook Remains Grim

VHCA (12/5/2008)

Virginia revenue projections show the state's fiscal outlook declining since October, when Governor Tim Kaine projected a $2.5 billion drop in revenue during the two years covered by the state budget. The Senate Finance Committee's staff recently shared its forecast showing a $3.2 billion shortfall as the full effects of the recession are felt statewide.

Earlier this week, the Governor and his financial advisers discussed a projection closer to $2.8 billion.  The governor will present his budget revisions to the General Assembly's money committees on December 17th.  The key difference between the governor’s October projections and the more pessimistic Senate Finance Committee projections focus on employment assumptions.  The governor’s forecast includes an assumption that there would be no net job losses in Virginia during state fiscal year 2010, which begins July 1, 2009.  In that scenario, jobs would increase nearly one percent, but the Finance Committee's projections assume a one percent decline in employment for this same period.

In recent weeks some legislators have suggested the total shortfall may be closer to $3.5 billion or $4 billion. On Tuesday, Delegate Phil Hamilton, who plays a key role in crafting the state budget, indicated cuts will be significant and include areas such as K-12 education and health care that previously have been spared.

Also on Tuesday, the governor attended a meeting in Philadelphia with President-elect Barack Obama.  Among the topics discussed was Medicaid relief to the states.  Governors have indicated that $40 billion is needed to address growing Medicaid funding shortfalls across the country.

VHCA staff continues to meet with key legislators who have committee assignments covering health care and Medicaid funding.  Without exception, legislators express sympathy for our Medicaid funding plight but stress the dire state of the Commonwealth’s budget deficit and their inability to balance the budget if Medicaid funding cuts are off the table.  Our message to legislators is that nursing facilities are increasingly challenged to do more with less and that providers are running out of options to offset growing Medicaid payment losses.  Today, we will deliver a letter to Governor Kaine highlighting the importance of adequate Medicaid funding for nursing facilities.

We want to thank our members who have taken the time to meet with or contact their local legislators about the need to maintain adequate Medicaid funding levels.  If you have not yet done so, the next two weeks represent a critical window for you to reach out to your state senators and delegates and make them aware of how Medicaid funding cuts impact your ability to delivery high-quality long term services.  Talking points have been developed to assist members with their legislative contacts.  If you need assistance contacting your legislators, please contact Mary Lynne Bailey at 804.212.1698.