State to get less Medicaid aid than hoped for

Posted: 8:16 pm Thu, August 12, 2010
By Associated Press

ANNAPOLIS — Maryland won’t be getting as much federal help in increased Medicaid payments as Gov. Martin O’Malley hoped for in the state budget, but the aid will enable the state to avoid a backup plan that would have made it harder to address next year’s deficit.

O’Malley, a Democrat who has been a strong supporter of federal aid to states during the recession, built in an assumed $389 million into the state budget that was approved in April. The federal jobs bill approved this week only fills about $273 million of that, but an additional $179 million will go to schools to help make sure teachers stay employed.

Although the Medicaid match approved in the jobs bill isn’t as much as the amount assumed in the budget, the state won’t have to rely as much on a backup plan or use as much fund balance to account for the difference. That provides more certainty in planning for future budget problems.

“It would have made the job more difficult if they had not passed the enhanced match,” said John Rohrer, coordinator of fiscal and policy analysis for Maryland’s nonpartisan Department of Legislative Services.

Maryland is facing an estimated $1.6 billion budget gap between projected revenues and spending needed to maintain current services in fiscal 2012.

Shaun Adamec, a spokesman for O’Malley, said it’s hard to say how the additional federal help translates into saving jobs.

“It’s hard to quantify, because at the state level there weren’t jobs in jeopardy this year,” Adamec said. But if officials had been forced to use reserve funds that needed to be paid back, that would have left the state with less money for future investments in jobs and other areas, he said.

The backup plan to make up for the $389 million, if no federal help had come through, would have tapped a local income tax reserve account. The account has been used to fill big budget holes during the recession to help avoid layoffs. The money is kept in reserve to repay local tax refunds, and it hasn’t been needed for that purpose. However, any money redirected from the account is supposed to be paid back.

Maryland Republicans say the federal jobs bill is a hugely expensive political sweetener in a tough election year.

State Sen. Allan Kittleman, R-Howard, saw it as a political ploy by Democrats to make unions happy.

“To me, this goes back to more politics than substance,” said Kittleman, the Senate minority leader.

Del. Anthony O’Donnell, the House minority leader, said the state should have been exercising greater spending restraint over the past several years.

“We can’t continue to rely on this bailout money from the federal government,” O’Donnell, R-Calvert and St. Mary’s, said. “It’s bankrupting this nation.”