Budget agreement reached; Medicaid faces big shortfall

By Bobby Harrison

Daily Journal Jackson Bureau

JACKSON – Legislative budget negotiators hammered out an agreement Saturday afternoon on a $3.6 billion general fund budget for the state.

Legislators are working on a budget for the fiscal year that begins July 1.

While the amount of money going to each state agency was agreed upon Saturday, there are still negotiations continuing on the budget bill to fund the Division of Medicaid. Rep. Steve Holland, D-Plantersville, said the budget for Medicaid is about $90 million short of the amount of funds needed to continue the programs to provide health care to the elderly, disabled and poor children.

Holland said he understands that more money is not available to put in Medicaid this session. But he said he wants language put in the Medicaid appropriations bill to ensure that addressing the deficit in the agency will be a priority during the 2004 session. With this being an election year, making it uncertain who will be governing in the 2004 session, Holland said he believes it is important to put the commitment to Medicaid into law.

''I want to put the commitment into the bill so that there will not be any question about it,'' Holland said late Sunday evening, sitting in his office on the second floor of the Capitol.

Senate Appropriations Committee Chairman Jack Gordon, D-Okolona, said the deficit in Medicaid could be much less than $90 million because of cost containment measures put in place by Medicaid Executive Director Rica Lewis-Payton. The cost containment measures, such as limiting the number of prescriptions and types of drugs provided to Medicaid patients, have helped reduce costs, but Lewis-Payton has said that the agency is still facing a huge deficit

“If the economy picks up, you will have people going back to work and getting off of Medicaid,'' Gordon said.

Gordon and other legislative leaders are depending on the economy picking up to help the state next year get out of the budget hole it is currently in. The general fund is funded through various types of taxes, such as the sales tax, income tax, gambling tax and others. Because of the poor national economy, tax collections have slowed in Mississippi.

To make up some of the shortfall caused by the slowdown in revenue going into the general fund, legislative leaders are placing an additional about $250 million in one-time money into the general fund to fund recurring expenses. The one-time money includes about $150 million in reserves the state has, $50 million in reserves from the Transportation Department and about $50 million in deposits other state agencies have on hand.

Negotiators also agreed Saturday to put an additional $9 million into the state health insurance program to ensure that benefits are not reduced or premiums are not raised. The negotiators' work was a little easier Saturday because early in the session the Legislature for the first time voted to fund education early. With that early commitment to education obligating 62 percent of the general fund, negotiators spent Saturday deciding how to divvy up the remaining money.

They finished much earlier in the day that is customary.

The overall state budget is more than $10 billion, but that includes special fund agencies and funds from the federal government that are designated for specific agencies. Special fund agencies are those that are funded through special taxes or fees, such as the fuel tax to fund the Department of Transportation.

While Gordon is hopeful that a rebounding economy can provide enough in tax revenues to absorb theuse of one-time money, Holland said he is less optimistic.

''We haven't been able to raise any additional revenue and nobody has the political will to make cuts,'' Holland said. “I genuinely understand why that is. But understanding it does not remove reality.''

House and Senate negotiators also worked Saturday night to reach agreement on about $300 million in bond bills to finance long-term construction projects in the state and to finance economic development projects.

Included in the economic development projects was a commitment by the state to provide $48 million in bonds to finance improvements at Northrop Grumman ship yards on the Mississippi Gulf Coast . The improvements effort is expected to help the Gulf Coast shipyard, which already employs 11,000 people, create an additional 2,000 jobs.

''This (bond projects) is a large amount of money, but every bit of it is going toward projects designed to create jobs and opportunities in the state,'' said Ways and Means Chairman Billy McCoy, D-Rienzi.

The House and Senate will meet today to pass the bond bills and the budget bills. Negotiators are still working to reach agreement on a host of other bills as the 2003 session enters its final week.