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Medicaid shortage will have to be repaid, lawmakers told

CHARLESTON, W.Va. -- In order to balance the 2012-13 state budget, state officials ended up shorting Medicaid by $109 million.

State Budget Director Mike McKown told legislators there are no cash-flow problems in Medicaid at the moment, but the $109 million of funding will need to be restored -- particularly as the federal health insurance program expands to cover working-class West Virginians.

He said the underfunding of Medicaid occurred for a number of reasons, intentional and unintended:

<z6b-1f"ZapfDingbats">n<f$z$b$> By law, the first $50 million of unappropriated surplus from the state Excess Lottery Fund is to go to Medicaid. With competition from casinos in Ohio, Maryland and Pennsylvania, that account ended the 2013 budget year on June 30 with only a $29 million surplus.

<z6b-1f"ZapfDingbats">n<f$z$b$> Legislators passed a supplemental appropriation bill in April to transfer $67 million of Lottery revenues to Medicaid, but inadvertently made the bill effective 90 days from passage -- which invalidated it, since the transfer would have been pushed into the new budget year.

<z6b-1f"ZapfDingbats">n<f$z$b$> In order to avoid finishing the 2013 budget year with a deficit, which is prohibited under the state Constitution, the governor cut out an additional $17 million of Medicaid funding just prior to June 30.

Revenue Secretary Bob Kiss stressed that the $17 million is not a permanent funding cut.

"It was a maneuver that allowed us to assure the budget was balanced for the last fiscal year," he said.

The first three years of Medicaid expansion will be federally funded, but Kiss said it is important to begin looking now at funding and cost-containment strategies for the program.

"Three years from now, these will be state dollars," he said.

While tax collections and Lottery revenues lagged in the 2012-13 budget year and so far in the first two months of the current budget year, McKown said there are a number of positives in the state budget.

The state's two Rainy Day Funds, set aside for use in the event of natural or fiscal disasters, currently total $907.77 million, making them the third-best funded as a percentage of the state general revenue in the U.S., at nearly 22 percent of the state's $4.1 billion budget.

"That seems like a lot, but that would last us about 2 1/2 months if everything shut down and we didn't have a way to collect revenue," McKown said of the funds.

Likewise, the state has gotten through the budget crunch to date with no furloughs or layoffs of state employees, while maintaining strong bond ratings, and adequately funding its pension plans for public school and state employees.

McKown compared that with Illinois, which has a $100 billion unfunded liability in its state pension plans.

"They're going to run out of cash soon," he said.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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