By Dave Ranney, KHI News Service, December 15, 2009
Next year’s state budget woes are shaping up to be worse than this year’s.
Budget officials Tuesday said they anticipate a $358.7 million gap between scheduled spending and revenues.
"Next year’s budget will be even more difficult than the one we’re in now," said Budget Director Duane Goossen, addressing members of the Senate Ways and Means Committee
The projected shortfall means lawmakers likely will have to come up with $358.7 million in spending cuts, tax increases or both.
It also means allotments that Gov. Mark Parkinson imposed last month – including a 10 percent cut in rates paid to Medicaid providers -- will likely carry into next year’s budget.
The shortfall is driven by increased unemployment and declines in Kansans’ personal income.
Between September 2008 and September 2009, the state lost about 60,000 non-farm jobs. Personal income dropped 2.7 percent.
"Never happened before"
Kansas Legislative Research Department Director Alan Conroy said that since the State General Fund was created in 1966, revenues have dropped just four times.
The first three declines – 1986, 1999 and 2002 – each lasted a year. But the current recession, Conroy said, is now in its third year and is expected to last at least one more.
"This has never happened before," he said.
Though some committee members objected to the cut in Medicaid rates, Goossen said without it the state would have no way to curb costs associated with more and more people becoming eligible for Medicaid-funded care.
Goossen said the reduced payments to providers are expected to save the state about $22 million in the current fiscal year; more than $80 million next fiscal year. It also will trigger a loss of tens of millions of dollars in federal matching funds.
Sen. Janis Lee, D-Kinsington, asked Goossen if he was aware of reports that some nursing homes plan to stop admitting Medicaid patients and that some physicians are likely to stop seeing Medicaid patients.
"It’s possible," Goossen said, adding that he hoped it wouldn’t happen.
Pushing it on property taxes
Lee, whose district covers all or parts of 10 counties in north central Kansas, said that while most legislators assume the state’s safety-net clinics will pick up the slack caused by the Medicaid cuts, those clinics are few and far between in western Kansas.
"What’s going happen is they’re going to emergency rooms," Lee said, noting that most of hospitals in her district are funded, in part, by local property taxes.
"So what we’re doing here is pushing these costs on the local property tax," Lee said.
Goossen did not defend the cut.
"Every one of these cuts has consequences," he said. "These are deep cuts, deeper than anyone wishes that we need to go. The results will not be positive, they are entirely negative."
Kansas Health Policy Authority Executive Director Andy Allison warned that recent cuts have hindered the agency’s ability to keep pace with the growing number of people eligible for Medicaid.
No customer service
He predicted a 30,000-application backlog by June 2010.
The backlog and other delays, he said, may draw the attention of federal auditors, who, in turn, could force the state to pay back tens of millions of dollars.
"We’re hoping that doesn’t happen," he said.
Allison said the agency plans to streamline the enrollment process in an effort to speed the processing of applications. For example, applicants will be required to show proof of citizenship during their initial application, but not when they renew.
The latest cuts, he said, also forced the health policy authority to eliminate its customer service call center for Medicaid providers. It’s also cut the call center that fields calls from people applying for Medicaid.
Combined, the two call centers handled more than 300,000 calls annually.
"I don’t know what it’s like to run what’s essentially an insurance program without having contact with your providers," he said.
The health policy authority, he said, would try to use its Website to address provider concerns.