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Gregoire: Second special session may be needed

Wed., June 2, 2010, 7:23 p.m.

Medicare funding figured into state budget stalled in Congress

OLYMPIA — Washington may need another special session of the Legislature if Congress doesn’t come through with some $480 million in higher payments for Medicaid, Gov. Chris Gregoire said Wednesday.

Concerns over the mounting federal deficit have delayed congressional approval of what Gregoire and officials of other states once considered a sure thing — a boost in the Federal Medical Assistance Percentages, or FMAP, for Medicaid costs that are shared with the states.

“We may or may not have to go into a special session,” Gregoire said in a telephone news conference from Washington, D.C., where she was discussing FMAP with Health and Human Services Secretary Kathleen Sebelius and disaster preparedness on a Pentagon panel. “It depends on our (economic) forecast.”

The state was expecting $480 million in higher Medicaid payments through next June. The general fund calls for a $450 million reserve to carry it over into the 2011-13 biennium, all of it coming from the boost in FMAP.

The Obama administration has called for the extra FMAP money, and both houses of Congress have approved it in some appropriations bill, but not yet in the same bill. As the November elections approach, Congress may be increasingly reluctant to approve the higher Medicaid payments, which would add $23 billion to the federal deficit, Gregoire said.

“It will be a nail-biter, all the way,” she said.

Governors are lobbying Congress to pass the increases. Without it, states that counted on the extra money would have to cut salaries and programs, which some economists argue could stall economic recovery in those states and potentially spread nationwide, Gregoire said.

Jason Mercier, a budget expert at the Washington Policy Center, argued Wednesday the prospect of higher FMAP payments allowed the states to avoid decisions about how to live within the revenue they collect.

“All this did was delay the decisions that need to be made in state capitals across the country,” he said. “Maybe we’re in for a rude awakening.”

Gregoire said governors and legislatures of both parties around the country worked the extra Medicaid money into their budgets. Some even allocated it to be spent for programs.

“It happened everywhere. Everybody was confident (FMAP approval) was going to happen,” she said,

Washington was smarter than states that already allocated the money to specific expenses, Mercier said, but it would have been better still to have a good ending fund balance without FMAP and use the extra federal money to boost reserves even further if it comes in.

State economic forecasts will be released next week and in September. Gregoire said she’ll have to weigh those against the prospects for FMAP.

“It’s a little premature right now,” she said when pressed on the prospects of a second special session this year. “If we got a terrible forecast …I’d have to rethink this.”

Because the state has accepted stimulus money, which comes with requirements to continue certain programs, only about 29 percent of the state’s general fund spending can be cut, she said. Basic education and higher education would generally be protected from the cuts; health care, social services and corrections would not.

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