While Hospitals Elsewhere Back Medicaid Expansion, Wisconsin Hospitals Offer a Fallback Plan
Hospitals in Wisconsin and many parts of the U.S. are asking state policymakers to take measures to reduce the amount of uncompensated care, although the recommended measures aren’t always quite the same. In our state, the Wisconsin Hospital Association (WHA) is asking state lawmakers to renew an expiring appropriation that provides state financial relief to hospitals that care for a disproportionate share of the uninsured or underinsured.
The $30 million state appropriation, which expires in June, captures $44 million in federal funds for “disproportionate share hospitals” (DSH). Wisconsin Health News reported last week that WHA plans to ask state policymakers to renew the appropriation. Extending that funding makes sense if state lawmakers continue to refuse to expand BadgerCare to cover more low-income adults, but the expansion option could save the state close to $300 million in the next budget and do far more to improve access to insurance and help hospitals. Read more
The Affordable Care Act (ACA), while authorizing the Children’s Health Insurance Program (CHIP) through federal fiscal year (FFY) 2019, created a funding cliff for states by only providing appropriations through FFY 2015. A letter made public last week, which was submitted to members of Congress by DHS Secretary Kitty Rhoades (on behalf of the Governor), explains why the extension of CHIP funding is extremely important for children in Wisconsin.
CHIP has garnered bipartisan support since its inception in 1997 and has been instrumental in lowering the uninsured rate of children in the U.S. Now, it’s up to members of Congress to continue working together to ensure that ongoing funding for the program is approved by September 2015.
At tail end of summer, the House Committee on Energy and Commerce (E and C) and the Senate Finance Committee sent a letter to the nation’s governors requesting state-specific input on CHIP. Wisconsin, along with 38 other states, provided responses that overwhelmingly stress the importance the program plays in providing low-income children with access to affordable, quality health care. Read more
The head of Wisconsin’s Department of Transportation has proposed diverting resources usually used to build strong schools, communities, and health care systems, and use the money instead to construct and repair highways.
The Secretary of Transportation has recommended that that lawmakers transfer $548 million from the state’s general fund to the transportation program in the state’s upcoming two-year budget. This proposed transfer would shortchange important priories supported by the general fund, such as keeping higher education affordable and helping workers get the training they need.
In each of the last several budgets, lawmakers have increased the resources transferred away from the general fund to support transportation programs. If lawmakers transfer the $548 million requested for the state’s next budget, there will be a net gain to transportation programs of $862 million over fourteen years, and a net loss to the general fund of that same amount.
At the ballot box this fall, voters approved a constitutional amendment that prohibits lawmakers transferring money out of the state transportation fund to use for other public services. Read more
State Faces Gap of More than $2.4 Billion between Now and June 2017
State officials confirmed today what we have feared for many months – that Wisconsin’s spending needs in the next biennium far exceed the projected revenue, and the state must also close a very substantial budget hole in the current fiscal year. As a result, lawmakers are likely to make cuts that have harmful consequences for Wisconsin children and families and for the investments needed to keep Wisconsin economically competitive.
Despite the assurances of Walker administration officials over the last couple of months that the state is in strong fiscal shape, the figures contained in a report released by the Department of Administration (DOA) today confirm that balancing the state budget in 2015-17 will require very deep spending cuts or significant tax increases. Specifically, the DOA document reveals the following:
- Tax revenue for the current fiscal year is now expected to be $82 million below the amount estimated in May (on top of a $281 million tax shortfall in the first half of the biennium), and net appropriations are estimated to be $43 million less.
An economic forecast issued Monday by the Department of Revenue (DOR) provides more evidence that Wisconsin will face substantial budget challenges in the current fiscal year and the next biennium. According to that document, which is the fall 2014 Wisconsin Economic Outlook, the nation’s economic growth will fall well short of what DOR assumed in its last report, which was issued in January. (These used to be known as the quarterly economic reports, but for some reason are now issued irregularly and just once or twice a year.)
The January economic report was issued in conjunction with increased state revenue projections, which helped persuade state lawmakers to enact substantial tax cuts. But over the last 10 months the estimates of the national* economy, i.e. the “gross domestic product” (GDP), have changed as follows:
- The anticipated GDP in 2014 is now $152 billion less (-0.9%) than assumed in January.
