According to the National Governors Association and National Association of State Budget Officers, more than 40 states are facing budget shortfalls. Most states have seen their estimates of tax collections for the current year decrease, often dramatically. And while State governments are scrambling to respond, they cannot do so by running a temporary deficit. All but one are required by law or constitution to balance their budgets. Maine is among those with a widely supported constitutional mandate to balance its budget.
Thirty-nine states have been forced to reduce their already-enacted budgets for fiscal year 2002 by cutting programs across-the-board, tapping rainy day funds, laying off employees, and implementing a variety of other cost-cutting measures. Especially hit hard is the Medicaid program in many states.
Medicaid is the fastest growing component of State budgets. While budgets were level or declined in many states last year, Medicaid costs increased 11 percent. This year, Medicaid costs are increasing at an even greater rate — 13.4 percent. Maine is one of a number of States that has been forced to consider cuts in their Medicaid programs to make up for their budget shortfalls.
Senator Ben Nelson (D-NE) has joined with me in a bipartisan effort, as we have often done in the past, to introduce legislation that would provide a temporary increase in the federal Medicaid matching rate. It would increase the federal government's share of each state's Medicaid costs by one percent and hold the federal matching rate for each state harmless for the remainder of this fiscal year and next.
In addition, one part of the bill includes a temporary block grant to states that would specifically help them pay for the rising demand in social services, like child care, resulting from the economic downturn. Overall, our bill would provide approximately $8.9 billion in total fiscal relief to states which would allow them to continue — not contract — Medicaid and other health and social services.
The National Governors Association has endorsed our bill because it represents a sound and reasonable, bipartisan approach to state fiscal relief, and one that could be enacted expeditiously. It is also endorsed by the American Hospital Association, which understands the importance of providing assistance to states at a time when many are looking toward cutting back health programs to help balance their budgets.
Earlier this month, Maine's budget estimators determined that the State's revenues would come in some $90 million under budget this year, and would experience another $90 million shortfall in the year to come. Suddenly, the State must consider cutting critical programs and even raising taxes. This is no small matter as, by some measures, Maine already imposes on its residents the highest tax burden in the nation.
My legislation would help to bridge Maine's funding gap by bringing an additional $56 million to Maine's Medicaid and social services programs over the next eighteen months. These funds would help forestall the need for deep cuts, and, I hope, allow Maine to proceed with its plans to expand its Medicaid program to provide health care coverage for more of our low-income uninsured citizens.
The challenge facing Governor Angus King and other governors across the country is a considerable one. The decisions they may be forced to make could affect the access of millions of Americans to health care and social services. The federal government can and should help states in a responsible way and this bipartisan legislation would achieve that end.