Tag: fiscal crisis


State House Passes Bill Requiring 6-Year Fiscal Outlooks as Part of Public Budget Process

While not on the order of the love note Washington State Democrats delivered Monday to liberal activists, Republicans in Olympia today are taking credit for a gift of deceptive importance to the objective of righting the state’s fiscal ship.

House Bill 2607—a proposal spearheaded by House Republicans that would require the Office of Financial Management to publish a six-year budget outlook coinciding with the governor’s budget release—passed the state House by a vote of 97-1.

“This is a win for budget sustainability, transparency and accountability in our state,” said State Rep. Alexander (R-Olympia), ranking Republican on the House Ways and Means Committee and primary sponsor of the bill. “This is one of many budget reforms needed to help get Washington off the budget rollercoaster that has plagued us the past few years.”

“The spending decisions we make in the Legislature today aren’t just felt for one or two years; they impact us down the road for years to come,” Alexander continued. “Having a clear picture of what our state’s fiscal health looks like six years from now because of the decisions we make today will help hold legislators more accountable, keep the public more informed and, hopefully, lead to greater budget stability in the future.”

The benefit HB 2607 represents for taxpayers is substantially greater than simply giving state bean-counters a clearer view of the road ahead, it should be seen as a tool to prevent negative impacts to the state’s borrowing power that typically stem sloppy budgeting methods.

At the beginning of the month, State Treasurer Jim McIntire sent a letter to Gov. Christine Gregoire and the leadership of both parties in the Legislature, notifying them that although the three major credit rating agencies had affirmed Washington’s current “AA+” rating, two of the three had downgraded their outlook on the state from “stable” to “negative”.

In layman’s terms, McIntire’s letter informed state officials that Wall Street is deeply concerned about the use of sloppy budgeting and accounting tricks to artificially balance the government’s ledger. Forcing lawmakers to work from a six-year projection of revenues and spending would make the use of gimmicks to create an illusion of fiscal stability much more difficult.


[photo credit: aufmkolk (hafoto.de)]


Daily Double-take: Gregoire Wants Unions to Re-negotiate Health Care Benefits

Tomorrow Governor Gregoire will be holding a press conference outlining her recommendations to address the state’s budget deficit. Today her budget director Marty Brown sent a letter to state unions informing them that the Governor was re-opening the 2011-13 health care benefits agreement “in order to negotiate a reduction in the employer premium contribution.”

Here is a copy of the OFM letter.

Last year the Governor and unions agreed to change the health-care ratio for state employees from an 88-12 split to 85-15. This was far below the 74-26 split the Governor had previously said was necessary.

Moving from the current 85-15 split to 75-25 could save as much as $30 million (preliminary numbers).

While this is an encouraging development, ultimately the Legislature should have full authority to make this change on its own.

Under the 2002 collective bargaining law, state unions no longer have their priorities weighed equally with every other special interest during the legislative budget process. Instead they now negotiate directly with the Governor, while lawmakers only have the opportunity to say yes or no to the entire contract agreed to with the Governor. Lawmakers can’t make any changes.

To put the Legislature back in charge of the budget so that all spending can be truly prioritized, the 2002 collective bargaining law should be repealed and replaced with something similar to what Indiana did in 2005.

One of the first things Governor Mitch Daniels did when he took office in 2005 was to issue this Executive Order which in effect ended any state negotiations with unions.

In response to my email asking about this action, Anita Samuel, Assistant General Counsel/Policy Director for Gov. Daniels, wrote:

“Employees are still able to pay union dues through payroll deductions. It is completely their choice. Union reps are allowed to represent employees in the grievance procedure. We expanded who was eligible to take a grievance through our State Employees Appeals Commission under this EO. Every employee, merit and non-merit below an executive level could file a complaint. The prior process only applied to merit employees.