- The estimate for 2015 is $210 billion lower than previously anticipated (-1.1%).
Spending on corrections has increased dramatically in Wisconsin in recent decades, reducing the resources available for quality schools, safe communities, and health care.
Wisconsin state spending on corrections rose by 308% between 1986 and 2013, when dollar amounts are adjusted for inflation. Only eight states had larger increases in prison costs, measured as a percentage increase. Nationally, state corrections spending averaged an increase of 141% over this period, less than half of Wisconsin’s increase. Figures are from a new report released by the Center on Budget and Policy Priorities.
Wisconsin’s increase in spending on corrections has outpaced the increase in all our neighboring states. Corrections spending in Wisconsin increased twice as fast as spending in Minnesota since the mid-1980s, and nearly five times as fast as in Illinois.
This significant increase in corrections spending comes with very large opportunity costs. As corrections spending has increased, it takes up an increasingly large share of the state’s public resources. Read more
An efficient transportation network can’t exist entirely of one-way streets. It needs to be adaptable, with multiple modes of transportation and some areas where traffic flows in different directions. Likewise, the financing for a good transportation network needs flexibility, and it shouldn’t invariably be restricted to one-way flows of revenue.
Next week Wisconsin voters will cast ballots on a proposed constitutional amendment that we think would be too restrictive. Although it would allow state lawmakers to continue to make transfers between many state funds, such as supplementing the Transportation Fund with money from the state’s General Fund, it would prohibit ever moving Transportation Fund revenue in the opposite direction. That would create a double standard for state revenue transfers. It would be a mistake to lock an inflexible policy for state budgeting into the Wisconsin Constitution, as this editorial explains.
Some who favor a constitutional amendment point to past transfers that reduced resources for transportation programs. Read more
The Department of Administration (DOA) announced last week that the state finished the 2013-14 fiscal year with a budget balance of almost $517 million, and many state lawmakers were quick to congratulate themselves for having a budget “surplus.” I don’t fault them for that; I think I would have done the same thing. However, the fleeting existence of a budget balance doesn’t support the argument some lawmakers have made that Wisconsin has turned a corner with respect to careful budget stewardship and long-term planning.
There are a number of reasons why I think it’s ironic that some lawmakers have been patting themselves on the back for getting halfway through the biennium with a relatively large budget balance. Consider the following points:
The “surplus” will be very short-lived – Because of the latest round of tax cuts, net appropriations for the current fiscal year exceed the budgeted revenue level by $569 million, so the state is very rapidly drawing down its budget reserves. Read more
A close look at Wisconsin’s annual fiscal report released last week reveals that state officials delayed a $25.75* million transfer, which made the budget balance larger than it otherwise would have been at the end of fiscal year 2013-14. However, that’s a cosmetic and deceptive improvement in the budget balance, since the payment will still be made during the current biennium. And because the Department of Administration (DOA) report buries mention of the delay in a footnote, that document presents a somewhat misleading picture of the difficulty of avoiding a budget shortfall in the current fiscal year. [*That figure is a correction to the original post, in which I incorrectly wrote that the delayed amount was $27.5 million.]
According to the DOA’s fiscal report released on Oct. 15, the General Fund balance at the end of the last fiscal year was about $517 million, which was $207.5 million lower than what state lawmakers were anticipating when they passed a tax cut bill early this year. Read more
Governor Walker floated the idea this week of replacing the current gas tax with a sales tax on motor fuel. It’s an interesting idea, but I don’t think it would be good public policy because it would replace a stable revenue stream with a tax source that is far less predictable. (You can read more about the idea in this Journal Sentinel article.)
Although we don’t have details of what the plan would look like, the Governor said it would be revenue neutral – at least at first. But clearly the intent is that the sales tax approach would generate more revenue over time, as gas prices increase, and I think that’s a reasonable assumption to make. However, fluctuations in gas prices mean that in any given year this source of revenue could fall well short of the anticipated level.
From a political perspective the chief virtue of the plan, perhaps the sole virtue, is that it offers a way of potentially raising more revenue for transportation projects without periodically asking elected lawmakers to vote on gas tax increases. Read more