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AZ to gain $500M in new fed bill, but still come up short

WEDNESDAY, 04 AUGUST 2010 19:25

By Mary K. Reinhart, The Arizona Guardian

Arizona stands to gain nearly $500 million if Congress moves ahead with a $26 billion state-aid package this month, but the state still faces a mid-year budget deficit.

The Senate is expected to vote Thursday on a mini-stimulus package that would send additional Medicaid and education funding to states.

Arizona and 29 other states this spring built their current-year budgets around the extended health care funding, but election-year fears over deficit spending sidetracked the provision.

Now it’s back, but smaller, so an expected $400 million worth of extra matching funds for the AHCCCS rolls has turned into an estimated $246 million, leaving a $150 million hole in Arizona’s fiscal 2011 budget.

Added to the mix is $10 billion in education funding, estimated to bring Arizona another $212 million. That money, however, is supposed to be spent on teacher salaries or saving education jobs this school year, a tough call when districts have contracts in place and school starts this month.

Janice Palmer, lobbyist for the Arizona School Boards Association, said the education stimulus funding has been debated since May, and lawmakers may need to tweak the language to reflect the fact that teachers are now back to work.

“I really don’t know how this is going to work,” Palmer said. “I just hope that the feds don’t put strings on the funding where we’re not able to use it in places where it’s needed.”

House Speaker Nancy Pelosi announced via Twitter on Wednesday that she intended to call lawmakers back from their summer break next week to get the measure passed. That came after the Senate voted 61-38 to end a filibuster, clearing the way for an expected vote Thursday.

Governors have lobbied hard for the money over the past few months, as have hospitals, nursing homes and other health care groups. State executives argued in June that failure to extend the Medicaid funding could lead to layoffs and endanger economic recovery.

In Arizona, Gov. Jan Brewer and Republican lawmakers originally tried to balance the budget by eliminating health care for more than 300,000 Arizonans. They had to reverse themselves after Congress approved federal health care reform, which requires states to maintain their current eligibility or risk losing Medicaid funding.

As part of the $800 billion stimulus package, states were given additional federal aid to help pay for expanding Medicaid rolls. Arizona’s federal match went from two-thirds to about three-quarters. That funding was due to expire Jan. 1, but the proposal would extend it through June 30.

John Arnold, Brewer’s budget director, said the latest plan would put the state $150 million in the hole.

Arizona’s current-year spending plan also depends on voters approving two ballot measures to do away with voter-approved programs to preserve open space and provide early childhood development health and education through First Things First.

Looking forward to fiscal 2012, Arnold said the state is looking at a nearly $1 billion deficit. Federal stimulus funding that has plowed nearly $7 billion into the state over the past two years will end June 30.