No money in Little’s budget for Medicaid work requirements

January 9, 2019 GMT

BOISE — Idaho Gov. Brad Little’s proposed budget for next year doesn’t provide any funding for additional requirements or restrictions — such as work requirements — on Medicaid expansion. If the Legislature decided to add those, the federal government likely wouldn’t pay for them, and the state would have to cover them on its own.

That’s what lawmakers on the budget-writing Joint Finance-Appropriations Committee learned on Tuesday as they began delving into the details of Little’s budget. The very first question, from Rep. Melissa Wintrow, D-Boise, was on that point.

Wintrow noted that Little’s budget proposes funding Medicaid expansion next year, as required by voter-approved Proposition 2, and does so by tapping the Millennium Fund, a tobacco settlement endowment, and using budget offsets. That means it wouldn’t cost the state general fund anything in the first year.

“I really appreciate the governor’s creativity in coming to a zero balance there,” she said. “Does this recommendation include if we were to add anything additional to Prop 2, any other procedures or operations or requirements?”

Alex Adams, Little’s budget director, responded, “The way the budget was structured, is this does not include administrative costs for sideboards in the current recommendation. The governor yesterday, in his State of the State speech, said he’d like to implement this in an Idaho manner, so he’s open to those conversations. … But as the budget is structured, it doesn’t account for additional requirements.”

Wintrow followed up, noting that Medicaid expansion is covered with a 90-10 federal match, meaning the state only has to come up with a 10 percent share. “If indeed we did any additional requirements or sideboards … would any of those additional costs be covered in that match?” she asked.

Adams responded, “It depends on the nature of the sideboards that would be added. If they simply add administrative costs, it’s not clear if the 90-10 cost would apply to those. My understanding is in other states that added certain requirements, that those have not been covered by that 90-10 match and that the costs have fallen primarily on the state.”

He then asked analyst Sara Stover to address that in more detail. “Generally speaking there is not a 90-10 match that is applicable to administrative costs,” she said. “Generally you would have closer to 50-50 match on administrative costs, or sometimes it’s even 100 percent general fund, depending on what is needed.”

That news was significant, as budget writers begin their task of setting a balanced budget for the state for the coming year, even as state tax revenues are falling short of projections.

Sen. Fred Martin, R-Boise, the new chairman of the Senate Health & Welfare Committee, already has come out against adding work requirements to Medicaid expansion; Martin campaigned in favor of Proposition 2 in the same election in which he was narrowly re-elected in November.

Among other news from the lawmakers’ first dive into the details of Little’s proposed budget:

n The Millennium Fund has $17.5 million available for distribution in fiscal year 2020. Even with Little’s proposal to tap $10.8 million for Medicaid expansion, there still would be enough to cover ongoing programs that have been using the fund within the state Department of Health & Welfare, including the Project Filter anti-tobacco program; public health districts; the Attorney General’s office; the state cancer data registry; and more.

n Little’s proposal to raise starting teacher pay to $40,000 includes a $3,000 boost for second- and third-year teachers as well, to keep them from making less than their less-experienced colleagues. Those minimum pay levels would be $41,000 for second-year teachers; and $42,000 for third-year teachers.

n The governor is proposing a $20 million transfer to the state’s fire suppression fund, which will cover the current deficiency in that fund of about $8.3 million, plus sock money away for next summer’s fire season. “This would clear the deficiency and provide for future expenditures,” Adams said.

n Little is proposing $11 million for the Public Defense Commission next year for grants to bring local public defender services up to constitutionally required standards, which nearly doubles the amount available for that purpose. He’s also calling for removing strings on the grant funds that now require them to be reverted to the general fund if they’re not all spent by the end of the year; instead, the fund would have carry-over authority.

n He’s proposing just $1.1 million for occupancy costs at Idaho college and university buildings, half or less of what was requested, to staff, equip and furnish new buildings at Boise State University, Idaho State University, the University of Idaho and North Idaho College. Adams said Little doesn’t believe the current process of allowing colleges to fund new buildings on their own, then ask the state to pick up the ongoing operating costs from the general fund, “is the best approach.” He’s asking the state Board of Education to review it.

n A proposal in Little’s budget would cover $6.3 million in state employee health insurance costs next year from reserves; while that would mean a one-time savings to the state general fund, it wouldn’t decrease plan costs. Instead, Adams said, the move is designed to avoid federal penalties for allowing reserves to build up too high. It would mean next year, the state would spend $11,020 per state employee for health insurance costs, down $630 from the current year; but the following year, that cost would rise to $13,850 per employee.

n The shortfalls of $62.9 million in state general fund tax receipts since July 1 “appear to be a matter of timing,” because Idaho income taxpayers who haven’t updated their withholding to match new state and federal tax laws will have to pay up when they file their returns in April. “Nonetheless, the governor has stated he will not spend money that’s not in the bank,” Adams said. He said the state Tax Commission estimates that 75 percent of Idahoans haven’t updated their W-4 forms. That’s why Little’s budget leaves significant unspent year-end balances. “The higher-than-normal ending balance will enable the state to respond … if the current shortfall would not be resolved when the taxpayers file in 2019,” Adams told JFAC. “The ending balance lays the foundation for elimination of the grocery tax once and for all in fiscal year 2021.”

n The governor’s chief economist, Derek Santos, has now adjusted the state revenue forecast to account for the withholding issue. With that adjustment, it shows current-year revenue of $3.8 billion, or just 0.5 percent growth; but for 2020, revenue is forecast to top $4 billion for the first time in state history, which would be 8.2 percent growth when compared to the anemic new fiscal 2019 figure.

n With existing state savings accounts and additional transfers that Little proposes, Idaho’s combined rainy-day accounts would have a balance by 2020 of about $510 million.