I am sometimes told my newsletters are overly-partisan or that I have a negative outlook on our state’s budget. This week I want to share an example of why I’m so concerned, why this matters and what our state is in for.
Currently we are in FY 2010 and the FY 2011 budget begins on July 1st of this year. When the Legislature sets the budget, they create 12 different appropriations bills. So far, nine of these have been released by the majority party.
One of the FY 2011 budgets released is the Health and Human Services appropriations bill. This budget funds Medicaid (aka Title 19) and Hawk-I, among other things. When putting together budgets it must always be done with one eye toward the future. That is the real problem with this proposed budget – no one is paying attention to what happens to Medicaid next year.
For FY 2011 this budget is expected to approach $1 billion. As displayed by the graph below, only $400 million of this is projected to be covered by ongoing revenue. This is a huge problem for next January when we put together the FY 2012 budget. The projections then are that this budget will exceed $1 billion and a gap of $500 million exists after the one-time dollars are expended the previous year.
The proposed FY 2011 budget marks a dramatic shift in how the state funds Medicaid. The state will use almost as much one time and non-recurring funding for Medicaid as it will from the General Fund and the 2007 cigarette tax increase. Among the sources will be $225 million of federal stimulus funds, $187.8 million taken from the state’s Cash Reserve Fund, and the final dollars out of the Senior Living Trust Fund.
This may get the state through FY 2011, but it creates a monumental problem in FY 2012. With normal growth factor for the program of six percent, Iowa would need $1.071 billion to maintain the current program. The recurring revenue that would be spent on Medicaid is $534 million. This means the next governor and the 84th General Assembly would have to find $537 million in new money to maintain Medicaid as it is today. (to view the funding spreadsheet, click HERE)
Another point worth noting is that most of this program is mandatory. Once a state agrees to participate in the Medicaid program, which every state does, the state has little freedom to decide who can be covered and what will be paid for. Right now, Congress is prohibiting any state from lowering its Medicaid eligibility levels. And the parts of the program that Washington considers to be "optional" aren't.
This puts taxpayers at huge risk for continued tax increases. Something House Republicans will not support. According to the State Auditor, taxes and fees account for a minimum of $600 million in revenue growth over the past several years. Additionally, close to $250 million of state spending was passed on to the property tax payer by Governor Culver and his legislature.
State spending has grown by 19 percent over the last 3 years. Governor Culver and legislative Democrats continue to have a huge spending problem, one that puts the taxpayers at risk for the future.
As always, if you have any questions or concerns, please don’t hesitate to contact me via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call my office at (515) 281-3521.
Again, 2010 is an election year and I believe we have great opportunities to elect more Republicans to your Iowa House of Representatives. I would appreciate your support with a financial contribution, please visit: http://victorydiy.com/secure/diy/shopping_cart_contrib.php?addtocart=29&site=1133&contrib.
These dollars will be used for candidate training and constituent contact, ensuring we are able to communicate our message effectively. 
(To view larger, click HERE)