The state does not negotiate with the unions on any issues. At times, the State Personnel Department will meet with the unions when requested. The state sets the compensation, pay for performance increases and benefits without negotiating with the unions. Governor Daniels put in place a robust pay for performance system starting in 2006. The first year the structure was 0% for does not meet expectation, 4% for meets and 10% exceeds.  The second year it was 0,3,8.5%. Employees were also given a 1.5% general salary increase that the legislature called for. I think that most employees were pleased with this system.”

Unions exist to fight for their members, not to advocate for policy that is in the best interest of taxpayers. This why it is incumbent on the Legislature to have the authority to weigh all spending requests equally in the context of the priorities of all taxpayers and citizens and not be cut out of budget decisions totaling millions of dollars.


[Reprinted from the Washington Policy Center blog; photo credit: BC Gov Photos]


State Spending on Employee Compensation Increased More Than 17 Percent Over Last Ten Years

It’s hard to tell from reading the articles, but state employee compensation has risen 17.3 percent over the last ten years.

Both the Olympian and the News Tribune recently ran the same story about state employee salaries and compensation.

According to the stories, salary and benefits have decreased as a share of general-fund spending over the course of the last decade. Both articles say:

New Washington state figures show that the cost of paying state employees shrank as a share of government agency costs over the past decade.

Total compensation fell from 20.5 percent of general-fund outlays in 2002 to 18.2 percent in the year ending in June. The decline was in total pay and benefits for both higher-education and general-government workers.

It should be noted that while compensation’s share of the budget has gone down, the dollar amounts being spent have gone up. Compensation for general-government and higher-education went from $2.3 billion in 2002 to $2.7 billion in 2011—an increase of 17.3 percent.

As the story explains, these numbers include general-government and higher-education compensation amounts. Missing from the mix is a significant amount of money that goes to pay for K-12 administrative and teacher compensation.

According to the Office of Financial Management, including K-12 compensation kicks up the total share of salaries and benefits to around 55 to 60 percent of the budget—not a trivial amount of money by any measure.

So what does all this mean?

It seems likely that this information is designed to substantiate soon-to-be-made arguments from state employees and their unions, that compensation costs should be an either constant or increasing share of the budget—if compensation isn’t keeping up with the rest of the budget then there must be a problem. Right?

Not so fast. This argument misses the forest for the trees.

Compensation can go up or down as a share of the budget for different reasons. In this case, it’s not because spending has decreased, but because other areas of the budget have increased faster than salary and benefits for state employees.

What matters is whether government is fulfilling its core functions, whether priorities are funded first, and whether taxpayers are getting value rather than getting taken for a ride. Period.

Appealing to some mythical share of ideal spending on state employee compensation won’t solve the state’s new $2 billion budget hole.

At the end of the day, such budget comparisons aren’t any more useful than looking at the ratio of state employees to toothbrushes, or the variance of state employee compensation compared to changes in the state’s chipmunk fertility rates.

Prioritizing state spending—which includes finding ways to reduce expenditures on compensation—is the best way to deal with the state’s budget problems.


[Reprinted from the Freedom Foundation blog; photo credit: Mrsballoon]

McKenna Issues Statement on Special Legislative Session

On the news that Gov. Christine Gregoire is finally calling the State Legislature back into session to tackle budget woes in the form of a $1.5 billion deficit, Republican candidate for governor Rob McKenna issued a statement, praising the incumbent Governor for taking action and suggesting that a quick and bipartisan process is what Washington needs:

“No one can be pleased with the situation that our state budget is in, but I do congratulate the Governor for recognizing the need for action this year, and scheduling a special legislative session to start November 28.  I look forward, as should all Washingtonians, to a speedy and bi-partisan resolution to the current challenge after legislative leaders spend the next two months negotiating with the Governor.”





Gregoire Calls Special Session to Start November 28

Governor Gregoire announced this morning she is calling a special session to start November 28 to address the state’s $1 billion plus budget deficit.

