Budget and Spending

Congress came through with additional Medicaid assistance to help states finish out the 2011 fiscal year—but the aid is an estimated $1.74 billion short of what 24 states had hoped for, according to a survey by The Council of State Governments.

In tight finacial times for the states, many have had to rely on late payments on contracts, and more specifically late on payments to nonprofits for services rendered to the public.  Several states are in violation of their own prompt pay laws or have passed emergency spending bills to pay on overdue invoices .  But how significant is the issue? One state's comptroller dug a little further to find out.

With states facing budget deficits, several are finding a new way to save the tax payers a few more dollars - by limiting the pay of nonprofit CEOs that are contracted to provide services.

This week the National League of Cities, the National Association of Counties, and the U.S. Conference of Mayors released a survey that indicated that local governments would be forced to slash over 500,000 jobs if Congress does not pass a $75 billion local jobs bill. 

The Missouri public defender system announced yesterday that its Springfield office would not accept new cases until August because attorneys have exceeded their maximum caseloads.

CSG has completed a survey of states' adopted FY 2011 budgets and whether they count on Congressional approval of extending the Medicaid enhanced match started under the 2009 stimulus.

Just days after the new fiscal year starts for most states, 23 states already face budget gaps unless Congress passes an extension of the enhanced Medicaid match started under the federal stimulus legislation.

Ezra Klein of the Washington Post asks this question:  "Did the stimulus a) work; b) fail; c) end up locked in an unexpected battle with the massive anti-stimulus that's ripped through the states?"

Unemployment rates remain high and people are unemployed for longer, exhausting state unemployment trust funds quickly.  More states are borrowing from the federal government to cover costs, which could have an impact on future fiscal stability.

Worst case scenarios abound if Congress fails to extend for another six months the enhanced Medicaid match begun by the 2009 stimulus. CSG’s recent survey found that over half the states have already counted on the extension, from January 1 until June 30, 2011, in their budget deliberations for FY 2011. The Senate appears poised to put the extension back in the so-called “tax extender” bill next week.

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