Heres Comes the House Ways & Means Budget

By Steve Poftak
April 12th, 2011

The Legislature gets its first cut at a response to the Governor’s budget tomorrow, when the House Ways & Means Committee releases its budget.

We’ll be carefully watching how they address two of the major ‘plugs’ in the Governor’s budget. First, with a few paragraphs on procurement reform and other cost-sharing, the Governor’s budget sidesteps the potential for a huge increase in Medicaid spending. All well and good, except the budget depends on a dramatic reversal in Medicaid per enrollee costs — from an average rate of 5% growth over the past five years to a reduction of 3.5%.

Anyone who can turn around the rate of healthcare cost growth has accomplished a great deal. I’m skeptical it can be done and if Medicaid per enrollee cost growth holds to trend, that’s a $912 million hole in the budget.

The second plug is a fifteen year extension of the pension funding schedule, which frees up a $1 billion in current revenues.

Its a bad idea for two reasons — its pushes out our pension problem onto our children and it effectively extinguishes the possibility of funding the OPEB unfunded liability for the foreseeable future.

We’ll see if the House buys into these plugs or does something different.