State Agencies, Including Medicaid, Told to Make Further Budget Cuts (TX)
December 8, 2010
State leaders, trying to dig out of a hole in the current two-year budget before the next one has to be whacked, ordered agencies Tuesday to further curb spending.
Agency chiefs were told in a letter that they must reduce expenditures by 2.5 percent in the remaining nine months of the fiscal year.
Managers of the state Medicaid program immediately announced they would cut another 1 percent from the fees paid to doctors, dentists and hospitals, along with 2 percent in payments to nursing homes and home health care providers.
The decreases take effect Feb. 1, and they come on top of 1 percent cuts that kicked in just before Labor Day.
Explaining the latest round of cuts, Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Joe Straus said some recent improvements in sales tax receipts are encouraging but won’t be enough to make up lost ground in a two-year revenue forecast.
Overall, revenues wound up $2 billion below expectations for the budget year that ended on Aug. 31, they noted.
"We still anticipate insufficient revenue to cover general revenue spending needs" in the current two-year cycle, wrote the leaders, who are all Republicans.
Just over a month ago, some senior legislative staff members estimated the shortfall in the next two years could be as high as $24 billion or $25 billion. Dewhurst, though, has said it’s between $15 billion and $16 billion.
Recently, the lieutenant governor said that the higher estimates of the deficit "include pretty aggressive new spending," an apparent reference to several billion dollars assumed to be needed to cover inflation and the state’s rapid population growth.
Straus, a San Antonio lawmaker, said Tuesday’s move underscores his and other leaders’ commitment to "to balance the state budget with no tax increases."
Last May, the leaders culled lists of suggested trims and ended up cutting two-year spending by about 1.4 percent, or $1.25 billion. This time, they told agency heads to proceed on their own. Experts said the 2.5 percent cuts will save no more than $500 million, since they’ll be applied to just a fraction of one year.
The cuts in fees to health care providers in Medicaid and the Children’s Health Insurance Program are expected to save the state an additional $42 million this year, beyond about $64 million generated by the initial 1 percent reduction, said Stephanie Goodman, a spokeswoman for the Health and Human Services Commission. The commission oversees both programs.