Phase I Budge Cuts in Health and Human Services

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h2>Crisis deepens for Phase II

The House and Senate adopted their proposals to eliminate the $356 million deficit for this fiscal year, ending June 30, 2003.  In the health and human services area, the House adopted most of the governor’s proposals and added a number of their own.  The Senate adopted some of the governor’s proposed cuts and declined to accept others, but added hospital and social service grant payment shifts and other savings for this biennium.

At press time, the outcome of the Conference Committee between the House and Senate on the Phase I Budget Balancing bill is unknown.  Governor Pawlenty has warned the Legislature that if agreement is not reached by early February, he will make cuts himself through unallotment.  This would mean that the governor would decide where to cut and take administrative action to do so.

Phase I

The Phase I proposals affect persons with disabilities in a number of ways:  the House proposed to add a Medical Assistance prescription drug co-payment only affecting persons with disabilities with incomes less than 100 percent of the Federal Poverty Level ($740 per month), a 5 percent increase in parental fees for families with children with significant disabilities who need Medical Assistance services, and elimination of state-funded Medical Assistance for noncitizen immigrants, some of whom have disabilities.  The governor proposed delaying the new Medical Assistance autism service six months, while the Senate proposed elimination of the new service entirely.  The governor and House proposed delaying the targeted home care case management benefit and the common service menu improvements to the disability waiver programs by 2 ½ years until July 1, 2005, while the Senate delayed these changes only six months until July 1, 2003.  Both the House and Senate eliminate a grant for counties to assist in moving people from public guardianship to private alternatives and an unspent fetal alcohol grant.  The Senate eliminates Medical Assistance coverage for chiropractic and podiatry services.  Both the governor and House cut the Ombudsman for Mental Health and Mental Retardation and the Council on Disability 4 percent this year and through the next biennium.  Final decisions on Phase I cuts will be made through the Conference Committee process or, if negotiations fail, by the governor through unallotment.

Phase II

While it is clear that persons with disabilities are affected by Phase I cuts, the service cuts yet to come in Phase II will completely dwarf the Phase I cuts.  Minnesota faces at least a $4.2 billion deficit for the next biennium.  Governor Pawlenty has pledged not to raise taxes as part of the budget solution or to cut K-12 classrooms, which make up 41 percent of the state budget.  Given the governor’s position, it is expected that health and human services, which make up 25 percent of state general fund spending, will face proposals for deep cuts in services.  The health care area is over 90 percent of the Department of Human Services budget, so most DHS cuts will be in health and continuing care.

It is very important for everyone who relies upon any government services—such as Medical Assistance, mental health grants, semi-independent living services, family support grants, General Assistance Medical Care, group residential housing, special education or any other publicly-funded service—to follow proposals of the governor and the hearings in the House and Senate in the months ahead.  Governor Pawlenty’s budget proposals will be released by mid-February.  The proposals will be available on the Department of Finance Web site, www.finance.state.mn.us.  Another very important date is February 27, when a new economic forecast will be released.  If the February forecast provides an even bleaker projection of Minnesota’s fiscal future, the resulting service cuts could be even worse for persons with disabilities.

There is no doubt that Minnesota is facing a catastrophic budget deficit.  It appears impossible to make up the deficit with cuts alone without creating serious hardship for Minnesotans with disabilities and many other groups.  While the governor pledged not to raise taxes, tax increase proposals, which would lessen the deep service cuts, will be debated at the Legislature.  Some options to increase revenue include a cigarette tax increase, gas tax increase, sales tax on clothing, sales tax on services and an income tax surcharge.  It will be very important for persons with disabilities to be involved in the debate on increasing revenue as well as how to cut state spending.

Federal Action Could Help

Finally, congressional action could assist Minnesota and a large majority of other states facing serious budget crises.  There are proposals in Congress to increase the federal match for Medicaid and federal social services funding.  Other proposals which could help our state include funding for homeland security requirements for our state, county and local governments.  Persons with disabilities have a tremendous amount at stake in the historic decision-making now under way at our State Capitol and in Washington D.C.  Information about your Legislature, including help to find your state representative and senator as well as your U.S. congressperson and senators, can be found at www.leg.state.mn.us.

Anne L. Henry is an attorney with the Minnesota Disability Law Center.

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