Governor’s “New Normal” Means No Restored Funding for Health and Welfare Department

Darin Oswald / Idaho Statesman

Gov. C.L. "Butch" Otter gave his address from the floor of the Idaho Senate.

One of the most prominent issues last legislative session was a nearly $100 million cut in combined state and federal Medicaid funding.  For many observing Gov. C.L. “Butch” Otter’s State of the State and Budget Address last week, reinstated support for Medicaid was a key omission.  Restoring funding to health and human services programs that have undergone deep cuts over the last four years did not make the governor’s list of budget priorities.

“It sends a pretty clear message to people who rely on Medicaid,” said Katherine Hansen, Executive Director of Community Partnerships of Idaho, Inc., a Medicaid service provider. “It sends a clear message that people with disabilities are not as valued.”

Last year, service providers and people with disabilities worked with legislators and the state Department of Health and Welfare to craft the cuts.  The idea, Hansen says, was that the changes would be temporary: the cuts would be a short-term way of getting Idaho through its budget difficulties.  Referring to the money excised from state Medicaid spending last session, she said, “It feels very, very discouraging when, before that is restored, there is tax relief given.”

With the Idaho Division of Financial Management projecting 4.4 percent revenue growth for 2012 and 5.8 percent growth next year, the governor’s budget sets aside $45 million for unspecified tax cuts, and puts $60 million dollars into Idaho’s rainy day funds.  “I guess it does speak to priorities when we’re in a situation where we’ve had substantial cuts in these public services,” Idaho’s former chief economist Mike Ferguson observed last week.  “Rather than taking the available additional resources and putting them into restoring those things, we’re going to sock them away.”

House Minority Leader John Rusche (D-Lewiston) notes the Department of Health and Welfare was not the only department that didn’t see a restoration of funding.  “The only thing that I could see was reinstated in any of the departments was $750,000 into the Department of Commerce,” he said.  “So, there’s a lot of holes.  Everything from building repair on state buildings to home care services for those that we could keep out of nursing homes – I think we’re missing opportunities.”  Rusche says that’s part of the message he will try to bring to the legislature as the session unfolds.

Rusche isn’t alone, among state leaders, in questioning the budget laid out by the governor last week.  Rep. Wendy Jaquet (D-Ketchum) has expressed concern about ongoing diminished funding for state mental health services.  Joint Finance-Appropriations Committee Co-Chair Rep. Maxine Bell (R-Jerome) voiced her general support for tax cuts just after the governor’s address, saying, “I have never seen a tax that was too low.”  But she also indicated that, in light of recent budget austerity, this might not be the right time to forgo tens of millions of dollars in tax revenue.  “To say you have $40 million that perhaps you didn’t need to shore up some the places that we’re weak, to plug some of those holes in the dam that we’ve been treading water around?  Way too many variables, I think,” she said.

Speaking before the Joint Finance-Appropriations Committee yesterday, Department of Health and Welfare Director Richard Armstrong gave a bleak description of the conditions faced by the department’s staff members.  He mentioned rising caseloads, office closures and worker furloughs, and he voiced concern about the department’s ability to retain employees.  In 2011, he said, the department’s rate of turnover stood at more than 13 percent.  On the subject of Medicaid, Armstrong said, “I think we have pushed the limits with any further reductions.  Any further reductions would have a much greater impact for participants, providers, and services.”

The governor’s budget would increase general fund health and human services spending by 8.8 percent in 2013, compared to the 19.2 percent increase requested.  The lion’s share of the spending growth proposed by Gov. Otter is unavoidable: as Idaho’s Medicaid enrollment grows and people use the program more, the state must allocate additional funding to provide health care to needy residents.

Advocates for Idaho’s Medicaid recipients will hold a roundtable discussion and press conference tomorrow morning.  While many maintain that service reductions are negatively affecting Idahoans with mental illness and developmental disabilities, Department of Health and Welfare Medicaid Administrator Paul Leary today said he hasn’t seen a spike in crises.