[Congressional Record Volume 148, Number 73 (Thursday, June 6, 2002)]
[Senate]
[Pages S5111-S5113]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATE FISCAL RELIEF AMENDMENT
Mr. NELSON of Nebraska. Madam President, this morning I would like to
talk about a very important issue that is affecting the States and the
budgets at the State level.
While the national economy may be recovering from the recession,
State budgets will take another 12 or 18 months to recover. Just last
month, the National Governors Association and National Association of
State Budget Officers found that over 40 States are facing an aggregate
budget shortfall of $40 billion to $50 billion.
In my home State of Nebraska, the latest numbers show the highest
unemployment level in 15 years. Tax receipts this year will be less
than the previous year for only the second time in the history of the
State. The State is cutting child care, rural development, and other
essential services. Raising taxes to build up the budget cap and
cutting aid to local governments will result in higher property taxes.
Many States face the same challenges as Nebraska. This is the
appropriate time for some help to come from Washington. Part of the
blame that can be assessed for States that are hurting can be laid at
the feet of Congress.
A few months ago, this body passed--and the President signed into
law--a bill to stimulate the economy and help workers. It wasn't a
perfect bill. But then there are very few. But the economy was hurting,
and it was, in fact, time to act.
But there were unintended consequences of that bill. Not only did the
economic stimulus bill fail to provide State fiscal relief in certain
areas, but by making some changes to Federal tax law, the bill
unintentionally added to revenue shortfalls. This means that we, in
effect, cut State tax revenue streams. This, in turn, has put at risk
programs such as medical assistance to the most vulnerable individuals
in this country.
I am concerned about the crunch that the States are facing. As a
former Governor, I know how hard it is to balance a State's budget. And
every State has to balance its budget. The most important thing is that
we recognize that this shortfall will continue, and it will affect the
most vulnerable among us.
This supplemental appropriations bill that is being considered--and
other bills will be coming up in the area of appropriations--is an
important opportunity to do something helpful.
My good friend, Senator Susan Collins, from Maine, will be speaking
shortly as well on the Collins-Nelson proposal that would provide a
temporary 1-percent increase in the Federal Medicaid matching rate. In
Washington, we require that the States deal with Medicaid and that they
provide the services, and we offer some assistance. It is an
underfunded Federal mandate.
At the present time, if we increase the amount of State funding to a
temporary 1-percent increase, we will assist the States in being able
to deal with the challenges in their budgets. At the same time, this
bill will also permit them to continue to provide in the short term for
the rising demand in social services from the economic downturn.
The bill would provide approximately $8.9 billion in total fiscal
relief to the States, which would allow them to expand--not contract--
Medicaid and other health and social services.
States have worked very hard in order to be able to help people go
from welfare to work. It is very important for us to help them continue
that because if they are unable to continue, and they pull back on the
Medicaid funding and they are not able to provide the social services,
you could very easily have States returning to the process of bringing
people from the workplace back into welfare. That is counterproductive.
It works in the opposite direction. That is why we, in fact, must move
forward and assist the States at this very important time.
The National Governors Association has embraced much of what we have
proposed, and so have other organizations. And a number of cosponsors
in our own body have stepped forward and said that this is the right
thing to do, it is the right time to do it, and it is the right way to
approach it.
The health care of Americans is part of our responsibility and our
interest. We must, in fact, help the States so we do not end up with
the tough choices that the States are having to make, involving
reducing Medicaid benefits to those among our most neediest in our
midst.
According to the National Governors Association, Medicaid spending
has been a particular struggle for States since expenditures have risen
by an average of 12 percent over the last 2 years, while the State's
revenues rose a total of 5 percent, as in the State of Nebraska. It
appears that the revenues are flat.
Medicaid spending has been driven by high increases in health care
costs nationwide, particularly the cost of prescription drugs, an issue
that we are going to be facing to move forward to help our seniors deal
with the high cost of prescription drugs as part of Medicare. These
same pressures on the health care system and on our citizens are
affecting the Medicaid population as well.
States have exhausted the usual ways of balancing their budgets. And
so, given the projection of continued deficits, this means that we
must, in fact, step up to the plate at this time and help our States
work through this partnership that we have with Medicaid, where the
States have a matching obligation with the Federal Government, with our
budget. I hope we will be able to do that.
In closing, as a former Governor, I can say, having worked with this
program, that it is an essential program. But it is a partnership with
the Federal Government. Now is an opportunity for the Federal
Government to do its share in assisting the States in dealing with this
very important problem.
I urge my colleagues to join with Senator Collins and myself in this
effort to show the States that Congress is not indifferent to their
budget problems, and we will step in and provide meaningful assistance
at a time when Governors need it most.
Madam President, I believe my time is about to expire, so I yield the
floor.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Ms. COLLINS. Madam President, I rise today with my good friend,
Senator Ben Nelson, to discuss the fiscal plight of our States. Here in
Washington, consumed with our own budget challenges, we often forget
that we have 50 partners in our efforts to provide needed health,
education, and other essential services to our citizens. Our partners
are our States and they need our help.