Here are my notes from her press conference:

  • Need budget to be done in one special session – she won’t call another.
  • The total budget reductions needed are in the range of $2 billion to provide for a minimal reserve fund.
  • The goal of the budget is long-term sustainability.
  • By addressing the budget deficit in the special session, lawmakers can focus the 2012 regular session on job creation.
  • The 10% proposed agency reductions due to today will help to guide the Governor’s budget plan she hopes to release the week of October 24.
  • Lawmakers can no longer use a “Pac Man” approach to the budget. Instead entire programs need to be eliminated versus merely suspended or reduced.
  • Talks of a tax package are “premature” though nothing is being taken off the table.
  • Tax loopholes are not a panacea as often times a job will be lost by closing them.

The Governor was also asked about the Tacoma teacher strike and whether she agrees with the 2006 Attorney General Opinion that teacher strikes are illegal. She said the issue was “unresolved” and that she didn’t support changing the law to provide for automatic fines or penalties saying instead that was the role of the Courts to determine.

As a contrast, here is the “Taylor Act” in New York which not only makes it crystal clear teacher strikes are illegal but also imposes automatic fines and penalties for violation.

Here is the Governor’s press release announcing the special session.


[Reprinted from the Washington Policy Center blog.]


More Bad News For Washington State—Revenue Projection Drops $1.4 Billion

It may have been by design, though perhaps it was simply fortuitous, that the Economic and Revenue Forecast Council voted to extend the contract for the state’s current Chief Economist Arun Raha another year before they heard what he had to say today.

The embattled chief economist delivered a quarterly revenue projection that was unambiguously depressing.

According to the forecast, state revenue collections for the 2009-11 budget were reduced by $25 million. And projected revenue collections over the course of the current 2011-13 budget fell by $1.4 billion.

The result is a gaping hole in the current budget.

It is important to keep in mind, the state is still expecting more revenue in the current two-year budget than it did in the last two-year budget. Even though the governor and legislature are now expecting less money than they were projected to have at the last quarterly forecast in June, the state is still taking in $2.1 billion more in 2011-13 than it did in 2009-11. That’s an increase of 7.5 percent.

Nevertheless, current expenditures remain out in front of current revenue.

After assuming full use of the Budget Stabilization Account, the “Rainy Day Fund,” the state is facing a revenue shortfall of almost $1.3 billion over the next two years.

A press release accompanying the revenue forecast relays the somber tone of today’s meeting:

We are in the fragile aftermath of the Great Recession where a return to normalcy seems like a mirage in the desert – the closer we get to it, the further it moves away. Fear and uncertainty have overwhelmed consumer and business behavior. Every time our state has looked like it would break out of the malaise, it has been sucked right back in. Political gridlock in the nation’s capital gives little hope that the full toolkit of policy options will be acted on. In an increasingly interconnected world we are not immune to Europe’s problems either. Downside risks outweigh upside risks.

All economic and revenue signs point to more weakness in the future. Chief Economist Raha concluded today’s meeting by saying he wished he could tell everyone the current nightmare is about to end, but that he sees no end in sight.

Not that long ago Raha was predicting an economic turnaround in the second half of this year. But the world, and the state along with it, has taken a dive. Talks of recover have shifted to worries of an increasing likelihood Washington state and the country may be in for a double dip recession.

Such being the case, now is, perhaps more than ever, time for the governor and legislature to prioritize state spending and act quickly to stop the hemorrhaging. The economy is not going to bail the state out of its current slump, so we need to find a way to live within our means.

The sooner action is taken, the greater the number of available options. The longer elected officials sit on their hands, the faster the window will close on certain policy options making the task before them all the more difficult.

Elected state officials cannot wait until January to start working on the $1.3 billion budget problem. For all they know, the next forecast in November will only bring more dire news.


