Topeka Legislators swallowed another dose of bad-tasting budget medicine Tuesday when they learned that Kansas will receive $83 million less than expected in federal Medicare reimbursements.
Some legislators had hoped to use the money for general state expenditures in the 2003 fiscal year, which begins July 1.
"We aren't going to get as much as was anticipated and, in fact, we have to give part of what we received back," Budget Director Duane Goossen told the Senate Ways and Means Committee.
The $83 million was an optimistic projection based on a change last fall in Medicare reimbursement rates to states for nursing home care for the elderly. The first payments showed up in February.
However, Congress closed a loophole that has allowed states to bill the federal government for half of the highest nursing home provider fees even though they often contracted for services at much lower prices. When reimbursement checks arrive, the states pocket the difference.
Federal officials told Kansas on Monday that its attempt to draw down extra money was not allowed under federal law.
"There has always been a big 'if' associated with those funds," Goossen said.
The congressional action will have significant budget implications for about 20 states, including California, New York and Illinois.
"I think Kansas is being punished for the misdeeds of other states," said Senate Ways and Means Chairman Steve Morris, R-Hugoton.
Kansas captured $19.4 million of the extra federal funds during its 2000 fiscal year and $90.1 million in fiscal 2001.
Goossen said new estimates are that Kansas will receive $103.2 million in the current fiscal year and $51.6 million not the anticipated $135 million in fiscal 2003.
"Then that's it," Goossen said.
He noted that Gov. Bill Graves and the House drafted budgets for fiscal 2003 that depended on $97 million in extra federal funds, leaving about $50 million available for fiscal 2004.
The Senate's budget plan, expected to be debated today, uses the $50 million that Graves wanted to leave for 2004 and the now-unavailable $83 million to cover part of a projected $700 million budget gap for fiscal 2003.
"It's the ultimate in one-time money," Goossen said. "It creates a huge, huge gaping hole."
Senators appeared shell-shocked by the news.
"We all knew the program was going to come to a screeching halt," Morris said. "It obviously is very disappointing."