State Budget Battle Begins

March 19, 2010

The battle lines over the FY 2011 state budget, which begins on Oct. 1, have already been drawn. And to no one’s surprise, they’re in the same place they were last year, with Gov. Granholm seeking more revenue and smaller cuts and the Republican-led Senate seeking all cuts to balance the budget.

On Wednesday, the Senate Appropriations Committee passed a series of budget bills that include no new revenues and make steep cuts in K-12 and higher education and in Medicaid services and reimbursement. The Detroit News reports:

    Here’s a rundown:

    • School aid: The Senate cuts spending for public schools by $118 per pupil in addition to the $165 a student cut made this year. That reduction would be offset by reforms to lower school district retirement costs and taps $195 million from the cash-starved general fund. The governor proposed extending the sales tax to most services to provide $554 million for public schools and has said she will not sign a budget that cuts education.

    • Higher education: Universities and community colleges take a 3.1 percent cut under the Senate bills. Granholm would maintain higher education spending.

    • Community health: The Senate would cut $830 million from the governor’s plan. The bill rejects Granholm’s call for a physician tax, reduces by 4 percent Medicaid rates paid to some doctors and eliminates Medicaid for young adults and relatives who care for Medicaid-eligible children. Community mental health funding also is slashed by 20 percent in the Senate bill.

So at a time when an unprecedented number of Michigan residents rely on Medicaid for their health care, the Senate wants to cut the amount Medicaid pays to doctors and hospitals. Medicaid reimbursement is already at only 65 percent of cost, incidentally.

As we reported the other day, the number of uninsured and Medicaid patients is bankrupting hospitals around the state and forcing them to close down departments, particularly OB departments — at a time when Michigan already ranks near the bottom for pregnancy-related deaths.

And one thing that could bring in more than half a billion dollars in federal aid and increase our Medicaid reimbursements rates? The quality assurance tax on doctors that the Senate just rejected (again – they also rejected it last year, passing up $522 million in federal funds).