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House Appropriations, Senate Finance Report Budgets

The House Appropriations and Senate Finance Committees reported their respective budgets on Sunday, February 18, and as signaled by passage of two key pieces of legislation last week, the chambers take vastly different approaches to the issue of Medicaid expansion, with the result that the two budgets have very different levels of resources available to support key spending priorities.  The House Appropriations budget contains most of the savings generated from drawing down the additional federal dollars associated with expansion, while the Senate Finance budget incorporates none of the assumed savings.  Full text of budget amendments proposed by the “money committees” will be available on Tuesday, February 20; the following is a preliminary analysis based on information presented on February 18.

The House Appropriations budget provides for expansion of Medicaid coverage to individuals with incomes up to 138 percent of the federal poverty level, pursuant to the Affordable Care Act, and directs DMAS to pursue a waiver allowing for the implementation of the Training, Education, Employment, and Opportunity Program (as incorporated in HB 338 (Miyares), which passed the House last week), as well as cost-sharing requirements for enrollees and incentives for healthy behaviors.  The state’s share of the costs for the expansion would be funded by a provider assessment on private acute care hospitals, as proposed in the introduced budget (the House Appropriations proposal clarifies that the provider assessment will only be used to pay for the state share of coverage for newly-eligible individuals and not for other purposes).  The introduced budget assumed savings of approximately $422 million associated with Medicaid expansion; because the House Appropriations budget assumes that the coverage expansion will be effective January 1, 2019, rather than October 1, 2018, as envisioned in the introduced budget, the House Appropriations budget contains funding to backfill some of the expected savings to Community Services Boards and the Department of Corrections.  However, the bulk of the expected savings remain, allowing for priority spending items such as advancing proposed salary increases for teachers, state employees, and state-supported local employees from November 10, 2019 (for state employees) and December 1, 2019 (for teachers and state-supported local employees) to July 1, 2019.

The Senate Finance Committee did not include Medicaid expansion in its budget, though the substance of the legislation creating the Priority Needs Access Program, an expansion of the existing GAP program (as set out in SB 915 (Dunnavant), which passed the Senate last week) is embedded in the budget as a package of items to be considered for implementation, subject to the appropriation of funds.  As a result, the $422 million in savings assumed in the introduced budget were not available to the Senate Finance Committee in making spending decisions.  For example, the Senate Finance budget contains no funding for salary increases, though it directs the Governor to set aside funding for a two percent raise for state employees, state-supported local employees, and teachers, effective July 1, 2019, contingent on revenues meeting the forecast.

While the committee reports on “Budget Sunday” are an important stage in the budget process, they are far from the final word in budget discussions.  Each house must approve its budget by Thursday, February 22, after which each chamber will reject the other’s budget and begin the budget conference. VACo will provide a more detailed analysis of the components of each budget soon.

VACo Contact: Katie Boyle

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