[reprinted from the Freedom Foundation blog; photo credit: im_on_tambourine]


National Rating Firms Give Washington Credit Rating of “Stable”

Washington State is faring better than Washington D.C. when it comes to governmental credit rating. While national credit rating firms have put the U.S. on their “watch” list for possible downgrade, Washington State has been given a “stable” rating for its response to balancing the state’s budget. That said, clouds remain on the horizon that could impact our future credit rating.

Here are the July 2011 reports for the state from Moody’s and Standard and Poor’s.

Moody’s Outlook:

“Washington’s rating outlook is stable reflecting Moody’s expectation that the state’s finances will remain well-managed despite its recent sizeable budget shortfalls and uncertainty surrounding the timing and strength of the economic recovery which could pose additional budget challenges. Given the substantial use of one-time actions to balance budget gaps thus far, Washington’s reserve levels will likely remain slim over the near term. In addition, out year structural gaps will likely be challenging to resolve.

Economic concentration in some industries that are historically volatile poses longer-term credit risk. However, the state demonstrated impressive financial flexibility through the 2001 recession as it accommodated economic and revenue swings and has shown a willingness to curtail spending during this economic cycle.

What Could Make The Rating Go Up

*Sustained trend of structural budget balance, plus restoration and maintenance of strong reserve levels.

*Economic expansion and improved industry diversification.

*Reduction of debt ratios to levels closer to Moody’s 50-state medians.

What Could Make The Rating Go Down

*Deeper and longer recession or muted recovery that restrains consumer confidence, leading to prolonged revenue weakness and employment erosion.

*Protracted structural budget imbalance.

*Increased reliance on one-time budget solutions.

*Deterioration of the state’s cash position.”

Standard and Poor’s Outlook:

“The ratings reflect our view of the state’s:

*Relatively well-educated workforce and good income indicators;

*Sales tax-based revenue structure that exhibits sensitivity to economic cycles, but to a lesser degree than those of states that rely primarily on personal and corporate income taxes;

*Strong financial policies and practices, including an automatic funding mechanism for its budget reserve; and

*Moderately high per capita debt burden and well-funded pension plans . . .

Washington’s $31.7 billion two-year budget, signed by Governor Chris Gregoire on June 15, 2011, addresses what had been a projected $4.9 billion deficit by making $4.5 billion in program reductions. The balance of budget solutions comes from fund transfers and from using the state’s beginning balance left from the prior biennium.

Although the legislature provided funding for a $723 million reserve through fiscal 2013, the budget reserve at the biennium ending in June 2013 is now projected to be $163 million, low in our view. The change is due to the recent downward revision to the revenue forecast for the biennium ending in 2013. By agreeing to a budget package that resolves the state’s anticipated deficit largely with recurring measures, the state has helped preserve its credit strength in our view . . .

The stable outlook reflects our view that the state’s financial management is strong, as demonstrated by its continued willingness to make timely and proactive budget amendments as it deems necessary to maintain budgetary balance. The state’s automatic budget stabilization fund deposits serve its credit well when the economy — and revenues — take a negative turn. Pending voter approval, the budget stabilization funding mechanism could become stronger, which would likely benefit the state’s credit quality. At present, the state’s reserves are low despite its practice of making regular reserve contributions — a reflection of the severity and duration of the recent recession.

The low reserves limit the state’s rating from moving upward and, in fact, render its rating vulnerable to downward movement if revenues deteriorate further without very timely corrective budget action.”

It is encouraging to see the state’s budget discipline this session be acknowledged and rewarded by the national credit rating firms.

One of the major positive developments this year was at the time of its adoption, the 2011-13 budget was the first budget since 1997 that spent less than forecasted revenue.

It is important to note lawmakers accomplished this “Budgeting 101” feat of spending within the revenue forecast without raising general taxes though the budget does rely on $517 million in fee increases. The vast majority of these fee increases are for higher education tuition ($369 million).

