Lawmakers look at cutting Medicaid, education

BY REX BOWMAN
Media General News Service
Published: November 19, 2008

ROANOKE — Members of the House of Delegates Appropriations Committee signaled Tuesday that they are prepared to cut spending on public education and Medicaid to help the state balance its budget.

A wide range of options are on the table, including slashing payments to health-care providers in order to cut Medicaid costs; and enlarging class sizes and reducing payments to local school boards in order to curb education spending.

Virginia needs to make up a $2.5 billion shortfall to balance its two-year, $77 billion budget, and spending on Medicaid, a state-administered, federally subsidized health-care program for the poor, and education for kindergarten through 12th grade constitutes a huge chunk of the state’s expenses.

Spared up to now by Democratic Gov. Timothy M. Kaine when he announced a series of belt-tightening measures last month, the two programs are in the sights of the Republican-dominated Appropriations Committee, whose members say permanent changes to the programs’ funding might have to be enacted.

“They have to be a part of the mix,“ said Del. M. Kirkland Cox, R-Colonial Heights.

Tuesday, at a committee meeting at the Hotel Roanoke, delegates listened as staff analysts shared details of what other states have done to pare the two programs. Thirty-five states have cut school funding since 2000; Virginia is one of the 15 that has not, said Susan Hogge, fiscal analyst for the committee.

Committee Chairman Del. Lacey E. Putney, I-Bedford, said the state’s budget predicament makes stopgap measures unworkable, so the Medicaid and K-12 programs have to be reduced.

“As painful as it might be, we are better off addressing this issue once,“ Putney said, “not leaving it to the next General Assembly to fix.“

Education accounts for about 40 percent of the state’s total operating expenses, which were projected to be $73 billion at the beginning of the two-year budget cycle, according to the Virginia Department of Planning and Budget.

As for Medicaid, in the last fiscal year, the state paid $2.2 billion in reimbursements for more than 818,000 recipients, many of them elderly, young or disabled. Altogether, the state spent $5.3 billion on medical services in fiscal 2008.

The state is trying to right its fiscal 2009-10 budget in the face of a turbulent economy. State revenues, initially projected to increase 2 percent in fiscal 2009, now are expected to shrink 4 percent. Meanwhile, state analysts foresee the loss of 38,000 jobs between Oct. 1 and July 1, and a housing market still suffering from a foreclosure crisis.

Kaine, expected to announce plans for additional state cutbacks next month in advance of the 2009 General Assembly session, has said he will try to protect core programs, but nothing is exempt automatically from the budget ax.

Kaine spokesman Gordon Hickey said Tuesday that the Appropriations Committee’s focus on Medicaid and K-12 spending is not at odds with the governor’s effort to balance the budget.

“The governor’s position on that is that everything is on the table,“ Hickey said. “He has not ruled out anything.“

Committee member Del. Clarence E. Phillips, D-Dickenson, said he understands that K-12 education funding “has a big target on its back,“ but he cautioned that the state should not move too hastily to cut school funds. “If we’re cutting,“ he said, “how do we cut without diminishing the quality of education these children get?“

Virginia currently spends about $5,500 in state funds per pupil, putting it in the bottom 25 states in terms of expenditures.

Committee member Del. H. Morgan Griffith, R-Salem, said cuts are unavoidable. “We’ve got to figure out what’s right for Virginia, and that’s not going to be fun or easy. If [Kaine] can figure out how to do it without cutting these programs, more power to him.“