State faces $700m budget gap, if Congress nixes funds

By Jim O’Sullivan
State House News Service / June 3, 2010

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Reliance by the Patrick administration and the Democrats who control the House and Senate on nearly $700 million in additional health care funding has become a riskier proposition. Congress is balking at extending the funds, potentially creating a gap in the state’s fiscal 2011 budget just as lawmakers begin to work out differences in their proposals.

If the federal aid, excised last week by the US House of Representatives, is not authorized, state budget writers would probably have to turn to more aggressive cost-cutting or turn again to dwindling state reserves.

“I’ve always been concerned about it,’’ said House Ways and Means Committee vice chairwoman Barbara A. L’Italien, an Andover Democrat.

Aides to Governor Deval Patrick have reassured lawmakers for months that the funding was a near certainty, since Patrick included $608 million from an anticipated six-month extension to the Federal Medicaid Assistance Percentage program in his budget for the fiscal year that begins July 1.

The House followed suit, and the Senate ramped up its expectation for federal reimbursement to over $680 million, calculating that the state’s unemployment rate would draw more from Washington.

Budget authors in both chambers have acknowledged that they would probably have to impose deeper spending cuts if the aid does not materialize.

States have been pushing Congress to find another vehicle for the funding, and US House Speaker Nancy Pelosi sounded a note of optimism Tuesday that the House would tackle the Medicaid and unemployed health benefits spending after it returns from recess next week.

Massachusetts House budget chief Charles Murphy said: “Was it a risk going down that road? Absolutely it was risk. But, again, we feel confident that it’s going to come through.’’

Asked if the Patrick administration is drafting contingency plans in case the funds don’t come through, Health and Human Services Secretary JudyAnn Bigby said, “We’re following this very closely.’’

In a letter to Patrick dated yesterday, Senate minority leader Richard R. Tisei and House minority leader Bradley H. Jones Jr. asked for a contingency plan, calling the governor’s assumption of the revenues “arguably reasonable, but risky.’’

“Should the FMAP extension not materialize, the state budget will be left with a $700 million gap, and few solutions to fill it,’’ the Republicans said.

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