No one is more aware of the difficulties States are facing than
Senator Nelson. As a former Governor, he understands that we are most
effective when we work arm in arm, not toe to toe, with our partners,
the States.
Senator Nelson and I have filed an amendment to the supplemental
appropriations bill to provide emergency short-term fiscal relief to
the States. Our amendment is needed, and it is needed now.
[[Page S5112]]
The recession may have eased earlier this year, but its effects still
linger. They are felt acutely by States from Maine to Nebraska, from
New York to Washington State. And I know the Presiding Officer is a
cosponsor of the underlying bill that Senator Nelson and I have
introduced. Though the recession has ended and economic growth has
picked up in the first quarter of this year, unemployment continues to
rise. Now it stands at 6 percent. It is an 8-year high.
The recession, the resulting rise in unemployment, and the tragic
events of September 11 have placed tremendous and unanticipated demands
on government services and resources. At the same time, these factors
have contributed to a dramatic and unexpected drop in government
revenues at precisely the time when more revenues are needed to respond
to the confluence of challenges that confront us.
The combination of the increasing demands for services and the
unexpected drop in revenues is causing a fiscal crisis for State
budgets all across this Nation. According to the National Governors
Association and the National Association of State Budget Officers, more
than 40 States are facing a combined budget shortfall of between $40
and $50 billion. Most States have seen their estimates of tax
collections for the current year decrease, often dramatically. State
governments are scrambling to respond. Forty-nine States are required
by law or constitution to balance their budgets, so running a temporary
deficit is simply not an option.
Moreover, the problem is getting worse and is not likely to improve
until next year at the earliest. A survey released by the National
Governors Association shows that individual tax revenues for the first
4 months of this year are running nearly 15 percent below last year's
levels.
The problem is not an isolated one. Thirty-nine States have been
forced to reduce their already enacted budgets for fiscal year 2002, by
cutting programs across the board, tapping rainy day funds, laying off
employees, and reducing important services.
States have been forced to cut a number of critical programs. Twenty-
nine States have attempted to balance their budgets by cutting spending
on higher education. Twenty-five States have cut corrections programs.
Twenty-two have been forced to slash Medicaid. Seventeen States have
cut spending for K-12 education. And 10 States have reduced aid to
local governments. In addition, a number of States have raised taxes
and fees by a total of $2.4 billion. We believe the Federal Government
can and should help our partners, the States. We should do so in an
effective and responsible way.
Our amendment would provide a temporary increase in the Federal
Medicaid matching rate and would provide block grant funds to each and
every State. Specifically, our proposal would increase the Federal
Government's share of each State's Medicaid costs by 1 percent and hold
the Federal matching rate for each State harmless for the second half
of this fiscal year and all of the next.
In addition, our proposal includes a temporary block grant to States
that would help them pay for the rising demand in social services
resulting from the economic downturn. Our amendment would provide
approximately $8.9 billion in total fiscal relief to the States that
would allow them to continue rather than contract Medicaid and other
vital services.
Our amendment would provide fiscal relief to each and every State
that is struggling to balance the budget and care for their citizens.
It has been endorsed by the National Governors Association, the
American Hospital Association, the American Health Care Association,
and the Visiting Nurse Associations of America. These groups understand
the importance of providing assistance to States at a time when many
are forced to look at cutting Medicaid and other essential health care
programs.
For that reason, our bill targets most of the assistance to the
Medicaid Program. That is the fastest growing component of State
budgets. While State revenues were stagnant or declined in many States
last year, Medicaid costs increased by 11 percent. This year, Medicaid
costs are increasing at an even higher rate--13.4 percent. My home
State of Maine is one of a number of States that has been forced to
consider cuts in the Medicaid Program in order to compensate for
declining revenues and to balance the budget.
Earlier this month, after the legislature had already adjourned for
the year, Maine's budget estimators determined that the State's
revenues would come in some $90 million under budget for this year and
would most likely result in another $90 million shortfall in the year
to come.
Maine, despite the fact the legislature has gone home after enacting
cuts earlier this year, is once again confronted with the need to
reexamine its budget and make painful cuts.
Among the programs being considered for reductions in Maine are
Medicaid and general purpose aid, which funds are vital for K-12
education. Maine is not alone. Maine is typical. If we do not help, if
we do not provide some modest, reasonable aid to our States, States
will be forced to slash health care, education, and social service
programs in order to balance their books.
The amendment we have filed would help to bridge Maine's funding gap
by bringing an additional $56 million to my State. It would help us
preserve Medicaid and other essential programs such as education over
the next 18 months, while the economy continues to recover.
I emphasize, even with our amendment, States are still going to face
very difficult choices. They are still going to have to cut worthwhile
programs. But with our amendment, States will be able to keep critical
programs such as Medicaid, such as education, without having to slash
them and cause real harm for the low-income populations in our States.
The challenges facing Governor King in Maine and other Governors
across the country are considerable. The decisions they may be forced
to make could affect the access of millions of Americans to health care
and social services. They simply need our help. The proposal Senator
Nelson and I have put forth would do just that.
