Gov. Terry McAuliffe’s final budget once again proposes using Obamacare dollars and a tax on hospitals to expand Medicaid to cover at least 300,000 uninsured Virginians.
His budget for the two years beginning July 1, 2018, says that money will save the state nearly $422 million over that time, in part by shifting costs to Medicaid that the state already incurs, including for mental health care and medical care for prisoners.
The savings exceeds some top spending priorities that both the governor and the General Assembly have already set, including setting up a new cash reserve to protect the state’s triple-A bond rating, same-day access for mental health evaluations at Community Services Boards, tackling the opioid epidemic and boosting the state’s economic development.
But costs the state can’t dodge would make affording these difficult without the Obamacare dollars, the budget suggests.
Overall, the budget projects larger increases in state general fund revenues than seen in recent years, to bring in a total of more than $42 billion over the two-year budget period.
“Our outlook in this budget is far more positive than we were thinking” over the summer, McAuliffe told a meeting of state Senate and House of Delegates money committees on Monday.
But later, House Appropriations Committee Chairman Chris Jones, R-Suffolk, warned state financial officials testifying before the joint committee meetings against growing too optimistic.
“We’re a cash-in-the-bank kind of state” when it comes to spending, he said. He told reporters the governor might be overly aggressive in building up the new cash reserve, and a better approach would be to simply commit to slating any surplus the state sees to the reserve fund.
Under the governor’s proposed budget, spending increases for the two biggest mandatory programs — Medicaid and state aid to public schools to cover its share of state-ordered Standards of Quality — will exceed $1 billion during the next two fiscal years.
McAuliffe proposed putting nearly $271 million in the new cash reserve.
Other spending increases for the two fiscal years include:
•$54 million for services, mainly private day treatment for at-risk children, mainly in foster care, covered by the state Children’s Services Act — a mandatory increase.
•$51 million to help pay for a 2 percent pay increase for teachers, to take effect in 2019.
•$49 million to pay for a 2 percent pay increase for state employees in 2019.
•$45 million to provide services for 825 Virginians with mental disabilities, required by a settlement with the U.S. Department of Justice over civil rights violations at Virginia facilities.
•$1.3 million to Fort Monroe to offset the loss of U.S. Defense Department grants because of the transfer of the last U.S. Army land to the state. In addition, the state is designating $2 million in its maintenance funds for Fort Monroe.
On the Peninsula, Christopher Newport University would get a $6.2 million increase from its current budget to $165.4 million in fiscal 2019. It would get an additional $500,000 the year after that. Most of those increases go for instruction — that is, for teaching staff.
The College of William and Mary would get a $19.4 million increase next year, for a total of $363.2 million, with nearly half the increase going for more student financial aid . The Virginia Institute of Marine Science would get a $2.2 million increase next year to $48.8 million.
The Jamestown Yorktown Foundation would receive an additional $662,000 next year, for a total of just under $18 million.
McAuliffe’s budget proposes a one-time increase of $500,000 in state support for Jefferson Lab next year to establish a center for nuclear femtography, a kind of high-speed imaging.
The governor said many of his initiatives — particularly the stepped-up pace of funding a new reserve fund — wouldn’t be affordable without the savings that would come from accepting Affordable Care Act funds to expand Medicaid.
Expanding Medicaid so that it covers all Virginians living in households earning less than 138 percent of the federal poverty level would allow the state to cut more than $181 million over the next two years in projected payments to hospitals for caring for indigent patients, as well as more than $110 million it pays for community mental health treatment programs, $39 million spent on medical care for prisoners and $91 million on people who would be newly eligible for Medicaid anyway but who could be enrolled as expansion patients for whom the federal government would pick up most of the cost, according to a worksheet of the Secretariat of Health and Human Resources. In fiscal year 2020, Washington would cover 90 percent of the cost of Medicaid expansion, compared with its 50 percent share for standard Medicaid.
The hospital fee would raise an estimated $307 million over the two years, intended to cover the state’s share of Medicaid expansion.
General Assembly Republicans have strongly opposed Medicaid expansion when McAuliffe pushed for it in all his previous budgets, but Gov.-elect Ralph Northam and the newly elected Democratic House of Delegates members who swept nearly a quarter of the GOP’s House caucus out of office last month campaigned forcefully in favor of expansion.
Jones said he wasn’t sure about Medicaid expansion, noting that Congress’ lack of action to extend the Children’s Health Insurance Program, which covers 125,000 Virginia children whose families earn less than 200 percent of the federal poverty line, makes him nervous about relying on federal funding promises for health care.
But, he said, he expects figuring on a way of expanding access “will be front and center” in the 2018 General Assembly session. He said that could include changes to Virginia’s eligibility rules for Medicaid benefits, which are among the most restrictive in the nation.
Senate Majority Leader Thomas K. “Tommy” Norment, R-James City, said the future of CHIP will be a critical issue. McAuliffe’s budget, which includes an additional $27 million to fund the program, assumes Congress will reauthorize the program, which has officially lapsed. Washington has been covering 88 percent of the cost of the program with a plan to reduce by 11.5 percentage points, and the budget assumes that plan will eventually be approved as well as the reduced level of support, said state director of planning and budget Daniel S. Timberlake. In his remarks to the committee, McAuliffe said Congress’ lack of action on the program “is nothing less than malpractice.”
But if it is not funded, that poses a huge financial challenge for the state, Norment said. About half the children covered by the program would move into the state’s regular Medicaid program, with the state and federal government splitting the cost of their care 50-50.
While McAuliffe’s budget appears to link Medicaid expansion to funding some top priorities of the General Assembly, Norment said he’s not sure how closely Medicaid expansion would be linked to funding for those priorities.
“We’re going to take the governor’s budget as we always do and we’re going to write our budget,” Norment said.
In his remarks to the committees, McAuliffe also highlighted proposals to fund planning work necessary to speed the flow of federal funds to dredge ship channels in the Port of Virginia, as well as an additional $45.5 million slated for financial aid to in-state undergraduates at state colleges and universities, a $20 million increase in state support for local police, and appropriations of more than $7 million each to make every elementary school in the state, even the smallest, have a full-time principal and an effort to help at-risk students.
Norment noted than many of the governor’s proposals, as has been the past with other governors presenting their final budgets, commit funds for the second year of the budget — fiscal year 2020, in this case, which is when the 2 percent raises for state employees and teachers would occur.
“Governors can do that, but we have to be cautious,” he said.
Ress can be reached by telephone at 757-247-4535