As noted in the downside risk for our credit rating, however, lawmakers did not leave a big enough reserve which became apparent the day after the budget was signed by the Governor when most of the ending fund balance was wiped out by the June revenue forecast – leaving only $163 million in total reserves for 2011-13 or less than 0.5% of spending (prior to the forecast there was $723 million in total reserves or 2.3% of spending). This scant remaining reserve increases the possibility of a special session being necessary later this year should the economic outlook worsen.

This is one of the reasons why going forward the Legislature should consider adopting a structural requirement that lawmakers set aside at least a 5% reserve (not counting constitutional rainy-day account) when adopting the initial biennial budget (for a $32 billion budget this would be reserves of around $1.6 billion versus the $723 million initially set aside).

By building in adequate savings from the start of the budget cycle, the likelihood of being able to weather the economic ups and downs during a biennium without needing to make spending reductions dramatically improves.


[Reprinted from the Washington Policy Center blog; photo credit: flickr]


It Is Time for a New Amendment

Even after over 200 years, our Constitution is still a thing of wondrous beauty. The proof of the Constitution’s success is, like those truths in the Declaration of Independence, self-evident: America is the wealthiest, most powerful nation on the face of the Earth. Our Founding Fathers constructed a marvelous governing machine, complete with checks and balances, firm prescribed limits, and divergent interests offsetting each other. They realized that this government was to be administered by men, not angels, and planned accordingly. They also realized that over time everything changes, and so incorporated a means to modify the nation’s guiding document, to amend the Constitution as the need arose.

Today we face the kind of unforeseen problem for which the amendment process was intended. During the past century, the Federal Government has gradually but relentlessly grown, consuming an ever larger portion of both our economy and our lives.  Much of this uncontrolled growth can be attributed to the unlimited ability of the government to borrow money. When programs handing out benefits are not limited by the ability to afford them, but can be paid for by borrowing, there no longer is any constraint on what politicians can offer “for free.”

This wanton spending haunts America like a dark rider—a force of expanding government usurpation and the inevitable control it has over America’s citizens—stalks our society with a companion, an oppressive and unsustainable debt load spawned by reliance on deficit spending.

The answer to this problem is The Balanced Budget Amendment.  The writers of state constitutions across the nation had the good sense to include a requirement to allow states to spend only what they take in. It is about time the Federal Government had such a requirement as well.

An Amendment to the Constitution, House Joint Resolution 1 has been proposed to resolve this problem for good, and will be voted on in the House shortly. H.J. Res. 1 addresses our fiscal crisis by:

  • Requires a vote of three-fifths of both Houses of Congress for outlays to exceed revenues
  • Caps spending at 18% of GDP, unless two-thirds of both Houses vote otherwise
  • Requires a vote of two-thirds of both Houses to raise taxes
  • Forbids raising the debt limit without a vote of three-fifths of both Houses
  • Requires the President to propose a balanced budget to Congress

There is no persuasive argument why the Federal Government should possess the power to spend, tax and borrow with the ease of a simple majority vote. This Amendment simply makes spending, taxing and borrowing more difficult by requiring supermajority approval by both Houses of Congress.

Some have objected to past proposed balanced budget amendments on the grounds that such a measure might handcuff the nation from raising arms to defend our interests and security. H.J. Res. 1 resolves that tension by permitting a majority of the House to waive the Amendment’s requirements for spending on a military conflict.

Despite the obvious need for such a law, getting a Constitutional Amendment passed is no easy task; the difficult and time-consuming process for full enactment is that way by design. But our current fiscal debt crisis is an excellent example of why one is needed now, and in fact was needed yesterday. Passing it will require bi-partisan support across the nation. It will also require every citizen to demand that their state and federal representatives support the Balanced Budget Amendment, and, if they refuse, to work to replace them with a representative who will.


There and Gone: 2009-11 Budget Balanced For a Day

That didn’t take long. The 2009-11 supplemental budget (rolled into the 2011-13 budget) Governor Gregoire signed yesterday is already projected to end in an $84 million deficit thanks to today’s revenue forecast.

