The State Capitol Report
Submitted By
Rep. Vida O. Miller, 335D Blatt Building
SC House District #108
This week the House approved and sent to the Senate a state government budget for fiscal year 2009-2010. The budget proposed for the upcoming fiscal year incorporates federal stimulus funds available under the American Recovery and Reinvestment Act of 2009. In order for the state to be eligible to receive the federal stimulus dollars, 81.8 percent of the funds must be used to restore funding through the state’s primary and secondary education formula by eliminating cuts imposed in recent years. The remaining 18.2 percent may be used for other education or government services. The proposed budget utilizes federal funds to restore funding for the Education Finance Act, four-year-old kindergarten, and institutions of higher learning to required levels. Remaining federal funds are devoted to school bus fuel, education assessments needed to comply with federal No Child Left Behind requirements, items related to teacher salaries, the deficit at the Department of Juvenile Justice, and a portion of the deficit at the Department of Corrections.
As part of its economic stimulus efforts, the federal government is temporarily increasing its financial commitment within the Medicaid program that it offers in collaboration with the states. With the enhanced federal Medicaid match rates, the proposed budget allows for the restoration of Medicaid reductions made in October’s rescission bill and the avoidance of proposed reductions in Medicaid coverage that were, at one point, scheduled to take effect on February 1 of this year. Federal provisions also allow for enhanced Medicaid match rates to apply on a retroactive basis through October of 2008. The budget includes a one-time transfer of funds from the Department of Health and Human Services to allow the funds realized through the retroactively enhanced federal Medicaid match rates to be redistributed to other budget needs.
Since restoring K-12 and higher education funding levels is a condition for receiving federal stimulus money and since new federal Medicaid match provisions effectively prevent reductions in Department of Health and Human Services programs, the categories of education and health, which together comprise the vast majority of the state’s budget, are shielded from significant reductions. Remaining eligible to receive federal stimulus funds requires that the budget cuts needed to cope with current revenue shortfalls be concentrated in the relatively small portion of the budget that remains after the categories of education and health are removed. To avoid drastic state agency budget cuts within this remaining sector, a $50 million base reduction is authorized for the Local Government Fund and these funds are redirected to other budget needs. To allow for this redistribution, a statutory requirement is temporarily suspended that guarantees the state’s counties and municipalities an annual increase of 4.5 percent in state aid to political subdivisions in order to accommodate growth. The budget legislation also draws upon $37 million from an insurance reserve account and $35 million from Medicaid savings to contend with shortfalls. The proposed budget reduces most state agencies to fiscal year 2005-2006 funding levels, if they were not already functioning at such levels.
Many lawmakers were unwilling to support this budget because of the cuts to local government funds, the lack of willingness to expand healthcare for children and the questionable use of the economic stimulus money. A summary of the budget details will be included in next week’s report.
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