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Governor says ‘no’ to more Medicaid or education cuts

Instead, he'll push for tax increases to fill the state's budget gap

By Dave Ranney, Mike Shields | December 17, 2009

The state needs a higher levy on tobacco and a new nursing home tax would help the industry, the governor said today in an interview with KHI News Service.

Other taxes also should be explored to help balance the budget because cuts to needed services over the past two years have gone too deep already, he said.

Gov. Mark Parkinson today honored the long-running tradition of granting short, year-end interviews with individual members of the Statehouse press corps.

In his 15-minute talk with KHI News Service, Parkinson, a Democrat, repeated his pledge to not seek election next year.

The question had fresh currency because of the announcement earlier that Tom Wiggans, a Kansas-raised businessman, was withdrawing from the governor's race, leaving no known Democrat to challenge U.S. Sen. Sam Brownback, a Republican leaving Congress with hopes of claiming the Statehouse executive suite.

Tax increase hardly a sure thing

Crippling cuts

Parkinson said the $1 billion cut from the state's budget over the past two years has left the social-service safety net tattered and other core services such as education pared to the bone.

"We attempted to start out making cuts that were painful but not crippling," he said. "I think we're to a point now where we've made cuts that are potentially crippling."

In November, the governor announced a 10 percent cut in the rates paid to doctors, hospitals and others who see Medicaid patients. Thursday, he said he had no other option because the state constitution requires a balanced budget, the state was deep in the red and education and Medicaid were the only areas of state spending that could be reduced enough to fill the budget hole.

"Probably the cut that has been the hardest for me has been the decision to reduce the Medicaid reimbursement rates by 10 percent," Parkinson said. "It is very poor public policy. It not only reduces access to health care for those who are most in need, it punishes the providers who are willing to take Medicaid patients, which is something we need to encourage not punish."

At least $300 million short

The treasury is expected to be short at least another $300 million for fiscal 2011, which begins July 1, 2010, and Parkinson said he preferred tax increases to making additional cuts in Medicaid, schools or other essential services.

That news pleased those who represent doctors and safety net clinics.

Wow and an exclamation point

"Wow," Jerry Slaughter, executive director of the Kansas Medical Society, told a reporter when relayed the governor's comments. "I wasn't expecting that. When the Medicaid cuts were first announced we were told they would be for an indefinite duration, which we took to mean more than the short term, so this is good news."

"Oh, that's good news and you can put an exclamation point at the end of that sentence!" said Cathy Harding, executive director of the Kansas Association for the Medically Underserved, a group that represents the state's safety-net clinics. "Everybody is struggling to weather the storm right now, so it's good to know that the governor understands how extremely challenging these cuts are."

Harding said she thought many legislators also were disturbed by the Medicaid cuts and would work to prevent them going deeper.

"I think it's pretty clear that legislators, too, are realizing these were not good cuts," she said. "There is compassion."

But Slaughter said he wasn't so sure that legislators would back tax increases.

"I don't see a groundswell of support out there for a tax increase when so many people are hurting" from a down economy, he said. "Maybe there is and I just don't see it. We'll sure work with the governor and the Legislature in shoring up the system."

The governor said it would be overly optimistic to suppose that the 10 percent cut to Medicaid rates this year could be fully restored in the coming year. But he said he hoped that new revenue from taxes, federal aid or a rebounding economy would make it possible to roll back at least a portion of the reimbursement cuts.

The Medicaid program had been spared earlier cuts when nearly every other area of state spending was being trimmed.

Parkinson last summer said he would push for a tobacco tax increase, if the 2011 state budget situation became dire. Thursday, he said the time has no come to call for a bigger levy on cigarette sales, which he said would produce the collateral benefit of discouraging teen smoking.

Nursing home tax, too

The governor also said he supported a "provider" or bed tax on nursing homes. The Kansas Health Policy Authority working with the Kansas Department on Aging has crafted a plan for increasing the bed tax as a way of drawing down more federal aid. Under the plan, the additional federal money would be redistributed among the state's nursing homes, leaving most of them with net gains. The provider tax has generally been supported by for-profit nursing homes but opposed by the non-profits.

"I believe that implementing a provider tax is one of the best ways to help the nursing homes that actually take Medicaid residents," Parkinson said. "That's what I've told our secretary on aging and he and I are on the same page on this.

"If the provider tax can successfully make its way through the Legislature," the governor said, "we'll be supportive. That doesn't solve the general fund problems, but it is very helpful to the nursing homes."