[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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