By J. Lyn Carl, GalleryWatch.com
Austin, TX –
The governor created the problem; he should come up with a solution.
That is the apparent attitude of Sen. Judith Zaffirini (D-Laredo) regarding Gov. Rick Perry's line item veto in SB 1, the General Appropriations Bill from the 79th Regular Session, of $440 million for the Federal Medicare Give-Back program. According to the governor, these are savings that the state has accrued through efficiencies in operating the "dual eligibles program" for persons who are eligible for both Medicaid and Medicare services.
At Thursday's Senate Finance Committee hearing, committee members heard testimony from John O'Brien with the Legislative Budget Board (LBB) regarding the available general revenue of the state to deal with school finance reform and the impact of the governor's line item vetoes in SB 1.
LBB officials said the Medicare Give-Back funding vetoed by the governor is the amount the state would have paid were it not for the current Medicare Part B prescription drug benefit. This is an estimate of funds starting in February 2006, were that benefit not in place. The way the law is written, the federal government takes on responsibility but requires a "maintenance of effort" from the state. In the first year, the state would pay 90 percent of expenditures, and that amount decreases so that within 15 years, it will be reduced to 75 percent. If payments are not made, the federal government can reduce the state's "draw."
"The federal government is taxing the state," said Finance Chair Sen. Steve Ogden (R-Bryan), noting he does not see how the federal government can make the state send tax money to them. "We volunteer to participate in the Medicare program and 60 percent of the cost is reimbursed by the federal government," said Sen. Robert Duncan (R-Lubbock). "They hook you into the program and then change the rules." He said the "payoff" is that the cost is reduced over the 15-year period.
Bobby Hoffman of the Texas Health and Human Services Commission (HHSC) said the state must pay back the feds and the options are "pretty limited" on whether those payments must be made or not. Under current law, he said, the state has to pay the payback amounts. He said the governor's position is that the state can improve on the provisions of the law and Texas is working with other states to either change the formula or make the changes more favorable to the states.
"How can you make the payment when we didn't appropriate it?" asked Ogden of HHSC officials. He said the item vetoed was the payback to the federal government and questioned if HHSC was going to transfer funds from various strategies to pay back the federal government. Hoffman said it could be paid from existing Medicaid funds. "Under current federal law, that is what we are required to do," said Hoffman.
"We're hedging a little bit here thinking the federal law is going to change?" asked Duncan. He asked if that strategy is followed, would there be an actual reduction in Medicaid services. Hoffman said it is not the intent of HHSC to reduce Medicaid services as a result of that decision.
Zaffirini said if the governor vetoed these funds, payments should not be made. She said because he vetoed funding, no other funds should be used to make up that funding.
Ogden said federal law requires the state to make the payback. He said if the agency made the decision not to pay back the funds, because the state is drawing down federal funds on a regular basis, the federal government could withhold other funds.
Zaffirini insisted that should be negotiated by the governor. Otherwise, she said, the state would be "solving this problem while creating problems elsewhere." She recommended that HHSC officials write a letter to the governor explaining the options and possible repercussions of executing those options and ask the governor to address the situation.
Ogden suggested the letter instead should be addressed to the Finance Committee. "We're the ones who make the appropriations, not the governor."
"He vetoed it," responded Zaffirini, saying she thought it would be "improper" for the agency to make that appropriation. She suggested that perhaps LBB officials and the governor need to address the issue. The Laredo Democrat said she does not think HHSC should "single-handedly" make an appropriation from within the agency that would cause a shortage elsewhere.
Back to addressing available funding for school reform, O'Brien said that on June 21, the comptroller sent out a letter regarding available revenue. It was intended to appropriate funds for HB 2 and HB 10, but that was contingent on passage of other bills.
O'Brien said figures show the state has $1.1 billion in additional revenue over the original biennial revenue estimate. Passage of SB 1863, a shell bill, added $687 million in revenue; the exemption for teacher health benefits related to taxing results in a revenue reduction; HB 2161 adds funds from a tax credit; HB 20 adds $200 million from some funds left unspent; recapture will result in a reduction of funds; and bills that did not pass will results in some reductions. The "bottom line," he said, is $1.9 billion in available funds.
The LBB official also addressed other line-item vetoes and the additional revenue those vetoes might add for appropriations. Veto funds are actually appropriated in SB 1, but there is nothing that says they can't be re-appropriated for another use, said O'Brien, and if lawmakers choose to add the veto funds to the $1.9 billion, the figure will increase to $2.2 billion.
The committee also heard from the Adjutant General and members of the Military Facilities Commission (MFC). Revenue bonds were appropriated through the MFC, some $9.2 million in bonds for roof repairs and maintenance projects. The chair of the MFC addressed how the governor's veto that transferred the functions of the agency to another agency would affect those bonds. Committee members were told the bonds were for a 10-year period for repairs/maintenance for facilities. If those bonds go away, those facilities do not get maintained - there will be no updates to conform to the Americans With Disabilities Act, no roof repairs and no multi-gender facility updates.
Brad Livingston of the Texas Department of Criminal Justice (TDCJ) addressed the impact of the governor's veto of $19.8 million for the agency to contract for bed space in county jails in fiscal year 2006.
The appropriation was based on LBB projections of how many beds TDCJ would need to rent. Livingston said a supplemental appropriation in HB 10 was $15.9 million and in his veto, Perry said all of that money will not be spent and can be used for bed space contracts in 2006.
Livingston acknowledged there will be some expectation of some money left at the end of the fiscal year as agencies the size of TDCJ rarely spend to the last dollar. Those dollars could carry over to FY 06, said Livingston, and if the population growth is not as high as forecast, there is an appropriation rider that allows TDCJ to seek approval to spend funds from one year of the biennium in the other year.