Out of Control Policy Blog

Kentucky House Leaders Want to Bet the Budget on Another Federal Bailout

Kentucky House leaders are so confident of either health care reform or another federal bailout of the states (see ARRA; stimulus) that they're willing to bet their budget on it. Per the Louisville Courier-Journal:

House leaders are proposing a daring budget maneuver that would strip $227 million in General Fund money from the state's Medicaid program for the next budget year in hopes that the federal government will approve additional stimulus funds for the program starting in 2011. The federal stimulus money, which has helped keep Kentucky’s $5.4 billion plan in the black, expires Dec. 31, the midpoint of the budget year.

Advocates Tuesday were stunned to learn that the House is considering taking state money from Medicaid — with no guarantee Congress will provide extra money for the health plan, which covers the poor and disabled. "It's a scary proposal," said Sheila Schuster, a longtime advocate for the disabled. "It makes me extremely nervous to predicate a budget on a program that affects so many lives on the presumption that the federal government is going to continue additional funding." [...]

Rep. Rick Rand, D-Bedford, the chairman of the House budget committee, outlined the plan to take state money from Medicaid in an interview Tuesday, saying he expects additional federal funds in 2011.

"It's a reasonable assumption to make that that money will be there," Rand said. [...]

Rep. Jimmie Lee, D-Elizabethtown Lee acknowledged that if Congress doesn’t approve additional federal stimulus money, Medicaid — and Kentucky — will be in trouble.

"If they don't, you'd have such a hole that the General Assembly would have to come back no later than December and do something or the program would collapse," he said.

This is at once farcical, cynical and manipulative. Defund the program to create a horror story so that you can now go hat in hand to DC to beg and tell sob stories, hoping some dunces on Capitol Hill react. Of if that pans out, then you go back home hat in hand to beg voters to let you pick their pockets so you can paper over your out-of-control spending. Either way, this amounts to a game of high-stakes fiscal "chicken."

Meanwhile, California, New York, and other spending addicted states watch eagerly from the sidelines, needles ready to fill with the next stimulus fix so they can avoid the pain of spending withdrawal.

Leonard Gilroy is Director of Government Reform


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