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Washington Budget Crisis

Washington Budget Crisis. Len McComb and Cassie Sauer . State Budget Basics. Size of the State Operating Budget. All Funds, 2001 - 2003. Outside the Pie: Transportation Budget: $4.6 billion Capital Budget: $2.6 billion. Other $20.627

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Washington Budget Crisis

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  1. Washington Budget Crisis Len McComb and Cassie Sauer

  2. State Budget Basics

  3. Size of the State Operating Budget All Funds, 2001 - 2003 Outside the Pie: Transportation Budget: $4.6 billion Capital Budget: $2.6 billion Other $20.627 billion (federal funds, matching funds, dedicated accounts) State Operating Budget Total: $43.078 billion State General Fund $22.451 billion

  4. Human Services in the Total State BudgetAll Funds All Other State Programs38% Human Services38% K-12 24%

  5. Human Services in the State General FundState General Fund Spending Only Other24% Human Services32.5% K-12 43.5%

  6. The DSHS BudgetAll Funds Aging & Adult Services16% EconomicServices16% Developmental Disabilities8% Medical Assistance41% Mental Health 8% Children’sAdministration6% Other 6%

  7. Preliminary 2003-2005 State General Fund Budget Outlook $23.9 Billion Gap of $1.2 Billion 2003-2005PreliminaryExpenditure Estimate Maintenance Level $22.7 Billion SeptemberRevenueForecast

  8. Increasing Expenditureswhen the economy declines, demand for state services increases Other ($14 Million) $23,901 Corrections/JR $88 $100 Tort Claims Other Human Services $189 I-732 COLA $215 Millions Public Schools Enrollment Growth $350 2001-03 Spending Level Medical Assistance $493

  9. Voter Approved Initiatives Affect Budget Measure Purpose 01-03 03-05 Biennium Biennium Led to millions in tax cuts Initiative 601 State spending limit (passed 1993) Initiative 695 Motor vehicle excise (passed 1999) tax reduction $83 million loss ?? $464 million loss $764 million loss Initiative 728 Increased education (passed 2000) spending $358 million loss $215 million loss Initiative 732 Cost of living adjustments for (passed 2000) teachers $25 million loss $95 million loss Initiative 747 Property tax limitation (passed 2001)

  10. Possible Budget Busters Gap becomes $1.8 billion $24,506 Higher education enrollments and financial aid $109 Maintain current share of health care benefits for teachers & state employees $277 Millions $605 Million I-732 COLA for all other state employees Current ServicesLevel $219

  11. Health Care in the State Budget

  12. People Covered by State Healthcare Medicaid for Children 531,000 Medicaid for Adults, Aged, Blind, Disabled 286,000 Basic Health 130,000 Other State Programs (MI, GAU, ADATSA) 15,000 Medically Needy 14,000 Children’s Health Insurance Program (CHIP) 7,000 TOTAL 983,000 also, 300,000 public employees covered by the state

  13. Hospitals Receive State Funding Billions of Dollars

  14. Growth in State Medical Assistance (General Fund-State and Health Services Account) 30% 28% Billions 01-03

  15. Health Services Account • Dedicated account to pay for health care • Not subject to I-601 spending limit • Funding from insurance premium taxes, sin taxes, hospital taxes, Proshare • Funds Medicaid expansion for children, Basic Health, public health, others • In the past, it’s been flush so general fund health expenses moved in and cash moved out

  16. Declining Revenue to the Health Services Account • Less Proshare money than budgeted • Tobacco settlement securitized • Cigarette tax static to declining • Cigarette tax revenue dedicated to I-773 (I-773 increased cigarette tax; for Basic Health expansion) • Liquor taxes flat

  17. Proshare Money Less than Budgeted • The federal government offered an agreement • $70 million more than what the federal government would normally pay • $332 million less than budgeted by Governor and Legislature • In exchange for this additional ProShare funding, Washington agrees to stop pursuit of other remedies (appeals, lawsuits, etc.)

  18. Status of the Health Services Account • Non I-773 portion has a projected deficit of $155 million this biennium; projected to grow another $400 million next biennium • I-773 portion has a projected ending balance this biennium of a positive $128 million; must be used for expansion • Potential to amend I-773 to use money for existing expenses

  19. 2001-2003 Biennium Legislative Budget Federal CMS Offer Beginning Balance (19) (19) Revenues Nursing Home ProShare 511 179 All Other (Taxes, MSA, Transfers, etc.) 786 774 Total Revenues 1,297 953 Expenditures BHP Premiums & Administration 505 505 Medicaid for Kids & Other DSHS 502 502 Public Health Programs 82 82 Total Expenditures 1,089 1,089 Projected Ending Balance 189 (155) Health Services Account Balances

  20. Projected Expenditures in Health Services Account $701 $621 $582 $507 Millions

  21. What’s the Bottom Line?

  22. The 2003-05 Budget Problem is Between $1.2 Billion and $2.3 Billion $2.3 Billion $1.7 Billion $25,014 $1.2 Billion $24,409 $23,901 Millions 2003-05 Revenue $22.7 Billion Current Services2003-05 General Fund and Basic HSA Deficit Maintenance Level(GF-S & HSA)Selected Program Enhancements

  23. General Fund-State RevenueUsed to Grow--No Longer Increase in Revenue to State General Fund $507 Biennium

  24. This Situation is Referred to as a “Structural Budget Deficit” Deficit with current revenues and spending Millions Permanent budget cuts or permanent tax increases needed

  25. Revenue Options Being Considered(WSHA has no position on these options) • Income tax over $100,000 • Income tax on dividends and interest • Education initiatives back out for a vote with a revenue source • Securitize more tobacco settlement revenues • Tax restructuring commission proposals (not yet released)

  26. Revenue Options Being Considered(WSHA has no position on these options) • Amend I-773 (need 2/3 vote to amend); use funding for current services • Sales tax on selected consumer services (beauty/barber, manicure, cable TV) • Sales tax on medical services (would result in B&O tax cut for hospitals and doctors as retailers) • Grab Premera conversion money, if it happens

  27. Gimmicks Have Saved Budget in Past • Tobacco settlement • Proshare • Tobacco settlement securitization • Moving money in and out of dedicated accounts • Using reserves / rainy day fund • Premera conversion? • Will one appear?

  28. Possible Federal Remedies • Increase the Federal Medicaid Assistance Percentage (more for states with high unemployment) • Allow access to surplus Children’s Health Insurance Program money for current Medicaid children • Ask your federal legislators to support!

  29. Possible Health Care Cut Proposals • Eliminate Medically Indigent (MI) • Eliminate General Assistance- Unemployable (GA-U) • Eliminate adult dental and vision • Cut Medicaid for kids: for example, to 175% or 130% of poverty • Cut Basic Health by 50,000 people • Raise premiums or copays to make people drop • Prescription drug cuts

  30. One Example: Gridlock to the South • Oregon faces similar budget crisis • Longest legislative session in history; 5 special sessions • Possible solutions in Oregon: • Raise income tax • Release prisoners, close prisons • Close mental health hospitals • Eliminate many state trooper jobs • Big cuts in state workers • Securitize tobacco settlement

  31. What You Can Do • Meet with your legislators • Talk to others in your community about what health care spending means • Highlight good things government accomplishes • Talk to a reporter or editorial board • Vote/volunteer for a campaign

  32. Questions and CommentsContact Information:cassies@wsha.orgor 206/216-2538lenm@localaccess.com or 360/951-1661

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