Lot of debate, but, as expected, Gov. Mike Beebe got his way. An effort in Joint Budget today to earmark part of the state’s surplus for future Medicaid spending failed. The Beebe administration argued that tying the money down before it’s needed would make it harder to use the surplus if an unexpected emergency need developed before fiscal 2014, when large Medicaid money shortfalls have been predicted, anywhere from $250 to $400 million.
Earmarking surplus, it could be argued, not only doesn’t “fix” Medicaid, it guarantees a much larger problem down the line. Plugging a shortfall with surplus, rather than with a continuing funding source guarantees a much larger shortfall the succeeding year. (Unless you cope by cutting expenditures through a cut in services.) The use of surplus really does, in terms of a lasting solution, “kick the can down the road,” the cliche employed by Republicans criticizing Democrats who opposed handcuffing the surplus money.
January 2013 is soon enough, and the proper time, for systemic review of Medicaid. There’ll be no artificial procedural limits on introduction of legislation. There’ll be no time limit on the session itself. That surplus will still be there and legislators will have a more specific idea of how much it might be, against today’s estimate. Remember, once again, that the surplus can’t be spent for frivolous purposes — as opposed to statewide big tickets like Medicaid, schools and prisons — without appropriations approved by 75 percent of the legislature.
The headlines will work in the favor of Republicans’ trying to specifically obligate surplus money. Legislators “reject using surplus for shortfall,” said one already published. Not exactly. This year’s Medicaid budget has already been met, as has the budget for the year beginning July 1, 2012. What was at issue was specifically putting money aside for the year after that. That surplus still could be tapped in the 2013 session for the fiscal year beginning July 1, 2013, even without an earmark this year. If it is, something dire will have to happen the following year to cover ongoing costs, unless revenue growth from existing taxes is sufficient.