According to the state’s budget director Marty Brown, the ending fund balance for 2009-11 is projected to be minus $84 million and plus $163 million for 11-13. That $163 million reserve for 11-13 is nearly $600 million less than was assumed yesterday when the Governor signed the budgets.

This despite the fact that the net impact of today’s revenue forecast was only a negative $12 million between the two budgets ($171 million higher for 09-11 and $183 million lower for 11-13).

Confused? You’re not alone.

The Seattle PI has this write up of today’s events:

“The state has $183 million less than it expected to pay for services through 2013. Or $600 million. Or $483 million. Take your pick.

For the dozens of fans of economic forecasts and state budgets, Thursday’s meeting to discuss Washington’s economy was pretty good theater.

Arun Raha,  executive director of the Economic and Revenue Forecast Council, told lawmakers they’d have $183 million less to spend because of an anticipated drop in state taxes. But some on the panel started tossing around numbers like $483 million or $600 million or several other figures.

Exasperated reporters tried to pin them down. Exasperated lawmakers and budget officials tried to explain.

‘At the end of the day, the revenue is down almost $600 million,’ said state Sen. Joseph Zarelli, R-Ridgfield. ‘The big bogey here is the counting of the amnesty ….We had a discussion about how much of that we ought to count.’ . . .

But Raha, counting the tax amnesty program, says revenue through 2011 was actually higher, not lower. And he says his projection through 2013 is down $163 million.

Raha was asked why his figure differed from the ones being cited by legislators.

‘I can’t help you understand the difference. I think they’re right, and I think so am I. It’s just a different way of looking at things,’ he said. ‘What you’re bringing up is really an accounting issue.'”

Bottom line: $84 million deficit for 2009-11 and a scant $163 million reserve for 2011-13 (0.5% of spending).

Looks like lawmakers could be a bad September revenue forecast away from another special session.


[Reprinted from the Washington Policy Center blog.]

[photo credit: flickr]


Let Washington State Run Our Own Medicaid Program

It is an honor to have my op-ed published in the Wall Street Journal. It is also true that editors 3,000 miles away have the power to edit my words with abandon and select a title that frankly isn’t what I would have chosen.  They are intent on selling papers; I worry about frustrating any effort to reward our politicians for governing responsibly.  The benefit of a blog post such as this is that I can flesh out my thoughts and tell the full back story in a more familiar setting. ~Nansen

Let Washington State Run Our Own Medicaid Program

Washington State faces a fiscal crisis in paying for Medicaid.  This simple fact was recognized by legislators from both sides of the aisle during the contentious special session that just concluded.  The result was SB 5596, a Medicaid block-grant bill – similar to the reform proposed for all 50 states in U.S. Rep Paul Ryan’s budget.  Here in Washington State, the block grant concept was remarkably non-partisan: the bill, requiring the state to apply the U.S. Department of Health and Human Services (HHS) for a waiver that would replace its Medicaid program with an indexed, eligibility-driven block grant, passed both houses with unanimous support.

On Tuesday, Governor Christine Gregoire, previously an opponent of block grants, signed the bill.  Now it’s in the hands of HHS Secretary Kathleen Sebelius, who is expected to meet with Gregoire Monday. Sebelius should move swiftly to approve this approach.

The modified block grant would free Washington State officials from being reduced to de facto appendages to the far-away federal government, implementing rules and restrictions from bureaucrats on the other side of the country.  Worse, new requirements imposed by the federal stimulus bill and ObamaCare will add hundreds of thousands of  people to our state’s Medicaid rolls, and prohibit the state from modifying eligibility rules without risking a loss of all Medicaid funding.

