At 11 a.m. today, legislative leaders held a press conference at the General Assembly to discuss their freshly-minted budget compromise – but lo and behold, no budget documents were provided. Today’s coverage of the budget has been dominated by discussion of what the leaders said, rather than analysis of the actual budget plan which hasn’t been released to the public. However, the breadcrumbs of information dropped by Sen. Berger and Speaker Tillis in their news conference are just enough to pose some stark questions that, as yet, have gone unasked – specifically, where is all this recurring money coming from when we know there won’t be any tax increases?
A quick reckoning: the final budget is said to include $251 in recurring funding for education. It is also said to include a $212 million Medicaid rebase, which will address a large part of next year’s anticipated shortfall.
So here’s the issue: a Medicaid rebase is a recurring adjustment. It reflects anticipated costs in the Medicaid program that are beyond the control of state lawmakers. When calculating the Medicaid rebase, DHHS considers anticipated changes in the number of Medicaid-eligible individuals being served, the amount and type of services being consumed, inflation for cost-settled providers and changes to the amount of costs that will be shared by the federal government (a.k.a., FMAP).
By our reckoning, if both the $251 million in expansion funding for K-12 education is recurring, and the $212 million Medicaid rebase is also recurring, the General Assembly is about $200 million short of available recurring tax revenues to pay for it. Here’s the math.
|$ 20,200,000,000||announced size of the final budget|
|$ 19,944,480,000||in tax and non-tax revenues|
|$ 262,550,625||difference, recurring revenues and final budget expenditures|
|$ 251,000,000||recurring funding for K-12 education|
|$ 212,000,000||Medicaid rebase|
|$ 463,000,000||total recurring funding needed to fund both items|
|$ (200,449,375)||shortfall in recurring funds to meet both spending items|
This is back-of-the-envelope estimating for certain, but when information is piecey and incomplete, speculation will abound. The question needs to be, then – what got its recurring funding cut, supplanted, or otherwise changed in order to make room for these items given that they didn’t responsibly raise revenue? It’s been announced that the budget documents will be released after session today, so soon this mystery may be laid to rest. In the meantime, we are left to wonder why North Carolina has to be stuck with such a constrained budget.