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Congress might thwart state’s budget plan

Post by Jordan Schrader / The News Tribune on June 2, 2010 at 5:55 pm |
June 2, 2010 5:55 pm

A month after Gov. Chris Gregoire signed it into law, Washington’s state budget is in trouble without an expected lifeline from the nation’s capital.

The Obama administration’s stimulus act helped states’ bottom lines by increasing matching funds for Medicaid, the federal-state insurance program for the poor. Now states want a six-month, $23 billion extension, but they’re running into roadblocks in Congress.

Washington stands to take in about $480 million. State lawmakers and Gregoire counted on the money when they wrote the state budget. Not getting it would wipe out the $450 million in reserves they left as a cushion, leaving the state vulnerable if tax revenues don’t pan out exactly as predicted.

More cuts would be required to balance the budget, before even dealing with next year’s predicted shortfall.

“I don’t think there’s any state service that’s not in danger if members of Congress don’t do the right thing here,” said David Rolf, a vice president of Service Employees International Union.
Those include health care and social services, which have already seen deep cuts, said Rolf, president of an SEIU local that represents nursing home and home care workers, Healthcare 775 Northwest.

Gregoire met with supporters of the Medicaid extension like SEIU president Mary Kay Henry in Washington, D.C., Wednesday, part of lobbying efforts by governors.

The House stripped the Medicaid extension from legislation it passed last week, which Democrats call a jobs bill. Among other things, it would extend unemployment benefits. But the original bill was largely not paid for.

The Senate could take up the legislation when it returns from a weeklong Memorial Day recess.
Members of Congress are balking over worries about a ballooning federal deficit.

They’re right, said state Sen. Joseph Zarelli, minority Republicans’ point man on the budget. Congress should refuse states’ request and force them to curb spending with sweeping reforms, rather than continue to depend on temporary federal stimulus money.

“The sooner we stop that bleeding, the better off we’ll be,” said Zarelli, of Vancouver. “Using all this federal money to artificially keep our spending high, that piper has to be paid eventually.”
Republicans in control of state governments don’t share that feeling. Gregoire said 47 governors, Democrat and Republican, have signed a letter asking for the extension. More than 30 states counted on the money in their budgets, she said.

Democrats in Olympia shouldn’t have bet on the money being there to spend, Zarelli said.
But Gregoire, talking to reporters by phone from Washington, D.C., defended the assumption.
“When our legislature put it in our budget, it was in the president’s budget, it had been passed by the (U.S.) House twice, it had been passed by the Senate once,” she said.

The governor said Congress’s deficit concerns comes down to election-year politics. The $23 billion price tag isn’t large in the context of the multi-trillion-dollar federal budget, she said.
“If (states) have to do additional cuts, it can hurt the economic recovery,” she said.

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