Posted on December 9, 2009 15:44
Categories: Medicaid | Legislative and Regulatory Issues | State and Local
Topics: Legislation (National) | Medicaid | Spending | State Data
A report published November 11 by the Center on Budget and Policy Priorities (CBPP) estimates how the expiration of Medicaid American Recovery and Reinvestment Act (ARRA) funding on December 31, 2010, will affect states and the country. The report notes that, because FY2011 begins July 1, 2010 for most states, states’ budget processes will begin as early as January or February 2010, forcing state lawmakers to create budgets assuming that ARRA assistance will expire. The CBPP estimates that those budgets will reduce U.S. GDP by nearly 1 percent and force states to cut numerous safety net programs and/or raise taxes to generate additional revenue. The CBPP report advocates additional federal funding for states, extending beyond the ARRA’s 2010 cap on Medicaid funding.
From the summary:
States face a serious fiscal problem that could force them to institute additional deep budget cuts and tax increases in 2010, weakening the fragile economic recovery and harming vulnerable children, seniors, and people with disabilities, among others. The federal assistance that states received for their Medicaid programs under this year’s economic recovery legislation is scheduled to end with a “cliff” on December 31, 2010, and the assistance states received for education and other services also will be largely exhausted by then. Although that date is more than a year away, the problem is coming to a head now. That’s because states — which continue to face huge budget shortfalls that they must close — are taking steps now to plan their budgets for state fiscal year 2011, which starts on July 1, 2010 in most states. Governors will send their budget proposals to their legislatures between next month and February 2010 in almost all states. The legislatures will have to pass budgets as early as March or April in some states and by the end of June in almost all states. If states do not know they will receive additional federal fiscal relief, they will begin implementing new budget cuts and tax increases by this summer, at the latest.
Full report: Additional Federal Fiscal Relief Needed to Help States Address Recession's Impact (PDF | 207.67 KB)
Center on Budget and Policy Priorities. (2009). Additional federal fiscal relief needed to help states address recession's impact: without it, states’ steps to balance their budgets could cost economy 900,000 jobs next year. Lav, I.J., Johnson, N. and McNichol, E.
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