Legislature Budgets Money S.C. Doesn’t Have

June 15, 2010

Investigative Reports

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The NerveThe S.C. House’s chief budget writer, Rep. Dan Cooper, is definitely not a man with a plan.

At least when it comes to the possibility of the state not receiving $213.5 million in federal funding, which Congress has not approved but the General Assembly has included in its budget for next year anyway.

Cooper, R-Anderson and chairman of the budget-writing House Ways and Means Committee, openly admitted to not having such a plan while speaking June 3 at the podium on the House floor.

That was the last day of this year’s regular legislative session. It was also the day the Legislature passed a budget for the 2010-11 fiscal year that begins July 1.

The $213.5 million is detailed in the last section of the budget, called Part IV.

The money in Part IV is contingent upon Congress passing, and President Obama approving, a six-month renewal of extra Medicaid funding for the states. That funding is called enhanced Federal Medicaid Assistance Percentage, or FMAP.

Trouble is, it might not happen.

Thus, Gov. Mark Sanford vetoed Part IV and issued a verbal smackdown to the Legislature for passing it.

“Balancing a budget based on merely the hope of congressional action is unwise in the best of times and simply unacceptable in today’s economic climate,” Sanford wrote to lawmakers in nixing Part IV and 106 other items in the budget.

Legislators are scheduled to reconvene at the State House today for up to three days to deal with Sanford’s vetoes and tie up other loose ends from the session.

“So, Tuesday and Wednesday should be interesting, to say the least,” Rep. Harry Ott of Calhoun, leader of the minority Democratic caucus in the House and a critic of Part IV, told The Nerve last week.

With regard to that section of the budget, the timing of the legislative wrap-up session should be interesting as it relates to the goings-on in Congress, too.

Medicaid is a health care program for the needy. It is funded jointly by the federal and state governments; in South Carolina, usually 70 percent/30 percent, respectively.

The enhanced FMAP, originating in the stimulus, increased the feds’ share for the Palmetto State to 80 percent. But it will run out at the end of this calendar year – halfway through the upcoming fiscal year.

As The Nerve reported on April 13, Congress has been debating an approximately $26 billion FMAP extension that would provide extra Medicaid funding to the states for an additional six months – the remainder of their 2010-11 fiscal year.

Such an extension was in a U.S. house bill, H. 4213, named the American Jobs and Closing Tax Loopholes Act.

But the enhanced FMAP reauthorization was stripped out of the bill before the House recently passed it and sent it to the U.S. Senate.

In that chamber, Democratic leaders are trying to get the higher FMAP continuation reinserted in the bill.

However, the legislation faces a Republican filibuster, and Democratic leaders are working to muster enough votes, a minimum of 60, to break the GOP filibuster and bring the bill to a vote, a process known as cloture.

“This upcoming Tuesday they’re trying to get cloture on it,” Jeff Stensland, spokesman for the S.C. Department of Health and Human Services, told The Nerve last week.

If that happens, it could take place right around the same time lawmakers at the State House vote on whether to override Sanford’s veto of Part IV. A two-thirds vote in both chambers of the Legislature is required to overrule each of the governor’s vetoes.

The $213.5 million in Part IV is an estimate of how much South Carolina would receive from a six-month extension of the larger FMAP.

Stensland says state HHS officials talked with Matt Salo, manager of the National Governors Association’s Health and Human Services Committee, on Wednesday to get an update on the FMAP issue.

The NGA and other organizations, such as the National Association of State Budget Officers, have been monitoring it closely.

Efforts by The Nerve to reach Salo were unsuccessful.

Jodi Omear, communications director for the National Governors Association in Washington, D.C., e-mailed a letter to The Nerve and said it represents the only public statement the NGA is making on the proposed six-month renewal of the enhanced FMAP.

Dated Feb. 22 and signed by the governors of 42 states, the letter urges congressional leaders to pass it.

Every governor in the Southeast put their names on the letter except Sanford and Bobby Jindal of Louisiana.

Rep. Cooper, who as Ways and Means chairman occupies one of five seats on the powerful S.C. Budget and Control Board, co-sponsored Part IV.

The way it works is: If six more months of higher FMAP funding for the states passes, Part IV would keep about $170 million of the $213.5 dedicated to Medicaid.

To critics of the budget section, that’s one problem with it: funding for a mandatory federal program that has not been authorized.

Opposition to that idea found Sanford and House Democrats on common ground.

“I think we were in agreement with him when we were formulating a budget,” Minority Leader Ott said last week. “But now the only game in town is the budget that was passed, and I’m having some difficulty coming to grips with sustaining (the veto of) Part IV and eliminating all those services that would go along with that sustaining motion.”

Because of that conundrum, Ott said his caucus was undecided about whether to vote to override the governor’s Part IV veto. “So, we are still wrestling with that decision.”

But it’s not just Medicaid services that are on the line, and that’s where opposition to Part IV arises on a second front: It would redirect the rest of the $213.5 million – $43.5 million in state Health and Human Services funding – to other ends.

A big chunk of those redirected dollars would be for state agency operating expenses – nearly $16.4 million for the Department of Mental Health and $9 million for the Department of Health and Environmental Control, for example – and other uses.

And in many cases, those redirected allocations would not qualify for federal matching dollars as state Medicaid expenditures do.

Then there’s the question of what happens if an extended FMAP boost doesn’t pass.

In that case, the state HHS agency could be in serious trouble given the Legislature’s reliance on a to-be-determined extension instead of greater state funding for Medicaid.

Stensland says the department, which oversees the Medicaid program in South Carolina, wants to avoid sounding alarmist. But in the absence of a reauthorization of larger FMAP allocations, he says, HHS could go into the red in April, or even sooner.

Ott put the what-if question to Cooper on the House floor as the Legislature was closing out its last day of the regular session on June 3: “Do we have a plan, mister chairman, if that money was to not come from Washington?”

Cooper: “I would have to say at this point, no. We’ll have to address that in January in some kind of supplemental bill if that indeed happens.”

Ott: “How would you have a supplemental bill if we didn’t have any money?”

Cooper: The state might run a surplus this fiscal year, or the Legislature could look at using revenue from a 50-cent-per-pack cigarette tax increase lawmakers passed this year after Sanford vetoed it.

“I really don’t know at this point, Mr. Ott,” Cooper continued. “I’m trying to get through this budget process, and the sooner I can do that the sooner I can focus on how we deal with those issues for next session, assuming I get to come back next session.”

Reach Ward at (803) 779-5022, ext. 117, or eric@scpolicycouncil.com.