Ky. facing more budget woes if federal aid defeated

Local News

June 26, 2010

By Ronnie Ellis CNHI The Richmond Register Sat Jun 26, 2010, 12:00 PM EDT

FRANKFORT — FRANKFORT — The recently passed state budget for the next two years relies heavily on an assumption: that the U.S. Congress will pass an extension of increased Medicaid matching funds.

Just one problem: Senate Republicans Thursday blocked the bill which would have extended the higher Medicaid match, an extension of unemployment benefits, some new taxes and extension of some key business tax credits.

It will cost Kentucky about $238 million for its Medicaid program but because of the federal match could cost the state as much as $1 billion in aid to the poor and disabled for medical care. Democrats fell three votes short of the 60 necessary to prevent a Republican filibuster and Democratic leaders indicated they intend to move on to other business and legislation.

Gov. Steve Beshear said Friday if the impasse holds it could force severe cutbacks and require the state to revise the budget it just passed to cover an additional $238 million shortfall. That, he said, would require cuts to nearly every state program or service, most of which have already been cut multiple times during the last two years as Beshear and lawmakers struggled to manage falling revenues in the midst of the deep recession.

The Senate's failure to extend unemployment benefits will mean nearly 8,700 Kentuckians will stop receiving assistance,” Beshear said Friday. “Right now, nearly 140,000 Kentuckians ar”e receiving unemployment aid — money that helps families keep roofs over their heads and food on the table as they try to find work. The failure to pass the federal extension means thousands of Kentucky families will continue to struggle in this recession.

Beshear said he will continue to lobby Kentucky's congressional delegation “to make sure they understand the critical need the Commonwealth has for both the Medicaid extension and unemployment assistance extension.”

Members of the General Assembly in both the Republican controlled Senate and Democratic controlled House had counted on the $238 million in additional federal funds to balance the budget during a special June session. Both Senate President David Williams, R-Burkesville, and House Speaker Greg Stumbo, D-Prestonsburg, expressed confidence during the regular session and again in the June special session that Congress would pass the extension.

But in an election year, Republicans have hit President Barack Obama and Democrats hard on federal spending, the growing federal debt and their handling of the economy. Republican Leader Mitch McConnell, who voted for a similar measure earlier in the year, voted against the measure Thursday.

During the debate Thursday, McConnell said the bill "adds new taxes and over $30 billion to an already staggering $13 trillion dollar national debt."

Stumbo was quick and harsh in his reaction.

“It’s obvious Sen. McConnell knows nothing about the economy, and his failed leadership is once again jeopardizing our most vulnerable Kentuckians. Having him lecture us on debt after he helped to throw us into a worldwide Republican recession during President Bush’s administration is like having a witch doctor perform open-heart surgery.” Stumbo said in a prepared statement released through his spokesman.

Typically, whatever Kentucky spends on Medicaid is matched by the federal government 70-30. But Congress passed an increase in the match as part of the federal stimulus to help states weather the economic downturn and Kentucky’s federal match grew to 80-20. That increase is set to expire in December but the bill defeated Thursday would have extended the higher match another six months, something lawmakers factored into their budget calculations.

Kentucky will have to find the $238 million elsewhere or risk losing a total of $1 billion for Medicaid. Without new revenue, the $238 million will have to come from other areas of the already strapped budget.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort. The Richmond Register is a CNHI newspaper.

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