WAITING ON OBAMA

by Clay Chandler

Published: January 12,2009

There are a lot of moving targets lawmakers have to hit when it comes time to set the state’s budget, and this year there is a rather large addition.

President-elect Barack Obama will take the oath of office next week, and his administration’s first wave of policies could shape some legislative budget decisions.

One relates to Medicaid, the healthcare program that serves more than 600,000 poor and elderly Mississippians.

Obama and members of his transition team have kicked around the idea of changing the matching guidelines that determine how much money states pay in and how much they get back from the federal government to fund programs like Medicaid. Such a move would be designed to save states money.

Currently, Mississippi pays in $90 million and receives around $540 million in return. The prospect that the formula will change is another wrinkle in the annual legislative fight over the Medicaid funding method.

Lawmakers are split over who should pay the tab, with the Senate and Barbour favoring a hospital assessment and the House pushing an increase in the state’s cigarette tax. It has become universally agreed upon that the state’s tax on cigarettes will increase, but how much and where the money will go will be key issues this session.

Gov. Haley Barbour said last week that it would be foolish to earmark money for Medicaid when the federal/state funding formula could change.

“If the federal government cuts the state matching requirement, we could end up with $100-something million of our money that doesn’t generate a penny, because you have to spend it on Medicaid, not budget it for Medicaid. We’re not going to spend money on a program just because it’s a good deal.”
Barbour’s budget for fiscal year 2010, which starts July 1, calls for the cigarette tax to rise from 18 cents per pack to 42 cents per pack. Some House leaders have said they want it increased to $1 per pack and higher, and want the money to go straight toward healthcare costs. Barbour favors putting the money in the general fund, where it could be spent on any of the state’s agencies, departments or programs.

House Medicaid Committee chairman Rep. Dirk Dedeaux, D-Perkinston, says the state has to act with a sense of urgency in funding Medicaid.

“Those who would be in opposition to some of the solutions that we would be proposing to the Medicaid crisis, I suspect they will use the speculation of the heavens opening under President Obama. But you can’t run government on that type of speculation,” Dedeaux said. “You can’t take that check to the bank.”

Another federal program that pours massive amounts of money into states’ coffers is the funding mechanism for the construction and maintenance of federal highways.

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA:LU) was signed into law by President George W. Bush in 2005. The $244-billion program, the largest surface transportation investment in U.S. history, expires in September.

How much tweaking to the program Congress does will have a profound effect on how Mississippi shapes its own highway funding agenda. The Obama Administration has made one of its major policy initiatives the passage of a public works stimulus package, whose amount would most likely exceed the nearly trillion-dollar bailout of the financial system. The public works package would fund construction and repair of highways, ports, airports, water and sewer lines and would be meant to create jobs in a spiraling economy.

“One thing I would not advise is for us to try to pre-empt Congress,” Barbour said. “I would urge people that we should not take any action until we see what the stimulus package is. Until we see what they’re going to do there, I think it would be foolish to try to figure out what we’re going to do.”

Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .

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