Last week, the Commissioner of Management and Budget certified that the state is facing a $2.7 billion deficit for FY 2010-11 – the official notice needed to trigger the Governor’s unallotment authority. Earlier this week, we had a chance to get some insights into the potential unallotment plans from Cal Ludeman, Commissioner of the Department of Human Services (DHS).
As we’ve heard before, the unallotments will come from four key buckets:
Higher education- it sounds like unallotments in this area may be as large as possible without triggering the loss of federal fiscal stabilization funds.
K-12 education – the Governor is likely to maximize the education shift recommended during the legislative session, potentially $1.7 or $1.8 billion.
City and county aid and other credits – there will probably be significant cuts here, including reducing state funding where new federal funds are available.
Health and human services - since we were meeting with the Commissioner of DHS, we learned a little more detail about this particular bucket.
- The Commissioner said not to expect any huge surprises – the unallotments are likely to be spread between 30 to 40 programs and will mostly reflect proposals that were made during the legislative session.
- Contrary to early reports, the cuts in HHS will not come mostly in the second year of the biennium. Instead, look for most of the unallotments in this area to take effect in the first year (which starts on July 1st).
- Look for additional cuts to provider rates and suspensions of previously authorized rate adjustments.
- Look for delays in implementing initiatives – including initiatives that were passed as far back as 2007.
- Although the Governor will attempt to avoid losing federal dollars, it is inevitable that the state will end up forgoing some federal matching funds as a result of unallotments.
- The hope is to avoid piling-on those areas which have already been significantly cut (probably referring to adults without children and hospitals impacted by the elimination of General Assistance Medical Care) and minimize the pain to the most vulnerable (he mentioned the elderly and people with disabilities).
It is also useful to note that in the next biennium (FY 2012-13), base funding for programs will return to the appropriations level prior to unallotment. That is not the case for any line-item vetoes made by the Governor, according to the Commissioner.
The Governor’s unallotment announcement may come at any time in the next week or two. We’ve heard that the Governor hopes to announce the entire unallotment plan at once, providing everyone with as much notice as possible to adjust to the cuts to programs and services.
As a procedural note, the Governor must present his unallotment plan to the Legislative Advisory Commission before it can be implemented. The LAC, however, has no authority to change or reject the plan. Instead, the legislature’s opportunity to respond will come when they reconvene next February. By that time, however, many cuts may have already taken effect.