House, Senate Leaders Agree On Budget Cuts

March 7th, 2008

Tampa Tribune--Mar. 7, 2008

TALLAHASSEE - House and Senate leaders agreed Thursday to slice more than $500 million from the current state budget but remain polarized over an aggressive Senate plan to freeze Medicaid payment rates for nursing homes, hospitals and certain other health care providers that serve poor patients.

The Senate passed a $506 million package of cuts to the $70 billion budget Thursday, including more than $350 million from K-12 and higher education and $37 million from health care. With the House having passed a similar proposal of $517 million in cuts Wednesday, the chambers sent their budget writers into joint conferences to negotiate what few differences remained.

Still left unresolved Thursday night, however, was the Senate's proposal to freeze Medicaid payment rates for certain providers at the start of 2008-09. Denying those providers an automatic annual rate increase would cost them $316 million; for nursing homes alone, the hit is $139 million.

Although lawmakers tied the Medicaid rate freeze into their budget package for 2007-08, it does not actually have an impact on the current fiscal year. Instead, the Medicaid rate freeze would take effect July 1 to guarantee a savings of $340 million for the state in fiscal year 2008-09. Lawmakers are preparing to slash spending next fiscal year by as much as $2.5 billion later in the session in respond to revenue shortfalls.

The Medicaid rate freeze would "mitigate what we're going to have to do next year, and make sure we have a firm foundation to do it on," said Sen. Durell Peaden, R-Crestview, who chairs the Health and Human Services Appropriations Committee. "The economy isn't going to turn around in the next 18 months. When the budget gets tight, we have to be more responsible to the people."

Peaden noted that while hospitals and nursing homes receive automatic rate increases each year by as much as 7 percent, smaller providers such as doctors and dentists do not. In that respect, he said, ending the automatic increases for larger providers during tight budget times is fair.

Sen. Nan Rich, vice chairwoman of Peaden's committee, objected to what she described as a hasty move that would decimate health care and nursing home accessibility and affordability for Medicaid patients.

"This is the most distressing part of the proposals that came out of the Senate because it's a permanent public policy decision, and it's not a good decision," said Rich, D-Sunrise, arguing that lawmakers should consider all possible cuts and alternative revenue sources for next year before making the cut.

Plan 'Would Be The Death Knell'

House health budget writers rejected the Senate plan outright. "We recognize that Medicaid providers are dying on the vine," said Rep. Bill Galvano, R-Bradenton, who chairs the House Healthy Families Committee. "We're losing them at a rapid rate from the Medicaid program, at a time when we're trying to promote access and affordability. This would be the death knell."

Rich said the rate freeze follows a 3 percent cut that lawmakers imposed on providers in the fall, which amounted to a loss of $75 million for nursing homes. Lawmakers have set a minimum standard of 2.9 nurses per day for each resident, she said, and these cuts jeopardize the nursing homes' ability to comply.

Peaden said lawmakers can decide later to reverse the rate freeze. None of the state's analysts has determined yet that the cuts will cause care or staffing levels to deteriorate, he said.

The Senate and House conferees resolved to "bump" the issue up to their respective chambers' main budget chiefs, who may defer to House Speaker Marco Rubio and Senate President Ken Pruitt for a decision. The chambers are expected to pass a completed joint proposal of budget cuts next week.

Resolving Differences

The afternoon's negotiations between the two chambers yielded agreements to restore several million dollars of funding for two hot-button areas: courts and schools.

The Senate voted Thursday morning to authorize the use of $2.5 million in trust fund money for the state's criminal justice budget. The additional dollars, if utilized, would keep thousands of court workers from being sent home without pay during the final quarter of this fiscal year, which ends June 30.

When House and Senate lawmakers still agreed in conference to cut the state's criminal justice budget by $47.1 million, the House accepted Criminal and Civil Justice chairman Victor Crist's amendment.

Although Crist, R-Tampa, said he expected to take "every nickel and dime out of every trust fund imaginable" to restore the funding, in the end he said, "We did not sweep the trust funds." But he added, "We gave them authority to access them."

The trust funds may not be tapped at all if court-system officials come up with an alternative plan to raise the $2.5 million, which is needed to avoid furloughs.

Senate budget writers also accepted a House proposal to restore $8.5 million to an education program that rewards teachers for earning national board certification. House GOP leaders agreed to Democrats' request Wednesday to protect the program.

Breaking Ranks

When the Senate voted 26-13 to pass its budget proposal and send it to conference, just one Democrat broke party ranks to vote yes.

A former Senate president, Sen. Gwen Margolis, said it's a matter of facing Florida's grim economic reality.

"We swear to uphold the constitution and it says you have to balance the budget," said Margolis, D-Miami Beach. "It's kind of the real world."

Senate Minority Leader Steve Geller, D-Hallandale Beach, said the requirement to balance the budget doesn't mean lawmakers have to impose sharp spending cuts to meet their obligation. When lawmakers turn to the coming fiscal year, he said, Geller and other Democrats will be pushing proposals for new revenue sources, such as closing tax loopholes, and echoing pleas from Gov. Charlie Crist to dig into state reserves.

So far, Geller said. "All we have looked at are cuts. That is not good economic policy for the state of Florida."