Governor Pawlenty and the Minnesota Legislature are anxiously awaiting word on whether and when Congress will act to extend federal fiscal aid to the states that will expire in December. Last year, under the American Recovery and Reinvestment Act (ARRA), Minnesota received $1.8 billion from an increase in the federal matching rate for Medicaid (FMAP) and additional federal aid primarily for K-12 and higher education. Prior to 2009, the federal government and the state each paid 50 percent of the state’s Medicaid costs. But under the increased matching rate, the federal government now pays 60 percent of the state’s Medicaid costs with the state picking up the remaining 40 percent. Without this assistance, state budget cuts would have been much deeper and health care for thousands of Minnesotans would have been at risk.
A new report from the Center on Budget and Policy Priorities confirms the bleak fiscal outlook facing most states and predicts that, “Without further federal aid, the actions states will have to take to close their budget gaps could cost the economy 900,000 jobs.”
Minnesota is facing a severe budget shortfall of $1.2 billion in this budget cycle. The Governor’s budget proposes deep cuts to health care and other human services that are vital to the well-being of thousands of Minnesotans but also assumes that Congress will pass an extension of health care assistance. Such an extension could bring $387 million to Minnesota and could help to ease the pressure for further cuts. The key question is whether Congress will act in time to impact state budget decisions that need to be made in the next few months.
The U.S. House of Representatives passed an extension of fiscal aid in late December last year, but the Senate has yet to act. Senator Franken is a cosponsor of a bill (S.3000) to extend the increased matching rate for Medicaid by an additional six months. The senator’s leadership on this issue is extremely helpful in focusing attention on the need to extend FMAP to the states. Both Senators Franken and Klobuchar have also signed a letter to Majority Leader Reid asking him to include a six-month extension of the increased matching rate for Medicaid in legislation to extend Unemployment Insurance and COBRA health care benefits.
Please call Senators Franken and Klobuchar to thank them for their support on this issue. Let them know the U.S. Senate must vote soon for Minnesota to avoid deeper state budget cuts. For more details, see our action alert.
- Steve Francisco