Receiving federal dollars in a lump sum instead of matching funds would make it much easier to find cost-savings in Medicaid.  Currently, 1.2 million residents of Washington State receive health-care benefits through Medicaid at a cost of $3.1 billion annually with the federal government matching dollar-for-dollar, contributing another $3.1 billion.  But if the Washington State legislature wants to reduce Medicaid spending, they have to find two dollars in cuts to realize one dollar in savings, creating a perverse incentive to keep spending unsustainably.

As State Senator Linda Evens Parlette, one of the bill’s chief senate sponsors, observed, the state will be hamstrung if this waiver is not approved.  “One of the few choices to reduce Medicaid spending that states have is to eliminate adult prescription drug coverage.” Parlette said.  “As a registered pharmacist, I can tell you that is not a good option!”

Washington’s State Medicaid Director Doug Porter went even further, saying that without the waiver, “even if we eliminated every single optional benefit, we still don’t get there.”  That leaves only the disastrous option of slashing reimbursement rates to already underpaid physicians and hospitals.

In contrast, SB 5596’s authors explain that the block grant would “allow the state to operate as a laboratory of innovation for bending the cost curve, preserving the safety net, and improving the management of care for low-income populations.”  Rhode Island has had success under a similar waiver granted in 2009, saving $100 million within the past eighteen months.  With a block grant, state legislators will have the ability to alter eligibility and benefits to best serve the unique needs and priorities of their constituents without having to eliminate programs such as Basic Health Program or Disability Lifeline.

State legislators in Washington State unanimously acknowledged the advantages and successes of indexed block-granting when they passed SB 5596.  As State Senator Joseph Zarelli, another key sponsor of the bill, said “This bipartisan solution gives Washington State the tools needed to find the best solution for our citizens. We can bring private sector model successes to solve the budget crisis while still providing protection for the most needy in society.”

In 1996, a Republican Congress and President Bill Clinton transformed the Aid to Families with Dependent Children (AFDC) program into block grants to the states.  With finite funding, states were given an incentive to reform programs and reduce costs as additional costs are borne solely by the state.  Critics argued that costs were being shifted from the federal government to the states and a race to the bottom would occur.

Instead, the new program Temporary Assistance for Needy Families (TANF) has been a remarkable success.  Welfare rolls decreased by two-thirds, and by 2006 total real federal and state spending on TANF has decreased by 31% from 1995 AFDC levels. Washington State saw our caseload decrease 37% from 96,000 in September 1996 to 61,200 in March 2003, saving taxpayers $290 million in annual expenditures.  Given the right incentives, and freedom to propose changes, states saved taxpayer’s money while better serving the poor.

Governor Gregoire deserves credit for putting politics aside, changing her position and signing SB 5596.  Gregoire was one of 17 Democratic governors who signed a letter to Congress in April opposing Paul Ryan’s budget plan to block grant Medicaid. She made the right choice putting the state’s fiscal health ahead of partisan politics.  While the legislative language is not finalized for the Medicaid block grants in the Ryan plan, it is assumed that they are pure block grants, with no strings attached.  The waiver requested by the Legislature, however, is for an indexed type block grant, which ties the federal payments to the number of eligible participants. It does retain the perverse incentive not to cut eligibility, but it also eases the fears of some who worry that the federal government will be tempted to reduce support absent a requirement to cover a portion of each health care service. Says Rep. Cathy McMorris Rodgers (WA-05) in regards to SS 5596: “It’s a positive step in the right direction which underscores the urgency of the Medicaid reform issue and the need for Congress to address it at the national level”

Now, the decision is up to Secretary Sebelius.  While the waiver formally requires approval from the Center for Medicare and Medicaid Services and the Office of Management and Budget as well as HHS, Sebelius is the administration’s decision-maker on Medicaid waivers.  She should act swiftly to fast track this waiver, which has the unanimous approval of the state’s elected officials.  It’s time for Washington, D.C. to let Washington State run our own Medicaid program.

To that end I’m asking everyone to click to link below to sign a petition asking Secretary Sebelius to approve Washington State’s waiver as soon as possible. Thank you.



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