We are very hopeful that the distinguished chairman and ranking
minority member on the Appropriations Committee will join us in the
effort to assist our States. If the supplemental appropriations bill is
not the right vehicle for our amendment, we hope they will help us to
identify very soon an appropriate bill to which our amendment could be
attached.
We need to provide this help right away. Most States begin a new
fiscal year next month, and we need to provide this much-needed
assistance now.
It has been a great pleasure to work with the Senator from Nebraska
on this important initiative.
Mr. NELSON of Nebraska. Will the Senator from Maine yield for a
question?
Ms. COLLINS. I am happy to yield.
Mr. NELSON of Nebraska. If we are unable to find the appropriate
legislative mechanism to get this legislation passed, what is the
Senator's opinion as to what States will be faced with doing, and what
will the impact be for the citizens of States?
Ms. COLLINS. Madam President, the Senator from Nebraska raises a very
important question. If we do not act, if we do not act within the next
few weeks, States will have no choice but to slash their Medicaid
Programs, thus depriving our needy low-income families of the health
care they depend on. They will be forced to cut education programs for
K-12 and for State universities. They will be forced to make choices
that will cause real harm to the citizens of this country.
They have no other option. Unlike the Federal Government, they cannot
temporarily run a deficit. Forty-nine States are required to balance
their budgets so they will have no choice, given that the fiscal year
for most States is going to begin on July 1, but to make Draconian cuts
in the programs that serve the most needy members of our society.
We need to act as their partners. We need to provide them with help
to get over this difficult period.
I thank the Senator from Nebraska for his excellent question.
Mr. NELSON of Nebraska. I have another question, if I might ask the
Senator from Maine, who so very eloquently expressed the concerns and
so diplomatically suggested that we need
[[Page S5113]]
some help in finding the true mechanism to get this legislation
through.
What, in the Senator's opinion, might happen to the efforts we made
collectively as partners with the States for welfare reform and getting
people off the welfare rolls and into the workforce? What might happen
to that?
Ms. COLLINS. The Senator from Nebraska has asked a very important
question. He was a leader, when he was Governor, in helping people in
his State move from welfare to work, to give people the dignity and
independence that comes from the ability to earn a living. Those
efforts depend on child care. They depend on assistance with
transportation. They depend on assistance with education, with expanded
Medicare coverage. In order for people to be able to move from welfare
to work, we have to have the social supports in place to ease that
transition. Those supports would be in jeopardy if we do not provide
our States with the assistance we are discussing.
Furthermore, there are States that are scheduled to have an actual
decline in the amount of Medicaid match that they receive from the
Federal Government. That could not happen at a worse time. It would
cause them to slash services even more. We cannot allow that to happen.
This is a temporary problem. We are proposing temporary assistance to
our States. The economy is recovering, but the effects still linger.
States are still seeing the demand for social services.
I ask, through the Chair, the Senator from Nebraska--yielding some of
my time to him--whether he has seen the kinds of problems in his State
that we are seeing in Maine where revenues have dropped unexpectedly
one more time, causing the legislature and the Governor to confront a
pending deficit in a budget that had already been enacted.
Mr. NELSON of Nebraska. Madam President, the State of Nebraska's tax
receipts, for the first time--maybe only the second time in history--
are below what they have been in the past. We have had downturns in the
economy previously, and the tax revenues may have been down, but they
would continue to be greater than the previous year. That is no longer
the case. You actually do have a downturn in the economy--much of it
related to the difficulties in agriculture. But when you see
unemployment moving up to the highest level in 15 years, together with
tax receipts going down, it doesn't take a mathematician to figure out
what will, in fact, continue to happen in the future.
When we require, at the Federal level, certain programs and do not
provide all the funding, all we are really doing is underfunding a
mandate to the States. Maybe it is an important mandate that we are
requiring, but it is also important to not be inconsistent here, to try
to further reform welfare with legislation that is going to be coming
before this body in a short period of time and, at the same time, as we
try to have a higher requirement for work, and what have you, to
improve the income level of people going from welfare to the workforce.
We have to make sure we are consistent and we don't require that on the
one hand and not make it impossible when it comes to funding on the
other hand.
I thank my colleague from Maine for a very articulate and passionate
expression of why it is important that we do this. I hope I have
responded to her question.
Ms. COLLINS. I thank the Senator.
Madam President, I will make one final point. This proposal will not
only help our States balance their budgets without slashing essential
social services such as the Medicaid Program, but it will also provide
much-needed help to struggling health care providers such as our rural
hospitals, our nursing homes, and our home health agencies. Those
health care providers have been struggling with inadequate
reimbursements under Medicaid and Medicare. By increasing the Federal
share of what is a partnership between the Federal Government and the
States to provide health care for our low-income families, we will also
be helping to stabilize the health care providers, particularly in
rural States such as Nebraska and Maine. So that is another reason you
will find that health care providers associations are strongly backing
our legislation, as is the National Governors Association.
This is not a partisan issue; it is one where we have come together
to provide much-needed relief to our partners, the States. My hope is
that we will expeditiously enact our proposal before the July 4 recess.
Mr. NELSON of Nebraska. Madam President, I suggest the absence of a
quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BYRD. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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