October 2009

State News: August 2009



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Even as budgets in many agencies are being cut, some governors exempted education funding from such cuts, recognizing the importance of good schools in addressing the national economic situation.
“Education is the great equalizer,” Nebraska Gov. Dave Heineman said, “and a quality education is essential for our children’s ability to compete in a knowledge-based, free-market economy.” His budget included an additional $100 million in state aid to education as well as increased funding for special education. It also provides more money for the University of Nebraska and for state and community colleges.
In other states, education funding was a mixed bag. Some included the same or increased K-12 funding, but cut higher education. Others increased funding for both areas, while some states cut funding in both areas.
Governors in Alabama, Alaska, Arizona, Arkansas, Indiana, Kansas, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Dakota, Pennsylvania, South Dakota and Wyoming proposed either the same level or funding or increased funding in at least one area of K-12 education.
“In an economic downturn, decisions can have dire consequences and a lifetime impact on future generations,” said Kansas Gov. Kathleen Sebelius. “No student can afford to miss a few years of quality education.”
Even so, several governors proposed looking at some level of reform for funding or operations. One of those states is Minnesota, where Pawlenty suggested changes including minimum standards for teachers and incentives of up to 2 percent additional funding per student for school districts that meet minimum standards or at least show reasonable growth.
But some states—Idaho, Mississippi, Vermont, Virginia and Wisconsin among them—proposed cuts to K-12 funding. Mississippi Gov. Haley Barbour said his hands were tied when it came to such cuts.
“The law says I can cut any department or agency by 5 percent of its appropriations; however I cannot cut any department of agency by more than 5 percent until every department and agency has been cut 5 percent,” he said.
And Virginia Gov. Tim Kaine said education was spared in the three previous rounds of cuts. “However, education is the single largest expenditure in the state budget and the revenue reductions necessary for 2010 are big enough that we will not be able to continue to leave education untouched,” he said.
In higher education, governors in Arkansas, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, North Dakota and Virginia proposed more funding for financial aid—either grants or scholarships—to help students attend college. Granholm in Michigan and Texas Gov. Rick Perry proposed freezing tuition rates at their states’ colleges and universities.
In South Carolina, Gov. Mark Sanford proposed linking the price of higher education to its cost. “By capping its increase,” he said, “we would force coordination—which is key to preventing higher education from continuing to spiral out of the reach of working families.”
Nevada Gov. Jim Gibbons proposed cuts in general higher education funding, as did Kaine in Virginia, although both left scholarship money intact. In Pennsylvania, Gov. Ed Rendell made a special plea for the legislature to help families who lost ground in the 529 college savings plans, which were hit hard in the stock market collapse.

Health Care

Wisconsin Gov. Jim Doyle said even as states face budget shortfalls because of the faltering economy, more people need help. “The explanation is pretty simple: Almost all states have to pass balanced budgets. So when people lose their jobs and stop buying things, and the demand for state services goes up, states have deficits,” he said.
Nowhere is that more true than in state health care programs. Even before the current economic situation, governors recognized the need to do more in this area.
Governors in Arkansas, Michigan, Missouri, Montana, Nebraska, New Jersey, North Dakota, Ohio and South Dakota proposed increases in the State Children’s Health Insurance Program. This can be addressed, they said, by increasing the eligibility to up to 300 percent of the poverty level, in Ohio, or by identifying those who are already eligible but can’t get through the paperwork, in Missouri.
And governors in Colorado, Idaho, Mississippi, Missouri, New York, Oregon, Pennsylvania, Utah and and Wisconsin proposed action to reduce the number of uninsured people in their states.
In Idaho, Gov. Butch Otter touted a recommendation from the Idaho Health Care Summit, which recommended a Healthy Idaho program that would provide affordable individual and insurance packages for residents ages 25 to 40—the largest group of people without health insurance.
Still some states are proposing some cuts in health care. In Virginia, Kaine proposed cuts in Medicaid without taking anything away from those currently covered. He said the state should set caps on enrollment in certain programs and freeze or reduce provider reimbursement rates. Those steps, in addition to delaying expansion of certain services, could cut the Medicaid budget by $400 million, he said.
Doyle said cuts may also be necessary in Wisconsin’s Medicaid program. “I am not going to say we won’t make reductions in Medicaid, but I will not allow cuts to undermine our ability to get a sick kid to a doctor,” he said.
Colorado Gov. Bill Ritter proposed a strategy to bring more money into Medicaid without additional money from the general fund: Charge hospitals a fee based on patient revenue. “This revenue would then be used to leverage matching federal dollars,” he said. “Finally, the new resources would be used to reduce underpayments to hospitals—stabilizing their rates—and to provide coverage to our most vulnerable populations.”
Several governors—including Hoeven in North Dakota, Paterson in New York, and Perdue in Georgia—also promoted wellness initiatives among their states’ residents.
“At little or no cost, innovative wellness policies at home, at school and at work can make a real difference both personally and collectively, to improving the general health of North Dakota,” Hoeven said.


“Shovel-ready” projects are getting a lot of attention as states look to the federal government for funding in the proposed stimulus package. And that means governors put a special emphasis on infrastructure projects—from transportation to energy infrastructure to public buildings—in their state of the state addresses.
Those projects are important, they said, for the future economic vitality of each state. Beyond that, it just makes good sense to address the crumbling infrastructure of the country, some of the governors said.
“Here in Pennsylvania, the key to recovery lies in putting our citizens back to work through continued infrastructure investments,” Gov. Ed Rendell said. That includes repairs to bridges, roads and mass transit systems, improvements to water quality and delivery systems, and expansion of the state’s rail freight capacity.
Other governors have plans for infrastructure, using both state funds and money from the federal economic stimulus package, including a gas line in Alaska, passenger rail service between Ohio’s three major cities, and a multi-island highway modernization plan in Hawaii.


While many believe raising taxes will only create more roadblocks in the economic recovery, some governors saw this option as an important step to funding programs.
In Idaho, for instance, Otter proposed raising the fuel tax by 2 cents a gallon over five years, increases in the vehicle registration fees, a 6 percent excise tax on car rentals and an elimination of ethanol exemption from the state fuel tax.
Even while proposing some tax cuts, Sanford in South Carolina proposed raising the state’s cigarette tax from 7 cents to 37 cents a pack and increasing the state’s tipping fee on garbage.
Kaine in Virginia proposed a 30 cent per pack increase on cigarette taxes, and Kentucky Gov. Steve Beshear proposed a hefty increase on cigarette taxes, and the legislature recently approved a 30 cent increase.
—Mary Branham Dusenberry is managing editor for State News magazine.
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