Topeka Democratic Gov. Kathleen Sebelius believes federal stimulus dollars will help Kansas avoid a budget shortfall, but a key Republican senator is wary of using the money to avoid spending cuts.
The state expects this week to receive the first part of the $1.7 billion promised to Kansas under the federal stimulus legislation. The initial installment is $71.5 million in additional dollars for Medicaid, which covers health care for the needy.
Sebelius said Tuesday that those funds, along with other Medicaid dollars Kansas expects to receive in 2009 and 2010, will help the state in avoiding a deficit in the budget for the fiscal year that begins July 1.
She and other officials are less certain about some $585 million for education that Kansas expects to receive from the stimulus package. But Sebelius said some of those dollars also could help the state manage its budget problems.
“I think it will make 2010 budget decisions a little easier because it does give us a cushion,” Sebelius told The Associated Press. “Given the fact that 85 percent of our budget is education and health care, these are the two areas that a lot of states were looking for specific federal help.”
Legislative researchers project that the state will end its next fiscal year with a $654 million deficit if it attempts to carry the current budget forward. Senate Republican leaders already had said they would look to cut spending an average of 10 percent in fiscal 2010.
Leaders of the GOP majorities in both the House and Senate have been reluctant to include any stimulus dollars in the budget. They note that the federal government isn’t planning to continue its payments past 2010.
Senate Ways and Means Committee Chairman Jay Emler, a Lindsborg Republican, said new federal money will help some but, “We can’t count on the stimulus.”
“If there are moneys that we can capture later to fill some holes, we’ll take a look at that,” he said.
The stimulus package provides additional funds for more than two dozen items, and state officials are still waiting to see what rules come with the money for many of the new dollars.
“Most of it is not going to help us in the budget,” said Budget Director Duane Goossen. “It’s going to be layered on top of what we’re already doing.”
But, Goossen added, “The Medicaid piece will change our budget.”
The state expects to spend about $2.45 billion on Medicaid services during its 2010 fiscal year.
Before the stimulus legislation, the federal government picked up 60 percent of the cost. Under the legislation, the federal government’s share rose to 66 percent, and that change is applied to spending after Oct. 1, 2008.
Thus, the additional federal dollars will reimburse Kansas for state revenues it spent on Medicaid and replace some of those dollars going forward. That means state dollars will be freed up for other purposes.
The Kansas Health Policy Authority, which administers the Medicaid program in the state, expects Kansas to receive $440 million in additional Medicaid funds in 2009 and 2010.
“The importance of this money cannot be overstated,” Marcia Nielsen, the authority’s executive director, said. “This is real money, and it is direct fiscal relief for the state of Kansas.”